ArcelorMittal reports first quarter 2022 results

ArcelorMittal (referred to as “ArcelorMittal” or the “Company”), (MT (New York, Amsterdam, Paris, Luxembourg), MTS (Madrid)), the world’s leading integrated steel and mining company, today announced results1,2 for the three-month period ended March 31, 2022.

1Q 2022 Key highlights:
• Health and safety focus: Protecting the health and wellbeing of employees remains the Company’s overarching priority; LTIF rate of 0.69x in 1Q 2022
• Ukraine update: At the onset of the war in Ukraine, the Company announced the suspension of operations to protect its people and assets. Since then we have slowly restarted operations, and are currently operating one of three blast furnaces18
• Operating income: 1Q 2022 operating income of $4.4bn (vs. $4.6bn4 in 4Q 2021) and EBITDA of $5.1bn in 1Q 2022 (vs. $5.1bn in 4Q 2021)
• Enhanced share value: 1Q 2022 basic EPS of $4.28/sh increased +9.0% vs. 4Q 2021, representing an ROE19 of 36%; book value per share16 increased to $57/sh
• Financial strength: Gross debt of $8.7bn at the end of 1Q 2022; net debt declined to $3.2bn (vs. $4.0bn end of 2021)
• Higher net income: $4.1bn in 1Q 2022 (vs. $4.0bn in 4Q 2021) includes share of JV and associates net income of $0.6bn (vs. $0.4bn in 4Q 20215)
• Strong FCF generation: The Company delivered $1.5bn of free cash flow (FCF) in 1Q 2022 ($2.0bn net cash provided by operating activities less capex of $0.5bn and dividends paid to minorities) despite a $2.0bn investment in working capital, reflecting seasonal as well as market factors (higher selling and raw material prices)
• A platform for consistent capital returns: The Company announces an increase in its 2022 buyback program to $2.0bn (of which $1.0bn was completed on April 25, 2022) in addition to the $0.38/share base dividend which will be paid in June 2022

Continued progress in leading the industry in Climate Action:
• In April 2022, signed an agreement to acquire an 80% shareholding in voestalpine’s world-class Hot Briquetted Iron (‘HBI’) plant located in Texas
• Established strategic renewable energy partnership with Greenko Group in India and announced a $0.6bn investment to build 975MW of Solar/Wind capacity

Delivering strategic growth in support of higher sustainable returns
• Ramp up of the 2.5Mt Mexico hot strip mill is progressing well
• Strategic capex envelope (including renewables project in India) increased to $3.65bn to be spent between 2021-2024 (of which $0.25bn has been spent to date)17; FY 2022 capex guidance remains unchanged at $4.5 billion

Financial highlights (on the basis of IFRS1,2):

Commenting, Aditya Mittal, ArcelorMittal Chief Executive Officer, said:
“Our first quarter performance was overshadowed by the war in Ukraine. Our focus has been on providing support to our 26,000 colleagues and their communities at a time of tragedy and hardship.

Notwithstanding this backdrop, further aggravated by rising inflationary pressures across the world, ArcelorMittal produced a strong first quarter performance. This is testimony to the resilience of our business model, characterized by diversity of geography, product category and vertical integration.

Our performance continues to be supported by consistent execution against our strategy. We have approved targeted investments in support of our decarbonization plans and continue to fund high-return projects in growth markets. This is achieved without compromising our balance sheet strength or returns to shareholders.

Market conditions are currently strong although we are now anticipating apparent steel consumption to contract slightly this year compared with 2021. Nevertheless, it is clear that the longer-term fundamental outlook for steel is positive. China’s focus on decarbonization and removal of VAT-rebates on steel exports are encouraging; so too are the actions taken by governments to protect against the threats of unfair trade. And we know that steel will play a critical and vital role in the transition to a decarbonized and circular economy – there is no substitute.”

Sustainable development and safety performance

Health and safety – Own personnel and contractors lost time injury frequency rate

Protecting the health and wellbeing of employees remains the Company’s overarching priority with ongoing strict adherence to World Health Organization guidelines (in respect of COVID-19), and specific government guidelines have been followed and implemented.

Health and safety performance based on own personnel and contractors lost time injury frequency (“LTIF”) rate was 0.69x in the first quarter of 2022 (“1Q 2022”) as compared to 0.74x in the fourth quarter of 2021 (“4Q 2021”) and 0.78x in the first quarter of 20213 (“1Q 2021”).

A concerted effort is underway to improve health and safety across the group and strengthen our safety culture. We have completed a comprehensive review of our efforts to eradicate accidents and fatalities, and have started 2022 with a refreshed company-wide commitment to put this fully into action.

Corporate oversight of safety has been strengthened, our Global Health & Safety Council is sharing and promoting best practice, peer-to-peer mentoring between sites has been introduced, training (which was reduced as a necessary precaution during COVID-19) has been strengthened and we are prioritizing support for underperforming units.

The Company is also tightening guidelines for mandatory leadership shop floor presence (which similar to training was reduced as a necessary precaution during COVID-19). All leaders must now spend a certain minimum time on the shop floor every week – when they must carry out a safety layered evaluation. While the Company policy has always specified leaders to regularly spend time on the shop floor, setting out a higher minimum accepted level for senior leaders will help reinforce the culture of visible felt leadership which we know has weakened in some regions as a result of COVID-19.

Furthermore reporting of proactive KPIs such as potential serious injury frequency (PSIF) will be also be strengthened. Every segment is required to put in place a quality assessment process for PSIFs. Understanding clearly why PSIFs happen is vitally important to tightening processes, improving behaviours and preventing fatalities. Widespread use of what we call ‘quarantining’ will also now be in place across all operations where plants are put into ‘quarantine’ if a seriously unsafe incident takes place or the plant is deemed to be at risk of a serious incident or fatality.

A change to the Company’s executive remuneration policy has been made to reflect this focus.

Own personnel and contractors – Frequency rate³

Key sustainable development highlights:

Developments in support of our decarbonization plans:
• Announced the agreement to acquire an 80% shareholding in voestalpine’s world-class Hot Briquetted Iron (‘HBI’) plant located in Corpus Christi, Texas
• Established a strategic partnership with Greenko Group, India’s leading energy transition company, and announced a $0.6 billion project to build 975MW of renewable energy capacity
• Announced the acquisition of Scottish recycling business John Lawrie Metals Ltd
• Received confirmation that the Government of Ontario would invest CAD$500 million of the total planned CAD$1.8 billion investment in decarbonization technologies at ArcelorMittal Dofasco’s plant in Hamilton. This follows the previous announcement that the Government of Canada would invest CAD$400 million to the project
• Inaugurated a combined heat and power plant at ArcelorMittal Zenica, cutting sulphur dioxide and dust emissions by 80% and also cutting 18% of ArcelorMittal Zenica’s total CO2 emissions
• Announced that it has successfully tested the use of green hydrogen in the production of direct reduced iron (“DRI”) at its steel plant in Contrecoeur, Quebec

Developments in support of humanitarian aid:

• ArcelorMittal has been actively supporting the humanitarian relief efforts in Ukraine with $7.6 million donated so far:
 ArcelorMittal Kryvyi Rih made a $1.0 million donation to humanitarian relief efforts in the city of Kryvyi Rih for the provision of food stocks, medical supplies and equipment for local hospitals.
 ArcelorMittal Kryvyi Rih has also donated a further $1.0 million to the Ukrainian government’s humanitarian efforts which are focused on providing food, shelter, medicine and clothing to refugees.
 In addition, ArcelorMittal is channeling donations from ArcelorMittal employees worldwide via the United Nations humanitarian effort UNICEF, with the Company matching donations made by employees. To date, over $5.6 million in total has been donated in this way.

• The Company operated a program of voluntary evacuation to Poland and western Ukraine for family members of ArcelorMittal Kryvyi Rih employees, in response to demand. To date, approximately 1,000 individuals have been safely evacuated.

Analysis of results for 1Q 2022 versus 4Q 2021 and 1Q 2021
Total steel shipments in 1Q 2022 were 15.3Mt, -2.7% lower as compared with 15.8Mt in 4Q 2021 largely reflecting the impact of the war in Ukraine (ACIS down -20.3%) offset in part by improved NAFTA shipments +11.4%. Comparing to 1Q 202115, and adjusting for the change in scope (i.e. excluding the shipments of ArcelorMittal Italia20 deconsolidated as from April 14, 2021), steel shipments in 1Q 2022 decreased by -1.6%: Europe +2.9% (scope adjusted), Brazil +5.9% offset in part by ACIS -20.2% and NAFTA -2.2%.

Sales in 1Q 2022 were $21.8 billion as compared to $20.8 billion for 4Q 2021 and $16.2 billion for 1Q 2021. As compared to 4Q 2021, the 5.0% increase in sales was primarily due to higher average steel selling prices (+7.5%, supported by positive automotive contract resets), and higher mining revenue primarily due to higher iron ore reference prices (+28.2%), offset in part by lower steel shipment volumes (-2.7%). Sales in 1Q 2022 were +34.8% higher as compared to 1Q 2021 primarily due to significantly higher average steel selling prices (+46.0%) offset in part by lower iron ore reference prices (-15.3%) and the impacts of scope changes.

Depreciation for 1Q 2022 was lower at $647 million as compared to $712 million for 4Q 2021 including impacts from foreign exchange but higher as compared to $601 million in 1Q 2021 driven by changes in the useful lives estimates for certain assets in Europe and Canada due to decarbonization projects, partially offset by foreign exchange benefit.

There were no impairment items for 1Q 2022 or 1Q 2021. Impairment reversal gain for 4Q 2021 amounted to $218 million following improved cash flow projections in the context of decarbonization plans in Sestao (Spain) partially reversing the impairment recognized in 2015.

Operating income for 1Q 2022 was $4.4 billion as compared to $4.6 billion in 4Q 2021 and $2.6 billion in 1Q 2021.

Income from associates, joint ventures and other investments11 for 1Q 2022 was $559 million as compared to $383 million for 4Q 2021 and $453 million in 1Q 2021. 1Q 2022 is higher than 4Q 2021 on account of results of AMNS Calvert7 and AMNS India6 and includes $117 million Erdemir annual dividend received (as compared to $89 million dividend received in 1Q 2021).

Net interest expense in 1Q 2022 was $51 million as compared to $49 million in 4Q 2021 and significantly lower than $91 million in 1Q 2021, reflecting savings following the repayment of bonds.

Foreign exchange and other net financing losses in 1Q 2022 were $140 million as compared to losses of $111 million in 4Q 2021 and $194 million in 1Q 2021. 1Q 2022 includes foreign exchange loss of $46 million compared to $30 million in 4Q 2021 and $118 million in 1Q 2021. 4Q 2021 included a charge of $61 million related to the repurchase of approximately $395 million in aggregate principal amount of the Mandatorily Convertible Subordinated Notes (“MCN”) on December 23, 2021.

ArcelorMittal recorded an income tax expense of $555 million (including deferred tax benefit of $140 million) in 1Q 2022 as compared to $632 million (including deferred tax benefit of $46 million) in 4Q 2021 and $404 million (including deferred tax benefit of $165 million) for 1Q 2021.

ArcelorMittal recorded net income for 1Q 2022 of $4,125 million ($4.28 basic earnings per common share), as compared to net income of $4,045 million for 4Q 2021 ($3.93 basic earnings per common share), and a net income of $2,285 million for 1Q 2021 ($1.94 basic earnings per common share).

NAFTA segment crude steel production increased by +1.5% to 2.1Mt in 1Q 2022, as compared to 2.0Mt in 4Q 2021 despite the impact of the labour actions at ArcelorMittal Long Products Canada that negatively impacted 1Q 2022. As compared to 1Q 2021, crude steel production in 1Q 2022 declined -4.5% on account of these labour actions at ArcelorMittal Long Products Canada.

Steel shipments in 1Q 2022 increased by +11.4% to 2.5Mt, as compared to 2.2Mt in 4Q 2021, but declined by -2.2% as compared to 1Q 2021.

Sales in 1Q 2022 increased by +13.0% to $3.8 billion, as compared to $3.3 billion in 4Q 2021, primarily due to an increase in steel shipments offset in part by a -1.4% decrease in average steel selling prices (despite the positive impact of automotive contract resets). Sales increased by +48.2% in 1Q 2022 as compared to $2.5 billion in 1Q 2021 primarily on account of higher average steel selling prices (+55.5%).

Operating income in 1Q 2022 was $1,054 million as compared to $939 million in 4Q 2021 and $261 million in 1Q 2021.

EBITDA in 1Q 2022 of $1,147 million was +9.0% higher as compared to $1,052 million in 4Q 2021, primarily due to higher shipment volumes. EBITDA in 1Q 2022 was higher as compared to $332 million in 1Q 2021 mainly due to a significant positive price-cost effect.

Brazil segment crude steel production declined by -2.5% to 3.0Mt in 1Q 2022 as compared to 3.1Mt in 4Q 2021 primarily due to planned maintenance in Acindar (Argentina). Production was stable as compared to 3.0Mt in 1Q 2021.

Steel shipments were stable at 3.0Mt in 1Q 2022 and 4Q 2021, and +5.9% higher as compared to 2.9Mt in 1Q 2021 due to higher export volumes.

Sales in 1Q 2022 decreased by -2.5% to $3.4 billion as compared to $3.5 billion in 4Q 2021, primarily due to a 0.9% decrease in average steel selling prices (-4.4% in local currency). Sales in 1Q 2021 were lower at $2.5 billion on account of lower average steel selling prices and lower steel shipments.

Operating income in 1Q 2022 of $674 million was lower as compared to $892 million in 4Q 2021 and $714 million in 1Q 2021.

EBITDA in 1Q 2022 decreased by -23.1% to $732 million as compared to $952 million in 4Q 2021, primarily due to a negative price-cost effect. EBITDA in 1Q 2022 was $732 million as compared to $767 million in 1Q 2021 primarily due to higher costs offset in part by higher steel shipments and average steel selling prices.

Europe segment crude steel production was stable at 8.7Mt in 1Q 2022 as compared to 8.6Mt in 4Q 2021, but lower by -10.4% as compared to 1Q 2021 due to the change in scope. Following the formation of a public-private partnership between Invitalia and AM InvestCo Italy renamed Acciaierie d’Italia Holding (ArcelorMittal’s subsidiary party to the lease and purchase agreement for the ILVA business)20, ArcelorMittal has deconsolidated the assets and liabilities as from mid-April 2021. Adjusted for this change of scope, crude steel production was stable in 1Q 2022 as compared to 1Q 2021.

Steel shipments in 1Q 2022 were stable at 8.3Mt as compared to 4Q 2021 and lower as compared to 9.0Mt in 1Q 2021. Adjusted for scope, shipments in 1Q 2022 were +2.9% higher as compared to 1Q 2021.

Sales in 1Q 2022 increased by +8.0% to $13.0 billion, as compared to $12.1 billion in 4Q 2021, primarily due to +9.7% higher average selling prices (supported by positive automotive price resets). Sales were higher than 1Q 2021 with the impacts of higher prices offsetting the change in scope, as discussed above.

Impairment charges for 1Q 2022 and 1Q 2021 were nil. Impairment reversal gain for 4Q 2021 amounted to $218 million following improved cash flow projections in the context of decarbonization plans in Sestao (Spain) (partially reversing the impairment recognized in 2015).

Operating income in 1Q 2022 was $2,081 million as compared to $1,886 million in 4Q 2021 (including impairment reversal gain as discussed above) and $599 million in 1Q 2021.

EBITDA in 1Q 2022 of $2,407 million increased by +19.1%, as compared to $2,021 million in 4Q 2021, primarily due to a positive price-cost effect with higher contract pricing more than offsetting higher raw material prices. 4Q 2021 was impacted by one-time charges of $55 million related to an early retirement scheme in Spain. EBITDA in 1Q 2022 increased significantly as compared to $898 million in 1Q 2021 primarily due to a positive price-cost effect.

ACIS segment crude steel production in 1Q 2022 was -9.0% lower at 2.5Mt as compared to 2.7Mt in 4Q 2021 primarily due to suspension of production in Ukraine18. At the onset of the war in Ukraine, the Company announced the suspension of operations to protect its people and assets. Since then we have slowly restarted operations, and are currently operating one of three blast furnaces. Blast furnace No.6 (approximately 20% of Kryvyi Rih capacity), was restarted on April 11, 2022 (to resume low levels of pig iron production). Iron ore production is currently running at about 50-60% capacity.

Steel shipments in 1Q 2022 decreased by -20.3% to 2.1Mt as compared to 2.6Mt in 4Q 2021 and were lower by -20.2% as compared to 1Q 2021, mainly due to the impacts of Ukraine.

Sales in 1Q 2022 decreased by -17.9% to $2.1 billion as compared to $2.5 billion in 4Q 2021, primarily due to lower steel shipments offset in part by +5.6% higher average steel selling prices.

Operating income in 1Q 2022 was significantly lower at $280 million (due to the factors as discussed above) as compared to $439 million in 4Q 2021 and $535 million in 1Q 2021.

EBITDA of $385 million in 1Q 2022 was -30.8% lower as compared to $557 million in 4Q 2021, primarily due to lower steel shipments and higher costs. EBITDA in 1Q 2022 was lower as compared to $645 million in 1Q 2021 due to higher costs and lower steel shipments offset in part higher average steel selling prices.

Iron ore production decreased in 1Q 2022 by -3.2% to 6.9Mt as compared to 4Q 2021 and was -4.8% lower as compared to 1Q 2021. Lower production in 1Q 2022 was primarily due to seasonally lower production driven by severe weather conditions in AMMC.

Iron ore shipments decreased in 1Q 2022 by -6.3% to 6.7Mt as compared to 7.1Mt in 4Q 2021, primarily driven by seasonally lower shipments at AMMC (severe weather and associated logistics issues) and a rail incident in Liberia. 1Q 2022 iron ore shipments decreased by -10.2% as compared to 1Q 2021 primarily due to lower rail haulage and port shipments driven by severe weather conditions at AMMC and the rail incident in Liberia.

Operating income in 1Q 2022 increased to $511 million as compared to $343 million in 4Q 2021 but was lower as compared to $779 million in 1Q 2021.

EBITDA in 1Q 2022 increased by +41.8% to $567 million as compared to $400 million in 4Q 2021, largely reflecting the positive impact of higher iron ore reference prices (+28.2%), higher quality premia and lower freight costs offset in part by lower iron ore shipments (-6.3%). EBITDA in 1Q 2022 was lower as compared to $838 million in 1Q 2021, primarily due to lower iron ore reference prices (-15.3%) and lower shipments (-10.2%).

Joint ventures
ArcelorMittal has investments in various joint ventures and associate entities globally. The Company considers the Calvert (50% equity interest) and AMNS India (60% equity interest) joint ventures to be of particular strategic importance, warranting more detailed disclosures to improve the understanding of their operational performance and value to the Company.

Calvert’s hot strip mill (“HSM”) production during 1Q 2022 totaled 1.1Mt, higher as compared to 4Q 2021 (impacted by a planned shutdown) and -10.9% lower than 1.3Mt in 1Q 2021.

Steel shipments in 1Q 2022 were +11.3% above 4Q 2021 due to improved automotive demand as well as non-auto recovering from the seasonally weak 4Q 2021.

EBITDA*** during 1Q 2022 of $327 million (100% basis) was +21.1% higher than $270 million in 4Q 2021, largely due to higher steel shipments.

Crude steel production in 1Q 2022 decreased by -6.3% to 1.7Mt as compared to 1.8Mt in 4Q 2021 primarily due to planned maintenance. Crude steel production in 1Q 2022 decreased by 5.2% as compared to 1.8Mt in 1Q 2021.

Steel shipments in 1Q 2022 were stable as compared to 4Q 2021 and 1Q 2021.

AMNS India EBITDA of $470 million (100% basis) was +8.0% higher as compared to $435 million in 4Q 2021, with the contribution from external sale of pellets from the newly commissioned Odisha plant offset in part by a negative price cost impact.

Liquidity and Capital Resources

Net cash provided by operating activities for 1Q 2022 was $2,034 million as compared to $4,154 million in 4Q 2021 and $997 million in 1Q 2021. Net cash provided by operating activities in 1Q 2022 includes a working capital investment of $2,047 million as compared to working capital release of $22 million in 4Q 2021 and a working capital investment of $1,634 million in 1Q 2021. 1Q 2022 working capital requirements were driven by relatively robust finished steel prices including positive automotive contract price resets and elevated raw material prices. Based on current market conditions, the Company expects a further working capital investment in 2Q 2022.

Capex of $529 million in 1Q 2022 compares to $1,145 million in 4Q 2021 and $619 million in 1Q 2021. Capex for FY 2022 is still expected to total $4.5 billion. Capex outside of strategic capex and decarbonization projects is now expected to be $2.9 billion in 2022, having been lowered by $0.2 billion due to reduced activity in Ukraine. Decarbonization capex is expected to be $0.3 billion in 2022 (net of government support). Capex on strategic envelope projects has been increased by $0.2 billion to $1.3 billion to include the renewables project in India. The pellet plant project in Ukraine has been temporarily suspended.

Net cash used in other investing activities in 1Q 2022 was $77 million as compared to $90 million in 4Q 2021 as compared to net cash provided by other investing activities of $887 million in 1Q 2021. 1Q 2022 cash outflow primarily relates to the acquisition of the Scottish scrap recycling business John Lawrie Metals Ltd. 4Q 2021 cash outflow primarily relates to the $45 million investment through the XCarb™ innovation fund10 (including carbon recycling company, LanzaTech). 1Q 2021 cash inflow primarily relates to $0.6 billion cash received from the sale of 40 million Cleveland Cliffs shares and the recovery of the cash collateral (short-term deposits) for the TSR receivables retained in ArcelorMittal USA after its disposal.

Net cash used in financing activities results from movements in debt (including commercial paper) issuance and repayments, share buy backs, dividends and lease payments. Net cash used in financing activities in 1Q 2022 was $185 million as compared to $2,990 million in 4Q 2021 and $1,338 million in 1Q 2021. In 1Q 2022, net cash used in financing activities includes an inflow from commercial paper portfolio offset by the reimbursement of an outstanding bond paid at maturity. In 4Q 2021, net cash used in financing activities includes an inflow of $0.1 billion from commercial paper portfolio. In 1Q 2021, net cash used in financing activities includes an outflow of $0.6 billion primarily related to $0.3 billion decrease of commercial paper portfolio. During 1Q 2022, ArcelorMittal repurchased 18.3 million shares for a total value of $569 million of which $504 million was paid by the end of March 2022 with $65 million settled in early April 2022. During 4Q 2021, ArcelorMittal repurchased 59.2 million shares for a total value of $1.8 billion. In addition, the Company repurchased $395 million in aggregate principal amount of its 5.50% Mandatorily Convertible Subordinated Notes (“MCN”) due 2023 for an aggregate repurchase price of $1,196 million, equivalent to repurchasing approximately 36.6 million shares (based on the minimum conversion ratio). During 1Q 2022, 4Q 2021 and 1Q 2021, the Company paid dividends of $12 million, $21 million and $65 million, respectively, to minority shareholders. Outflows from lease payments and other financing activities were $48 million in 1Q 2022 as compared to $53 million in 4Q 2021 and $49 million in 1Q 2021.

Gross debt increased to $8.7 billion as of March 31, 2022, as compared to $8.4 billion as of December 31, 2021 and $11.4 billion as of March 31, 2021. Net debt declined by $878 million to $3.2 billion as of March 31, 2022 as compared to $4.0 billion as of December 31, 2021 and $5.9 billion as of March 31, 2021.

As of March 31, 2022, and December 31, 2021, Company had liquidity of $11.1 billion and 9.9 billion, respectively. March 31, 2022 liquidity consisted of cash and cash equivalents of $5.6 billion (December 31, 2021 cash and cash equivalents of $4.4 billion) and $5.5 billion of available credit lines9 . As of March 31, 2022, the average debt maturity was 5.7 years.

Key recent developments

• On May 2, 2022, ArcelorMittal announced that it has successfully tested the use of green hydrogen in the production of direct reduced iron (“DRI”) at its steel plant in Contrecoeur, Quebec. ArcelorMittal’s ambition is to lead the decarbonization of the steel industry and this test is an important milestone in the Company’s journey to produce zero carbon emissions steel via the DRI-based steelmaking route using green hydrogen as an input. The objective of the test was to assess the ability to replace the use of natural gas with green hydrogen in the iron ore reduction process. During this first test, 6.8% of natural gas was replaced with green hydrogen during a 24-hour period, which contributed to a measurable reduction in CO2 emissions. The green hydrogen used in the test was produced by a third-party owned electrolyser (device that produces green hydrogen from electricity and water) and was then transported to Contrecoeur. This is a major step forward since the iron ore reduction process alone contributes to more than 75% of ArcelorMittal Long Products Canada’s (“AMLPC”) overall CO2 emissions. AMLPC is evaluating the possibility of carrying out further tests in the coming months by increasing the use of green hydrogen at the DRI plant, which could eventually reduce CO2 emissions in Contrecoeur by several hundred thousand tonnes per year. The potential use of electrolysers to produce green hydrogen in Contrecoeur will depend on certain criteria, particularly the availability of sufficient electricity to power the units.
• On April 29, 2022, ArcelorMittal published its 2021 integrated annual review, ‘Smarter steels for people and planet’. The review underpins the Company’s commitment to transparent reporting. It has been produced to reflect the guiding principles of the Value Reporting Foundation and in-line with the Global Reporting Index (GRI) Sustainability Reporting Standards, the United Nations Global Compact, and the European Union’s Directive 2014/95/EU on non-financial reporting. The Integrated Annual Review is a central element in the Company’s commitment to engage stakeholders and communicate our financial and non-financial performance. It provides an overview of the Company’s performance in 2021, outlines progress against its strategic priorities, and details its short- and long-term plans.
• On April 26, 2022, ArcelorMittal announced that it had completed its $1.0 billion share buyback program announced on February 11, 2022 under the authorization given by the annual general meeting of shareholders of June 8, 2021. By market close on April 25, 2022, ArcelorMittal had repurchased 31,751,960 shares for a total value of €911 million (equivalent to $1.0 billion) at an approximate average price per share of €28.68.
• On April 14, 2022, ArcelorMittal announced it had signed an agreement to acquire an 80% shareholding in voestalpine’s world-class Hot Briquetted Iron (‘HBI’) plant located in Corpus Christi, Texas. The transaction values the Corpus Christi operations at $1 billion, with $680 million cash out and closing is expected in 3Q 2022, subject to customary regulatory approvals. The state-of-the-art plant, which was opened in October 2016, is one of the largest of its kind in the world. It has an annual capacity of two million tonnes of HBI, a high-quality feedstock made through the direct reduction of iron ore which is used to produce high-quality steel grades in an EAF, but which can also be used in blast furnaces, resulting in lower coke consumption. HBI is a premium, compacted form of Direct Reduced Iron (‘DRI’) developed to overcome issues associated with shipping and handling DRI. Ideally located with its own deep-water port with unused land on the site which provides options for further development. voestalpine has retained a 20% interest in the plant – with a corresponding offtake agreement – ArcelorMittal would own 100% of any future development. The remaining balance of production will be delivered to third parties under existing supply contracts, and to ArcelorMittal facilities, including to AMNS Calvert in Alabama, upon the commissioning of its 1.5 million tonne EAF, expected in the second half of 2023.
• On March 30, 2022, Votorantim exercised its put option right to sell its entire equity interest in ArcelorMittal Brasil to the Company, following the acquisition of Votorantim S.A.’s long steel business in Brazil in 2018, which became a wholly-owned subsidiary of ArcelorMittal Brasil. The exercise price is calculated pursuant to a contractual formula which applies a 6x multiple of ArcelorMittal Brasil Longs Business EBITDA for the trailing four quarters (subject to certain adjustments, such as the exclusion of any unusual, infrequent or abnormal events) less an assumed net debt of 6.2 billion reais, times 15%. ArcelorMittal Brasil’s initial calculations indicate a value of approximately $0.2 billion to the put option. ArcelorMittal Brasil is required to deliver to Votorantim its calculation of the exercise price, along with the proper documentation, by May 14, 2022.
• On March 22, 2022, ArcelorMittal announced it had established a strategic partnership with Greenko Group, India’s leading energy transition company. The $0.6 billion 975 MW project will combine solar and wind power and be supported by Greenko’s hydro pumped storage project, which helps to overcome the intermittent nature of wind and solar power generation. The project provides for 250 MW of uninterrupted renewable power to be supplied annually to AMNS India (ArcelorMittal’s joint venture company in India) under a 25-year off-take agreement to be entered into with AMNS India (starting in mid-2024). The project and land will be owned and funded by ArcelorMittal. Greenko will design, construct and operate the renewable energy facilities in Andhra Pradesh, Southern India. This will result in over 20% of the electricity requirement at AMNS India’s Hazira plant coming from renewable sources, reducing carbon emissions by approximately 1.5Mt per year. The project provides an attractive return on investment for ArcelorMittal and offers AMNS India the dual benefits of lower electricity costs and lower CO2 emissions. The Company is studying the option to develop a second phase which would double the installed capacity.
• On March 2, 2022, ArcelorMittal announced its acquisition of Scottish recycling business John Lawrie Metals Ltd., as part of the company’s strategy of increasing the use of scrap steel to lower CO2 emissions from steelmaking. John Lawrie Metals, is a leading consolidator of ferrous scrap metal, exports to steel producers mainly in western Europe. Increasing the use of scrap steel in both the EAF and blast furnace routes of steelmaking, is one of the five key levers of ArcelorMittal’s decarbonization roadmap.
• On February 25, 2022, ArcelorMittal announced that its Significant Shareholder had decided not to further participate in its $1.0 billion share buyback program. In its announcement of February 11, 2022 regarding a new $1.0 billion share buyback program, ArcelorMittal had noted the declared intention of its Significant Shareholder to sell shares to it in proportion to shares purchased on the market to maintain its percentage shareholding. ArcelorMittal was subsequently informed by the Significant Shareholder that it had decided not to make such sales; accordingly, its percentage holding of issued and outstanding shares (which stood at 36.3% as of January 31, 2022) increased to 37.53% as of April 25, 2022, following completion of the $1.0 billion share buy back program.
• On February 15, 2022, ArcelorMittal confirmed its plan for a CAD$1.8 billion investment in decarbonization technologies at ArcelorMittal Dofasco’s plant in Hamilton, following the announcement on February 15, 2022, that the Government of Ontario would invest CAD$500 million in the project, which followed the previous announcement in July 2021 that the Government of Canada would invest CAD$400 million in the project. The investment will reduce annual CO2 emissions at ArcelorMittal’s Hamilton, Ontario operations by approximately 3 million tonnes, which represents approximately 60% of emissions. This means the Hamilton plant will transition away from the blast furnace-basic oxygen furnace steelmaking production route to the DRI – EAF production route, which carries a significantly lower carbon footprint. The project is scheduled to be complete by 2028.

Capital return
On April 26, 2022, ArcelorMittal announced the completion of the $1.0 billion share buyback program it had announced on February 11, 2022.

The Company is now announcing an increase in its 2022 buyback program to $2.0 billion (of which $1.0 billion has been completed) and, following shareholder approval at the AGM, the $0.38/share base dividend will be paid in June 2022.

Outlook
Whilst we have updated our forecasts for apparent steel consumption (ASC) to reflect developments since 4Q 2021 results, with the exception of CIS, we have not changed our production plans and shipment forecasts – i.e. excluding CIS, we expect scope-adjusted shipments in 2022 to be above 2021 levels.

Based on the current economic outlook, ArcelorMittal now expects global apparent steel consumption (“ASC”) to contract slightly in 2022 (by up to -1.0%) vs. the previous forecast for slight growth (of up to +1%). By region:
• In the US, ASC growth in 2022 is expected to be within the previous forecast range (+1.0% to +3.0%);
• In Europe, due to the negative impact of rising inflation, ASC in 2022 is expected to decline by between -4.0% to -2.0% (vs. the previous forecast of slight positive growth in the range of +0% to +2.0%);
• In Brazil, our forecast for ASC demand growth are unchanged (within the range of -10.0% to -8.0%);
• In India, our forecast for ASC demand growth are unchanged (within the range of +6% to +8%);
• We now forecast a significant contraction in demand in the CIS region (which includes Commonwealth of Independent States and Ukraine) by more than -10.0% (from previous range of +0% to +2%);
• In China, given the temporary economic weakness caused by COVID-19 restrictions, we now forecast ASC demand towards the bottom of the previous forecast range (-2.0% to 0%);
• We now forecast Global ex. China ASC to be broadly in line with 2021 (within the range of -0.5% to +0.5%), a downgrade from our previous estimate (+2.5% to +3.0%); and
• As a result, global ASC in 2021 is now forecast to contract by -1.0% to +0% in 2022 (versus +0.0% to +1.0% forecast previously).

How long strong market conditions will prevail remains uncertain and subject to many factors, but it is clear that the longer-term fundamental outlook for steel is positive. China’s focus on decarbonization and removal of VAT-rebates on steel exports are encouraging; so too are the actions taken by governments to protect against the threats of unfair trade. And we know that steel will play a critical and vital role in the transition to a decarbonized and circular economy – there is no substitute.

Appendix 2b: Capital expenditure projects21
The following tables summarize the Company’s principal growth and optimization projects involving significant capex.

For projects in which the targeted addition to EBITDA is indicated, such amount is based on numerous assumptions as to selling prices and input costs in particular.

Appendix 6: Terms and definitions
Unless indicated otherwise, or the context otherwise requires, references in this earnings release report to the following terms have the meanings set out next to them below:

Apparent steel consumption: calculated as the sum of production plus imports minus exports.
Average steel selling prices: calculated as steel sales divided by steel shipments.
Cash and cash equivalents: represents cash and cash equivalents, restricted cash, and short-term investments.
Capex: represents the purchase of property, plant and equipment and intangibles.
Crude steel production: steel in the first solid state after melting, suitable for further processing or for sale.
EPS: refers to basic or diluted earnings/loss per share.
EBITDA: operating results plus depreciation, impairment items and exceptional items.
EBITDA/tonne: calculated as EBITDA divided by total steel shipments.
Exceptional items: income / (charges) relate to transactions that are significant, infrequent or unusual and are not representative of the normal course of business of the period.

Foreign exchange and other net financing loss: include foreign currency exchange impact, bank fees, interest on pensions, impairment of financial assets, revaluation of derivative instruments and other charges that cannot be directly linked to operating results.
Free cash flow (FCF): refers to net cash provided by operating activities less capex less dividends paid to minority shareholders
Gross debt: long-term debt and short-term debt (including that held as part of the liabilities held for sale).
Impairment items: refers to impairment charges net of reversals.
Liquidity: cash and cash equivalents plus available credit lines excluding back-up lines for the commercial paper program.
LTIF: lost time injury frequency rate equals lost time injuries per 1,000,000 worked hours, based on own personnel and contractors.
Mt: refers to million metric tonnes.
Net debt: long-term debt and short-term debt less cash and cash equivalents (including those held as part of assets and liabilities held for sale).

Net debt/LTM EBITDA: refers to Net debt divided by EBITDA (as used in the Company’s financial reporting) over the last twelve months.

Net interest expense: includes interest expense less interest income
On-going projects: refer to projects for which construction has begun (excluding various projects that are under development), even if such projects have been placed on hold pending improved operating conditions.
Operating results: refers to operating income/(loss).
Operating segments: NAFTA segment includes the Flat, Long and Tubular operations of Canada, Mexico; and also includes all Mexico mines. The Brazil segment includes the Flat, Long and Tubular operations of Brazil and its neighboring countries including Argentina, Costa Rica, Venezuela; and also includes Andrade and Serra Azul captive iron ore mines. The Europe segment includes the Flat, Long and Tubular operations of the European business, as well as Downstream Solutions, and also includes Bosnia and Herzegovina capital iron ore mines. The ACIS segment includes the Flat, Long and Tubular operations of Kazakhstan, Ukraine and South Africa; and also