Aperam – Positioning, strategy and drivers Bernard Fontana – Chief Executive Officer 16 December 2010
Forward-looking Statements This document may contain forward-looking information and statements about ArcelorMittal and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “target”, “will” or similar expressions. Although ArcelorMittal’s management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of ArcelorMittal’s securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of ArcelorMittal, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the filings with the Luxembourg Stock Market Authority for the Financial Markets ( Commission de Surveillance du Secteur Financier ) and the United States Securities and Exchange Commission (the “ SEC ”) made or to be made by ArcelorMittal, including ArcelorMittal’s Annual Report on Form 20-F for the year ended December 31, 2009 filed with the SEC. ArcelorMittal undertakes no obligation to publicly update its forward-looking statements, whether as a result of new information, future events, or otherwise. 1
Content • Overview • Markets and products • Unique strengths • Challenges and opportunities in stainless steel • Challenges and opportunities in electrical steel, alloys and specialties • The Leadership Journey • Q&A 2
Overview 3
Aperam snapshot – A global player in stainless steel • 2.5mt of Flat stainless steel capacity in Europe and Brazil (27% of Aperam turnover in 2009) – Leading position in high valued added niches, alloys and specialties • Stainless specialities (Ferritics) • Electrical steel (GO and NGO) • Special-carbon • Nickel alloys & specialties – A highly integrated distribution, processing and services network – A unique capability to produce stainless and specialities from low cost biomass/charcoal – An industrial network concentrated in 6 main plants located in Brazil, Belgium and France • Approximately 9,800 employees An EBITDA average of USD 778m over 2007-2009 representing approximately 5%* of ArcelorMittal’s EBITDA *Stainless steel segment within ArcelorMittal 4
A global player Stainless steel shipments in 2009 Europe North America and CIS 43 kT 743 kT Asia & Pacific 46 kT South 41 kT America Middle-East & Africa 228 kT PLANTS SERVICE CENTERS FOREST 5 Source: Aperam SALES AGENCIES
Production assets in Europe & South America Châtelet Genk Isbergues Imphy Gueugnon Timóteo Location & facts Location & facts Location & facts Location & facts Location & facts Location & facts - Melt shop and cold - Melt shop and hot- - Cold-rolling mill and - Cold-rolling mill and - Melt shop and - Melt shop and rolling mill finishing finishing rolling finishing facilities finishing facilities - Belgium - France - France - Belgium - Brazil - France Capacity: Capacity: Capacity: Capacity: Capacity: Capacity: - Slabs: 1,200 kt - Finished: 400 kt - Finished: 350 kt - Slabs : 1,000 kt - Melt shop: 900kt - EAF: 60 kt - Finished: 740 kt - Specialised in Bright - LC2i: integrated - HSM : 3,400 kt - 320kt cold rolled & - 1 VIM, 1 VAR, Rotary Annealing (BA) line 60kt hot rolled Continuous Caster for - 2,000 mm wide products and annealed and pickled Long Products capacity, 316 and stabilized ferritics duplex grades - Silicon cold rolling: – Hot Rolling mill of 60kt GO and 120kt of wire: ~40 kt - Cold rolling mill: 750kt NGO – 6 Cold Rolling Mills Strong presence in both Europe and South America 6
An organization by core competencies Alloys & Specialties Biomass & Upstream Bioenergia Strategic participation GMO Stainless & Industry Industry Industry Electrical Steel Distribution Distribution Services Distribution & Tubes Wire drawing Tubes Solutions Precision Components 7
Team and organisation Bernard FONTANA CEO 48 years old Clenio Julien Jean-Paul Timoteo DI Julien Johanna VAN GUIMARAES BURDEAU ROUFFIAC MAULO ONILLON SEVENANT Services & Alloys & CFO & Sustainability, Stainless & Stainless & Solutions Specialities Strategy HR & Electrical steel Electrical steel Communication South America Europe 53 years old 58 years old 51 years old 39 years old 40 years old 42 years old 8
Markets and products 9
Stainless steel represents only 2% of total world steel market in volume Main end-user applications Stainless steel consumption by end user* Energy & Others Chemicals 3% Industry 14% Catering & Appliance General 34% Industry 20% Building & Automotive & Construction Transportation 17% 12% Demand for stainless steel driven by consumers and industrial investments 10 *Pre-crisis Source: Aperam
Demand for stainless steel comes later in the economic development cycle Stainless steel consumption per capita* (kg/year) Carbon steel consumption per capita* (kg/year) 500 12 10 400 30% 8 90% 300 x6 6 x8 200 4 100 2 0 0 Emerging world China Developed world Emerging world China Developed world Stronger growth potential in stainless steel than carbon steel 11 *Pre-crisis Sources: CRU and Aperam
Electrical steel products are driven by energy oriented applications Grain Oriented (GO) High grades • Higher efficiency equipment • GO is used in the construction of static electrical • Lower Energy consumption machines / transformers • Lower CO 2 emissions • Amorphous alloy is the only material that competes with GO steels (restricted to small distribution transformers for specific market segments ) High Regular grades • Low efficiency Polarization equipment Best properties Non-grain Oriented (NGO) • High energy consumption • NGO is used in the construction of large and small rotating electrical machines (hydro- generators , electrical motors, hermetic motors / Low compressors for refrigerators, air conditions and freezers, drills, household appliance transformers, energy meters , ballasts ….) • Limited substitution threat Low High Core Losses Stricter governmental regulations, greater electricity demand/cost, focus on energy efficiency and environmental concerns drive the growth of both GO & NGO products 12
Nickel Alloys applications and products Aerospace Oil & Gas Magnetic and controlled expansion alloys • FeNi alloys (Ni>25%) and FeNiCo exhibit unique thermal expansion coefficient and magnetic properties Superalloys, corrosion alloys • High Ni-based alloys, enriched with Cr and additions of Heat resistance Electronics Co, Mo, Nb, Ti exhibit outstanding corrosion performance in various environments and mechanical properties at high temperatures Specialty stainless grades • Strict control of residuals High value added materials (price over 20,000 USD/t) with unique properties CAPEX budget of USD 4.0 billion for 2010 13
Unique strengths 14
What makes Aperam unique – Long-term growth trends in mature markets supported by emerging market demand • Emerging markets representing approximately 30% of Aperam total sales • Approximately 30% of sales in emerging markets – Global, integrated distribution network and proximity to customer • Services & Solutions division provides exclusive global distribution channel • Focus on services, partnership and customer satisfaction offers growth opportunities – Leading R&D capabilities • Continuous product development and innovation (Ferritics, High-end GO/NGO, Nickel Alloys, Duplex…) • R&D facilities in France and Brazil – Culture of continuous improvement • Continuous improvement program ensuring cost effectiveness and focus on health & safety – Ability to produce stainless and speciality steel products from low-cost charcoal • Unique upstream integration into forestry asset provides cost advantage and access to sustainable energy source – Strong financials through the cycle and effective working capital and risk management • Superior earnings profile and lower volatility • Best in class working capital ratio • Active use of risk management tools to manage in particular Nickel exposure Strategy to leverage and maximize unique strengths 15
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