ArcelorMittal S.A. (NYSE:MT) Q3 2024 Earnings Call Transcript

ArcelorMittal S.A. (NYSE:MT) Q3 2024 Earnings Call Transcript November 7, 2024

ArcelorMittal S.A. beats earnings expectations. Reported EPS is $0.63, expectations were $0.58.

Daniel Fairclough: Great. Good afternoon, everyone. This is Daniel Fairclough from the ArcelorMittal Investor Relations team. Thank you for joining this call to discuss ArcelorMittal’s performance and progress during the Third Quarter and Nine-Months of 2024. Leading today’s call will be our Group CFO, Genuino Christino. Before we begin, I would like to mention a few housekeeping items. As usual, we will not be going through the results presentation, which we published this morning on our website. However, I do want to draw your attention to the disclaimers on Slide 2 of that presentation. As usual, Genuino will be making some opening remarks before we move on to the Q&A session. So if you would like to join the queue ask a question, then please door press star 1 on your keypad. Over to you, Genuino.

Genuino Christino: Thanks, Daniel, and welcome everyone. As usual, I will keep my remarks brief. I want to focus on three key themes, beginning first with safety. Across ArcelorMittal our people are galvanized to improve our safety performance and achieve our goal of being fatality and serious injury free as quickly as we can. We recently announced that the dss+ safety audit has been completed, culminating a clear set of six recommendations. The audit took nine months and we went right from top to bottom of the company. As we now move to the implementation phase, there is considerable work underway to transform the recommendations into very specific work plans that are tailored to each business unit. These work plans will support us in our journey to zero fatalities and safety results we are striving for.

Moving to our financial performance, I want to highlight the benefits of our diversification. Our resilient performance this quarter reflects the progress we have made to high grade our asset portfolio in recent periods. We have sold or exited several high cost assets, assets that are clearly struggling in the current environment. At the same time, we have added new assets to our portfolios that are well positioned to create value not just in the good times but in all market environments. And our results are a clear testament to this progress. Despite the evidently challenging market conditions, ArcelorMittal EBITDA per ton margin in the third quarter was $118 per ton compares very favorably with our long-term averages. A key part of our resilience is our diversification, diversification across products, end markets and geographies.

It is often underappreciated that North America is by far the biggest contributor to our EBITDA. We have the leading franchise business in Brazil where demand this year is very strong and this is supporting good momentum for domestic prices and margins. And of course we are exposed to ingot, the fastest growing major economy globally. The sophistication means that relative to our peers our results are showing more stability. My final theme is the strategic execution. Our defined capital allocation and returns policy continues to deliver value for our shareholders. We are consistently investing to grow and develop the earnings capacity of ArcelorMittal. Since 2021 we have generated $20 billion of investable cash flows. This has allowed us to fund our portfolio of high quality organic projects, take advantage of the best inorganic opportunities, return almost $12.6 billion of capital to shareholders, all while maintaining a very strong balance sheet.

We have so far commissioned three strategic growth projects and all are performing well. Our Mexico hot strip mill continues to deliver a better than expected contribution to our results. The new cold mill complex in Brazil delivered its first high quality coated coil at the beginning of the quarter and then in September its first tones of Magnelis, ArcelorMittal’s patented metallic coated coil that offers unparalleled corrosion protection and our 1 gigawatt solar wind project started supply of renewable energy to AM/NS India in September. But there is a lot more to come. As our presentation deck shows, we anticipate that our strategic growth projects will add a total of $1.8 billion of new EBITDA, $1 billion of this will come over the next two years, providing ArcelorMittal with a significant boost on top of the anticipated cyclical recovery.

Q&A Session

And we continue to take advantage of our low valuation through our share buybacks. During the third quarter, we bought back another $280 million of stock. We have reduced the share count by almost 6% this year, bringing the total reduction to 37% over the past four years. As our presentation shows, our ordering cash yield remains very favorable for shareholders. Dividends and buybacks so far this year are $1.4 billion and we’ve annoyed $200 million dividend payment due in the fourth quarter, the total yield so far this year is almost 8% of our current market capitalization. Returning significant capital to shareholders at the bottom of the cycle while continuing to invest in growth is clear evidence of the progress ArcelorMittal has made.

To conclude my opening remarks, we are delivering resilient results and our performance continues to provide evidence that ArcelorMittal can deliver value through all aspects of the sales cycle. Our results, free cash generation and a strong balance sheet provides a strong platform for our strategic growth projects. The projects delivered so far are achieving the results we anticipated and there is a lot more to come. The projects we will be commissioning over the next two to three years will provide significant structural upside to our EBITDA and cash flows on top of any cyclical recovery. And all the benefits to our shareholders are being compounded by our continued share buyback. So with that, we are now ready to take your questions Daniel.

A – Daniel Fairclough: Great. Thank you, Genuino. We have a queue of questions already. [Operator Instructions] Shall we move to the first question please? And the first question we will take is from Ephrem at Citi. Please go ahead, Ephrem.

Ephrem Ravi: Thank you. So, three short questions. Firstly, on Calvert, obviously you’ve had this deal with Nippon. For how long would that deal be valid for, i.e. it could take a long time for the deal to get approved. And associated with that, the second EAF at Calvert, is that effectively on hold till the whole transaction completes or is there a possibility that you can start it or start construction even if that deal is not completed? Secondly, on Monlevade, I mean obviously you have put that project on hold as well, but the overall EBITDA of $1.8 billion from investments hasn’t changed. So, can you just give us a sense as to how, how big the EBITDA contribution from that was supposed to be, just so that we can get a sense as to how big or small that was?

Genuino Christino: Sure Ephrem. Let me start with the last part of your question, Monlevade. I think that’s a good example of the discipline that we want to make sure that we employ in all of our capex projects. As you know, this is a project that we started years ago, we stopped the project and we restarted the engineering. And as we completed the engineering work, we realized that investments would need to be higher and therefore we felt that it was just prudent to put it on hold. And we do have options in Brazil to continue to develop the business and in a less capex intensive. As you know, the Monlevade project, initially the benefits expected with the project was $200 million. And you’re right, you don’t see a change in the overall $1.8 billion targets because we going to be announcing soon new investments that will basically offset Monlevade.

So, that’s why we are keeping the overall EBITDA target same. And then as we release Q4 results, we will talk more about the new investments. Regarding COVID, so the focus right now is really on completing the first year, right? So everybody there in that facility is very much focused on that. Of course, we have the discussion the deal with Nippon Steel that is dependent on them closing that transaction. But on our facility, everybody is focused on the projects, continue to service our clients. So nothing changed. So as you know, as we started the first year, a lot has already been done posting the second year end. But at this point in time, we have not yet taken the decision to move ahead with that second year, although of course, that’s always something contemplated.

Ephrem Ravi: Thanks. If I can squeeze just one more question, Ukraine, can you tell us what you are producing right now? And if there is a ceasefire or peace in Ukraine, how much upside and from volume can you kind of bring on within a short period of time?

Genuino Christino: Yes. So the situation in Ukraine remains – that is similar to what we discussed in our previous call. So, we are producing right now – we add about 40% of the capacity there. So we are producing a range of 500kt per quarter. So, clearly if we were to see stabilization of the situation end of the war, we should be in a position to ramp up production, initially, I would think at least 2 or 3 million tons. And then we would need to see them after that, how to bring all the furnaces back up again.

Ephrem Ravi: Thank you.

Daniel Fairclough: Great. Thanks, Ephrem. So we’ll now move to the next question, which we will take from Alain at Morgan Stanley. Please go ahead, Alain.

Alain Gabriel: Yes, sir. Thank you. Thanks Daniel, for taking my questions. Two questions from my side as well. So, first question is on the buyback, you still have less than $300 million to complete your current program, which is likely to conclude much earlier than the May deadline. I appreciate that we still have some time to cross that bridge, but how are you thinking about the next program at year end? Is it fair to expect a similar buyback program to be launched in Feb 2025? That’s my first question.

Genuino Christino: Yes. So first of all, I think we are very pleased, right, with our capital allocation policy. It’s working very well. I think we are really taking advantage of the weak share price. We bought back 37% of the company this year, 6% as I was saying during my opening remarks. And looking forward, I mean, of course the focus is first completing the remaining program. We still have 12 million shares to buy. And I guess, the message is that our policy will not change. So and when I look forward, I’m very optimistic about the capacity of the group to continue to generate free cash flow. Especially, when we look at the projects that we talked about, right, the fact that we commissioned that we started our renewable project in India that we’re going to have Liberia also starting up soon.

So we will have another $500 million of EBITDA coming through next year and another $500 million in 2026. That provides a lot of comfort that the group should be in a position to continue to generate strong free cash flow. And our policy, as you know, 50% will be returned back to shareholders, minimum 50%. So we’re going to be closing the year with net debt at low levels, well under control. So I think that places us very well to continue to do the buybacks. We have the authorization from our shareholders. But let’s first complete the existing program and then discuss the second with the next program.

Alain Gabriel: Thank you very much, Genuino. The second question is on the decarb spending that has been very immaterial so far year-to-date, and I would say two or three years to-date. Many investors are worried that we will hit a wall of spending into the end of the decade. And so firstly, do you still stand by your $10 billion target through 2030? And then secondly, when are we likely to hear more about the specifics of your decarb plans? Thank you.

Genuino Christino: Yes. Well, the way I see it, I think we have been doing quite a lot and where we are today, I mean, we continue, of course with our engineering work. So we continue to develop that, as we said in the previous quarter, we should be in a position to provide some more color towards the end of the year. So that remains. But look, I think we have been doing quite a lot. So we have the [indiscernible] that we are building. We have now a portfolio of 2-giga of renewable projects. So we talked about India. We have another 1-giga in Brazil and Argentina. We are investing in Sestao in Spain. So we’re going to be doubling the capacity, current capacity of that facility, which is also green steel. So I think we are doing a lot.

And then of course, which is extremely important here is to make sure that we have the right policies in place so that we can justify the large investments in Europe, right. And we have been talking about that. I think we have been very clear that we need a number of things in place. We need a strong C-band, we need strong protection to the industry so that once we invest, these assets will be in a position to compete in a level playing field.

Alain Gabriel: Thank you, Genuino. So basically a follow up to this question is do you stand by your $10 billion by 2030 given we know what we know today?

Genuino Christino: Yes, I think we are not changing that. So that number remains our best guess.

Alain Gabriel: Thank you. Thank you very much.

Genuino Christino: And yes, just to remind everybody, obviously that’s a gross number pre-government funding. So on an ArcelorMittal basis, it would be about $5 billion. But we’ll move now to the next question, which we will take from Tom Zhang at Barclays. Please go ahead, Tom.

Tom Zhang: Hi, afternoon. Thanks for taking my questions. Two from me, I’ll state them one by one. First, maybe just the usual walk that you guys give quarterly raw material costs, pricing volumes by division, if that’s okay, into Q4.

Genuino Christino: Daniel?

Daniel Fairclough: Yes. Sure, Genuino. So I think looking to the fourth quarter, we can go into more detail if you would like. But looking at the fourth quarter, there are clearly some pluses and there are some minuses, but I think the overall picture is broadly similar to the third quarter. So on the positive side of the equation, we should see the benefit of high volumes in Europe and higher iron ore shipments. Then on the other side of the equation, we’ll have the impact of lower spot prices, particularly North America, and then seasonally lower shipment volumes in Brazil. So as I say, some pluses and some minuses, but the overall picture broadly similar to the third quarter.

Tom Zhang: Got it. Thank you. And then just the second one was it’s a bit early to start talking about it, but obviously at the moment, until [indiscernible] up and running, you don’t have upstream. You only have the Corpus Christi assets, DRI. But 40, 50% of the USMCA sales number for you is still in the U.S. that is material, I guess, from Mexico and Canada. One is that number roughly, right sort of 40 to 50%. And then can you just talk about any backup options that you guys have already been thinking about if under the new administration, material starts to become more difficult to send in, particularly from Mexico. Thanks.

Genuino Christino: Yes. Tom, look, as I said, I think its early days, right? And what we saw in the first term of President Trump, he was extremely supportive to the industry. He was also, I think a lot of what we see happening in U.S. today comes from the fact that he put in place Section 232, that he renegotiated the NAFTA agreement. Of course, now USMCA was part of his legacy. It was all very supportive to the industry in U.S., and to North America overall. We saw the consequences of that in other parts of the world as well. So we hope that as he comes back now and he’s doing his second term, that we will probably most likely see that, that support continuing. And it will be very interesting to see also how the other regions, the other governments respond to that.

So I think it’s early days, really, to talk about the flows between Mexico, Canada to the U.S. and vice versa. The way we see it today, the flows, they are on a similar basis when you look at Canada, Mexico and U.S., but I think we will have to wait and see how it develops.

Tom Zhang: Okay, fair enough. Thanks. I’ll turn it back.

Daniel Fairclough: Great. Thanks, Tom. So we’ll move to the next question now, which we will take from Patrick at Bank of America. Hi, Patrick. Go ahead.

Patrick Mann: Hey, good afternoon. Thanks very much for the opportunity. Can you maybe just touch a little bit on how we should think about automotive business going into next year? So spot prices are a little bit lower, so how should we think about that aspect of, in particular, Europe, the sort of pricing into next year? And I suppose, given the backdrop that it looks a lot of auto suppliers are under a lot of pressure and we’ve seen a lot of restructuring and I suppose a lot of it looks structural rather than cyclical. So maybe yes, just a bit of context, how important is that business to Europe overall and how should we think about it into 2025? Thank you.

Genuino Christino: Yes. So Patrick, that’s another benefit of our diversification. So when we look at our auto business in 2024, what we see is, as we all know, we are going through some destocking in Europe. So our production in Europe will be lower compared to the previous year. But at the same time, we are seeing growth in Brazil, in Argentina, we’re – and we are seeing more stability, really, in North America. So when we look at our business as a whole, there are pluses and minuses, right? Looking forward, our base case today is that we’re going to see some stability in terms of volumes compared to this year. And when it comes to prices, of course, it’s too early. We have not yet really started all these negotiations.

But our focus is the same, right, is to make sure, as you know, we invest heavily in making sure that we develop the grades that we have, the technology that will help support the OEMs with their objectives. And our focus is make sure that we are rewarded for that. So our focus is more on the margins that we can secure as we sign these contracts. So we remain, of course, optimistic that it’s not going to change, that we will be able to sign contracts that will reward the company for the investments that we make.

Patrick Mann: Got it. Thank you. And then if I could have a follow-up, please. Just on sustainable solutions, can you give us an update on that business, obviously, revenue is down year-on-year, and it’s an area that you were looking to grow. So just thinking about how do you think about that going forward? Some steer would be helpful. Thank you.

Genuino Christino: Yes, sure. Yes. I think you see a decline in quarter three, which to some extent is also linked to seasonality. We expect to be doing better in Q4. But more importantly here, Patrick, is we have the 1 giga renewable project that we talked about. So that will add close to $100 million next year to sustainable solutions. So we talked about and you can see now that some of the renewable projects that we started in Brazil, so that we’ll continue to support, we have completed the acquisition of – in our construction business in Europe. So that will also provide support next year. So I think we are on track to double the profitability of this segment over the next couple of years.

Patrick Mann: Thank you.

Genuino Christino: Daniel?

Daniel Fairclough: Yes. Hi Genuino, sorry about that. My system just crashed.

Genuino Christino: No problem, Daniel.

Daniel Fairclough: So I think we’re ready to take the next question, which is from Andrew at UBS. Hi, Andrew. Go ahead.

Andrew Jones: Thanks, Daniel. Yes, I just want to push a bit more on one of the previous questions around the decarb and just how you think about when you basically press the trigger. I mean, you mentioned that, you’d like to see a stronger CBAM, obviously, we’ve got a structure in place for the CBAM. I’m wondering what more you want to see from the structure of that to cause you to invest. And what other factors are you looking for in particular, i.e., do we need to see more on the infrastructure side whether it comes to hydrogen, whether it comes – where we’re talking about sufficient renewable energy. What factors are you looking for before you actually pull the trigger? And is there a scenario where – if you don’t see that sufficient return on capital and you don’t see enough support on some of those projects in the higher cost jurisdictions in terms of energy such as Germany or maybe Belgium.

Is there a scenario where you just do not spend that money and you actually essentially run these assets for cash and don’t do those investments? I mean, is that a realistic scenario.

Genuino Christino: Andrew, I think you touch on all the points, right? So I think it’s very, as I said – and I think it’s very important that as we embark on some of these projects that we can be sure that we’re going to be remain competitive, right? And that the assets will be able to – we want to be able to run the assets and be competitive, and for that today, as we know the competition in Europe is not there. We are paying for CO2 costs that nobody else is paying. We still have the high energy costs we don’t have yet availability of renewable power sufficient or hydrogen. So I think you touched on all the points that I think it’s also clear to all the governments that is really what is required for the industry to be able to invest.

First of all, I think we need to have strong protection in Europe, because we have China, we just saw the numbers, right? October numbers from China, a flood of exports. So I think that needs to be taken very seriously and quickly by the authorities in Europe and across the world, quite frankly. So until we see – we can see that, then it’s very hard really to take a decision to invest. And we are hopeful that we’ll see progress. We have the first review of CBAM coming up soon and we will see finally what the government takes into account. So that is, as you can see, Eurofer is also very active in showing the needs and what needs to happen so that we can have again a level playing field in Europe, again, I think the competition today is just not fair.

Andrew Jones: Okay, that’s clear. And just a second question on Ilva. Obviously it’s no longer your asset, but we’ve seen news about them restarting glass furnaces. They’re talking about ordering DRI equipment. It seems as though things are moving there and there’s going to be more volume in the market from Ilva in the near-term and into next year and potentially longer-term if they build that DRI capacity. To what extent are you concerned about that supply growth coming out of town and obviously weak demand?

Genuino Christino: Yes. Look, to be honest, Andrew, our number one concern right now is imports. As I said, I think the level of imports in Europe are just too high and that should be – it’s really the first priority just to get that under control and that’s really what the most critical piece here for us.

Andrew Jones: Okay, fair enough. Thanks.

Daniel Fairclough: Thanks, Andy. So we’ll move now to the next question and we’ll take that question from Dominic at JPMorgan. Go ahead, Dominic.

Dominic O’Kane: Hi guys. Thanks for taking my question. Just some simple questions. Just on working capital for Q4, is it reasonable to assume that we see a full unwind of the $1.5 billion that you’ve built so far in the first nine months of the year? Second question, similar question on the previous question around CapEx but if I look away from decarb CapEx specifically and look at the regions, Europe first nine months is still about 50% of your CapEx. As you look into 2024, are you seeing opportunities to maybe bring down some of the European CapEx or is that not on the agenda? And yeah, those are my three questions. Thank you.

Genuino Christino: Yes. Hey Dominic, so on the working capital, you’re right, I mean that’s our guidance that we should release a similar number as we have invested up to now. And we are doing this very carefully because as we have pointed out in our release, at some point we’re going to see a cyclical recovery, right? And so we want to make sure that the business is well-funded, and they have the working capital that they need as and when we see this cyclical rebound. On CapEx, I think it’s very important to your point because when you look at the beta that we are generating in Europe, you see the CapEx there, you can see that our segment is doing well. So we are generating levels – good levels or decent levels of free cash flow in Europe.

But you should also – we can talk about that in more detail, but you also have growth CapEx in Europe, right? And that’s basically our new electrical steel project in Mardyck that we are investing. So we’re going to be completing the first phase of the project towards the end of this year and then that is the second phase that will happen in 2025. But overall, if I can talk about CapEx for next year and as you can see in our deck you have basically three components. Our expectation is we will of course be in a position to update you more as we complete the budget, the strategy cycles and in our Q4 numbers we will be in a position to update you with more precision. But our expectation at this point in time is that the CapEx number for next year will not change significantly.

Dominic O’Kane: Thank you. Very clear.

Daniel Fairclough: Great. Thanks, Dominic. So we’ll move to our next question and we’ll take that from Boris at Kepler Cheuvreux. Please go ahead, Boris.

Boris Bourdet: Hello. Thank you for taking my questions. The first one is on Europe. I was quite impressed by the margin resilience here in a period where we see all the, we’ve seen a lot of warnings, so I suppose you already answered part of it. But in this context we see more and more M&A in Europe with partnerships [indiscernible] made an announcement about one of its main shareholders, planning to make a takeover bid and we see ThyssenKrupp trying to form partnerships with EPCG. So I was wondering if you had some tired opportunities there for some of your assets and if you started to see some opportunities. And also on my second question on the M&A front, there were news flow about some interest in your South African assets. So could you elaborate a bit and comment on those reports? Thank you.

Genuino Christino: Yes. So, first on Europe, I think we are pleased with our performance in Europe. The teams are doing a great job operationally, reliability. You can see that we are running our finance [ph] as well. So that, of course, supports our costs. We can bring costs down so we can achieve management gains. I think teams are doing a very good job in this very challenging market conditions. Having said that, in terms of M&A, I think we are happy with our footprint. So that’s the borderline. And in South Africa, there is, we are not contemplating any change there.

Boris Bourdet: Okay, thank you.

Daniel Fairclough: Great. Thanks, Boris. So we’ll take the next question now. So we’ll move to Tristan Gresser at BNP Paribas. Please. Go ahead, Tristan.

Tristan Gresser: Yes. Hi, thank you for taking my questions. First one is on North America. Could you remind us the volumes and the type of products you ship to the U.S. from Mexico, from Canada, from Europe and Brazil, please? And also, if with Trump [ph] you’re getting back tariffs against Mexico, what are your options to mitigate that risk? How flexible can you be? And more specifically, regarding the U.S. Trade case against Canada, hot dip galvanized imports, how confident are you that Canada will not face tarriffs there? I start there.

Genuino Christino: Look, I mean, we have to wait, of course, for the outcome of the investigation, right? So of course, we will cooperate. We will be part of the process. So, of course, what we sell from Canada into the U.S. These are contracts that are in place for many, many years, mostly to the OEMs. So we don’t believe that we are causing any injury. But of course, we will participate and we will have to wait to see how it plays out. And then, as you know, I think you know very well our flows. So we bring slabs to Calvert from Mexico and from Brazil. We buy some also domestically. And we will have, of course, the EF [ph] now coming up so that we be extremely positive for operations in U.S. So we will have melted and pool steel in the U.S. 1.5 million tons will give us speed.

We will have capabilities to do exposed parts. We will have everything that is required for that. So that should provide a good boost to our operations in U.S. But Calvert, of course, will still need to buy is less. So at this point in time, I think it’s too early to talk about we have options, right? So we have Mexico, which is part of the North America, part of the USMCA. We have Brazil, and we have other options as well. We can bring materials from Europe if you have to, but at this point in time, I think it’s just too early to speculate on that.

Tristan Gresser: Okay, and could you share the slab supply that you’re getting for Calvert at the moment? How much volume is coming from Mexico, Brazil?

Genuino Christino: I don’t think it’s something that we are disclosing, Tristan.

Tristan Gresser: Okay. Okay. And my second question is on Europe and again on decarb. So when you talk about positive free cash flow past 2024, should we think it as a firm target that you absolutely want to achieve? Or is more kind of an aspiration? You talk about the level playing field, but let’s say would you be okay if down the line there is a level playing field that require investment and require you to be negative free cash flow for a couple of years? That’s something that you could contemplate or you really want to be in that positive free cash flow setup for the medium term?

Genuino Christino: That has to be the objective, Tristan. Of course, we want our business to be sustainable. I think that’s key, right? And sustainability is really the key word. If we feel that we have a sustainable business, a strong business, we are preparing this and that’s what we have always done. So Europe, it’s an important market. It’s a big market and it’s not going to disappear, right? So I think – so we are potential investors as long as we have the right conditions.

Tristan Gresser: Okay. Thank you. And maybe just a quick last one, Mexico, you mentioned that the EAF started, was there a blast furnace outage as well due to the strike? Has it restarted already?

Genuino Christino: Yes. So in blast furnace, as you know, I mean, the biggest part of the business is the flat business, which has started immediately, almost immediately after the end of the blockade. It was mid-July. So that is up and running. The blast furnace which is a smaller part of the business has not yet started. It should be started anytime soon. It’s the blast furnace. It’s 1 million tons furnace. So it’s a small furnace. And to do it safely, we have to go through some maintenance work and that’s why it’s taking a bit longer, but we should be in a position to start that [indiscernible].

Tristan Gresser: Perfect. Thank you very much.

Daniel Fairclough: Great. Thanks, Tristan. So we’ve got two more questions. Genuino, [ph] now the first we will take from Matt at Goldman Sachs. Please go ahead, Matt, if you can hear us.

Matt Greene: Thanks, Dan. Good afternoon. My first one is just on Brazil. The positive PCE that you’ve seen this quarter, I guess some of that’s the tariffs flowing through. But I’m just interested on you’ve also ramping up the Vega CMC, I guess into year end and trying to think about 2025. You’ve stated that this project should bring $100 million EBITDA, but I think that’s on a more normalized basis. So as we stand today, is there upside or downside to that number? And can you just provide some color as to the timing as to when we can see that full ramp up delivered?

Genuino Christino: Matt, the 100 million is probably a good number for next year. We are very pleased with the ramp up of the facility. It’s been done on a record basis I would say. We should be closing the year already probably around 80%. So I think the 100 million is – it’s a good number for you to take into your models for next year in Brazil. We are pleased of course with the overall performance in Brazil. I mean, Q3 was really great. Economically, the country is doing well. GDP is strong this year. We have low unemployment rates. So it’s a good setup right now. So apparent steel consumption will grow well this year. So it’s a good setup at the moment.

Matt Greene: Okay. That’s great. Thank you. And then just moving on to Liberia, it looks like you’re delivering first concentrate this – I guess this quarter. So how’s the commissioning of the concentrator gone? Can you just provide contrary as to has it performed in line with expectations in terms of product quality? And do you still stand by, I guess, the ramp up of that expansion into next year?

Genuino Christino: Yes. So the focus is of course on the project. Everybody is focused on that and having the first concentrate end of this year. So as you can imagine, it’s a large project, a lot of challenges, but we are progressing, we feel optimistic. So let’s see how it goes. But that’s an important project for us. So as you know, we have three models, so we start with 5 million tons and then we will have a second one and third one in 2025. So we remain optimistic that we’re going to be in a position to start to see significant contribution from Liberia next year.

Matt Greene: That’s great. Okay, thank you. And I’ll squeeze one last hypothetical question with Calvert and I guess just having full ownership and I guess importantly operatorship and ignoring tariffs and all the moving parts out there at the moment. But having this asset and control of this asset, does this unlock any synergies that across the broader North American or sort of Mittal portfolio that you can maybe touch on?

Genuino Christino: Look, as we know, Calvert is the most capable finishing facility in North America, right? It’s – and it makes of course good sense for us to own 100% of the asset to the extent that Nippon has to divest. But having said that, this is not really about synergies, it’s just about owning 100% of disasters in a region that is very important for as Mittal and we talked about in the past projects that we are developing right now for the region. And so to the extent that Nippon can complete their own transaction we will be pleased to own 100% of Calvert.

Matt Greene: That’s great, Genuino. That’s all for me, thank you.

Operator: Great. Thanks, Matt. So we will take our last question now, Genuino, and we’ll take it from Max at Oddo. So please go ahead, Max.

Max Kogge: Yes. Good afternoon all. First question is on Calvert, precisely. Can you talk us through the financial implications of the deal because Nippon still highlighted a second [ph] 1.5 billion negative impact on the balance sheet? Should we expect the same kind of impact on your own balance sheet positive this time? And can we just add the current EBITDA contribution as reflected in the disclosure you give to your own EBITDA? Or is there some kind of elimination we should do to take into account the slab shipments from Brazil and from Mexico?

Genuino Christino: Yes. Max, what I suggest we do is, let us – let us wait to see whether the transaction closes and then we’re going to be in a position to walk you through the account implications. Clearly we don’t have any write downs and impairments, but let’s wait until the transaction closes and then we can walk you through the account implications of the transaction.

Max Kogge: Okay. That’s fair. And second question is on Vallourec, I think you were a bit reluctant so far to give more color on the synergies as long as you had not closed the acquisition, which was the case at the last results presentation in late July. But now that you have closed the deal, can you talk us through the same way of potential synergies you expect to achieve on Vallourec? And I mean, as you know the company now for a few months, have you progressed in that direction?

Genuino Christino: Well, so what I would say is that we are pleased with the acquisition. Next we – what we see today, it’s in line with our expectations. So the company continues to perform well. So no bad news, so that’s good news. And as we discussed, I mean, this is not a transaction that was done based on synergies, right, because we are a minority shareholder. We have of course an important stake, but still we have a minority. We don’t have control. So all we are doing is of course we are open to work together. We have areas where we have – where they are present, we are present, and to the extent that we can work together, we will. To the extent that it’s a win-win that is good for Vallourec shareholders, good for ArcelorMittal shareholders we’re going to be open to explore, but at this point in time, I don’t have anything to report to you on that front.

Max Kogge: Okay, that’s fair. And the last one is on Ukraine. There’s a possibility of a truce, but there’s also the possibility of Russia progressing further. Notably, the City of Pokrovsk is under threat from Russia and it’s the main call center in the region. Are you sourcing yourself some coal from this mine and would you be able to upset the shipments with another supply? And perhaps related to that, you had just idled 1 platform there and you had just reopened it. So can you explain why you did kind of step back there?

Genuino Christino: Yes. Well, as we know the situation in Ukraine, it’s volatile, it’s changing every day. So I think the teams are doing the best they can. What we experienced more recently is that the price of energy has been very high and therefore we are just optimizing the flows, the production so to save on energy costs. So that’s why you’re going to see this volatility in terms of production for as long as the situation lasts. And so we do have the possibility to bring the raw materials from different sources if that happens with the scenario that you just described. So we have the connections with Poland, we have the port that is open that it’s operating. So we do have possibilities there, if we lose connection with that part of the country.

Max Kogge: Okay, that’s clear. So thank you.

Daniel Fairclough: Thanks, Matt. Actually, we’ve got time for one follow-up question. I hope Jeremy knows. So we will take that from Bastian at Deutsche Bank. Hi Bastian, Please go ahead with your follow up.

Bastian Synagowitz: Yes, good afternoon all and thanks for taking my question. I only have a quick one which is a follow up on Ukraine as well. Can you maybe just remind us, what is the capacity you have available there at the moment and if you would go from where you’re currently running to full capacity, is there any major investments needed at this point and then related to that maybe could you put this into the context of the wider, I guess Ukrainian context in terms of what that capacity been has there prewar, the way you perceive it and basically how much capacity is available there in the broader market versus what unfortunately has been taken out? Those are my questions.

Genuino Christino: Yes. Well, Bastian so we are running two furnaces at the moment we are running one furnace. So we are running at about, as I said, at about 40%. So historically, before the war, we were north of 4 million tons, 4.5 million tons. So we do have the possibility here to increase capacity from 40% to maybe 70% and then beyond that point, that would require some investments. Right. So clearly we have the potential here to ramp up. If we see the conditions, if we see markets, it makes economic sense. But that’s the situation right now.

Bastian Synagowitz: Okay, thank you. And I guess prewar, I think Ukraine obviously has been pretty much like a 20 million, 22 million ton production country hub. I mean, how do you see the feasibility of the whole market now given the current situation versus before?

Genuino Christino: It’s all yet very fragile Bastian, as we know, we’re in a big part of the industry was destroyed and that has not changed, so the markets. I have to say it’s fragile. Everybody’s facing the same situation. We have high energy costs which is then holding development there. So I think we have to wait a bit to see how things stabilize in Ukraine. Let’s hope for peace and that we can restart rebuilding the country.

Bastian Synagowitz: Okay, understood. Thank you.

Daniel Fairclough: Thank you, Bastian. So that’s our last question, gentlemen. So I’ll hand back the call to you for any closing remarks.

Genuino Christino: Thank you, Daniel. And thank you everyone. Before we close, I want to reiterate my message from the beginning of the call. Firstly, the whole ArcelorMittal organization is organized to improve safety performance. Secondly, our resilient results in the face of challenging markets continue to demonstrate structural improvements. Returning significant capital to shareholders at the bottom of the cycle while continuing to invest in growth is clear evidence of the progress ArcelorMittal has made. There is much to anticipate. Our projects have good momentum and will provide unique upside to EBITDA and cash flows on top of any cyclical recovery. If you need anything further, please do reach out to Daniel and his team and I look forward to speaking with you soon. Stay safe and keep those around you safe as well. Thank you very much.