The sustainable services is really a bunch of businesses which have a fundamentally different character to the businesses that we own. A lot of them are downstream. So, for example, our construction business that we call internally is really supporting manufacturing of buildings and systems. We have project engineering in which we supply product for energy infrastructure requirements. We have an EAF based facility called Industeel, which provides really niche, high quality plates, whether it’s to the nuclear industry or to low cost — not low cost, low carbon segments of the industrial landscape. Included in this will be the scrap, the metallics, which is recycled steel, as well as our renewable investments. So really what we want to highlight is that we have a bunch of high growth, niche capital light businesses which are playing an important role in supporting climate action and have a different profile in terms of the capital that is deployed, the return on capital, and the stability of earnings.
We intend to double this based on the existing plans that we have. And to the extent that it makes sense to acquire and further boost the growth, we will examine that.
Bastian Synagowitz: Okay, great. That’s great color. Thanks, Aditya. Then my second question is one on ADIA, actually. So I’m wondering what was the recent underlying run rate for the loss in the fourth quarter if you were [indiscernible] the impairment? And then maybe also, is there still a realistic pathway for you to retain an involvement? And I guess I’m asking that because I guess if you’re not able to run it on your platform as a European market leader, I’m not quite sure who will be capable or willing to take on that risk.
Aditya Mittal: Yes, sure. I will answer the second part of your question, and then maybe Genuino would like to add something. As you know and as you have alluded to, the troubles of Ilva are well documented, right? We have entered into a public-private partnership with the government, to ensure that the assets remain sustainable and viable. On our part, we have invested a significant amount of capital. We have completed all of the environmental investments, which were mandated. We have actually even spent more than €1 billion in capital equipment or CapEx and improving the performance of existing assets. I believe that today we are in a discussion with the government on the appropriate way forward. The energy crisis that occurred in Europe over the last 18 months has exacerbated the viability of this asset or has diminished, I should say, the viability of this asset.
And therefore, we remain in discussions on the appropriate way forward. This is a live discussion as you are aware, and to the extent that there are developments, we will immediately keep performed. In terms of the impairment, it was prudent to impair our assets in Ilva based on our future cash earning projections as well as the potential settlement. We’re not expecting any further impacts from Ilva or ADI going forward.
Bastian Synagowitz: Okay. And again, just on the — and then on the run rate — loss run rate contribution, excluding the impairment, I guess, if you were to consolidate it, you would probably get a relief on the associates line?
Genuino Christino: Sorry, Bastian. Can you repeat again your question?
Bastian Synagowitz: Yes, sure. Sure. I think in the fourth quarter, you’ve been impairing Ilva. But I guess you also on an underlying basis has been loss-making. And so if you — if you just exclude the impairment effect from the net loss, what would have been the loss contribution to the associates and joint venture line. And I guess if you were to deconsolidate it, just to gauge what the asset could be, so i.e., what has been the underlying loss before impairment in Q4?
Genuino Christino: Right. Yes. So for full year, so that would — I mean, of course, you don’t have the losses of Q4 because we have impaired the assets, right? So then — so it would have improved our results in JVs by about $50 million.
Bastian Synagowitz: Okay. Great. Thank you.
Daniel Fairclough: Thanks, Bastian. So we have about five minutes left to [indiscernible] question about — three more people to ask questions. So hopefully we can get through this. But we’ll take the next question from Andrew at UBS. Go ahead, Andrew.
Andrew Jones: Yes. Thanks Daniel. I think a lot of the questions have already been answered. But just for the first quarter, just curious if you could just talk us through some of the main divisions, your expectations for sort of broadly volume change spread mix or the rest of it? And just a quick comment on the European market, I mean, we’re seeing prices just ticking down a little bit on plants the last couple of days. I mean just wondering if we’ve — if you’re seeing the end of that destocking bounce or in your view, what’s sort of driving that the last minutes restarting or just give us a bit of color about how you see the European [indiscernible] price at the moment? Thanks.
Genuino Christino: Yes, sure, Andrew. Let me take this one. So in terms of the moving parts for quarter one clearly, we’re going to see the benefits of the higher prices that we started to see really in the second part of Q4, so that will impact our — positively impact our results in quarter one to higher prices, especially in NAFTA, to some extent also in Europe. We should also see better shipments. We will see improvements, of course. As we all know, Q4 is seasonally a weak quarter in some regions, and also, we faced the destocking in most parts of our business. So we’ll see a recovery in shipments, we will see better prices. But at the same time, we’re also going to see some pressure from costs as we all know, we have also seen raw materials rising, especially coking coal, so that should also be taken into account.
So that’s in terms of the moving parts in Europe. I think I touched on it already. The fact that we had this very severe destock again in Q4 put us in a good place. I mean, in terms of apparent consumption going forward in Q1, we start to see prices, of course, recovering. We start to see the spreads improving as well. So that looks positive for quarter one, but of course we also need to take into account that raw material costs also increased, as I talked about.
Andrew Jones: And do you see an imports in the near-term, just given these Red Sea issues. So is that likely to keep supply tight into 2Q? Or can you see can you see prices sort of starting to drift there?
Genuino Christino: Well, as you know, Andrew, we cannot really comment much on future prices. We’re not allowed to do that. So we — I guess we will have to wait and see. But the point is that we have highlighted in our earnings, I guess, they’re all positive, right? The fact that apparent steel consumption for you should be positive this year, the fact that inventory levels are at the low levels, so we talked about some of the disruptions also impacting the Red Sea shipments. We’ll see, right? But I think the evidence that we have today in front of us it’s good.
Andrew Jones: Okay. Thank you.
Daniel Fairclough: Thanks, Andrew. So, we’ve got a couple of follow ups. So we’ve got a couple of follow-ups. We’ll take the first from Max at Oddo.
Maxime Kogge: Yes. Thank you for taking this one, on the maybe given the greenfield of recovery, you think what do you think of reopening a Fos-sur-Mer, there is still one blast furnace either there. So what can you say on this topic?
Genuino Christino: Yes, for now, there is no decision yet to restart furnace.
Maxime Kogge: Okay. And I think iron ore production last year was really soft. Can you give some kind of soft guidance on 2024? Do you think you can come back to the 2022 levels in terms of iron ore production?
Genuino Christino: Well, absolutely, I think that’s absolutely the target. So unfortunately, we had the bridge failure in Liberia. Will still impact us in January. But after that, we have restarted again haulage, so we should be up and running again. And mines [ph] Canada, in January, we are doing well in terms of material movements. So, I think the whole team is committed to be back to the 24 million tons there.
Maxime Kogge: Okay. And lastly, you don’t have any coal assets anymore. And in that situation, this could be interesting to have some given how high prices are? Are you willing to come back into that area alongside iron ore, where you have significant presence, or is it too difficult to handle given the security constraints?
Aditya Mittal: Yes. Thank you. Look, we — as ArcelorMittal today, we do not operate any coal mines globally. That will be the case for the foreseeable future. I do not rule out equity investments to secure our supply chain, but not a direct operating mine, not a direct operating coal mine under our ownership. I think we remain very focused on expanding our existing iron ore business. We have flagship assets, both in Canada and with the investments we’re making in Liberia. It’s a Tier 1 high-quality deposit we’ll be running at 15 million tons, and you heard from Genuino, we can take the rail line has a capacity of 30 million tons and the deposit there can support that output. So really, our focus in terms of the mining business is growing and developing our existing mining assets, i.e., iron ore and not focused on developing or acquiring coal assets in which we are the operator.
Maxime Kogge: Okay. Thank you for taking my questions.
Daniel Fairclough: Great. Thanks, Max. So Aditya, we’ll take last question from — it’s a follow-up from Alain at Morgan Stanley, and then I’ll hand back to you.
Alain Gabriel: Thanks. Just one quick question is on the slab market in Europe. Do you see it structurally changing with the plant closure Port Talbot and all the trouble that Ilva and the progressive sanctions on imported Russian slabs and how well are you positioned to capitalize on this new and evolving dynamic? Thanks.
Genuino Christino: Well, Alain, we — the whole teams are focused on, of course, making sure that we are capturing all the opportunities, right? So unfortunately, as we know, the Russian slabs, they continue to flow into Europe. There is quite a long transition period. We will see when that happens, right? I think we’re going to be in a position to then to be an important supplier to the market if that happens. I think we will have the capacity to do that. But we’ll see how it develops, right? Because we know that has that got extended at least once, we’ll see how it develops.
Alain Gabriel: Thank you.
Aditya Mittal: Okay. Great. I’ll conclude the call. Thank you, everyone. We covered a lot of ground on the call today, but I hope your takeaways are clear. We are on the cusp of a step change in our profitability. The outlook for steel demand is positive, and we are well positioned to capitalize on the growth vector that exist within our industry. We’re organizing various events this year to provide you with more insight on these dynamics including a trip to visit our operations in India at the end of September, where you can see firsthand all the positive developments that are occurring at the facility and the potential of the facility as well as the country. More details will follow soon, I’m sure. And in the meantime, if you need anything, please do reach out to Daniel and his team. With that, I conclude the call. I wish you all the best in the year ahead. Stay safe and keep those around you safe as well. Thank you.
