ArcelorMittal Narrows Loss, Remains Cautious on COVID

“The third quarter marked an improved operating performance for the Group with steel markets recovering gradually from the very challenging second quarter after the ending of lockdowns,” said Chairman and CEO Lakshmi N. Mittal. “All steel segments saw improved demand with Brazil and ACIS showing particularly encouraging profitability improvement. Our mining segment also delivered a strong performance taking advantage of the higher iron-ore price environment and outperforming production targets.

“The recent rise in COVID-19 cases worldwide makes it prudent to remain cautious about the outlook, and we should be prepared for further volatility.” 

President and CFO Aditya Mittal added that the company is carefully watching the trajectory of the virus, any new lockdowns and the size of government stimuli. “We don’t want consumer sentiment to turn negative and impact end markets,” he said. Development and distribution of a vaccine would help to offset any concerns regarding consumer sentiment.

ArcelorMittal’s NAFTA segment increased crude steel production by 19.8 percent to 4.4 million metric tons in Q3. Blast furnaces were restarted at Indiana Harbor (BF #4) and at Burns Harbor (BF #D), but demand is still below pre-crisis levels. NAFTA steel shipments jumped 16.8 percent to 4.4. million tons as demand improved from the automotive sector. Sales rose 20.3 percent to $3.3 billion due to higher steel shipments and improved sales mix as well as a 4.6 percent increase in average steel selling prices.

ArcelorMittal expects the sale of its U.S. assets to Cleveland-Cliffs will be completed in the fourth quarter without any antitrust complications. Aditya Mittal said the facilities will continue to be operated by ArcelorMittal until then, and the company will make any adjustments to production that are needed to satisfy demand during the period.

In September, ArcelorMittal announced a group-wide carbon neutral target, building on the commitments made in 2019 by its European business to reduce emissions by 30 percent by 2030 and to be carbon neutral by 2050. The company will focus on individual facilities in Europe to create carbon-free tons while maintaining capacity. Two methods of decarbonizing being developed are:

• The Hydrogen-DRI route, which essentially uses hydrogen as a reducing agent instead of fossil fuels. A demonstration plant in Hamburg, Germany, where ArcelorMittal owns Europe’s only operational DRI-EAF plant, is currently planned with a targeted start-up in 2023-2025 (depending on funding).
• The Smart Carbon route is based on modifying the blast furnace to create carbon-neutral steelmaking through a combination of circular carbon (in the form of sustainable biomass or carbon-containing waste streams) and carbon capture and use (CCU) or carbon capture and storage (CCS). It will also use hydrogen gas injection. Start-up of key testing projects is slated for 2022.

“While both routes have the potential to deliver carbon-neutral steel by 2050, we believe that Smart Carbon can deliver results sooner and make a meaningful contribution to CO2 emissions reduction this decade, while industrial scale production from the Hydrogen-DRI route is unlikely to be significant before 2030 due to the current high costs,” Aditya Mittal said.

Highlights of the third quarter included achieving the company’s net debt target of $7 billion and the completion of a $500 million share buy-back program. During Q3, the company also permanently closed its blast furnace in Krakow, Poland.

ArcelorMittal plans to move quickly on the construction of an electric arc furnace at the AM/NS Calvert steelmaking operations. The EAF will be capable of producing 1.5 million metric tons of slabs for the Calvert hot strip mill as well as producing a broad spectrum of steel grades for end-use markets. Slab production will help the company meet Buy America provisions as well as reduce the costs incurred by importing slabs. More detail on the project will be revealed during year-end results in February 2021.

The hot strip mill at ArcelorMittal Mexico is expected to be completed in 2021 and will have a capacity of 2.5 million metric tons. The ArcelorMittal Dofasco hot strip mill modernization is also expected to be finished in 2021.