Alain Gabriel

Alain Gabriel asked about ArcelorMittal's ability to quickly bring idle European steel capacity online, the specific types of capacity available, and the key market indicators or 'signposts' the company would monitor before making such a decision.

Answer

CEO Aditya Mittal explained that ArcelorMittal is well-positioned with idle capacity (Sestao mini-mill ramp-up, new Gijón electric furnace, spare blast furnace capacity) that can be brought online quickly without significant reline or rehiring, meeting a potential July 1st TRQ deadline. He emphasized that signposts for activation would be customer demand and the ability to earn a healthy, sustainable return on capital. CFO Genuino M. Christino added details on the Q4 to Q1 profit bridge, highlighting volume recovery and price increases in North America due to resolved operational issues in Mexico, seasonal higher shipments and improving prices in Europe (more so in Q2), and stable performance in Brazil and mining. He clarified that restart costs for European capacity would not be meaningful to the bridge.

Alain Gabriel asked about ArcelorMittal's strategy for ramping up European steel production capacity in response to changing industry structure and new trade measures, inquiring about the speed of bringing idle capacity online and the key indicators for such decisions. He also sought details on the profit bridge from Q4 to Q1, including potential restart costs in Europe, and the outlook for Q2, considering lag pricing effects.

Answer

CEO Aditya Mittal explained that ArcelorMittal is well-positioned with idle capacity, including the Sestao mini mill, a new electric furnace in Gijón, and spare blast furnace capacity, which can be brought online quickly to meet the projected July 1st TRQ deadline. He emphasized that customer demand and achieving healthy, sustainable returns on capital would be the primary signposts. CFO Genuino Christino detailed the Q4 to Q1 profit bridge, highlighting recovery in North American volumes and prices due to resolved Mexican operational issues, higher seasonal shipments and some price improvement in Europe (with Q2 seeing full price impact), stable performance in Brazil and Mining, and confirmed that restart costs for European capacity would not be significant. For Q2, Mr. Christino anticipated it would be the strongest quarter for European volumes, with full impact from current market prices in Europe and North America, and improving prices in Brazil.

Alain Gabriel asked about unusual or exceptional costs to consider for ArcelorMittal's 2026 EBITDA bridge, specifically U.S. tariff costs and Mexico stoppages, and inquired about the achievable 'blue sky' shipments in Europe if new safeguards dramatically reduce imports.

Answer

CFO Genuino Christino and Head of Investor Relations Daniel Fairclough clarified that Mexico's operational costs, estimated at $200 million for 2025, are not expected to recur in 2026. Genuino Christino also stated that ArcelorMittal's European capacity is well in excess of current production and can comfortably supply the market if imports decline by the expected 40%.

Alain Gabriel asked for a breakdown of the EBITDA drivers for Q3 2025, including tariff impacts in North America and the operational issues in Mexico. He also inquired about the strategy to mitigate tariff risks on imported slabs for the Calvert facility.

Answer

EVP & CFO Genuino Christino explained that the operational issue in Mexico would have a continued ~$40 million cost impact in Q3. Head of IR Daniel Fairclough detailed the Q3 outlook, citing normal seasonal volume declines in Europe, North American tariff costs being offset by the Calvert consolidation, and lower mining volumes. Regarding Calvert, Mr. Christino noted that the new EAF and a domestic slab supply agreement are key mitigants, and that much of the tariff impact was already reflected in Q2 results.

Alain Gabriel of Morgan Stanley inquired about the key drivers for ArcelorMittal's Q3 2025 EBITDA, including seasonal effects, tariff impacts, and the operational situation in Mexico. He also asked about the strategy to mitigate tariff risks for imported slabs at the Calvert facility.

Answer

EVP & CFO Genuino Christino explained that while a furnace in Mexico remains down for maintenance, the key flat business EAF is operational. He noted the incremental tariff impact is manageable and highlighted Calvert's strong performance and new domestic slab supply agreement. Head of IR Daniel Fairclough detailed the Q3 EBITDA bridge, pointing to seasonal volume dips in Europe, the net positive effect of the Calvert consolidation in North America, and lower mining volumes.

Alain Gabriel from Morgan Stanley inquired about the Q2 2025 EBITDA forecast, seeking a breakdown by division and clarity on the timing of benefits from lower metallurgical coal prices. He also asked about the applicability of new auto component tariff exemptions to steel in North America and how the company absorbs these tariff costs.

Answer

Group CFO Genuino Christino confirmed a stronger Q2 outlook, driven by recovering spreads in Europe, noting some high-cost coal is still being worked through. Executive Daniel Fairclough added that key drivers would be higher seasonal volumes in Brazil and Ukraine, a positive price-cost effect in Europe, and improved results in the India JV. Regarding North American tariffs, Christino reiterated the expectation of a largely neutral impact when combining the NAFTA segment with the Calvert JV and stated their understanding is that there is no tariff stacking on auto parts.

Alain Gabriel asked about the future of ArcelorMittal's share buyback program after the current one completes and whether the company would consider stretching its balance sheet to capitalize on its discounted share price.

Answer

CEO Aditya Mittal highlighted the company's significant capital returns, including a 37% share count reduction since 2020 and a 10% dividend increase. He affirmed that the company is very comfortable with its existing capital return policy, which allocates 50% of free cash flow (after the base dividend) to shareholder returns, and intends to stick with this framework rather than stretching the balance sheet.

Alain Gabriel inquired about ArcelorMittal's Q3 business outlook for its Europe and U.S. divisions, noting recent peer profit warnings in Europe and price increases in the U.S. He also asked for an update on the expected closing timeline and potential synergies from the Vallourec acquisition.

Answer

Group CFO Genuino Christino stated that for Europe, the company sees normal seasonality in Q3 and does not anticipate the same level of destocking seen in 2023. An unnamed executive added that Q3 would see lower spot prices in NAFTA and seasonally lower volumes in Europe, offset by lower raw material costs. Regarding Vallourec, Mr. Christino expects the deal to close in Q3, after which the company will explore potential win-win synergies.

Alain Gabriel from Morgan Stanley asked about the potential for simplifying Rio Tinto's portfolio by divesting businesses that are not material to group profits and followed up with a personal question to the outgoing CEO about what he wished he had more time to accomplish.

Answer

CEO Jakob Stausholm responded that while the company should always seek simplification, the key is creating NPV, and even smaller, profitable assets can be valuable if Rio Tinto is the best operator. He reflected on his tenure, stating his main frustration was that implementing strategic changes, such as improving operational performance, inevitably takes a long time, but he is happy to leave a wealth of options for his successor.

Alain Gabriel from Morgan Stanley asked about the potential for simplifying the portfolio by divesting non-material businesses and posed a personal question to the outgoing CEO about his remaining 'bucket list' items.

Answer

CEO Jakob Stausholm responded that while simplification is always a goal, decisions are based on being the best owner and creating NPV, not just asset size, noting the portfolio has no major loss-making assets. On his legacy, he expressed satisfaction in leaving a wealth of strategic options for his successor.

Alain Gabriel of Morgan Stanley asked about the potential for portfolio simplification by divesting non-material businesses and what legacy or unfinished business the outgoing CEO would pass on to his successor.

Answer

CEO Jakob Stausholm stated that while simplification is always a goal, the key criterion for asset ownership is being the 'best owner' and creating NPV, not just size. He reflected that he was proud to leave many growth options for his successor and that his main wish was that the positive impacts of strategic changes, like operational improvements, could have materialized even faster.

Alain Gabriel of Morgan Stanley asked for an update on the gold deposit project, including its potential size and CapEx budget, and requested a breakdown of the key drivers for the Q2 EBITDA forecast.

Answer

Executive Idil Onay stated that studies on the gold mine are ongoing with no new updates, but confirmed that the 2025 CapEx guidance of $800-$850 million could increase to $1 billion if reserves prove significant. She provided no specific timeline for the project's assessment. For Q2, Onay projected EBITDA would be very similar to Q1, with a potential slight increase in prices being offset by other factors.

Alain Gabriel from Morgan Stanley requested an update on the gold deposit, asking about its potential size, CapEx budget, and project timeline. He also asked for the key drivers (price, cost, volume) behind the Q2 EBITDA forecast.

Answer

Executive Idil Onay stated that studies on the gold mine are ongoing and an announcement will follow the release of the official UMREK report, noting that 2025 CapEx could increase from ~$850M to $1B if reserves are significant. For Q2, she projected EBITDA would be very similar to Q1, with a slight potential increase in prices.

Inquired about the progress, size, and CapEx for the gold deposit project and asked for guidance on the building blocks for Q2 EBITDA.

Answer

The executive stated there are no new updates on the gold deposit, but CapEx could increase if reserves are significant. An announcement will follow the UMREK report, for which there is no timeline. Q2 EBITDA is expected to be very similar to Q1.

Alain Gabriel from Morgan Stanley asked about Erdemir's flexibility to defer or delay its 2025 capital expenditures if the market environment deteriorates and questioned the effectiveness of existing anti-dumping tariffs in Turkey against cheaper imports.

Answer

Executive Idil Onay responded that while the company maintains the flexibility to adjust its investment timeline, there is currently no reason to delay the planned 2025 CapEx. Regarding tariffs, she explained that they have prevented prices from falling further but their full effect is limited by the inward processing regime, which allows importers to avoid duties. Onay noted that the Turkish Trade Ministry is actively working on revising this regime.

Alain Gabriel of Morgan Stanley questioned the company's flexibility to delay or defer its 2025 capital expenditures if market conditions worsen and asked about the effectiveness of existing anti-dumping tariffs in Turkey and any potential new measures.

Answer

Idil Onay (Executive) confirmed that while Erdemir has the flexibility to delay investments, there is currently no reason to do so. Regarding tariffs, she explained that while they have prevented prices from falling further, their effectiveness is limited by the inward processing regime, which allows importers to avoid taxes if the material is re-exported. She noted the Trade Ministry is working on revising this regime, which is expected to benefit local producers.

Alain Gabriel of Morgan Stanley asked if coal costs have become less price-sensitive due to new royalty structures and questioned the unchanged CapEx guidance, given that some previously capitalized items are now being expensed.

Answer

CFO Steven Kalmin clarified that coal costs remain highly sensitive to prices due to sliding-scale royalties and are not "sticky." He explained that if prices fall, costs will also decrease. Regarding CapEx, Kalmin noted the expensed amount was not material enough to alter the multi-year guidance at this time but will be reviewed at year-end.

Alain Gabriel asked about the potential for unlocking value from the company's diverse asset portfolio, such as through selling stakes or entire assets, particularly given the current scarcity of such assets in the market.

Answer

CEO Gary Nagle addressed the question by focusing on the El Pachón copper project, stating they are not rushing its development and will prioritize lower-risk brownfield expansions first. He confirmed that when the time is right and the market needs the copper, they would consider bringing in a partner to de-risk the project and share capital costs, but a decision is not imminent.

Alain Gabriel from Morgan Stanley inquired about potential M&A activities given the company's strong cash position and the status of its asset sales program, including the Cobalt sale and the future of Viterra.

Answer

CEO Gary Nagle responded that while M&A opportunities are limited, the company remains watchful. He confirmed the asset sales program is largely complete, declined to comment on the pending Cobalt sale, and reiterated that the company's positive stance on Viterra has not changed.