Capital expenditure

Segment annually and quarterly (2014 and 2015)

(US$ millions) 2014 2015 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15
NAFTA 505 392 110 116 152 127 90 97 85 120
Brazil 497 422 135 106 118 138 143 86 98 95
Europe 1,052 1,045 309 209 231 303 250 182 293 320
ACIS 573 365 105 110 170 188 93 86 105 81
Mining 993 476 209 220 274 290 173 90 101 112
Group 3,665 2,707 875 774 949 1,067 745 542 684 736

Capital expenditure by segment (2014 and 2015)

(US$ millions) 2014 2015
NAFTA 505 392
Brazil 497 422
Europe 1,052 1,045
ACIS 573 365
Mining 993 476

Note: Others and eliminations line are not presented in the table

Capital expenditure projects

The following tables summarise the company’s principal growth and optimisation projects involving significant capital expenditure completed in 2015 and those that are currently ongoing.

Projects completed in 2015

Region Site Project Capacity / particulars Actual completion Note #
Brazil Monlevade (Brazil) Wire rod production expansion Increase in capacity of finished products by 1.1mt/year Q4 2015 1
Canada Baffinland Early revenue phase Production capacity 3.5mt/year (iron ore) Q3 2015 2
NAFTA ArcelorMittal Dofasco (Canada) Phase 1: Construction of a heavy gauge galvanizing line#6 to optimize galvanizing operations Optimize cost and increase shipment of galvanized products by 0.3mt/year Q2 2015 3
China Hunan Province VAMA auto steel JV Capacity of 1.5mt pickling line, 1.0mt continuous annealing line and 0.5mt of hot dipped galvanizing auto steel Q1 2015 4
USA AM/NS Calvert Continuous coating line upgrade to aluminize line #4 Increase production of Usibor by 0.1 mt/year Q1 2015 5
Brazil Juiz de Fora (Brazil) Rebar expansion Increase in rebar capacity by 0.4mt/year Q1 2015 1

Ongoing projects

Region Site Project Capacity / particulars Forecast completion Note #
USA AM/NS Calvert Slab yard expansion Increase coil production level up to 5.3mt/year coils. H2 2016 5
NAFTA ArcelorMittal Dofasco (Canada) Phase 2: Convert the current galvanizing line #4 to a Galvalume line Allow the galvaline #4 to produce 160lt galvalume and 128kt galvanize 2016 3
Europe ArcelorMittal Krakow (Poland) HRM extension Increase HRC capacity by 0.9mt/year 2016 7
    HDG increase Increasing HDG capacity by 0.4mt/year 2016 7
Brazil Acindar (Argentina) New rolling mill Increase in rolling capacity by 0.4mt/year for bars for civil construction 2016 8
Brazil ArcelorMittal Vega Do Sul (Brazil) Expansion project Increase hot dipped galvanizing (HDG) capacity by 0.6mt/year and cold rolling (CR) capacity by 0.7mt/year On hold  
Brazil Juiz de Fora (Brazil) Meltshop expansion Increase in meltshop capacity by 0.2mt/year On hold 1
Brazil Monlevade (Brazil) Sinter plant, blast furnace and meltshop Increase in liquid steel capacity by 1.2mt/year; sinter feed capacity of 2.3mt/year On hold 1
Mining Liberia Phase 2 expansion project Increase production capacity to 15mt/ year (high grade sinter feed) On hold 9

1 During the second quarter of 2013, ArcelorMittal restarted its Monlevade expansion project, which is expected to be completed in two phases with the first phase focused mainly on downstream facilities consisting of a new wire rod mill in Monlevade with additional capacity of 1.05 million tonnes of coils per year with an estimated investment of $280 million and an increase in Juiz de Fora rebar production from 50,000 to 400,000 tonnes per year and an increase in meltshop capacity by 200,000 tonnes. Though the Monlevade wire rod expansion project and Juiz de Fora rebar expansion were completed in 2015, and Juiz de Fora meltshop is expected to be completed in 2017, the Company does not expect to increase shipments until domestic demand improves. A decision regarding the execution of the second phase of the project (for upstream facilities) will be taken at a later date.

2 First production in Baffinland was in the fourth quarter of 2014, with first shipments taking place during the third quarter of 2015 following the completion of shiploader and port infrastructure.

3 During the third quarter of 2013, the Company restarted the construction of a heavy gauge galvanizing line #6 (capacity 660ktpy) at Dofasco. Upon completion of this project, the older and smaller galvanizing line #2 (capacity 400ktpy) will be closed. The project is expected to benefit operating income through increased shipments of galvanized product (260ktpy), improved mix and optimized costs. The line #6 will also incorporate Advanced High Strength Steel (AHSS) capability and is the key element in a broader program to improve Dofasco’s ability to serve customers in the automotive, construction, and industrial markets.

4 Valin ArcelorMittal Automotive Steel (“VAMA”), a downstream automotive steel joint venture between ArcelorMittal and Valin Group, of which the Company owns 49%, will produce steel for high-end applications in the automobile industry and supply international automakers and first-tier Chinese car manufacturers as well as their supplier networks for the rapidly growing Chinese market. The project involves the construction of state of the art pickling line tandem CRM (1.5mt), continuous annealing line (1.0mt) and hot dipped galvanised line (0.5mt). Total capital investment is expected to be $832 million (100% basis). Production began in the first quarter of 2015.

5 On September 16, 2014, ArcelorMittal, in partnership with joint venture partner Nippon Steel & Sumitomo Metals Corporation (NSSMC), announced a $40 million slab yard expansion project to increase AM/NS Calvert’s slab staging capacity and efficiency. The existing hot strip mill consists of three bays with the capacity to stage around 335,000 tonnes of incoming slabs, significantly less than the staging capacity required to achieve the 5.3 million tonnes target. The slab yard expansion will include the addition of overhead cranes, along with foundation work and structural steel erection, to increase the staging and storage capacity in an effort to achieve the hot strip mill’s full capacity. The project is expected to be completed in the second half of 2016. At the same time, the Company announced an additional investment in the facility’s existing number four continuous coating line, which will significantly increase ArcelorMittal’s North American capacity to produce press hardenable steels, Usibor®, a type one aluminium-silicon coated (Al Si) high strength steel and one of the strongest steels used in automotive applications.

6 Ongoing projects refer to projects for which construction has begun (excluding various projects that are under development), even if such projects have been placed on hold pending improved operating conditions.

7 On July 7, 2015, ArcelorMittal Poland announced it will restart preparations for the relining of blast furnace No. 5 in Krakow, which is coming to the end of its lifecycle in mid-2016. Total investments in the primary operations in the Krakow plant will amount to PLN 200 million (more than €40 million), which also includes modernization of the basic oxygen furnace No. 3. Additional projects in the downstream operations will also be implemented. These include the extension of the hot rolling mill capacity by 0.9 million tons per annum and increasing the hot dip galvanizing capacity by 0.4 million tons per annum. The capital expenditure for the value of those two projects exceeds PLN 300 million (€90 million) in total. In total, the group will invest more than PLN 500 million (more than €130 million) in its operations in Krakow, including both upstream and downstream installations.

8 During the third quarter of 2013, Acindar Industria Argentina de Aceros S.A. (Acindar) announced its intention to invest $100 million in a new rolling mill in Santa Fe province, Argentina, which would be devoted to the manufacturing of civil construction products. The new rolling mill would have a production capacity of 400ktpy of rebars from 6 to 32mm and would also enable Acindar to optimize production at its special bar quality (SBQ) rolling mill in Villa Constitución, which in the future will only manufacture products for the automotive and mining industries. The project is expected to take up to 24 months to complete, with operations expected to start in 2016.

9 ArcelorMittal remains committed to Liberia where it operates a full value chain of mine, rail and port. It has been operating the mine on a DSO basis since 2011 and produced 4.3 million tonnes in 2015. In the current initial DSO phase, significant cost reduction and re-structuring has continued to ensure competitiveness at current prices. Drilling for DSO resource extension recently commenced and in 2016 the operation has been right sized to 3mtpa to focus on its ‘natural’ Atlantic markets. This repositioning for size and competitiveness also extends the life of the DSO phase as ArcelorMittal considers the appropriate next phase of development. ArcelorMittal had previously announced a Phase 2 project that envisaged the construction of 15 million tonnes of concentrate sinter fines capacity and associated infrastructure. The phase 2 project was initially delayed due to the declaration of force majeure by contractors in August 2014 due to the Ebola virus outbreak in West Africa. Rapid price declines over the period since force majeure have led to a reassessment of the project and ArcelorMittal is considering transitioning production to a higher grade sinter fines product but now in a phased approach as opposed to a major step up from 15 to 20mtpa as originally envisaged in phase 2. Extensive tonnage of concentrator feed material is already exposed in readiness for a concentrated sinter fines, and ArcelorMittal also has options in its concession to mine higher grade, lower gangue DSO ores. Work continues in 2016 to define the best business option.