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Management report  1

Annual Report 2016


2  Management report
Management report  3

Table of contents

Management Report
Company overview _____________________________________________________________________________________________ 4
Business overview______________________________________________________________________________________________ 5
Disclosures about market risks____________________________________________________________________________________ 28
Group operational structure______________________________________________________________________________________ 30
Key transactions and events in 2016________________________________________________________________________________ 32
Recent developments___________________________________________________________________________________________ 33
Corporate governance __________________________________________________________________________________________ 33
> Luxembourg takeover law disclosure_____________________________________________________________________________ 59
Additional information___________________________________________________________________________________________ 60
Chief executive officer and chief financial officer’s responsibility statement________________________________________________ 63

Consolidated financial statements for the year ended December 31, 2016_________________________________________________ 64
Consolidated statements of operations_____________________________________________________________________________ 65
Consolidated statements of other comprehensive income _____________________________________________________________ 66
Consolidated statements of financial position________________________________________________________________________ 67
Consolidated statements of changes in equity________________________________________________________________________ 68
Consolidated statements of cash flows______________________________________________________________________________ 69
Notes to the consolidated financial statements _______________________________________________________________________ 70
Report of the réviseur d’entreprises agréé – consolidated financial statements _____________________________________________ 155

Risks related to the global economy and the steel industry _____________________________________________________________ 157

Mining _______________________________________________________________________________________________________ 170


4  Management report

Company Overview several major research centers sells its steel products primarily Mining Value Chain: ArcelorMittal
as well as strong academic in local markets and through its has a significant portfolio of raw
History and development of the partnerships with universities and centralized marketing organization material and mining assets, as
Company other scientific bodies. to a diverse range of customers well as certain strategic long-
in approximately 160 countries term contracts with external
ArcelorMittal is the world’s Against this backdrop, including the automotive, suppliers. In 2016, approximately
leading integrated steel and ArcelorMittal’s strategy is to appliance, engineering, 55% of ArcelorMittal’s iron-ore
mining company. Since the leverage four distinctive attributes construction and machinery requirements and approximately
creation of ArcelorMittal in 2006 that will enable it to capture industries. The Company also 15% of its PCI and coal
(through the combination of leading positions in the most produces various types of mining requirements were supplied from
Mittal Steel Company N.V. and attractive areas of the steel products including iron ore lump, its own mines or pursuant to
Arcelor) and continuing through industry’s value chain, from mining fines, concentrate and sinter feed, strategic contracts with third-party
2008, ArcelorMittal has pursued at one end to distribution and as well as coking, PCI and thermal suppliers. The Company currently
a disciplined growth strategy, first-stage processing at the other: coal. has iron ore mining activities in
with transactions in Argentina, global scale and scope; superior Brazil, Bosnia, Canada, Kazakhstan,
Australia, Austria, Brazil, Canada, technical capabilities; a diverse As a global steel producer, the Liberia, Mexico, Ukraine and the
Costa Rica, China, Estonia, France, portfolio of steel and related Company is able to meet the United States. The Company
Germany, Italy, Mexico, Poland, businesses, one of which is mining; needs of different markets. currently has coal mining activities
Russia, Slovakia, South Africa, and financial capabilities. Steel consumption and product in Kazakhstan and the United
Sweden, Turkey, the United requirements clearly differ States.
Kingdom, Uruguay, United Arab Geography: ArcelorMittal is the between developed markets
Emirates, the United States and largest steel producer in the and developing markets. Steel In addition, ArcelorMittal produces
Venezuela. Beginning in the Americas, Africa and Europe and consumption in developed substantial amounts of direct
latter part of 2008, ArcelorMittal is the fifth largest steel producer economies is weighted towards reduced iron, or DRI, which is
largely suspended mergers and in the CIS region. ArcelorMittal flat products and a higher value- a scrap substitute used in its
acquisitions activity in light of has steel-making operations in added mix, while developing mini-mill facilities to supplement
the deteriorating economic 18 countries on four continents, markets utilize a higher external metallics purchases.
and market environment, and including 51 integrated and mini- proportion of long products and ArcelorMittal is also a significant
sharply curtailed its investment mill steel-making facilities. As of commodity grades. To meet these producer of coke, which is
activities, with the exception of the December 31, 2016, ArcelorMittal diverse needs, the Company produced from metallurgical coal
acquisition (along with a partner) had approximately 199,000 maintains a high degree of and is a critical raw material for
of Baffinland in 2011. employees. product diversification and seeks steel-making, satisfying 92% of
opportunities to increase the its coke needs through its own
Since September 2011, ArcelorMittal’s steel-making proportion of higher value-added production facilities. ArcelorMittal’s
ArcelorMittal has been undergoing operations have a high degree products in its product mix. facilities have good access to
a deleveraging process to reduce of geographic diversification. shipping facilities, including
its indebtedness including Approximately 37% of its crude Automotive focus: ArcelorMittal through ArcelorMittal’s own 16
numerous divestments of non- steel is produced in the Americas, has a leading market share in its deep-water port facilities and
core assets (see note 2.3 to the approximately 47% is produced in core markets in the automotive linked railway sidings.
consolidated financial statements Europe and approximately 16% is steel business and is a leader ArcelorMittal has its own
for the divestments made in 2015 produced in other countries, such in the fast-growing advanced downstream steel distribution
and 2016). Despite ArcelorMittal’s as Kazakhstan, South Africa and high strength steels segment. business, primarily run through its
overall strategy of deleveraging, Ukraine. In addition, ArcelorMittal’s ArcelorMittal is the first steel Europe segment. It also provides
the Company completed an sales of steel products are company in the world to embed value-added and customized
acquisition through a 50/50 joint spread over both developed its own engineers within an steel solutions through additional
venture partnership of Calvert in and developing markets, which automotive customer to provide processing activities to meet
2014. have different consumption engineering support. The specific customer requirements.
characteristics. ArcelorMittal’s Company begins working with
ArcelorMittal’s success is built on mining operations, present in original equipment manufacturers
its core values of sustainability, North and South America, Africa, (“OEMs”) as early as five years
quality and leadership and the Europe and the CIS region, are before a vehicle reaches the
entrepreneurial boldness that has integrated with its global steel- showroom, to provide generic
empowered its emergence as the making facilities and are important steel solutions, co-engineering
first truly global steel and mining producers of iron ore and coal in and help with the industrialization
company. Acknowledging that a their own right. of the project. In November
combination of structural issues 2016, ArcelorMittal introduced
and macroeconomic conditions Products: ArcelorMittal produces a new generation of advanced
will continue to challenge returns a broad range of high-quality high strength steels, including
in its sector, the Company has finished and semi-finished steel new press hardenable steels and
adapted its footprint to the new products (“semis”). Specifically, martensitic steels. Together, these
demand realities, redoubled ArcelorMittal produces flat steel new steel grades aim to help
its efforts to control costs and products, including sheet and automakers further reduce body-
repositioned its operations with plate, and long steel products, in-white weight to improve fuel
a view toward outperforming including bars, rods and structural economy without compromising
its competitors. ArcelorMittal’s shapes. In addition, ArcelorMittal vehicle safety or performance.
research and development produces pipes and tubes for
capability is strong and includes various applications. ArcelorMittal
Management report  5

Cautionary Statement Regarding Corporate and other information Business overview 40% over 2013. This led to stockists
Forward-Looking Statements purchasing over six million fewer
ArcelorMittal is a public limited The following discussion and tonnes in 2015, as compared to
This annual report and the liability company (société analysis should be read in 2014, as they sought to reduce
documents incorporated by anonyme) that was incorporated conjunction with ArcelorMittal’s inventory levels as steel prices
reference in this annual report for an unlimited period under consolidated financial statements declined. Although underlying
contain forward-looking the laws of the Grand Duchy of and related notes for the year steel demand continued to rise in
statements based on estimates Luxembourg on June 8, 2001. ended December 31, 2016 2015, apparent demand declined
and assumptions. This annual ArcelorMittal is registered at the included in this annual report. significantly, negatively impacting
report contains forward-looking R.C.S. Luxembourg under number the Company’s deliveries and
statements within the meaning B 82.454. Key factors affecting results of profitability. Apparent demand in
of the Private Securities Litigation operations the United States was still down
Reform Act of 1995. Forward- The mailing address and year-on-year in the first three
looking statements include, telephone number of The steel industry, and the iron quarters of 2016 as inventories
among other things, statements ArcelorMittal’s registered office are: ore and coal mining industries, continued to decrease and
concerning the business, future which provide its principal demand for Oil and Country
financial condition, results of ArcelorMittal raw materials, have historically Tubular Products (“OCTG”) in
operations and prospects of 24-26, Boulevard d’Avranches been highly cyclical. They are particular, was still very weak.
ArcelorMittal, including its L-1160 Luxembourg significantly affected by general However, the situation began to
subsidiaries. These statements Grand-Duchy of Luxembourg economic conditions, as well as by improve during the fourth quarter
usually contain the words Telephone: +352 4792-1 worldwide production capacity with apparent demand growing
“believes”, “plans”, “expects”, and fluctuations in international year-on-year and as prices began
“anticipates”, “intends”, “estimates” steel trade and tariffs. In particular, to increase toward year-end.
or other similar expressions. For ArcelorMittal’s agent for U.S. this is due to the cyclical nature
each of these statements, you federal securities law purposes is: of the automotive, construction, Demand dynamics in China
should be aware that forward- machinery and equipment and have also substantially affected
looking statements involve ArcelorMittal USA LLC transportation industries that are the global steel business. After
known and unknown risks and 1 South Dearborn Street, 19th floor the principal consumers of steel. growing strongly since 2000,
uncertainties. Although it is Chicago, Illinois 60603 In recent history, a telling example Chinese steel demand has started
believed that the expectations United States of America of the industry cyclicality was the to decline as a result of weaker
reflected in these forward-looking Telephone: + 1 312 899-3985 sharp downturn in 2008/2009, real estate sector construction
statements are reasonable, there is after several strong years, as a and machinery production. This
no assurance that the actual results ArcelorMittal shares are listed and result of the global economic crisis. decline in domestic demand
or developments anticipated will traded (through a single order has led to a surge in Chinese
be realized or, even if realized, book as from January 14, 2009) on The North American and steel exports, which more than
that they will have the expected the Euronext European markets European markets together doubled between 2012 and
effects on the business, financial (Paris and Amsterdam) (symbol accounted for over 60% of 2015, increasing by over 56
condition, results of operations or “MT”), are admitted to trading on ArcelorMittal’s deliveries in 2016 million tonnes to 112 million
prospects of ArcelorMittal. the Luxembourg Stock Exchange’s and, consequently, weakness in tonnes in 2015. This increase in
regulated market and listed on these markets has a significant Chinese exports was greater than
These forward-looking statements the Official List of the Luxembourg impact on ArcelorMittal’s results. the growth in world ex-China
speak only as of the date on which Stock Exchange (symbol “MT”) The onset of the Eurozone crisis steel demand over the same
the statements were made, and no and are listed and traded on the caused underlying European period, and has had the effect of
obligation has been undertaken Spanish Stock Exchanges (symbol steel demand to weaken in 2012 curtailing domestic production
to publicly update or revise any “MTS”). ArcelorMittal shares are and, coupled with significant in countries outside of China.
forward-looking statements made also listed and traded on the NYSE destocking, apparent steel Although Chinese exports
in this annual report or elsewhere (symbol “MT”). demand fell by over 10%. Since continued to rise during the first
as a result of new information, then, deliveries have increased half of 2016, up 10% year-on-year,
future events or otherwise, except Internet site in each of the past four years, a rebound in domestic demand
as required by applicable laws and and while 2016 demand is finally and the beginning of a capacity
regulations. A detailed discussion ArcelorMittal maintains an Internet above 2011 levels, it remains reduction plan has led to exports
of principal risks and uncertainties site at www.arcelormittal.com. around 22% below 2007 peak declining by 14% year-on-year
which may cause actual results Information contained on or levels. Demand has increased in the second half and by 3%
and events to differ materially from otherwise accessible through this since 2012 but imports into the for the year as whole. While the
such forward-looking statements is Internet site is not a part of this European Union (“EU”) have risen majority of exports are directed
included in the section titled “Risk annual report. All references in this more strongly, meaning domestic to Asia, and exports to the U.S.
factors”. The Company undertakes annual report to this Internet site European deliveries have hardly are reduced due to the impact of
no obligation to update or revise are inactive textual references to grown, impacting the ability of trade cases, a declining but still
publicly any forward-looking this URL and are for information ArcelorMittal to serve one of significant proportion are being
statements whether because of only. its largest markets. Underlying directed toward ArcelorMittal’s
new information, future events, steel demand in North America core European markets in 2016.
or otherwise, except as required increased strongly post-crisis, While not a sustainable long-term
by securities and other applicable but recently apparent demand strategy, Chinese exports in 2015
laws. has been impacted by inventory were increasingly being sold at
movements, particularly during prices below cost (CISA reported
2014 when inventories rose CISA mills losing an accumulated
significantly as imports rose almost RMB 65 billion ($10 billion) in
6  Management report

2015), negatively impacting product in which the raw material upward trend in iron ore prices Confidence has been resilient
prices and therefore margins in was used (average cost basis). In due (among other things) to following the United Kingdom’s
many regions. Chinese producers recent periods, steel selling prices strong growth of seaborne supply vote to exit the EU in June 2016.
continued to accumulate losses have tended to react quickly to or any decline in Chinese steel Negative policy interest rates,
until April 2016 when domestic changes in raw material prices, demand would negatively impact combined with large-scale
and export prices rose sharply due in part to the tendency of ArcelorMittal’s revenues and asset purchase programs by the
as domestic demand surprised distributors to increase purchases profitability. European Central Bank, led to a
producers on the upside, of steel products early in a rising noticeable easing of borrowing
increasing capacity utilization. cycle of raw material prices and Economic environment1 costs and generally had a positive
During the second half of 2016, to hold back from purchasing as effect on lending flows. However,
demand continued to support raw material prices decline. With Global growth in 2016 is estimated a rebound in oil prices, from
higher capacity utilization and respect to (b), as average cost basis at a post-2008 global economic their low in early 2016, implies
an improved domestic spread is used to determine the cost of crisis low of 2.2 percent as stagnant diminished support to real income
of steel prices over raw material the raw materials incorporated, global trade, subdued investment, and private consumption growth.
costs, which translated into higher inventories must first be worked and heightened policy uncertainty Labor market and credit conditions
export prices. through before a decrease in raw marked another difficult year for continued to improve in 2016.
material prices translates into the world economy. Although Employment reached pre-crisis
Unlike many commodities, steel decreased operating costs. In fiscal stimulus in major economies, levels, and the EU unemployment
is not completely fungible due some of ArcelorMittal’s segments, if implemented, may boost global rate ebbed further (falling to 8.3%
to wide differences in shape, in particular Europe and NAFTA, growth above expectations, risks in November 2016, from 9.0%
chemical composition, quality, there are several months between to growth forecasts remain tilted in November 2015), albeit from
specifications and application, raw material purchases and sales to the downside, especially due to elevated levels and with wide
all of which affect sales prices. of steel products incorporating policy uncertainty. cross-country variations. Despite
Accordingly, there is still limited those materials. Although this ongoing monetary policy easing,
exchange trading and uniform lag has been reduced recently by Growth in the United States headline and core inflation remain
pricing of steel, whereas there is changes to the timing of pricing slowed markedly, from 2.6 significantly below target. Fiscal
increasing trading of steel raw adjustments in iron ore contracts, percent in 2015 to an estimated policy was slightly expansionary in
materials, particularly iron ore. it cannot be eliminated and 1.6 percent in 2016, held back 2016 partly as a result of refugee
Commodity spot prices can vary, exposes these segments’ margins by weak exports, a continued related outlays.
which causes sale prices from to changes in steel selling prices in drawdown in inventories, and a
exports to fluctuate as a function the interim (known as a “price-cost deceleration in private investment. Growth in China is estimated
of the worldwide balance of squeeze”). In addition, decreases in Activity rebounded strongly to have slightly decelerated to
supply and demand at the time steel prices may outstrip decreases after a weak first half of 2016, 6.7 percent in 2016. As part of
sales are made. in raw material costs in absolute and a further tightening of labor ongoing economic rebalancing,
terms, as has occurred numerous markets led to a slow increase in consumption growth has been
ArcelorMittal’s sales are made on times over the past few years, for wages and supported continued strong, while investment growth
the basis of shorter-term purchase example in the second quarter of gains in real disposable income. has continued to moderate
orders as well as some longer-term 2013 and fourth quarter of 2015. Despite relatively subdued from the post-crisis peak. Fiscal
contracts to certain industrial underlying growth, the economy and credit-based stimulus
customers, particularly in the The Company’s operating has continued to move closer measures supported growth in
automotive industry. Steel price profitability has been particularly to the U.S. Federal Reserve’s 2016, focusing on infrastructure
surcharges are often implemented sensitive to fluctuations in raw full employment and inflation investment and on efforts to
on steel sold pursuant to long- material prices, which have objectives. The unemployment stimulate household credit.
term contracts in order to recover become more volatile since the rate remained slightly below 5 Credit growth, which has been
increases in input costs. However, iron ore industry moved away percent in most of the second moderating since late 2015,
spot market steel, iron ore and coal from annual benchmark pricing half of 2016. The Federal Reserve stabilized during 2016 but
prices and short-term contracts are to quarterly pricing in 2010. raised short-term interest rates in remained well above the pace
more driven by market conditions. Iron ore prices were relatively December as expected. Long- of nominal GDP growth. On the
stable in 2013, averaging $135 term interest rates increased back of a continued real estate
One of the principal factors per tonne (“/t”), but fell sharply substantially and the dollar has boom, loans to households
affecting the Company’s operating in 2014, reaching lows of $68/t appreciated in real effective accounted for an increasing
profitability is the relationship in December 2014. Volatility on terms, mostly driven by an share of credit extension in 2016.
between raw material prices and steel margins aside, the results of anticipated shift in the U.S. policy Partly as a result of real estate
steel selling prices. Profitability the Company’s mining segment mix. Specifically, U.S. fiscal policylending, housing prices reached
depends in part on the extent (which sells externally as well is projected to become more new heights, especially in major
to which steel selling prices as internally) are also directly expansionary, with stronger cities, although they showed
exceed raw material prices, and, impacted by iron ore prices, which future demand implying more signs of stabilization in recent
in particular the extent to which were weaker again in 2015, ending inflationary pressure and a less months, reflecting tighter property
changes in raw material prices are the year at $40/t and averaging gradual normalization of U.S. regulations. Despite some easing,
passed through to customers in only $56/t. Iron ore prices have monetary policy. capital outflows from China
steel selling prices. Complicating since rebounded from $40/t remained sizable and continued
factors include the extent of the during December 2015 to an The EU GDP growth slowed from to put downward pressure on
time lag between (a) the raw average of $52/t in the first half 2.1 percent in 2015 to 1.8 percent the currency. During 2016, the
material price change and the steel of 2016, increasing to $80/t in in 2016, as both domestic demand renminbi depreciated around 7
selling price change and (b) the December 2016 and an average and exports lost momentum. percent against the U.S. dollar and
date of the raw material purchase of $65/t during the second half 1
GDP and industrial production data around 5 percent in nominal trade-
and of the actual sale of the steel of the year. A reversal of the 2016 and estimates sourced from Oxford weighted terms. These movements
Economics January 13, 2017
Management report  7

notwithstanding, the renminbi Steel production2 year due to a weaker first quarter. Steel prices3
remains markedly above its 2005 In China, production declined
level in trade-weighted terms and After declining sharply during significantly during January and Steel prices for Flat products
broadly in line with fundamentals. 2009 to 1.2 billion tonnes, world February but a pick-up from March in Europe remained relatively
crude steel production grew led to output declining only 0.6% stable in euro terms during the
Although Brazil and Russia suffered each year to 1.67 billion tonnes year-on-year during the first half first quarter of 2015 against 2014
a second consecutive year of in 2014, driven by strong Chinese of 2016. Most other major steel fourth quarter averages, despite
recession in 2016, they have been growth, which grew to over 822 producing regions also recorded a continuous erosion of raw material
showing signs of improvement. million tonnes and accounted for decline in production during the costs. A balanced market, low
In Russia, the stabilization in 50% of global steel production. first half of 2016. EU28 steel output interest rates and steady demand
oil prices and the authorities’ World crude steel production decreased by 6.2% to around for durables, coupled with the
policy response - exchange rate then fell in 2015, for the first time 165.5 million tonnes annualized weak euro, helped improve the
adjustment, banking sector since 2009, as steel consumption even though consumption steel market in the first quarter of
capital and liquidity injections - in developed and key emerging recorded positive growth; as the 2015. In Northern Europe the price
improved the short-term outlook, markets declined. Amid depressed incremental demand continued to for hot rolled coil (“HRC”) improved
helped restore confidence and demand conditions, the availability be satisfied by imports. Significant slightly from January to March, to
stabilized the financial system. In of low priced imports, particularly declines also occurred in South an average of €405-413 ($458-467)
Brazil, a rebound in confidence from China, in which domestic America, which had a fall in output per tonne (/t) for the first quarter
following moves to alleviate demand also declined, forced of 13.7%, Africa, and to a lesser of 2015. Prices saw a similar trend
political uncertainty, combined many producers across the world extent in developed Asia, where in Southern Europe, with spot HRC
with improved terms of trade, to curtail output. Global steel production decreased by 2.3% improving to €395-404 ($446-456)/
helped to slow the pace of output production is estimated to have year-on-year in the first half of t, while a weaker euro impacted
contraction. fallen by 3.2% to 1.62 billion 2016. In comparison, production the realization of this improvement
tonnes in 2015, with the decline in NAFTA, CIS and the Middle East in USD terms both in Northern and
Global industrial production (“IP”) in production accelerating in the was broadly stable, while output Southern Europe by roughly -$50/t
growth slowed to 1.5% year-on- second half of 2015, reflecting continued to increase year-on-year quarter on quarter. Economic
year in 2016, after growing by worsening global demand in India. conditions remained good in
1.8% in 2015. IP in Organization conditions over the period, Europe during the second quarter
for Economic Co-operation and especially in China and increased The second half of 2016 saw of 2015, with strong bookings
Development (“OECD”) countries destocking as prices fell. a rebound in steel production in industry and auto. Despite
eased to just 0.3% year-on-year globally, with positive year-on-year this, steel prices saw consistent
in 2016, after growing by 0.8% in North American steel production growth in all major producing weakening on a monthly basis
2015. fell by 8.5% in 2015 mainly due regions except South America. from April to June, due mainly to
to a decline in U.S. output, which Indeed, global production grew pressure from imports. Spot HRC
Global apparent steel tumbled by 10.5% as stockholders 0.8% year-on-year during 2016, averaged at €398-405 ($440-
consumption (“ASC”) returned and end-users sought to correct as a 3.3% year-on-year growth in 448)/t in Northern Europe and at
to growth in 2016 after falling by inventories which had grown in the second half, more than offset €385-393 ($425-435)/t in Southern
2.4% year-on-year in 2015, the 2014 when total steel imports the declines seen earlier in the Europe. Aggressive domestic
first decline since 2009 and due rose by almost 40%. In the CIS, year. Chinese steel production offers at the beginning of the third
mainly to a 4.5% decline in Chinese output also fell (4.3% in 2015 growth accelerated through the quarter, coupled with low-priced
consumption in 2015. The 2016 year-on-year) as a recession year as government stimulus and imports from Turkey, Russia and
global ASC is estimated to have lowered domestic demand an improvement in the real estate China, kept prices in Europe under
grown just over 1% as Chinese and overwhelmed increased market drove steel production pressure, and HRC spot saw a
demand surprised on the upside, international competitiveness growth of over 3% in the second drop of approximately €27 ($27)/t
growing approximately 1.3%, from weaker domestic currencies. half of 2016 and 1.2% for the quarter on quarter, in Northern
compounding expectations of South America also saw a 2.5% full year. EU28 steel production Europe, to €372-378 ($414-
another year of decline. Elsewhere, decline in production as Brazilian improved in the second half of 420)/t and €37/$38/t, in Southern
world-ex-China ASC grew at a steel demand faltered by around 2016 as well, with output growing Europe, to €348-357 ($387-397)/t.
similar rate (1.2% year-on-year), 15% due to economic issues facing 2.2% year-on-year, albeit not Eurozone consumer confidence
as significant declines in CIS (4%) the country. In Asia, production enough to offset the weakness dropped to a nine-month low
and Latin America (11%, with Brazil decreased by 2.3%, mainly due seen during the first half, leaving in October, while the gap in the
declining 12.5% to 13.5%) were to slower growth in China and a production down 2.3% in 2016 offer price for steel in northern vs.
offset by growth in other regions, 5% decline in Japanese output. as a whole. Although output southern Europe continued to feed
particularly in the EU (almost 2%), In India, however, production in NAFTA grew year-on-year in expectations for price declines.
Asia ex-China (4%) and Middle East increased by 2.6% and elsewhere, 2016, this was entirely driven by HRC spot further weakened during
(3%). NAFTA saw a small decline Australia/New Zealand also growth in Mexico (an increase of the fourth quarter to €325-335
in demand as growth in Canada recorded a 4.6% rise in production. 4.3%) and Canada (an increase of ($357-368)/t in Northern Europe
and Mexico was offset by weaker 1.6%), whereas steel production and to €293-304 ($322-333)/t in
demand in the U.S., particularly Global crude steel production in the U.S. declined by 0.3% to Southern Europe.
pipes and tubes. Demand has picked up during the second 78.6 million tonnes, as domestic
improved through 2016, with quarter of 2016 while output demand remained weak. India saw Steel prices for flat products in
global ASC declining an estimated remained down 1.5% year-on- the fastest growth of the top ten Europe improved in euro terms
3% year-on-year during the first year during the first half of the producing countries globally, with during the first quarter of 2016
quarter of the year, slow growth crude steel production rising 7.4% against the December 2015 levels.
2
Global production data is for all
returning in the following two 66 countries for which production to 95.6 million tonnes in 2016. In Northern Europe the price for
quarters and accelerating during data is collected by the World steel, hot rolled coil (“HRC”) improved
the fourth quarter of the year. accounting for around 99% of global
steel production. 3
Source: Steel Business Briefing (SBB)
8  Management report

from January to March, to reach $541-559/t in April, and continuing a strong rebound by the stock price drop in June to €467-477
an average range of €325-334 to strengthen to an average range market following the central bank’s ($525-536)/t. The second quarter
($358-368) per tonne (“/t”) for the of $691-704/t in June 2016, for a announcement of a cut in the of 2016 ended with an average
first quarter of 2016. Prices saw a quarterly average range of $631- reserve requirement ratio by 0.5%. price improvement against the
similar trend in Southern Europe, 648/t, or a quarter-on-quarter This resulted in a significant price first quarter of approximately
with spot HRC improving to an improvement of approximately increase, which reached a peak €55/t for the medium sections
average range of €296-310 ($326- $184/t. The average HRC price for in China in April 2016, when the and approximately €99/t for
341)/t for the first quarter of 2016. the first half of 2016 in the United spot HRC price averaged $380/t the rebar. The average medium
The second quarter of 2016 saw States was $547/t as compared VAT excluded. The remaining two sections price for the first half of
a sharp increase in international to an average of $541/t in the months of the second quarter of 2016 in Europe was €481 ($537)/t
steel prices, led by China; spot HRC first half of 2015. The spot HRC 2016 saw domestic prices decline, as compared to €521 ($582)/t for
averaged at a range of €407-419 prices in the United States started with the spot HRC at an average the first half of 2015. The average
($459-473)/t in Northern Europe to decrease in July 2016 and range of $348-350/t VAT excluded rebar price in Europe for the first
and at a range of €394-405 continued this downward trend in May 2016, and $327-329/t half of 2016 was €404 ($452)/t as
($445-457)/t in Southern Europe, until October 2016. During the VAT excluded in June 2016. The compared to €420 ($469)/t for
corresponding to an average third quarter of 2016, the HRC average spot HRC price for the the first half of 2015. Long steel
increase quarter-on-quarter of price averaged $650/t (an increase second quarter of 2016 was a products prices weakened during
approximately €84 ($103)/t in of $11/t quarter-on-quarter), with range of $351-354/t VAT excluded, the third quarter of 2016, with
the North, and €97 ($118)/t in an average of $600/t in September corresponding to a quarter- medium sections at an average
Southern Europe. The average 2016. The spot HRC prices in the on-quarter improvement of of €511 ($571)/t, and rebar at an
HRC prices for the first half of 2016 United States reached a low of an approximately $71/t. The average average of €440 ($492)/t. Both the
were at €371 ($415)/t in Northern average range of $526-552/t in spot HRC price for the first half medium sections and rebar prices
Europe and €351 ($392)/t in October 2016, but then sharply of 2016 in China was $317/t VAT reached a low in October 2016,
Southern Europe, as compared increased towards the end of the excluded as compared to $344/t and started recovering through
to the first half of 2015 which year, reaching an average range VAT excluded in the first half of year end, reaching an average of
was at €405 ($453)/t in Northern of $641-655/t in December. The 2015. In China, spot HRC prices €511 ($539)/t and €454 (479)/t
Europe, and €394 ($441)/t in fourth quarter of 2016 average during the third quarter of 2016 in December, respectively. The
Southern Europe. Steel prices for spot HRC price in the United States reached an average of $348/t VAT average price for medium sections
flat products in Europe started was $586/t, or a quarter–on- excluded, representing a decrease in the fourth quarter of 2016 was
softening at the beginning of the quarter decrease of approximately of $4/t quarter-on-quarter. Prices €488 ($528)/t and €425 ($458)/t
third quarter due to the summer $64/t. The average spot HRC improved throughout the fourth for rebar. The average medium
seasonal effect, reaching a low at price in the second half of 2016 in quarter of 2016, reaching an sections price in Europe for the
€414-420 ($458-466)/t in Northern the United States was $618/t as average of $465/t VAT excluded second half of 2016 was €499
Europe and €380-400 ($426-449)/t compared to an average of $467/t in December, and an average ($549)/t as compared to €498
in Southern Europe, but improving in the second half of 2015. of $423/t VAT excluded for the ($549)/t for the second half of
towards the end of the quarter quarter, corresponding to an 2015. The average rebar price in
reaching an average price range of In China, average spot HRC prices improvement of $74/t quarter- Europe for the second half of 2016
€422-431 ($471-481)/t in Northern increased during the first quarter on-quarter. The average spot HRC was €432 ($475)/t as compared to
Europe and €394-410 ($440-458)/t of 2016 compared to the fourth price for the second half of 2016 in €389 ($430)/t for the second half
in Southern Europe for the third quarter of 2015. Domestic HRC China was $385/t VAT excluded as of 2015.
quarter of 2016. Prices continued prices went up from the January compared to $260/t VAT excluded
to increase until year end with HRC average range of $262-264/t in the second half of 2015. In Turkey, even though the
averaging at a range of €493-502 VAT excluded, to $309-312/t VAT average first quarter 2016 price of
($532-542)/t in Northern Europe excluded, in March 2016, setting During the first quarter of 2016, imported scrap HMS 1&2 at $194/t
and €468-480 ($505-518)/t in the first quarter average range long steel products saw a quarter- CFR showed a small improvement
Southern Europe, for the fourth at $280-283/t VAT excluded, as on-quarter price decline in Europe, of about $6/t against the average
quarter of 2016. The average HRC compared to an average range of with medium sections averaging of the fourth quarter 2015, the
prices for the second half of 2016 $250-252/t in the fourth quarter of at a range of €450-458 ($496- average price of March 2016 at
were at €462 ($507)/t in Northern 2015. Beginning March 2016, the 505)/t, as compared to €474-486 $218/t CFR represented a month-
Europe and €438 ($480)/t in imported 62% Fe Iron Ore price ($519-532)/t in the fourth quarter on-month increase of about $40/t.
Southern Europe as compared to significantly increased, starting of 2015. There was a similar trend The Turkish rebar export price
€353 ($389)/t in Northern Europe, with an increase of approximately in rebar prices, which were at followed a similar trend, with the
and €326 ($360)/t in Southern $10 per dry metric tonne unit (“/ an average range of €352-358 average price range for the first
Europe in the second half of 2015. dmt”) occurring in one single ($388-395)/t during the first quarter of 2016 at $333-337/t
day, after billet prices in Tangshan quarter of 2016, corresponding FOB, against $331-337/t FOB for
In the United States, spot HRC had surged by about $55/t. This to a quarter-on-quarter price the fourth quarter of 2015. The
prices increased during the first increase then spread across drop of approximately €15/t. This March 2016 export price of Turkish
quarter of 2016, from an average other steel products, which also downward trend has reversed rebar reached an average range
in December 2015 of $412/t, improved by $40-50/t. The main during the second quarter of of $361-365/t FOB (an increase
up to an average of $442/t in drivers for these increases were 2016, with medium sections of $44/t month-on-month). This
January 2016 and later to an linked to steel mills potentially improving from €467-479 ($530- upward trend continued during
average of $471/t in March 2016, bringing forward production 543)/t in April, up to €538-550 the first two months of the second
for a quarterly average of $456/t ahead of enforced production ($603-617)/t in June. Rebar prices quarter of 2016 with the export
in the first quarter of 2016. The cuts during Tangshan’s scheduled also improved from an average rebar price from Turkey reaching
second quarter of 2016 had a hosting of an international range of €389-400 ($441-454)/t in an average range of $451-457/t
strong start, with HRC prices horticultural exposition (from April, up to €487-501 ($551-567)/t FOB in April, and $472-479/t FOB
reaching an average range of April 29 to October 16, 2016), and in May, but was followed by a in May. In June 2016, rebar prices
Management report  9

reduced to an average range of ASC in the U.S. declined during supply and demand dynamics. versus previous restrictions to work
$395-403/t FOB Turkey. The second 2016, due to continued destocking Since most of the minerals used in of 276 days, logistical issues due to
quarter average export price for and a significant fall in energy the steel-making process are finite floods, which started in June 2016
Turkish rebar was $438-445/t FOB, pipe demand. Conditions have resources, they may also rise in and recovered in November 2016,
corresponding to a substantial improved and domestic prices response to any perceived scarcity disrupted the flow of material to
increase of approximately $106/t have rallied for delivery in the first of remaining accessible supplies, the final consumers.
quarter-on-quarter. The average quarter of 2017. The improvement combined with the evolution of
rebar export price from Turkey in in the HRC spread was mainly the pipeline of new exploration As for pricing mechanisms, since
the first half of 2016 was $388/t down to tight domestic supply projects to replace depleted 2012, quarterly and monthly
FOB as compared to the first half and limited availability of imports. resources. pricing systems have been the
of 2015, which was at $451/t FOB. As ASC is expected to rise in main type of contract pricing
The third quarter of 2016 average 2017, domestic production is also The spot markets for iron ore and mechanisms, but spot purchases
export price for Turkish rebar was expected to increase as some coking coal were in a downward also appear to have gained a
$375-382/t FOB, corresponding domestic capacity comes back price trend from the first half of greater share as steelmakers have
to a decrease of approximately online, and imports remain subject 2014 until the beginning of 2016. developed strategies to benefit
$63/t quarter-on-quarter. In the to anti-dumping duties. In the EU, In 2015, the downward trend from increasing spot market
fourth quarter, the export prices of steel demand continues to grow gained momentum with a slower liquidity and volatility. In 2015 and
Turkish rebar improved, averaging slowly but imports have taken a growth rate in China, recession in 2016, the trend for using shorter-
at $406-413/t for the quarter. The larger share of demand over the developing economies such as term pricing cycles continued.
average rebar export price for the past couple of years. However, Brazil and Russia, and continued
second half of 2016 from Turkey mills output should improve robust seaborne supply from Iron ore
was $394/t FOB as compared to slightly in the first half of 2017 as major miners. Between the
$361/t FOB for the second half of underlying demand from steel beginning of 2014 and the end In the first half of 2014, iron ore
2015. consuming industries continues of 2015, iron ore and coking coal spot prices declined by 31% from
to grow and import growth slows prices decreased by 61% and 37% $134.50 per tonne on January 1,
Current and anticipated trends in due to recent and potentially new respectively (Platts Q1-2014 vs. 2014 to $93.25 per tonne on June
steel production and prices trade protection, particularly flat Q4-2015). 30, 2014. This downward price
products. trend was due mainly to increasing
Steel output continued to decline Iron ore and coking coal prices supply in the seaborne market
in most major steel producing Overall, ArcelorMittal expects increased in 2016. Chinese crude and financial weakness in the
regions during the first half of world ex-China ASC growth to steel production recovered in Chinese steel sector. Credit market
2016 but the declines have been pick-up in 2017 as both NAFTA and the second quarter of 2016 and tightness combined with stretched
much less severe than during the South American markets return further stabilized in the third cash flows at Chinese mills resulted
second half of 2015 as global steel to growth, and demand in the CIS quarter of 2016 with support in a strong destocking trend at
demand stabilized year-on-year stabilizes this year after contracting
from the construction market. Chinese mills from the beginning
in the second quarter of 2016. As during 2016. This should enable The iron ore market recovered of the year through the end of the
expected, the second half of 2016 some improvement in utilization to $48 per tonne, $56 per tonne second quarter. Rising iron ore
saw steel production volumes and support the spread of steel and $58 per tonne in the first, import inventory at Chinese ports
grow year-on-year in both China prices over raw material costs. second and third quarter of 2016, was reflective of stronger seaborne
(+3.7%) and the world ex-China However, globally, ArcelorMittal respectively (quarterly averages), supply while real iron ore demand
(+2.9%) as underlying demand does not expect to see much of an with the fourth quarter of the in the Chinese off-shore market
improved and destocking waned. improvement in ASC, as Chinese year registering a 21% increase in remained relatively stable.
demand is expected to stabilize oraverage price to $70.7 per tonne
In China, in 2016, steel production decrease slightly (with expected compared to the third quarter. The downward trend continued
began increasing year-on-year growth ranging from 0% to a Hard coking coal (“HCC”) prices and reached $66-72 per tonne in
from March after a very weak start decrease of 1%) after growth of increased significantly in the third late December 2014 on continued
to the year. ArcelorMittal does not around 1.3% in 2016. However, we quarter of 2016 as spot prices structural iron ore oversupply
expect further steel production expect further capacity elimination
rose from $92 per tonne at the and persistent strains in the credit
growth in 2017; it expects instead to maintain improving utilization beginning of July to $212.50 per market in China. The average spot
that a combination of stable to rates in China during 2017. tonne on September 29, 2016. price for the fourth quarter of 2014
decreased domestic demand and This rebound was largely driven was $74.28 per tonne, or 18%
slightly weaker exports will cause Raw materials by a Chinese domestic shortage of lower than the previous quarter
production to decline slightly in coking coal as well as maintenance at $90.21 per tonne. As of end of
2017. The Chinese HRC spread The primary raw material inputs for and operational production issues January 2015, iron ore spot prices
(difference between raw material a steelmaker are iron ore, coking in Australian coking coal mines were trading in the range of $62-
costs and finished steel prices) coal, solid fuels, metallics (e.g., during the period. The price 69 per tonne (January 15-30, 2015,
fell from a peak of $210 per tonne scrap), alloys, electricity, natural rebound was further accentuated CFR China, Platts index, 62% Fe).
(“/t”) in April to $150-160/t in May gas and base metals. ArcelorMittal during the fourth quarter of 2016 The downward trend of iron ore
and June 2016 as idled capacity is exposed to price volatility in when a maximum of $310 per spot prices persisted throughout
came back on stream. However, a each of these raw materials with tonne was reached on November 2015, with quarterly averages
rebound in domestic demand and respect to its purchases in the spot 8, 2016 and the quarter closed spot prices of $62.40 per tonne
low inventory levels subsequently market and under its long-term with a spot average at $266.15 per in the first quarter of 2015,
pushed spreads (and therefore supply contracts. In the longer tonne. Despite a gradual increase $58.45 per tonne in the second
prices) back to $170/t in December term, demand for raw materials is in Chinese coal production at the quarter, $54.90 per tonne in the
and into January 2017. expected to continue to correlate mine level with selected mines third quarter and $46.65 per
closely with the steel market, with being temporarily allowed to tonne in the fourth quarter (CFR
prices fluctuating according to work at an annual rate of 330 days China, Platts index, 62% Fe). This
10  Management report

downward trend was due to Coking coal spot prices reached a low of $79 Scrap
continued structural oversupply, per tonne (FOB Australia) while
resilience of high cost mines The coking coal spot market and contract settlement for the same Scrap prices decreased
(in China and seaborne), lower quarterly contracts settlements quarter was at $93 per tonne (FOB throughout 2016 in Europe,
mining costs at major supply were negatively affected in 2014 Australia). Contract settlement where both Eurofer and German
regions (supported by currency and 2015 by the combined effects further reduced in the fourth Wirtschaftsvereinigung (“WV”)
depreciation, e. g. in Australia of strong Australian coking coal quarter of 2015, where contract indexes were discontinued as
and Brazil), lower fuel and freight production performance, a mild prices settled at $89 per tonne of January 1, 2016. The German
costs as well as bearish sentiment wet season in Australia and weaker (FOB Australia), while spot prices suppliers’ index (“BDSV”) is now
about Chinese steel demand. In seaborne demand from China. were trading in the range of $72- used and converted into Delivered
this context of oversupply, the Moreover, in the same period 77 per tonne (December 1 through at Place (“DAP”), in order to be
Samarco tailings ponds dam there was an increase of seaborne 31, 2015, FOB Australia HCC Peak comparable to WV. In Europe,
collapsed in November 2015 supply from new regions, notably Downs Platts index). the average price of E3 (old thick)
resulting in a halt of operations (a Russia and Mozambique, as well scrap in 2016 for the full year was
30 million tonne pellet capacity as productivity improvement and In 2016, the spot price (Platts €195 per tonne (WV or BDSV),
producer); however, it did not cost reductions at major producers Premium LV FOB Australia index) which was 10.1% lower than in
affect the plummeting iron ore also supported by depreciated traded on average at $76.60 per 2015 when the average price was
price trend, which continued local currencies and lower diesel tonne in the first quarter with the €217 per tonne, while in 2014 it
decreasing through the end of prices. This downward trend contract price settling at $81 per was €263 per tonne. In NAFTA, the
2015. prevailed despite some supply tonne for the same quarter; then average price of scrap in 2016 was
closures, e.g. major seaborne the second quarter of 2016 had a $208 per tonne (HMS 1 Domestic
Iron ore prices bottomed out suppliers of coking coal from contract settlement fixed at $84 MidWest), which was 4.6% lower
during the first quarter of 2016, Australia, the United States, and per tonne with the spot average than in 2015 when the average
after reaching $39.25 per tonne Canada announced the closure of for that quarter at $91.40 per price was $218 per tonne, and in
(CFR China Platts Index 62% Fe) on their least cost efficient mines in tonne while the third quarter had a 2014 it was $364 per tonne. During
January 14, 2016 and averaging order to adjust to weaker seaborne contract price settled at $92.50 per 2016, Turkish scrap import prices
$48.30 per tonne for first quarter demand and to remain cost tonne and the spot index traded decreased by 2.6% compared to
of 2016. During the second quarter competitive. These supply closures between $92 and $96 per tonne 2015 (from $234 in 2015 to $228
of 2016, the average price was were more than offset by lower for the first 15 days but averaged in 2016 per tonne: MB HMS 1&2
$55.66 per tonne and the period Chinese imports, throughout 2014- $136 per tonne for the third 80:20 CFR Turkey, North European
was marked by high volatility, 2015. Chinese coking coal imports quarter. During the fourth quarter origin), after decreasing by 34%
with a peak at $70.50 per tonne continued their decline during the of 2016, the spot price reached a in 2015 compared to an average
on April 21, 2016 and a low of period (a decrease of 21% year-on- maximum of $310 per tonne on price of $352 per tonne in 2014.
$49.30 per tonne on June 2, 2016. year in 2014 and a decrease of 21% November 8, 2016 and decreased
For the third quarter of 2016, the for January to November 2015 vs. through the closing of the year Scrap imports into Turkey, after
average was $58.60 per tonne January to November 2014, Tex to $230 per tonne on December a decrease of 14.7% in 2015 as
with a slight downward trend Report January 5, 2016), while 30, 2016, the average spot price compared to 2014, increased in
throughout September. During the an increased share of imports for the fourth quarter of 2016 was 2016 by 6.0% as compared to
fourth quarter of 2016, CFR China, from Australia at the expense of $266.10 per tonne with quarterly 2015. This was, to some extent, a
Platts’ Index 62% Fe, increased other seaborne suppliers, mainly contract prices settled at $200 per consequence of Turkey’s drop in
from a minimum of $54.85 per from the U.S. bearish market tonne. The highly volatile spot sourcing iron ore based materials
tonne on October 4, 2016 and price forecasts, combined with index over the second half of 2016 (semifinished: slabs and billets),
reached a maximum of $83.95 successive loss-making quarters was influenced by the Chinese which fell by 5.3%. Imports of
per tonne on December 12, 2016, partially originated from high domestic supply reduction billets were sourced from Russia,
the average for the fourth quarter debt service obligations (following (originating from weather/logistic Ukraine and China, at similar
was of $70.76 per tonne and was past acquisitions), forced several issues combined with regulations proportions. The world’s second
marked by high volatility and U.S. coal producers, to file chapter issued by the Chinese government and third scrap importers were
bullish market sentiment driven 11 bankruptcy in 2015 in order on lower mining working days, India (41% of Turkish imports)
by higher steel prices as well as to restructure their finances and from an annual rate of 330 days and South Korea. China takes
closure announcements by the operations. per year to a lower rate at 276 eleventh place and decreased
Chinese authorities in steelmaking days, with temporary relief as its imports of scrap by 14.3%
based on obsolete induction The first half of 2015 experienced described above) as well as in 2016 as compared to 2015,
furnaces using mostly scrap as raw sharp spot price and contract several maintenance and mining after decreasing 9.2% in 2015 as
materials. reference price reductions, with operational issues in Australian compared to 2014. This is mainly
a widening gap in the second coking coal mines during that due to a preference for iron ore,
ArcelorMittal has continued to quarter between both references period. plus the use of domestic scrap (no
leverage its diversified supply (spot indexes and quarterly exports recorded in 2014, 2015
portfolio and global footprint, contract settlement), as quarterly ArcelorMittal has continued to or 2016). Regarding countries
as well as mitigating the effect contract references settled at leverage its full supply chain and exporting scrap, the United States
of consolidation among supply $117 per tonne (FOB Australia) diversified supply portfolio as well continued to take the lead but
sources in 2016, mainly due to and $109.50 per tonne for the as contractual terms flexibility with a continuous downward
the absence of Samarco in the first and second quarters of to mitigate regional supply trend to 11.6 million tonnes in
seaborne market. 2015, respectively. Spot prices disruptions and also mitigate part 2016, after declining to 13.0 million
for such quarters averaged $104 of the market price volatility. tonnes in 2015 from 15.3 million
per tonne and $87 per tonne, tonnes in 2014, as a result of better
respectively. In the third quarter economic activity, which is to say,
of 2015, premium coking coal strong demand, plus a favorable
Management report  11

euro to U.S. dollar exchange rate, The relatively low scrap prices have tonne on January 12, 2016 and at approximately $39/MWh, a 6%
discouraging traditional exports to made the EAF process profitable the high was $2,907 per tonne on increase compared to 2016 spot
Turkey. as compared to the iron ore based November 28, 2016. The global power prices.
processes, since September 2016. zinc metal market was in a deficit
In Europe, the WV index has Subsequently, increased scrap of 277,000 tonnes in the first 10 The general commodity bearish
oscillated in 2016 along quarters prices, demand and corrections on months of 2016 (production vs. mood brought the electricity
at €168 per tonne, €218 per tonne, other raw material prices reduced usage), from 213,000 tonnes of price below €30/MWh at the end
€186 per tonne and €207 per the gap to the balanced situation surplus during the same period of 2015 in most of the Western
tonne for the first, second, third in January 2017. of 2015. Stocks registered at the countries, representing a drop
and fourth quarters, respectively. London Metal Exchange (“LME”) between €5 and €8/MWh or an
A monthly minimum was recorded Ferro alloys and base metals warehouses stood at 427,850 approximate 20% price reduction
in February at €159 per tonne, tonnes as of December 31, 2016, since November 2015. At the
with a recovery to a maximum Ferro alloys4 representing a decrease of 8% end of the first quarter of 2016,
in May at €252 per tonne. In the compared to December 31, 2015 prices began to increase due
third quarter of 2016, the price The underlying price driver for when stocks registered stood at to pressure on the commodity
remained stable at €186 per manganese alloys is the price of 464,400 tonnes (691,600 tonnes market (especially regarding coal,
tonne with a recovery by the end manganese ore which was at the in 2014). power), as well as physical storage
of the year to €222 per tonne in level of $4.30 per dry metric tonne and production constraints (gas
December. In NAFTA, the HMS 1&2 unit (“dmtu”) (for 44% lump ore) The average price of tin for storage technical constraints,
FOB index reacted consistently on Cost, Insurance and Freight 2016 was $18,006 per tonne, reduction of gas production
with Europe, with prices in 2016 at (“CIF”) China for 2016, representing representing an increase of 12% in Groningen gas fields in the
$179 per tonne in the first quarter, an increase of 38% from $3.11 compared to the 2015 average Netherlands and low nuclear
up to $274 per tonne in the second per dmtu in 2015 ($4.56 per dmtu of $16,070 per tonne (the 2014 availability in Belgium, Germany
quarter, $210 per tonne in the third for 2014) mainly due to supply average was $21,893). and France).
quarter and a final increase to $240 disruptions in South Africa and
per tonne in the fourth quarter. Australia and sustained demand of The average price of aluminum Forward calendar year 2017
manganese ore from China. for 2016 was $1,605 per tonne, electricity prices increased by
Scrap import prices have evolved representing a decrease of 3% 43% in Belgium (from €28/MWh
differently throughout 2016 as The 2016 prices of high carbon compared to the 2015 average in March 2016 to above €40/MWh
compared to 2015. In Europe, ferro manganese increased of $1,661 per tonne (the 2014 for the last quotation of 2016 for
average international scrap prices compared to the prior year by average was $1,867). calendar forward 2017), 54% in
decreased by 2.6% from $234 2% from $942 to $965 per tonne. France (from €26/MWh in March
per tonne to $228 per tonne (MB Prices of silicon manganese The average price of nickel for 2016 to above €40/MWh for the
HMS 1&2 80:20 CFR Turkey, North decreased compared to the prior 2016 was $9,609 per tonne, last quotation of 2016) and 59%
European origin). For NAFTA year by 2% from $1,009 to $992 representing a decrease of 19% in Germany (from €21.50/MWh
origin scrap, the average price in per tonne ($1,222 per tonne for compared to the 2015 average in March 2016 to above €34.30/
2016 was $225.2 per tonne (HMS 2014). Prices for medium carbon of $11,834 per tonne (the 2014 MWh for the last quotation of
1&2 FOB East Coast) which was ferro manganese decreased in average was $16,867). 2016). This strong price increase
0.4% higher than in 2015 when 2016 compared to the prior year was mainly due to the non-
the average price was $224.4 per by 6.07% from $1,465 to $1,376 Energy market planned unavailability of 20%
tonne. per tonne ($1,686 per tonne for of French nuclear fleet by cause
2014). Electricity of high carbon concentration
Turkish scrap import volumes found in steam generators. Since
were 16.1 million tonnes in the Base metals5 In most of the countries where then, French nuclear watchdog
first eleven months of 2016 ArcelorMittal operates, electricity lifted must of the restrictions,
representing an increase of 10.7% Base metals used by ArcelorMittal prices have moved in line with easing tensions in France and
compared to same period in 2015, are zinc, tin and aluminum other commodities. In North neighboring countries.
taking advantage of lower scrap for coating, aluminum for America, the continuous pressure
prices. Turkish imports of billets deoxidization of liquid steel and on oil brought the natural gas Since the beginning of January
were 4.3 million tonnes in 2016 nickel for producing stainless price down approximately 4% 2017, Brent oil prices are moving
from January to November as or special steels. ArcelorMittal during 2016 and spot prices in in the range of $53/barrel (“bbl”)
compared to 4.1 million tonnes partially hedges its exposure to its the PJM electricity market for and $56/bbl, as compared with
in the same period of 2015, an base metal inputs in accordance the full year 2016 have seen a $36.70/bbl at the end of December
increase of 4.9%. Turkey remains with its risk management policies. reduction of approximately 17% 2015, partially due to strong
the main scrap buying country (from $43.1/Megawatt (“MWh”) bullish sentiments regarding an
in the international market and The average price of zinc for down to $36.7/MWh) as compared agreement between OPEC’s 14
approximately 66% of its steel 2016 was $2,095 per tonne, to the full year 2015 spot price. oil producing nations. According
production is based on the EAF representing an increase of 9% Looking forward to 2017 prices, to a communication made on
process, with the other 34% as compared to the 2015 average recent oil price increases, higher September 28, 2016, OPEC agreed
through the Blast Furnace route. of $1,928 per tonne (the 2014 gas demand for power production to slightly reduce their global
Turkey’s crude steel production average was $2,164 per tonne). and fewer gas rigs have put output at the end of 2016 in an
increased by 4.8% in the first The low for 2016 was $1,454 per pressure on gas prices (84% gas attempt to avoid price volatility
eleven months of 2016 (30.3 price increase comparing spot due to high stock levels and
million tonnes) as compared to the Prices for high grade manganese ore
4
price in first quarter 2016 versus resilience of U.S. shale oil.
are typically quoted for ore with 44%
first eleven months of 2015 (28.9 manganese content. the expected in the first quarter of
million tonnes). 5
Prices included in this section are 2017). Currently, the calendar year
based on the London Metal Exchange 2017 electricity prices are quoting
(LME) cash price.
12  Management report

The electricity price crash that traded on the NYMEX exchange the United States, unconventional the second half of 2014 as a result
occurred at the end of 2015 and or over-the-counter. Elsewhere, gas production proved more of increased Brazilian shipments,
beginning of 2016 should have prices are set on an oil derivative or than robust despite low oil prices however, the recovery never
accelerated decisions to mothball bilateral basis, depending on local and the continuous drop in gas materialized and Chinese demand
unprofitable production units (coal market conditions. International market prices. A record buildup waned. As a result, rates primarily
and gas power plants) but existing oil prices are dominated by global of gas in storage has materialized remained at low levels throughout
market volatility, mainly caused by supply and demand conditions during the 2015/2016 winter with the second half of 2014, with
the reduced availability of nuclear and are also influenced by a surplus of approximately 6.5% as only small periods of temporary
power plants in France and a geopolitical factors. compared to the five year average strength. Ocean freight market
coal shortage due to the Chinese (decreasing the risk premium for rates for dry cargo remained low
decision to reduce domestic coal In 2015 and 2014, the LNG winter months). Current shale for the majority of 2015, primarily
production, will potentially delay market continued to grow in gas production remains at nearly due to a fall in coal and iron ore
or cancel this trend due to higher Asia, although at a slower pace maximum levels of around 43 imports and the fall in oil prices.
prices in the market. than in 2013. Excess supply is billion cubic feet per day.
developing in that market as Ocean freight market rates for dry
The reduction in Chinese domestic new liquefaction capacities are U.S. steam coal continues to be cargo remained low but volatile
coal production during 2016 coming on stream or ramping challenged as a fuel to produce during 2016. The Baltic Dry Index
has spurred a sharp increase in up from Australia, Papuasia and power. Gas power plants are taking (“BDI”) reached its lowest value
imports in China, which in turn Malaysia. US LNG initiated its first the lead and increasing their historically in February 2016 at 290
has driven coal seaborne prices shipments to Europe in 2016 and market share (an increase of 9%) points but recovered through the
in both the Pacific and Atlantic will continue to further escalate in the production mix which could year driven by heavy demolition
to multi-year highs. If nuclear its liquefaction capacity during trigger volatility during summer of ships and an increase in Chinese
capacity availability is clarified and 2017 and onwards. This increase periods if there are heat waves. demand in the fourth quarter of
coal production in China increases, will probably not be fully absorbed Projects to build liquefaction 2016. The BDI averaged 673 points
the market price will continue to due to the economic slowdown facilities for export to Europe or in 2016 (2015: 718, 2014: 1,105).
be inconsistent with the need of and will allow higher shipments Asia continue to be developed, The Baltic Capesize (5 time charter)
more flexible power generation to Europe (compounded by the with production started in early averaged $7,388/day (2015:
required to cope with increasingly fact that Japanese nuclear power 2016 and potentially pushing U.S. $8,127/day, 2014: $14,842/day).
intermittent renewables capacity. plants have slowly initiated the gas prices up to keep up with the Panamax time charter averaged
This is fueling “capacity market” ramp-up in generating power). new export demand. $5,562/day (2015: $5,561/day;
debates and other market The expected high number of 2014: $7,718/day).
mechanisms that could be LNG shipments in Europe has fully The number of U.S. gas rigs
needed to guarantee the required erased the bullish market effect continues to significantly decline Total major bulk demand grew in
investments ensuring security of of the lack of flexibility that was year on year in all zones, mainly 2016 as compared to 2015, when
supply. lost in 2015 when the production due to low oil prices putting there was a small contraction
of Groningen, a giant natural gas pressure on local gas production due to a fall in coal and iron ore
Natural gas field located in the Netherlands, areas. Such tension may be imports. In 2016, iron ore trade
was reduced due to repeated masked in the market, however, growth was driven by an increase
Natural gas is priced regionally. earthquakes. by gas storage levels above five in Chinese iron ore imports (a
European prices were historically year averages. If colder than record 1,018 million tonnes)
linked with petroleum prices Asian oil indexed LNG prices average temperatures materialize mainly due to cuts to the country’s
but continuous spot market (JKM) continue dropping (from for the winter of 2016-2017, price domestic iron ore output in 2016.
development and increasing $18 down to $7.50/MM British volatility is likely as the market Global seaborne iron ore trade
liquidity are now prevailing in thermal unit (“BTU”) during 2015 equilibrium may change towards is expected to increase in 2017,
almost all countries except in and below $6/MMbtu for spot a less comfortable supply/demand due to an increase in iron ore
poorly integrated markets (e.g., LNG cargos in October 2016), scheme. shipments from Australia and
Spain, Portugal) or markets in closing the arbitrage window Brazil to China and increased
transition from a tariff based between Europe and Asia. Since Ocean freight6 shipments into Europe and other
system (e.g., Poland). With the beginning of January, spot Asian countries. Coal trade fell,
increasing liquid natural gas prices for delivery in February have The shipping market generally driven by a fall in coking coal
(“LNG”) flows in Spain, a definitive increased in Asia, reaching close to exceeded expectations in the first shipments into the EU. However,
movement towards a more liquid $10/MMbtu. This is increasing the half of 2014, in a period which is compared to 2015, the rate of
and integrated market could be arbitration window for U.S. LNG, usually known to endure seasonal decline was lower due to an
experienced in 2017. reducing the number of cargo’s restrictions, due to strength seen increase in Chinese imports. The
arriving in Europe with the fallout in Australian exports. Total iron ore rate of net fleet growth slowed
This trend is reducing the of higher prices in Europe. imports by China were up 19% in 2016 as consistent with 2015,
correlation and sensibility of the year on year, as iron ore prices there was an increase in scrapping
Western European market to oil The premium related to the risk dropped. However, coal and other of older vessels due to the low
price volatility. As an example, of gas flow disruption between sectors such as grain did not see market.
the gas auction of Gazprom in Ukraine and Russia has reduced. In as much growth and especially
September 2016 was again based addition, Ukraine continues to buy as congestion eased, the result Impact of Exchange Rate
on market prices and not oil gas from Western Europe in order was improved vessel turnaround Movements
indexation, as market prices were to fulfill its storage requirement and increased efficiency in ports.
considered better indicators. North of 17 bcm (billion cubic meters) Rates were expected to recover in During 2014, mainly two
American natural gas prices trade to cover domestic consumption 6 Sources: CTM, Clarksons Shipping different periods and market
independently of oil prices and are and guarantee stable gas transit Intelligence network & Dry bulk trade conditions were seen. Aside from
set by spot and future contracts, to Europe during winter. In 2015 in outlook, Fearnleys sector report dry the Ukrainian Hryvnia and the
bulk.
Management report  13

Kazakhstani tenge devaluations the expectation of an ambitious 2016, it had depreciated to 673.76 Steel Consumption (“ASC”) has
against the U.S. dollar, in the fiscal and investment program. against the U.S. dollar. increased over 10% while, over the
beginning of 2014, there was a As a consequence, the euro same period, finished steel imports
low volatility period where the €/$ depreciated against the U.S. dollar Because a substantial portion have increased 67%, taking market
exchange rate remained within the to 1.0541 at the end of 2016 from of ArcelorMittal’s assets, share from domestic producers.
range of 1.35 - 1.40 and emerging 1.0898 at the start of the year, liabilities, sales and earnings
countries started their recovery further driven by the reduction are denominated in currencies Traditionally, imports into Europe
with evidence of adjustments. of the monthly asset purchase other than the U.S. dollar (its have come from CIS countries,
However, at the end of the second program from the European reporting currency), ArcelorMittal China, Turkey and developed Asia,
quarter of 2014, geopolitical Central Bank. has exposure to fluctuations in accounting for roughly 75% of
conflicts, monetary policy the values of these currencies imports over the past five years.
divergence, very low oil prices as Following the U.S. elections, the relative to the U.S. dollar. These Imports from the CIS remained
well as strong demand for the U.S. Mexican peso was impacted currency fluctuations, especially broadly stable in 2016 at a share of
dollar started to have a negative heavily by the threats of free trade the fluctuation of the U.S. dollar almost 30%, while the contribution
impact on a number of currencies, agreement renegotiations, as relative to the euro, as well as of Chinese origin imports fell
especially in jurisdictions where Mexico’s first commercial partner fluctuations in the currencies during 2016 from a peak of 29% in
ArcelorMittal operates. is by far the U.S. The Mexican peso of the other countries in which 2015 to 22% as shipment volumes
ended 2016 at 20.6545 against the ArcelorMittal has significant declined to approximately 6
In 2015, the currency landscape U.S. dollar compared to 17.3750 operations and sales, can have a million tonnes down from 7.2
was reshaped. Supported by a at the beginning of the year. As a material impact on its results of million in 2014. The share of other
robust labor market and resilient result of the possible removal of operations. In order to minimize its traditional importers into Europe
growth figures, the strength of sanctions against Russia following currency exposure, ArcelorMittal such as developed Asia and Turkey
the U.S. dollar was confirmed in the U.S. elections and the rebound enters into hedging transactions to have seen their market share
December 2015 by the first rate in oil prices, the Russian rouble lock-in a set exchange rate, as per pickup in 2016 to 12% and 10%
increase by the Federal Reserve appreciated during the year from its risk management policies. respectively as imports from China
after a seven year period of a “zero 73.1086 to 60.9999 against the U.S. have fallen. While imports from
interest rate policy.” The situation dollar. Trade and Import Competition Iran remained around 4% of total
in the U.S. contrasted strongly with imports in 2015 and 2016, this is
the eurozone, where the European In Brazil, the market welcomed Europe7 up significantly from under 1%
Central Bank’s (the “ECB”) the impeachment process prior to 2014.
quantitative easing program where charges of administrative During 2014, finished steel imports
increased in intensity throughout misconduct and disregarding the increased by 19.9% year-on-year United States8
the year. This, alongside federal budget were raised against to around 22.0 million tonnes with
disappointing data on production President Dilma Rousseff. The pro- growth mainly from shipments Imports rose significantly in 2014
activity and inflation, put pressure reform transitory government was originating from CIS and China. to 30.6 million tonnes. In the same
on the euro, which started the year positively received by investors Though finished steel demand also year, penetration increased to
at 1.21 and ended the year at 1.09 and during 2016, the Brazilian strengthened, growth was slower 28.4%, despite an 11.8% increase
against the U.S. dollar. real strengthened from 4.0395 to than imports at approximately in apparent steel demand as
3.2544 against the U.S. dollar. The 5% year-on-year. As a result, the overall steel imports were up
During the first half of 2016, the South African rand also benefited import penetration rate for 2014 37.9%.
foreign exchange market was from an improved political context rose to 15.1%.
turbulent, resulting in capital and strengthened to 13.7150 from In 2015, finished steel imports
outflow from China and the 15.5586 against the U.S. dollar In 2015, strengthening industrial fell 6.7% to 28.6 million tonnes,
weakening of the Chinese yuan during the same period. activity in Europe led to a 2% from a post-crisis peak of 30.6
against the U.S. dollar. Quantitative increase in real steel demand. million tonnes in 2014. However,
easing programs were enhanced in The Kazakhstani tenge leveled However, the slowdown in global due to the significant weakness
Japan and Europe where inflation off after a period of high volatility steel consumption coupled with in apparent steel demand, import
continued to be below the central (with a high of 388.5 and a low excess capacity in China led to penetration actually increased to
banks’ expectations. The ECB of 336.5 during the first quarter increased finished steel shipments over 29%, from 28.4% in 2014 and
increased monthly asset purchases of 2016) following the free float into Europe, rising to around 25.2 an average of 22.5% between 2007
to €80 billion and extended the regime introduction in August million tonnes, as domestic prices and 2013.
purchases to safe corporate bonds, 2015, and during the rest of 2016, remained relatively attractive.
while short-term interest rates it remained around 330 to 340 As a result, imports penetration
During 2016, imports were
further decreased. against the U.S. dollar. increased to over 16%. relatively stable at 1.9 million
tonnes per month during the
The outcome of the Brexit On February 17, 2016, the Although underlying steel demand first half of the year and 2 million
referendum triggered a move Venezuelan government devalued remained healthy during 2016, tonnes per month during the
toward safety trades that its currency by changing the ArcelorMittal estimates imports second half of the year. Import
prompted U.S. dollar strength, official rate of the bolivar fuerte penetration increased to 17.5% as levels were similar to the second
supporting the trend towards from 6.3 to 10 per U.S. dollar. It third country imports into Europe half of 2015, but down significantly
lower interest rates in the G10 also announced the elimination increased by approximately 18% from the peak levels of around 2.7
countries. This risk-off climate of the SICAD rate and starting year-on-year. This continues a million tonnes per month from
was confirmed later with the U.S. February 18, 2016, the SIMADI trend of imports growing more May 2014 to April 2015 driven
presidential campaign; however, rate (renamed DICOM) was strongly than domestic demand, by healthy domestic demand,
a sharp reversal of the market allowed to float freely at a rate of between 2012 and 2016 Apparent 8 Source: U.S. Department of
sentiment followed Donald approximately 203 bolivar fuerte 7
Source: Eurostat trade data to Commerce, customs census data up to
Trump’s election, triggered by per U.S. dollar. At December 31, November 2016, estimates for November 2016 and import licenses for
December 2016. December 2016.
14  Management report

restocking activity and attractive Consolidation in the steel and In Europe, Tata Steel and Key indicators
prices in the U.S. relative to mining industries Thyssenkrupp have confirmed
international markets. that they are in discussions for the The following discussion and
Consolidation transactions consolidation of their European analysis should be read in
Overall, 2016 finished steel decreased significantly in terms of steel mills. Thyssenkrupp had been conjunction with ArcelorMittal’s
import penetration fell to 25.4% number and value in the past three signaling its interest in combining consolidated financial statements
as imports fell 17% year-on-year years in the context of economic its European steel operations included in this annual report.
to 23.8 million tonnes in 2016, uncertainties in developed with those of another steel entity.
amid continued destocking economies combined with a In November 2016, Tata Steel ArcelorMittal reports its operations
and weak energy pipe demand slowdown in emerging markets. announced it reached a deal to in five reportable segments:
causing pipes and tubes imports However, in an effort to reduce the sell its UK specialty steel business NAFTA, Brazil, Europe, ACIS and
to decline around 35% last year. In worldwide structural overcapacity, to industrial metals firm Liberty Mining. The key performance
comparison, long product imports some consolidation steps might House Group. In addition, during indicators that ArcelorMittal’s
decreased by only 8% over the finally happen in 2017, specifically 2016, Tata sold its European Long management uses to analyze
peak levels seen last year, while in China and in Europe. Products division, mostly based operations are sales, average steel
flat products declined by around in the U.K., to Greybull Capital selling prices, steel shipments,
15% year-on-year reflecting the Steel industry consolidation and two steel mills in Scotland iron ore and coal production and
imposition of anti-dumping has slowed down substantially to Liberty House. Finally, at the operating income. Management’s
duties against a number of in China since 2012. As a key end of June 2016, ArcelorMittal analysis of liquidity and capital
major exporters of hot rolled flat initiative of the Chinese central and Marcegaglia announced they resources is driven by operating
products. government’s five-year plan issued have submitted an offer for the cash flows.
in March 2011, the concentration acquisition of Ilva, Europe’s largest
Total imports into the U.S. process of the steel industry was steel plant, located in Taranto,
(including semis) from other expected to reduce overcapacity, Italy. On February 22, 2017,
NAFTA countries (Canada and rationalize steel production Thyssenkrupp AG announced it
Mexico) in 2016 were similar to based on obsolete technology, would sell its Brazilian steel plant
2015 levels, accounting for an improve energy efficiency, achieve to Ternium SA for €1.26 billion
increased share of total imports at environmental targets and ($1.33 billion) and that it remained
over 25%. This meant that imports strengthen the bargaining position in talks with several parties about
from outside NAFTA fell more of Chinese steel companies in price a tie-up for its European steel
sharply, declining almost 20%, negotiations for iron ore. However, division.
with the bulk from developed that initiative is yet to produce
Asia, Brazil and EU accounting significant tangible results. In Going forward, any further
for around 50% of total imports. 2015, China dropped its target consolidation should foster
However, trade measures against objective for the top ten Chinese the ability of the steel industry
China have resulted in shipments steel producers to account for to maintain more consistent
declining over 60% accounting 60% of national production and performance through industry
for fewer than 3% of imports, for at least two producers to reach cycles by achieving greater
down from over 6% in 2015 and 100 million tonne capacity in the efficiencies and economies of
a peak of 10% in 2014. The CIS next few years. A new industry scale, and should lead to improved
origin imports remained broadly consolidation plan published by bargaining power relative to
stable due to pre-existing trade China aims at simplifying approval customers and, crucially, suppliers,
restrictions against Russia and procedures and facilitating which tend to have higher levels of
Ukraine. However, ASEAN’s acquisition financing for firms in consolidation.
contribution to U.S. imports more sectors like steel. In June 2016,
than doubled in 2016, to over Baosteel Group and Wuhan Iron
3.5% from around 1% in 2015, in and Steel Group announced the
particular due to shipments from launch of merger negotiations.
Vietnam, which increased 330%. Globally, the former ranked fifth
in terms of crude steel production
in 2015, while the latter placed
11th. After the state-controlled
companies integrate their
operations, they will become the
world’s No. 2 steelmaker. During
the second half of 2016, the
Chinese government approved
and finally endorsed the merger of
Baosteel and Wuhan Iron and Steel
to form a combined entity with
annual production capacity over
60 million tonnes. The new entity
will be called China Steel Baowu
and is expected to boast capacity
larger than Germany and Britain
combined.
Management report  15

Years ended December 31, 2016, 2015 and 2014

Sales, operating income, crude steel production, steel shipments, average steel selling prices and mining production

The following tables provide a summary of ArcelorMittal’s performance by reportable segment for the year ended December 31, 2016, 2015 and
2014:
Sales for the year ended December 31,1 Operating income for the year ended December 31,2
2016 2015 2014 2016 2015 2014
Segment (in $ millions) (in $ millions) (in $ millions) (in $ millions) (in $ millions) (in $ millions)
NAFTA 15,806 17,293 21,162 2,002 (705) 386
Brazil 6,223 8,503 10,037 614 628 1,388
Europe 29,272 31,893 39,552 1,270 171 737
ACIS 5,885 6,128 8,268 211 (624) 95
Mining 3,114 3,387 4,970 366 (3,522) 565
Others and eliminations (3,509) (3,626) (4,707) (302) (109) (137)
Total 56,791 63,578 79,282 4,161 (4,161) 3,034
1
Amounts are prior to inter-segment eliminations (except for total) and sales include non-steel sales.
2
Others and eliminations to segment operating income reflects certain adjustments made to operating income of the segments to reflect corporate costs, income from non-steel
operations (e.g. energy, logistics and shipping services) and the elimination of stock margins between segments. See table below.

Year ended December 31,


2016 2015 2014
Adjustments to segment operating income and other (in $ millions) (in $ millions) (in $ millions)
Corporate and shared services 1 (71) (10) (132)
Financial activities (17) (20) (16)
Shipping and logistics (97) (84) (30)
Intragroup stock margin eliminations 2 (94) 31 109
Depreciation and impairment (23) (26) (68)
Total adjustments to segment operating income and other (302) (109) (137)
Includes primarily staff and other holding costs and results from shared service activities. In 2015, Corporate and shared services includes the sale of corporate assets.
1

In 2016, as compared to 2015, margins increased mainly as a result of the recovery of iron ore prices and cost reductions leading to an increase in intragroup-margin eliminations.
2

Sales ArcelorMittal had sales of Cost of sales intangible assets for $4.8 billion
$63.6 billion for the year ended partially offset by a decrease in
ArcelorMittal had sales of December 31, 2015, representing Cost of sales consists primarily depreciation and foreign exchange
$56.8 billion for the year ended a 19.8% decrease from sales of of purchases of raw materials impacts due to the appreciation
December 31, 2016, representing $79.3 billion for the year ended necessary for steel-making (iron of the U.S. dollar against the
a 10.7% decrease from sales of December 31, 2014, primarily ore, coke and coking coal, scrap major currencies. Selling, general
$63.6 billion for the year ended due to lower average steel selling and alloys), electricity, repair and and administrative expenses
December 31, 2015, primarily prices which were down 19.7%, maintenance costs, as well as (“SG&A”) were $2.2 billion for the
due to lower average steel selling lower seaborne iron ore reference direct labor costs, depreciation year ended December 31, 2016
prices which were down 9.0% prices which were down 43% and impairment. Cost of sales compared to $2.5 billion for the
and lower marketable iron ore and lower steel shipments which for the year ended December year ended December 31, 2015.
shipments which decreased by decreased by 0.6%, partially offset 31, 2016 was $50.4 billion as SG&A as a percentage of sales
16.6%, partially offset by higher by higher market priced iron ore compared to $65.2 billion for remained stable for the year ended
seaborne iron ore reference prices shipments which were up by 1.4%. the year ended December 31, December 31, 2016 (3.9%) as
by 5.3%. Steel shipments for the In the first half of 2015, sales of 2015. Cost of sales for the year compared to 2015 (4.0%).
year ended December 31, 2016 $34.0 billion represented a 16.1% ended December 31, 2016 was
remained stable as compared decrease from sales of $40.5 billion positively affected by decreased Cost of sales for the year ended
to shipments for the year ended in the first half of 2014, primarily input costs, cost optimization December 31, 2015 was $65.2
December 31, 2015. In the first due to 18% lower average steel efforts as part of the Action 2020 billion as compared to $73.3 billion
half of 2016, sales of $28.1 billion selling prices and 46% lower plan and a one-time gain of $832 for the year ended December 31,
decreased 17.2% from sales of seaborne iron ore reference prices, million on employee benefits 2014. Cost of sales for the year
$34.0 billion in the first half of partially offset by a 3% increase in following the signing of the ended December 31, 2015 was
2015, primarily due to 17% lower steel shipments and a 2% increase new U.S. labor contract, partially negatively affected by an increase
average steel selling prices, 14% in marketable iron ore shipments. offset by impairments in the ACIS in impairment on tangible and
lower seaborne iron ore reference In the second half of 2015, sales of segment for $156 million mainly intangible assets for $4.8 billion
prices and a 13% decrease in $29.6 billion represented a 24.0% related to the Vanderbijlpark plant partially offset by a decrease in
marketable iron ore shipments. decrease as compared to sales of in South Africa and $49 million depreciation and foreign exchange
In the second half of 2016, sales $38.8 billion in the second half of impairment charge related to the impacts due to the appreciation
of $28.7 billion represented a 2014, primarily driven by a drop held for sale classification of the of the U.S. dollar against the
3.1% decrease as compared to in average steel prices of 21.6% ArcelorMittal Zaragoza facility in major currencies. Selling, general
sales of $29.6 billion in the second and a decrease of 4.4% in steel Spain. Cost of sales for the year and administrative expenses
half of 2015, primarily driven shipments. ended December 31, 2015 was (“SG&A”) were $2.5 billion for the
by a decrease of 1.1% in steel negatively affected by an increase year ended December 31, 2015
shipments. in impairment on tangible and compared to $3.0 billion for the
16  Management report

year ended December 31, 2014. $3.9 billion related to tangible and and $0.4 billion primarily in tonnes for the year ended
SG&A increased as a percentage intangible assets, of which $2.5 connection with the idling for an December 31, 2015, primarily due
of sales to 4.0% of sales for the billion was in respect of iron ore indefinite time of the ArcelorMittal to declines in Brazil (6.8%) and
year ended December 31, 2015 as mining operations at ArcelorMittal Sestao plant in Spain (Europe Europe (1.1%), partially offset by
compared to 3.7% for 2014. Liberia ($1.4 billion), Las Truchas in segment). Operating loss in 2015 increases in ACIS (6.3%).
Mexico ($0.2 billion), ArcelorMittal also included negative impacts
Operating income or loss Serra Azul in Brazil ($0.2 billion) due to inventory related losses ArcelorMittal had steel shipments
and coal mining operations at of $1.3 billion following the of 84.6 million tonnes for the
ArcelorMittal’s operating income ArcelorMittal Princeton in the rapid decline of international year ended December 31,
for the year ended December United States ($0.7 billion) mainly steel prices and litigation costs 2015, decreased by 0.6% as
31, 2016 was $4.2 billion as due to a downward revision of of $0.1 billion in South Africa. compared to steel shipments of
compared with an operating loss cash flow projections relating See note 5 to the consolidated 85.1 million tonnes for the year
of $4.2 billion for the year ended to the expected persistence of financial statements for the critical ended December 31, 2014. Steel
December 31, 2015. Operating a lower iron ore and coking coal accounting policies and uses of shipments increased 3% in the
income was positively affected by price outlook. Management judgments and estimates related first half of 2015 as compared to
a one-time gain of $832 million performed its quarterly analysis to the impairment of tangible the first half of 2014, but then
on employee benefits following of impairment indicators in the and intangible assets, including decreased 4.4% in the second half
the signing of the new U.S. labor context of high volatility in the goodwill. of 2015 as compared to the second
contract and partially offset by raw material prices during 2015 half of 2014, primarily due to lower
an impairment charge of $49 and concluded that impairment Operating income was $1.2 billion volumes in NAFTA.
million related to the held for sale indicators existed in the fourth for the first nine months of 2015
classification of the ArcelorMittal quarter of 2015 as a result of the as compared to $2.5 billion for Average steel selling price
Zaragoza facility in Spain and expected persistence of lower the same period in 2014, while decreased by 9.0% for the year
an impairment charge of $156 long term prices and strategic the operating loss in the fourth ended December 31, 2016 as
million mainly related to the decisions. ArcelorMittal also quarter of 2015 was $5.3 billion as compared to the year ended
Vanderbijlpark plant in South recorded impairment charges compared to operating income December 31, 2015. Average steel
Africa. Operating loss in 2015 was of $0.3 billion, $0.3 billion and of $0.6 billion for the same period selling price in the first half of 2016
negatively affected by impairment $0.2 billion with respect to the in 2014. The fourth quarter of decreased by 17% as compared to
charges of $4.8 billion as described Saldanha plant in ArcelorMittal 2015 was impacted by all of the first half of 2015 and increased
below and $1.4 billion charges South Africa (ACIS) as a result of the impairments and charges by 0.5% in the second half of 2016
mainly related to the inventory its revised competitive outlook, mentioned above and $0.8 billion as compared to the second half of
losses following the rapid decline Indiana Harbor East and West of inventory related losses (with 2015.
of international steel prices. in the United States (NAFTA) in $0.5 billion of inventory related
connection with the deployment losses recorded in the third quarter
Average steel selling price
ArcelorMittal’s operating loss for of asset optimization programs of 2015). decreased by 19.7% for the year
the year ended December 31, 2015 and the idled ArcelorMittal Point ended December 31, 2015 as
was $4.2 billion as compared with Lisas facility in Trinidad and Tobago Shipments and average steel compared to the year ended
operating income of $3.0 billion (Brazil segment), respectively. In selling price December 31, 2014. Average steel
for the year ended December 31, addition, the Company recorded selling price in the first half of 2015
2014. Operating loss in 2015 was impairment charges of $0.2 billion ArcelorMittal had steel shipments decreased by 18% as compared to
negatively affected by impairment with respect to the intended sale of 83.9 million tonnes for the the first half of 2014 and decreased
charges of $4.8 billion including of the Long Carbon facilities in year ended December 31, 2016 by 21.6% in the second half of
$0.9 billion with respect to the the United States (ArcelorMittal decreased marginally as compared 2015 as compared to the second
Mining segment goodwill and La Place, Steelton and Vinton) to steel shipments of 84.6 million half of 2014.
NAFTA Performance for the year ended December 31,
in millions of USD unless otherwise shown) 2016 2015 2014
Sales 15,806 17,293 21,162
Depreciation 549 616 706
Impairments - 526 114
Operating income / (loss) 2,002 (705) 386

Crude steel production (thousand tonnes) 22,208 22,795 25,036


Steel shipments (thousand tonnes) 21,281 21,306 23,074

Average steel selling price (USD/tonne) 672 732 843


Sales Average selling prices decreased Sales in the NAFTA segment were driven by lower domestic prices
15% during the first half of 2016 as $17.3 billion for the year ended impacted by weak demand and
Sales in the NAFTA segment were compared to the first half of 2015 December 31, 2015, representing import pressures. Sales in the first
$15.8 billion for the year ended and 0.5% during the second half of a decrease of 18.3% as compared half of 2015 were $9.3 billion, a
December 31, 2016, representing 2016 as compared to the second to $21.2 billion for the year 10% decrease as compared to the
an 8.6% decrease as compared half of 2015. Spot prices began ended December 31, 2014. Sales same period in 2014, mainly due
to December 31, 2015. Sales improving in the second quarter decreased primarily as a result to a 10% decrease in average steel
decreased primarily as a result of 2016 which positively impacted of the decrease in average steel selling prices and a 3% decrease in
of the decrease in average steel sales in the second half of 2016 selling prices by 13.2% and a steel shipments. In the second half
selling prices by 8.2%, while due to lead times and lagged decrease in steel shipments by of the year, sales were $8.0 billion,
steel shipments remained stable. pricing. 7.7%, both of which were primarily a decrease of 26.3% compared to
Management report  17

the same period in 2014, primarily optimization programs. It was also Carbon operations (U.S.) and the product shipments (mainly Mexico
driven by a 16.3% decrease in negatively affected by inventory divestment of LaPlace and Vinton and U.S.) and a decrease in long
average steel selling prices and related losses amounting to $0.5 U.S. Long Carbon facilities. Crude product shipment volumes due
12.6% decrease in steel shipments. billion following the rapid decline steel production in the NAFTA to the closure of Georgetown and
of steel prices. Operating loss for segment decreased 9% for the Indiana Harbor Bar in the first half
Operating income or loss the segment amounted to $52 year ended December 31, 2015 of 2015.
million for the six months ended as compared to the year ended
Operating income for the NAFTA June 30, 2015 as compared with December 31, 2014 to align with Average steel selling price
segment was $2.0 billion for the operating income of $77 million weaker demand. decreased 8.2% for the year ended
year ended December 31, 2016 for the same period of 2014. December 31, 2016 as compared
as compared to an operating loss Operating loss for the first half of Total steel shipments remained to the year ended December 31,
of $0.7 billion for the year ended 2015 was negatively affected by a flat for the year ended December 2015. Average steel selling price
December 31, 2015. Operating $69 million provision for inventory 31, 2016 as compared to the decreased 15% in the first half of
income was positively affected by related losses in the US and an year ended December 31, 2015. 2016 as compared to the same
lower input costs, the improved impairment of $19 million relating Shipments were 10.9 million period in 2015 and by 0.5% in the
performance of Calvert and a to the closure of the Georgetown tonnes in the first half of 2016, second half of 2016 as compared
one-time $832 million gain on facility in the U.S. as well as lower a decrease of 2% from the same to the same period in 2015. Spot
employee benefits following volumes and lower average selling period in 2015, primarily due prices began improving in the
the signing of the new U.S. labor prices as compared to the same to the divestment, idling and second quarter of 2016 which
contract. Operating loss for the period of 2014. Operating loss closure of the U.S. Long Carbon positively impacted sales in the
year ended December 31, 2015 for the second half of 2015 was facilities mentioned above, while second half of 2016 due to lead
was negatively impacted by $653 million which was negatively shipments in the second half of the times and the lag.
impairment charges of $526 affected by the impairments and year were 10.4 million tonnes, an
million and inventory related inventory related losses described increase of 1.7% as compared to Average steel selling price
losses amounting to $0.5 billion above as compared to operating the same period in 2015. decreased 13.2% for the year
described below. income in the second half of ended December 31, 2015 as
2014. Operating performance in Total steel shipments decreased compared to the year ended
Operating loss for the NAFTA the second half of 2015 was also 7.7% for the year ended December December 31, 2014. Average steel
segment was $705 million for the affected by negative price-cost 31, 2015 as compared to the selling price in the first half of 2015
year ended December 31, 2015 as squeeze. year ended December 31, 2014. decreased 10% from the same
compared to an operating income Shipments were 11.1 million period in 2014 primarily due to
of $386 million for the year ended Crude steel production, steel tonnes in the first half of 2015, lower domestic prices impacted
December 31, 2014. Operating loss shipments and average steel a decrease of 3% from the same by falling raw material prices and
included impairment charges of selling price period in 2014, while shipments import pressures. Average steel
$526 million of which $231 million in the second half of the year were selling price in the second half
related to the intended sale of the Crude steel production in the 10.2 million tonnes, a decrease of the year decreased by 16.3%
Long carbon facilities in the United NAFTA segment decreased 2.6% of 12.6% from the same period as compared to the same period
States (ArcelorMittal Laplace, for the year ended December in 2014. Steel shipments for the in 2014, although average steel
Steelton and Vinton) and $276 31, 2016 as compared to the first half of 2015 were negatively selling prices in the fourth quarter
million with respect to the Indiana year ended December 31, 2015, affected by increased imports. of 2015 decreased by 14.3%
Harbor East and West facilities primarily due to the closure of Steel shipments for the second compared to the same period of
(United States) in connection Georgetown (U.S.), idling of the half of 2015 were negatively 2014.
with deployment of the asset steel shop of Indiana Harbor Long affected by a decrease in flat
Brazil Performance for the year ended December 31,
in millions of USD unless otherwise shown) 2016 2015 2014
Sales 6,223 8,503 10,037
Depreciation 258 336 457
Impairments - 176 -
Operating income / (loss) 614 628 1,388

Crude steel production (thousand tonnes) 11,133 11,612 10,524


Steel shipments (thousand tonnes) 10,753 11,540 10,376

Average steel selling price (USD/tonne) 536 647 867

Sales 6.8% and unfavorable sales mix for international steel pricing for both down 19.7% from the same period
long products in Brazil. flat and long products offset in in 2014 primarily due to lower
In the Brazil segment, sales part by higher steel shipments. average selling prices (28.2%),
decreased 26.8% to $6.2 billion for In the Brazil segment, sales Sales in the first half of 2015 were partially offset by an increase in
the year ended December 31, 2016 were $8.5 billion for the year $4.3 billion, down 10% from the shipments (4.5%) and an increase
as compared to the year ended ended December 31, 2015 same period in 2014 primarily due in sales from the Company’s
December 31, 2015, primarily which represented a 15.3% to lower average selling prices Venezuelan operations.
due to 17.2% lower average decrease as compared to the partially offset by higher steel
steel selling prices following the year ended December 31, 2014 shipments following the restart of Operating income or loss
depreciation of the Venezuelan primarily due to lower average Blast Furnace #3 at Tubarão in July
Bolivar and the Argentinean peso, steel selling prices, impacted by 2014, while sales in the second Operating income for the Brazil
a decrease in steel shipments by foreign exchange rates and low half of the year were $4.2 billion, segment for the year ended
18  Management report

December 31, 2016 was $614 shipments. Operating income for the restart of Blast Furnace #3 at shipments from Brazil, although
million, a decrease of 2.3% as the first half of 2015 decreased Tubarão. Crude steel production shipments were down in the
compared to the year ended 4.4% to $566 million as compared increased by 21% to 5.8 million fourth quarter of 2015, due to a
December 31, 2015. While with the first half of 2014 primarily tonnes for the first half of 2015 as continued slowdown in demand.
operating income for the year due to lower average steel selling compared to 4.8 million tonnes for
ended 2015 was negatively prices offset in part by higher steel the first half of 2014 as a result of Average steel selling price
affected by inventory related shipments following the restart the restart of the Tubarão furnace decreased 17.2% for the year
charges of $91 million following of Blast Furnace #3 at Tubarão in July 2014, while crude steel ended December 31, 2016 as
the rapid decline of steel prices and the improvement in the production increased by 1.3% compared to the year ended
and an impairment of $176 million Company’s tubular operations. for the second half of 2015 as December 31, 2015 primarily due
related to the idled ArcelorMittal Operating income for the second compared to the second half of to depreciation of the Venezuelan
Point Lisas facility, operating half of 2015 was $63 million, a 2014. Bolivar and the Argentinean peso
income for the year ended 2016 92.1% decrease compared to the and an unfavorable sales mix for
was negatively affected by lower second half of 2014 due to the Total steel shipments reached long products in Brazil.
shipments and lower average decrease in average steel selling 10.8 million tonnes for the year
steel selling prices for the reasons prices (28.2%) and the impairment ended December 31, 2016, which
Average steel selling price
described below as well as and write-down described above, was a 6.8% decrease from steel
decreased 25.4% for the year
continued currency devaluation partially offset by a 4.5% increase shipments for the year ended
ended December 31, 2015 as
which impacted the tubular in shipments. December 31, 2015, primarily
compared to the year ended
operations in Venezuela. driven by weaker demand and the
December 31, 2014 primarily
Crude steel production, steel idling of the Trinidad and Tobago
driven by a weaker Brazilian
Operating income for the Brazil shipments and average steel facility mentioned above.
real, weaker product mix due
segment for the year ended selling price to increased slab exports and a
December 31, 2015 was $628 Total steel shipments reached decline in international prices.
million, a decrease of 54.7% as Crude steel production decreased 11.5 million tonnes for the year Average steel selling price in the
compared to the year ended by 4.1% to 11.1 million tonnes for ended December 31, 2015, which first half of 2015 was down 23%
December 31, 2014. The decrease the year ended December 31, 2016 was an 11.2% increase from steel from the same period in 2014,
was primarily due to a 25.4% as compared to the year ended shipments for the year ended primarily driven by a weaker
decrease in average steel selling December 31, 2015 as a result of December 31, 2014. Shipments Brazilian real, weaker product mix
prices, write-downs of $91 million weaker demand and the idling of were 5.5 million tonnes in the first due to increased slab exports post
primarily related to inventories in the Trinidad and Tobago facility half of 2015, which was up 19.5% the restart of Blast Furnace #3 at
the third and fourth quarters of mentioned above. compared to the same period in Tubarão described above and a
2015 following the rapid decline of 2014, primarily driven by increased decline in international prices.
steel prices and an impairment of Crude steel production increased slab exports from Brazil. Shipments The average steel selling price in
$176 million relating to the idled by 10.3% to 11.6 million tonnes for in the second half of the year the second half of the year was
ArcelorMittal Point Lisas (Trinidad the year ended December 31, 2015 were up by 4.5% as compared to down 28.2% from the same period
and Tobago) facility, partially as compared to the year ended the second half of 2014, primarily in 2014 due to the mix impact
offset by a 11.2% increase in steel December 31, 2014 as a result of due to higher exports of slab described above.
Europe Performance for the year ended December 31,
in millions of USD unless otherwise shown) 2016 2015 2014
Sales 29,272 31,893 39,552
Depreciation 1,184 1,192 1,510
Impairments 49 398 57
Operating income / (loss) 1,270 171 737

Crude steel production (thousand tonnes) 42,635 43,853 43,419


Steel shipments (thousand tonnes) 40,247 40,676 39,639

Average steel selling price (USD/tonne) 568 609 773


Sales in the second quarter of 2016 decreased 18% to $17.1 billion as Operating income or loss
which positively impacted sales in compared to the first half of 2014
Sales in the Europe segment were the second half of 2016 due to lead primarily due to a 22% decrease Operating income for the
$29.3 billion for the year ended times and lagged pricing. in average steel selling prices Europe segment for the year
December 31, 2016, representing which were negatively impacted ended December 31, 2016
an 8.2% decrease as compared Sales in the Europe segment by the USD appreciation against increased to $1.3 billion as
to sales of $31.9 billion for the were $31.9 billion for the year the euro, partially offset by an compared to $0.2 billion for
year ended December 31, 2015, ended December 31, 2015, increase in steel shipments by the year ended December 31,
primarily due to 6.7% lower representing a decrease of 19.4% 7%. In the second half of the year 2015. Operating income for the
average steel selling prices. as compared to the year ended sales were $14.7 billion, a decrease year ended December 31, 2016
Average selling prices decreased December 31, 2014 primarily due of 21.2% compared to the same was positively affected by cost
12.6% during the first half of to lower average steel selling period in 2014 primarily due to efficiency improvements and a
2016 as compared to the first prices partially offset by higher lower average steel selling prices gain of $96 million following an
half of 2015 and increased 0.3% shipments. Local average steel and a marginal decrease in steel agreement in France to cap the
during the second half of 2016 as selling prices declined, partially shipments described below. annual indexation of the IRUS
compared to the second half of reflecting lower raw material pension plan until 2026 and to
2015. Spot prices began improving costs. Sales in the first half of 2015 pay a lump sum amount to cover
Management report  19

the indexation obligation for the second half of 2015 following fewer facilities under maintenance down 1.6% from the same period
subsequent years. These positive the rapid decline in steel prices, during the first half of 2015 and in 2014 driven by lower demand
effects were partially offset partially offset by improved market to align with increased demand. and maintenance work.
by lower average steel selling conditions and realized benefits of Crude steel production decreased
prices and steep shipments as cost optimization efforts as well as in the second half of 2015 as Average steel selling price
well as a $49 million impairment increased shipments. compared to the second half of decreased 6.7% for the year ended
charge related to the held for sale 2014 by 3.3% driven by lower December 31, 2016 as compared
classification of the ArcelorMittal Crude steel production, steel demand and maintenance work to the year ended December
Zaragoza facility in Spain. shipments and average steel including the reline of a blast 31, 2015. Average selling prices
Operating income for the year selling price furnace in Dunkirk, France, and decreased 12.6% during the first
ended December 31, 2015 was repairs to a blast furnace in Gent, half of 2016, as compared to the
negatively affected by the items Crude steel production for the Belgium. first half of 2015 and increased
described below. Europe segment decreased 2.8% 0.3% during the second half of
to 42.6 million tonnes for the year Total steel shipments were 40.2 2016, as compared to the second
Operating income for the Europe ended December 31, 2016 as million tonnes for the year ended half of 2015. Spot prices began
segment for the year ended compared to 43.9 million tonnes December 31, 2016, a marginal improving in the second quarter
December 31, 2015 decreased to for the year ended December 31, decrease of 1.1% from steel of 2016 which positively impacted
$171 million, a 76.8% decrease 2015, primarily due to production shipments for the year ended sales in the second half of 2016
as compared to the year ended outages in the Fos plant (France), December 31, 2015 primarily due due to lead times and lagged
December 31, 2014. Operating loss the disposal of ArcelorMittal to production outages in the Fos pricing.
for the segment was $533 million Zaragoza during the third quarter plant (France) and the disposal of
for the second half of the year, of 2016 and the idling of the ArcelorMittal Zaragoza during the Average steel selling price
compared to operating income Sestao and the Zumarraga facilities third quarter of 2016. decreased 21.2% for the year
of $704 million for the first half in Spain. ended December 31, 2015 as
of the year. Operating income Total steel shipments were 40.7 compared to the year ended
was negatively impacted by (i) an Crude steel production for the million tonnes for the year ended December 31, 2014. Average steel
impairment charge of $398 million Europe segment increased 1% December 31, 2015, an increase selling price in the first half and
primarily relating to the indefinite to 43.9 million tonnes for the of 2.6% from steel shipments for second half of 2015 was down
idling of the Sestao facility in Spain year ended December 31, 2015 the year ended December 31, 22% and 20.2%, respectively,
and the write down of carrying as compared to the year ended 2014. Shipments were 21.6 million as compared to the first and
values for certain ArcelorMittal December 31, 2014. Crude steel tonnes in the first half of 2015, up second half of 2014, largely due
Downstream Solutions operations production increased in the first 7% from the same period in 2014 to exchange rate effects and a
as a result of the classification as half of 2015 as compared to the driven by improved demand, while marginal decline in local average
held for sale and (ii) write-downs first half of 2014 by 5% to 23 shipments in the second half of steel prices, partially reflecting
of inventories for $0.6 billion in million tonnes primarily due to the year were 19.1 million tonnes, lower raw material costs.
ACIS Performance for the year ended December 31,
in millions of USD unless otherwise shown) 2016 2015 2014
Sales 5,885 6,128 8,268
Depreciation 311 408 525
Impairments 156 294 -
Operating income / (loss) 211 (624) 95

Crude steel production (thousand tonnes) 14,792 14,219 14,148


Steel shipments (thousand tonnes) 13,271 12,485 12,833

Average steel selling price (USD/tonne) 395 432 576

Sales selling price by 23.5% offset by period in 2014 and sales in the $156 million impairments mainly
an increase in steel shipments by second half of the year were $2.8 related to the Vanderbijlpark plant
In the ACIS segment, sales were 9%. The increase in the second billion, down 30.4% from the same in South Africa. Operating income
$5.9 billion for the year ended half of 2016 is due to the increase period in 2014 primarily due to the for the year ended December 31,
December 31, 2016, representing of 10.0% in average selling prices decrease in average selling prices 2015 was negatively impacted by
a decrease of 4.0% as compared and an increase of 3.7% in steel and lower shipments. impairments and inventory related
to the year ended December 31, shipments. charges described below.
2015. The decrease was primarily Operating income or loss
due to an 8.6% decrease in average Sales were $6.1 billion for the Operating loss for the ACIS
selling price offset by higher steel year ended December 31, 2015, Operating income for the ACIS segment for the year ended
shipments by 6.3%. Sales in the representing a decrease of 25.9% segment for the year ended December 31, 2015 was $624
first half of 2016 decreased 17.7% as compared to the year ended December 31, 2016 was $211 million, compared to operating
to $2.8 billion compared to the December 31, 2014. The decrease million, compared to operating income of $95 million for the
same period in 2015, while sales was primarily due to a 25% loss of $624 million for the year year ended December 31, 2014.
in the second half of the year were decrease in average selling price ended December 31, 2015. Operating income for the year
$3.1 billion, an increase of 12.9% and lower steel shipments by 2.7%, Operating income for the year ended December 31, 2015 was
from the same period in 2015. The as described below. Sales in the ended December 31, 2016 was negatively impacted by a $294
decrease on the first half of 2016 is first half of 2015 decreased 22% to positively affected by better cost million asset impairment charge
due to the decrease of the average $3.4 billion compared to the same performance and offset by the mainly related to the closure
20  Management report

of Vereeniging melt shop ($27 South Africa) due to currency the Newcastle reline completion, Average steel selling prices
million) and the Saldanha facility devaluation. while crude steel production for decreased 8.6% for the year ended
in South Africa ($258 million), as the second half of 2015 decreased December 31, 2016 as compared
a result of its revised competitive Crude steel production, steel 3.0% as compared to the second to the year ended December 31,
outlook, and charges of $239 shipments and average steel half of 2014, mainly due to 2015; this decrease affected all
million including $159 million selling price planned repair of Blast Furnace #9 three units (Ukraine, Kazakhstan
primarily related to derecognition in Ukraine. and South Africa). Average steel
of a deferred stripping prepayment Crude steel production for the selling prices in the first half of
in connection with the amended ACIS segment increased 4.0% for Total steel shipments reached 13.3 2016 decreased 23% and increased
iron ore supply agreement and the year ended December 31, 2016 million tonnes for the year ended 10% in the second half of 2016 as
competition cases in South Africa as compared to 2015, primarily December 31, 2016, representing compared with the same periods
in the fourth quarter of 2015 driven by better operational an increase of 6.3% compared in 2015, primarily driven by the
and $80 million primarily related performance in Kazakhstan to the year ended December 31, international prices.
to write-downs of inventories and Ukraine. Production in 2015. The increase was driven
following the rapid decline of steel both CIS plants benefited from by the CIS entities due to better Average steel selling price
prices and to retrenchment costs improved operational stability operational performance. decreased 25% for the year ended
of $27 million in Thabazimbi and and production in South Africa December 31, 2015 as compared
Tshikondeni in South Africa in the marginally decreased due to the Total steel shipments reached 12.5 to the year ended December 31,
third quarter of 2015. Operating mini reline at the Saldanha plant million tonnes for the year ended 2014; this decrease affected all
income for the first half of 2015 and the closure of the Vereeniging December 31, 2015, representing a three units (Ukraine, Kazakhstan
was $7 million as compared to melt shop. decrease of 2.7% compared to the and South Africa). Average steel
$5 million for the same period year ended December 31, 2014. selling price in the first half of 2015
Crude steel production for the Steel shipments were 6.2 million
of 2014. Operating loss for the decreased 18% from the same
ACIS segment remained fairly tonnes in the first half of 2015,
second half of the year was $631 period in 2014, primarily due to
flat at 14.2 million tonnes for the down 4% from the same period
million as compared to operating lower global steel prices and weak
year ended December 31, 2015 as in 2014. Steel shipments for the
income of $90 million for the same demand in both CIS and South
compared to 2014. Production was first half of 2015 were negatively
period in 2014. Operating income Africa. Average steel selling price in
lower in Ukraine due to planned affected by lower volumes in South
was negatively impacted by the Africa and a weaker CIS market. the second half of 2015 decreased
decrease in average steel selling repairs of Blast Furnace #9, partially
offset by higher production Steel shipments for the second half 32.4% from the same period in
prices and lower shipments for of 2015 decreased 1% compared 2014 due to lower average steel
both the first and second half of in South Africa following the selling prices in all three units,
Newcastle reline completion. to the second half of 2014 due to
2015 (as well as the impairments lower steel shipments in Ukraine impacted by lower global steel
and write-downs in the second Crude steel production for the prices and weak demand in both
first half of 2015 increased 4% to impacted by lower production
half of 2015) as compared to the and a weaker South Africa market CIS and South Africa.
same period of 2014, partially 7.3 million tonnes as compared
to 7.0 million tonnes for the first in 2015, partially offset by lower
offset by lower costs in all three volume in 2014 due to the
units (Ukraine, Kazakhstan and half of 2014 primarily driven by
Newcastle reline.

Mining Performance for the year ended December 31,


in millions of USD unless otherwise shown) 2016 2015 2014
Sales 3,114 3,387 4,970
Depreciation 396 614 703
Impairments - 3,370 63
Operating income / (loss) 366 (3,522) 565

Own iron ore production (million tonnes) 55.2 62.8 63.9


Iron ore shipped externally and internally at market price (million tonnes) 1,2 33.6 40.3 39.7
Iron ore shipment - cost plus basis (million tonnes) 1 22.3 22.1 24.0

Own coal production (million tonnes) 6.3 6.1 7.0


Coal shipped externally and internally at market price (million tonnes) 1,2 3.4 2.8 3.9
Coal shipment - cost plus basis (million tonnes) 1,2 3.4 3.2 3.3
1
There are three categories of sales: (1) “External sales”: mined product sold to third parties at market price; (2) “Market-priced tonnes”: internal sales of mined product to
ArcelorMittal facilities reported at prevailing market prices; (3) “Cost-plus tonnes”: internal sales of mined product to ArcelorMittal facilities on a cost-plus basis. The determinant
of whether internal sales are reported at market price or reported at cost-plus is whether or not the raw material could practically be sold to third parties (i.e., there is a potential
market for the product and logistics exist to access that market).
2
Market-priced tonnes represent amounts of iron ore and coal from ArcelorMittal mines that could practically be sold to third parties. Market-priced tonnes that are transferred
from the Mining segment to the Company’s steel producing segments are reported at the prevailing market price. Shipments of raw materials that do not constitute market-priced
tonnes are transferred internally on a cost-plus basis.
Management report  21

Year ended December 31,


Iron ore production (million metric tonnes) 1 Type Product 2016 2015 2014

Own mines
Concentrate,
lump, fines and
North America 2
Open pit pellets 35.9 39.0 37.3
South America Open pit Lump and fines 3.1 3.5 4.5
Concentrate and
Europe Open pit lump 1.8 2.1 2.1
Open pit /
Africa Underground Fines 2.1 4.3 5.5
Concentrate,
Open pit / lump, fines and
Asia, CIS & Other Underground sinter feed 12.3 13.9 14.5
Total own iron ore production 55.2 62.8 63.9
Strategic long-term contracts - iron ore
North America 3 Open pit Pellets 6.1 6.6 8.2
Africa 4 Open pit Lump and fines 0.8 4.3 4.9
Total strategic long-term contracts - iron ore 6.9 10.9 13.1
Total 62.1 73.7 77.0
1
Total of all finished production of fines, concentrate, pellets and lumps.
2
Includes own mines and share of production from Hibbing (United States, 62.30%) and Peña (Mexico, 50%).
3
Consists of a long-term supply contract with Cliffs Natural Resources.
4
The production for year ended 2015 includes purchases under strategic agreements with Sishen Iron Ore Company (Proprietary) Limited’s (“SIOC”) Kumba and Thabazimbi mines
(South Africa). On November 6, 2015, ArcelorMittal announced that an agreement had been reached with SIOC to amend the pricing mechanism terms of the current iron ore
supply agreement related to Kumba from a cost-based price to an Export Parity Price (“EPP”) with effect from October 1, 2015. The EPP is calculated on the basis of the Platts 62%
Fe CFR China Fines Index (the “Index price”) and, at certain price levels, ArcelorMittal receives a discounted price. As a result of this amendment, the contract related to Kumba is no
longer considered as a strategic contract in 2016.

Year ended December 31,


Coal production (million metric tonnes) 2016 2015 2014
Own mines
North America 1.80 1.57 2.04
Asia, CIS & Other 4.45 4.58 4.98
Total own coal productions 6.25 6.15 7.02
Strategic long term contracts - coal
North America 1 - 0.14 0.37
Africa 2 - - 0.31
Total strategic long term contracts - coal - 0.14 0.68

Total 6.25 6.29 7.70


1
Includes strategic agreement - prices on a fixed price basis.
2
Includes long-term lease - prices on a cost-plus basis.

Sales decrease of 35% compared to the 2015. Coal shipments were 6.8
96.3% in the fourth quarter of 2016
same period in 2014, while sales in million tonnes for the year ended
as compared to the third quarter of
In the Mining segment, sales were the second half of 2015 were $1.7 December 31, 2016 as compared
2016. The decrease in the average
$3.1 billion for the year ended billion, down 28.6% from the same with 6.0 million tonnes for the year
reference iron ore price accelerated
December 31, 2016, representing period in 2014. ended December 31, 2015. The
in the second half of 2015, with
a decrease of 8.1% as compared increase is primarily due to higher
prices down 38% compared to
to the year ended December 31, Sales to external customers were shipments of Princeton.
the second half of 2014, and
2015. Sales in the first half of 2016 $781 million for the year ended down 46% in the first half of 2015
were $1.4 billion, a decrease of December 31, 2016, representing The average reference iron ore compared to the first half of 2014.
18% compared to the same period a decrease of 5.2% compared to price was $58.45 per tonne in However, there may not be a direct
in 2015, while sales in the second the year ended December 31, 2016, $55.50 per tonne in 2015 correlation between reference
half of 2016 were $1.7 billion, an 2015. Iron ore shipments were 55.9 and $96.7 per tonne in 2014 (CFR prices and actual selling prices in
increase of 2.4% from the same million tonnes for the year ended China 62% Fe, Platts Index) and the various regions at a given time.
period in 2015. December 31, 2016, representing average reference price for hard
a decrease of 10.4% as compared coking coal increased to $143.24 Sales to external customers were
Sales were $3.4 billion for the to 62.4 million tonnes for the per tonne in 2016, from $88.00 $824 million for the year ended
year ended December 31, 2015, year ended December 31, 2015. per tonne in 2015 and $114.44 per December 31, 2015, representing
representing a decrease of 31.8% The decrease is primarily due tonne in 2014 (FOB Australia HCC a decrease of 38% compared to
as compared to the year ended to lower shipments in Mexico, Peak Downs, Platts Index). The the year ended December 31,
December 31, 2014. The decrease Ukraine, Liberia and Canada. Iron increase in the average reference 2014. Iron ore shipments were 62.4
was primarily due to lower ore shipments to external parties hard coking coal price accelerated million tonnes for the year ended
seaborne iron ore market prices were 12.3 million tonnes for the in the second half of 2016, with December 31, 2015, representing
which were down 43% (average year ended December 31, 2016 as prices up 48.4% in the third a decrease of 2.0% as compared
year-on-year). Sales in the first compared to 13.7 million tonnes quarter of 2016 as compared to to 63.7 million tonnes for the year
half of 2015 were $1.7 billion, a for the year ended December 31, the second quarter of 2016 and up ended December 31, 2014. Iron
22  Management report

ore shipments to external parties due to the downward revision due to lower production at both received preferred shares of
were 13.7 million tonnes for the of cash flow projections relating U.S. and Kazakhstan operations as Gerdau and cash consideration
year ended December 31, 2015 as to the expected persistence of a well as the disposal of the Kuzbass of $28 million in exchange for
compared to 14.4 million tonnes lower raw material price outlook. coal mines in Russia during the unlisted Gerdau shares, resulting in
for the year ended December 31, In addition to such impairment fourth quarter of 2014. a gain of $55 million.
2014. The decrease was primarily charges, operating performance in
due to lower external shipments 2015 compared to 2014 reflected Income or loss from investments Financing costs-net
from Brazil and Liberia partially lower seaborne iron ore market in associates, joint ventures and
offset by the Company’s Canadian prices, offset in part by operating other investments Net financing costs include net
operations. Coal shipments were cost improvement. interest expense, revaluation of
6.0 million tonnes for the year ArcelorMittal recorded income of financial instruments, net foreign
ended December 31, 2015 as Production $615 million from investments in exchange income/expense (i.e.,
compared with 7.2 million tonnes associates, joint ventures and other the net effects of transactions in
for the year ended December 31, ArcelorMittal had own iron ore investments for the year ended a foreign currency other than the
2014. In the second half of 2015, production of 55.2 million tonnes December 31, 2016, as compared functional currency of a subsidiary)
iron ore shipments to external for the year ended December with a loss of $502 million for the and other net financing costs
customers were nearly in line with 31, 2016, a decrease of 12.1% year ended December 31, 2015. (which mainly include bank fees,
the first half. compared to the year ended The income for the year ended accretion of defined benefit
December 31, 2015. The decrease December 31, 2016 was primarily obligations and other long-term
Operating income or loss in iron ore production is primarily due to the gain on disposal of liabilities).
due to lower production in Liberia, stakes in Gestamp for $329 million
Operating income for the Mining Mexico, Ukraine and Canada. With and Hunan Valin for $74 million Net financing costs were lower
segment for the year ended the Company’s ongoing focus as well as improved performance for the year ended December
December 31, 2016 was $366 on its most competitive iron ore of the Calvert joint venture, 31, 2016, at $2.1 billion, a 28.1%
million, compared to an operating operations: Liberia production Chinese and Spanish investees decrease compared to the year
loss of $3.5 billion for the year is currently being maintained at offset in part by impairments of ended December 31, 2015. Net
ended December 31, 2015. approximately 2 million tonnes the primary steel making assets at financing costs were lower for the
Operating income for the year per year and the Volcan mine in China Oriental. year ended December 31, 2015,
ended December 31, 2016 was Mexico was suspended in October at $2.9 billion, a 15.5% decrease
positively affected by improved 2015 (2 million tonnes annual ArcelorMittal recorded a loss of compared to the year ended
cost performance, a decrease impact) and iron ore production $502 million from investments December 31, 2014. Net interest
in depreciation following the in Ukraine has decreased to reflect in associates, joint ventures and expense (interest expense less
impairments recognized in 2015 a revised mine plan following a other investments for the year interest income) was $1.1 billion
and higher average iron ore and delay in accessing new tailings ended December 31, 2015, as for the year ended December
coal reference prices. Operating disposal land (approximately 1 compared with a loss of $172 31, 2016, a decrease of 12.8%
loss in 2015 was negatively million tonnes impact). million for the year ended compared to the year ended
impacted by the decrease in December 31, 2014. The loss for December 31, 2015, primarily due
seaborne iron ore and coking coal ArcelorMittal had own iron ore the year ended December 31, to lower average cost resulting
market prices noted above and production of 62.8 million tonnes 2015 included an impairment from debt repaid during the
included impairment charges of for the year ended December charge of $283 million related to year. Net interest expense was
$3.4 billion. 31, 2015, a decrease of 1.7% the Company’s 50% interest in the $1.3 billion for the year ended
compared to the year ended joint venture Kalagadi Manganese December 31, 2015, a decrease of
Operating loss for the Mining December 31, 2014. The decrease (Propriety) Ltd engaged in the 13% compared to the year ended
segment for the year ended in iron ore production was development of the Kalagadi December 31, 2014 due to lower
December 31, 2015 was $3.5 primarily due to lower production manganese ore deposits in South average cost resulting from debt
billion, compared to operating in Kazakhstan, Brazil, Mexico Africa as a result of a downward repaid and raised during the year,
income of $0.6 billion for the and Liberia offset by increases revision of cash flow projections despite the increased interest costs
year ended December 31, 2014. due to higher production at the following an expected persistence following the ratings downgrades
Operating loss in 2015 was Company’s Canadian operations. of lower manganese prices. It also that occurred during 2015.
negatively impacted by the included an impairment charge
decrease in seaborne iron ore and ArcelorMittal had own coking coal of $138 million with respect to Foreign exchange losses decreased
coking coal market prices noted production of 6.3 million tonnes the Company’s Indian investee, to $3 million for the year ended
above and included impairment for the year ended December of which $69 million on the December 31, 2016, as compared
charges of $3.4 billion, including 31, 2016, an increase of 1.8% carrying value of the investment to $697 million the year ended
$854 million with respect to the compared to the year ended and $69 million on related loans, December 31, 2015, primarily due
Mining segment goodwill and December 31, 2015. The increase respectively, as a result of a to the stabilization of currencies in
$2.5 billion related to tangible in coking coal production was downward revision of cash flow 2016 as compared to 2015 which
and intangible assets in respect primarily due to higher production projections and a $101 million was impacted as described below.
of iron ore mining operations in Princeton. impairment charge related to
at ArcelorMittal Liberia ($1,426 the decrease in market value of Foreign exchange losses increased
million), Las Truchas in Mexico ArcelorMittal had own coking coal the Company’s 12.08% interest to $0.7 billion for the year ended
($220 million), ArcelorMittal production of 6.1 million tonnes in Erdemir (Turkey). These losses December 31, 2015, an increase of
Serra Azul in Brazil ($176 million) for the year ended December were partially offset by income 12.4% compared to $0.6 billion the
and coal mining operations at 31, 2015, a decrease of 12.4% generated from the share swap year ended December 31, 2014,
ArcelorMittal Princeton in the compared to the year ended agreement with respect to Gerdau, primarily due to an appreciation
United States ($684 million). December 31, 2014. The decrease Brazil entered into on July 14, 2015, of the USD against the euro. This
These impairments were mainly in coal production was primarily as part of which ArcelorMittal foreign exchange loss primarily
Management report  23

relates to the impact of the USD partially offset by the fair value
as compared to an income tax ArcelorMittal’s consolidated
appreciation of an additional 10% adjustment for the mandatory
expense of $0.9 billion for the year income tax expense (benefit) is
against the euro (12% appreciation convertible bonds for $0.2 billion.
ended December 31, 2015 and affected by the income tax laws
for the year ended December 31, $0.5 billion for the year ended and regulations in effect in the
2014), a 32% appreciation against Other net financing costs December 31, 2014. The deferred various countries in which it
the Brazilian real (12% appreciation(including expenses related to tax expense in 2016 includes $0.8 operates and the pre-tax results
for the year ended December 31, True Sale of Receivables, bank billion increase in projections of its subsidiaries in each of these
2014) and a 46% devaluation of fees, interest on pensions and of future taxable income in countries, which can vary from
the Kazakhstani tenge. fair value adjustments of the Luxembourg, $0.7 billion impact year to year. ArcelorMittal operates
mandatorily convertible bond from the derecognition of deferred in certain jurisdictions, mainly in
Other net financing costs and derivative instruments) were tax assets in Luxembourg related Eastern Europe and Asia, which
(including expenses related to $0.9 billion for the year ended to revised expectations of the have a structurally lower corporate
True Sale of Receivables, bank December 31, 2015, as compared deferred tax assets recoverability income tax rate than the statutory
fees, interest on pensions and to $1.3 billion for the year ended in U.S. dollar terms, and $0.6 billion tax rate as in effect in Luxembourg
fair value adjustments of the December 31, 2014, and included decrease following the change (26.01%), as well as in jurisdictions,
mandatorily convertible bond an expense of $79 million relating in tax rate in Luxembourg. The mainly in Western Europe and the
and derivative instruments) were to the extension of the mandatory increase in 2015 as compared Americas, which have a structurally
stable at $0.9 billion for the year convertible bond. The reduction to 2014 is due to impairments higher corporate income tax rate.
ended December 31, 2016 and the in the loss was mainly due to the of deferred tax assets stemming
year ended December 31, 2015. change in the accretion of defined from lower future taxable results The statutory income tax expense
Other net financing costs were benefit obligations and other long forecasts in some jurisdictions. (benefit) and the statutory income
negatively affected by premiums term liabilities for $0.2 billion. For additional information related tax rates of the countries that
and fees of $0.4 billion relating to ArcelorMittal’s income taxes, most significantly resulted in the
to early redeemed bonds in 2016 Income tax expense (benefit) see note 9 to ArcelorMittal’s tax expense (benefit) at statutory
and $0.1 billion non-cash expense consolidated financial statements. rate for each of the years ended
in connection with the issuance ArcelorMittal recorded an income December 31, 2016, 2015 and
of shares in the context of a tax expense of $1.0 billion for the 2014 are as set forth below:
B-BBEE transaction in South Africa, year ended December 31, 2016

2016 2015 2014


Statutory income Statutory income Statutory income Statutory income
Statutory income tax tax rate tax tax rate Statutory income tax tax rate
United States 224 35.00% (863) 35.00% (352) 35.00%
Argentina 22 35.00% 50 35.00% 59 35.00%
France 17 28.92% (32) 34.43% 18 34.43%
Brazil 86 34.00% (48) 34.00% 141 34.00%
Belgium 71 33.99% 64 33.99% (10) 33.99%
Germany (37) 30.30% (43) 30.30% (82) 30.30%
Spain (47) 25.00% (146) 25.00% (78) 25.00%
Luxembourg 196 26.01% (613) 29.22% (228) 29.22%
Mexico 53 30.00% (55) 30.00% 9 30.00%
South Africa (96) 28.00% (199) 28.00% (23) 28.00%
Canada 98 26.10% 247 26.90% 298 26.90%
Russia - 20.00% (1) 20.00% (18) 20.00%
Kazakhstan 36 20.00% (48) 20.00% (4) 20.00%
Czech Republic 3 19.00% 9 19.00% 38 19.00%
Poland 33 19.00% 23 19.00% 25 19.00%
Romania (11) 16.00% (10) 16.00% (12) 16.00%
Ukraine 20 18.00% 11 18.00% 23 18.00%
Trinidad & Tobago 66 25.00% (83) 25.00% (11) 25.00%
Liberia 6 25.00% (388) 25.00% (30) 25.00%
United Kingdom 15 17.00% 17 20.00% 55 20.00%
Others (78) (38) 35
Total 677 (2,146) (147)
Note: The statutory tax rates are the (future) rates enacted or substantively enacted by the end of the respective period.

Non-controlling interests attributable to non-controlling Net loss attributable to non- related to losses generated
interests for 2016 was primarily controlling interests was $477 by ArcelorMittal South Africa
Net loss attributable to non- related to losses generated by million for the year ended and Liberia resulting from
controlling interests was $45 ArcelorMittal South Africa partially December 31, 2015, as compared the impairments of the assets
million for the year ended offset by income generated with net income attributable described above.
December 31, 2016, as compared by ArcelorMittal Mines and to non-controlling interests of
with net loss attributable to Infrastructure Canada and Belgo $112 million for the year ended
non-controlling interests of Bekaert Arames in Brazil. December 31, 2014. Net loss
$477 million for the year ended attributable to non-controlling
December 31, 2015. Net loss interests for 2015 was primarily
24  Management report

Net loss attributable to equity As of December 31, 2016, in the event of a change in its certain adjustments as set out in
holders of the parent ArcelorMittal’s cash and cash long-term credit ratings. In the facility) does not, at the end
equivalents, including restricted the context of low steel prices of each “Measurement Period”
ArcelorMittal’s net income cash of $114 million, amounted and challenging industry (each period of 12 months
attributable to equity holders to $2.6 billion as compared to conditions, on February 3, 2015, ending on the last day of a
of the parent for the year ended $4.1 billion as of December 31, Standard & Poor’s downgraded financial half-year or a financial
December 31, 2016 amounted 2015. In addition, ArcelorMittal ArcelorMittal’s credit rating year of the Company), exceed a
to $1.8 billion compared to had available borrowing capacity and, on December 18, 2015, it certain ratio, referred to by the
net loss attributable to equity of $5.5 billion under its $5.5 placed ArcelorMittal on negative Company as the “Leverage ratio”.
holders of $7.9 billion for the year billion revolving credit facility outlook. On November 12, ArcelorMittal’s principal credit
ended December 31, 2015 and as of December 31, 2016, as 2015, Moody’s downgraded facilities set this ratio to 4.25 to 1,
$1.1 billion for the year ended compared to available borrowing ArcelorMittal and placed it on whereas one facility has a ratio of
December 31, 2014, for the capacity of $6.0 billion under negative outlook. On November 4.0 to 1. As of December 31, 2016,
reasons discussed above. its $6.0 billion revolving credit 16, 2015, while Fitch affirmed its the Company was in compliance
facility as of December 2015. credit rating of ArcelorMittal, it with both ratios.
Liquidity and capital resources lowered its outlook to negative.
As of December 31, 2016, Following the recovery in steel Non-compliance with the
ArcelorMittal’s principal sources ArcelorMittal’s total debt, which prices in the U.S. and in Europe covenants in the Company’s
of liquidity are cash generated includes long-term debt and during the first half of 2016, borrowing agreements would
from its operations and its credit short-term debt, was $13.7 Moody’s increased its outlook to entitle the lenders under
facilities at the corporate level. billion, compared to $19.8 billion stable on August 16, 2016. On such facilities to accelerate
as of December 31, 2015. November 17, 2016, Standard the Company’s repayment
Because ArcelorMittal is a holding & Poor’s revised its outlook obligations. The Company was
company, it is dependent upon Net debt (defined as long-term to positive from negative for in compliance with the financial
the earnings and cash flows debt ($11.8 billion) plus short- ArcelorMittal and affirmed its covenants in the agreements
of, as well as dividends and term debt ($1.9 billion), less credit ratings of the Company. related to all of its borrowings
distributions from, its operating cash and cash equivalents and The February 2015 downgrade as of December 31, 2016 and
subsidiaries to pay expenses restricted cash ($2.6 billion)) was resulted in an increase in interest December 31, 2015.
and meet its debt service $11.1 billion as of December paid of $28 million in 2015 and
obligations. Significant cash or 31, 2016, down from $15.7 the November 2015 downgrade As of December 31, 2016,
cash equivalent balances may billion at December 31, 2015 similarly resulted in increased ArcelorMittal had guaranteed
be held from time to time at comprised of long-term debt interest expense but was partially approximately $0.1 billion of
the Company’s international ($17.5 billion) plus short-term offset by the early repayments debt of its operating subsidiaries.
operating subsidiaries, in debt ($2.3 billion), less cash and and tenders as described below. ArcelorMittal’s debt facilities
particular those in France and cash equivalents and restricted have provisions whereby the
in the United States, where cash ($4.1 billion). Net debt ArcelorMittal’s $5.5 billion acceleration of the debt of
the Company maintains cash decreased primarily due to net revolving credit facility, which another borrower within the
management systems under proceeds from the equity offering incorporates a first tranche ArcelorMittal group could, under
which most of its cash and cash ($3.1 billion) and the Gestamp of $2.3 billion maturing on certain circumstances, lead to
equivalents are centralized, asset sale ($1.0 billion), net cash December 21, 2019, and a acceleration under such facilities.
and in Argentina, Brazil, provided by operations of $2.7 second tranche of $3.2 billion
Canada, Morocco, South Africa billion (including an investment maturing on December 21, 2021, The following table summarizes
and Ukraine. Some of these in operating working capital contains restrictive covenants. the repayment schedule of
operating subsidiaries have of $1.0 billion), partly offset by Among other things, these ArcelorMittal’s outstanding
debt outstanding or are subject capital expenditures of $2.4 covenants limit encumbrances indebtedness, which includes
to acquisition agreements that billion. The proceeds from the on the assets of ArcelorMittal short-term and long-term debt,
impose restrictions on such equity offering were used to and its subsidiaries, the ability as of December 31, 2016.
operating subsidiaries’ ability repay debt. Most of the external of ArcelorMittal’s subsidiaries
to pay dividends, but such debt is borrowed by the parent to incur debt and the ability of
restrictions are not significant company on an unsecured basis ArcelorMittal and its subsidiaries
in the context of ArcelorMittal’s and bears interest at varying to dispose of assets in certain
overall liquidity. Repatriation of levels based on a combination circumstances. The agreement
funds from operating subsidiaries of fixed and variable interest also requires compliance
may also be affected by tax and rates. Gearing (defined as net with a financial covenant, as
foreign exchange policies in place debt divided by total equity) at summarized below.
from time to time in the various December 31, 2016 was 34% as
countries where the Company compared to 57% at December The Company must ensure
operates, though none of these 31, 2015. that the ratio of “Consolidated
policies is currently significant Total Net Borrowings”
in the context of ArcelorMittal’s The margin applicable to (consolidated total borrowings
overall liquidity. ArcelorMittal’s principal credit less consolidated cash and cash
facilities ($5.5 billion revolving equivalents) to “Consolidated
In management’s opinion, credit facility and certain other EBITDA” (the consolidated
ArcelorMittal’s credit facilities credit facilities) and the coupons net pre-taxation profits of
are adequate for its present on certain of its outstanding the ArcelorMittal group for a
requirements. bonds are subject to adjustment Measurement Period, subject to
Management report  25

Repayment Amounts per Year (in billions of $)


Type of Indebtedness as of December 31, 2016 2017 2018 2019 2020 2021 >2021 Total
Bonds 0.6 1.4 1.6 1.8 1.3 4.8 11.5
Long-term revolving credit lines - - - - - - -
- $2.3 billion tranche of $5.5 billion revolving credit facility - - - - - - -
- $3.2 billion tranche of $5.5 billion revolving credit facility - - - - - - -
Other loans and commercial paper 1.3 0.1 0.3 0.1 0.1 0.3 2.2
Total gross debt 1.9 1.5 1.9 1.9 1.4 5.1 13.7
The following table summarizes the amount of credit available as of December 31, 2016, under ArcelorMittal’s $5.5 billion revolving credit facility:
Credit lines available Facility Amount Drawn Available
$2.3 billion tranche of $5.5 billion revolving credit facility $2.3 - $2.3
$3.2 billion tranche of $5.5 billion revolving credit facility $3.2 - $3.2
Total committed lines $5.5 - $5.5
The average debt maturity of on this facility in the framework of • $63 million of its U.S. dollar price (including premiums and
the Company was 7 years as of its cash management. denominated 5.125% Notes due accrued interest) of $160 million.
December 31, 2016, as compared June 1, 2020 (the “June 2020 Following this purchase, $853
to 6.2 years as of December 31, On September 30, 2010, Notes”) for a total aggregate million principal amount of the
2015. ArcelorMittal entered into the purchase price (including August 2020 Notes remained
$500 million revolving multi- premiums and accrued interest) outstanding.
Further information regarding currency letter of credit facility of $68 million. Following this • $323 million of its U.S. dollar
ArcelorMittal’s outstanding short- (the “Letter of Credit Facility”). The purchase, $324 million principal denominated 2021 Notes for a
term and long-term indebtedness Letter of Credit Facility is used by amount of the June 2020 Notes total aggregate purchase price
as of December 31, 2016, including the Company and its subsidiaries remained outstanding. (including premiums and accrued
the breakdown between fixed for the issuance of letters of • $228 million of its U.S. dollar interest) of $347 million. Following
rate and variable rate debt, credit and other instruments. denominated 5.25% Notes due this purchase, $1,177 million
is set forth in note 6 to the The terms of the letters of credit August 5, 2020 (the “August 2020 principal amount of the 2021
consolidated financial statements. and other instruments contain Notes”) for a total aggregate Notes remained outstanding.
Further information regarding certain restrictions as to duration. purchase price (including
ArcelorMittal’s use of financial The Letter of Credit Facility was premiums and accrued interest) On June 3, 2016, at maturity,
instruments for hedging purposes amended on October 26, 2012, of $253 million. Following this ArcelorMittal repaid its €1 billion
is set forth in note 6 to the to reduce its amount to $450 purchase, $626 million principal 9.375% unsecured bonds.
consolidated financial statements. million. On September 30, 2014, amount of the August 2020
the Company refinanced its Letter Notes remained outstanding. On May 20, 2016, ArcelorMittal
Financings of Credit Facility by entering into • $421 million of its U.S. dollar redeemed its U.S. dollar
a $350 million revolving multi- denominated 5.50% Notes due denominated $1.4 billion 4.5%
The principal financings of currency letter of credit facility, March 1, 2021 (the “2021 Notes”) Notes due February 25, 2017, prior
ArcelorMittal and its subsidiaries which matures on September 30, for a total aggregate purchase to their scheduled maturity for a
are summarized below by 2018. price (including premiums total amount of $1,466 million,
category. Further information and accrued interest) of $469 including premium and accrued
regarding ArcelorMittal’s short- 2016 capital markets transactions million. Following this purchase, interest.
term and long-term indebtedness $756 million principal amount
is provided in note 6 to the On September 23, 2016, pursuant of the 2021 Notes remained In May 2016, pursuant to cash
consolidated financial statements. to cash tender offers, ArcelorMittal outstanding. tender offers, ArcelorMittal
purchased: purchased $408 million of its USD
Principal credit facilities The 6.250% Notes due February 2019 Notes for a total aggregate
• $420 million of its U.S. dollar 5, 2022 (the “2022 Notes”) were purchase price (including
On December 21, 2016, denominated 6.125% Notes included in the cash tender offer, premiums and accrued interest)
ArcelorMittal signed an agreement due June 1, 2018 (the “USD 2018 but none of the tendered Notes of $498 million. Following this
for a $5.5 billion revolving credit Notes”) for a total aggregate were accepted. purchase, $1,092 million principal
facility (the “Facility”). This Facility purchase price (including amount of the USD 2019 Notes
amends and restates the $6 billion premiums and accrued interest) On June 29 and July 14, 2016, remained outstanding.
revolving credit facility dated April of $457 million. Following this pursuant to cash tender offers,
30, 2015. The amended agreement purchase, $644 million principal ArcelorMittal repurchased: In April 2016, pursuant to cash
incorporates a first tranche of $2.3 amount of the USD 2018 Notes tender offers, ArcelorMittal
billion maturing on December 21, remained outstanding. • $113 million of its U.S. dollar repurchased:
2019, and a second tranche of $3.2 • $241 million of its U.S. dollar denominated June 2020 Notes for
billion maturing on December 21, denominated 9.85% Notes due a total aggregate purchase price • $437 million of its U.S. dollar
2021, restoring the Facility to the June 1, 2019 (the “USD 2019 (including premiums and accrued denominated USD 2018 Notes
original tenors of 3 years and 5 Notes”) for a total aggregate interest) of $119 million. Following for a total aggregate purchase
years. The Facility may be used for purchase price (including this purchase, $387 million price (including premiums
general corporate purposes. As of premiums and accrued interest) principal amount of the June 2020 and accrued interest) of $467
December 31, 2016, the $5.5 billion of $301 million. Following this Notes remained outstanding. million. Following this purchase,
revolving credit facility was fully purchase, $851 million principal • $147 million of its U.S. dollar $1,063 million principal amount
available. The Company makes amount of the USD 2019 Notes denominated August 2020 Notes of USD 2018 Notes remained
drawdowns from and repayments remained outstanding. for a total aggregate purchase outstanding.
26  Management report

• €460 million of its euro Other loans and facilities 31, 2016, the facilities, totaling meeting of shareholders held on
denominated 4.625% Notes due approximately $0.7 billion, remain May 5, 2015, and the dividend was
November 17, 2017 (the “Euro On December 20, 2013, fully available. paid in full on June 15, 2015.
2017 Notes”) for a total aggregate ArcelorMittal entered into a term On November 6, 2015,
purchase price (including loan facility in an aggregate True sale of receivables (“TSR”) ArcelorMittal’s Board of Directors
premiums and accrued interest) amount of $300 million, maturing programs proposed the suspension of
of €511 million. Following this on December 20, 2016. The facility the dividend for the financial
purchase, €540 million principal was repaid at maturity. The Company has established year 2015. This proposal was
amount of Euro 2017 Notes a number of programs for sales approved by the shareholders at
remained outstanding. On December 16, 2016, without recourse of trade accounts the annual general meeting held
• €166 million of its euro ArcelorMittal signed a €350 receivable to various financial on May 4, 2016. The Company has
denominated 4.50% Notes due million finance contract with institutions (referred to as True indicated that a dividend will not
March 29, 2018 (the “Euro 2018 the European Investment Bank Sale of Receivables (“TSR”)) for be proposed until its leverage has
Notes”) for a total aggregate in order to finance European an aggregate amount of $5,222 further improved.
purchase price (including research, development and million as of December 31, 2016.
premiums and accrued interest) innovation projects over the This amount represents the ArcelorMittal held 7,222,439 shares
of €181 million. Following this period 2017-2020 within the maximum amount of unpaid in treasury as of December 31,
purchase, €334 million principal European Union, predominantly receivables that may be sold and 2016, as compared to 8,581,090
amount of the Euro 2018 Notes in France, Belgium and Spain, but outstanding at any given time. shares as of December 31, 2015.
remained outstanding. also in Czech Republic, Poland, Of this amount, the Company As of December 31, 2016, the
Luxembourg and Romania. has utilized $4,708 million and number of shares held by the
Mandatory convertible bond This operation benefits from a $4,580 million, as of December Company in treasury represented
guarantee from the European 31, 2016 and 2015, respectively. approximately 0.24% of the
On November 23, 2015, the Union under the European Fund Through the TSR programs, Company’s total issued share
Company announced the for Strategic Investments. As of certain operating subsidiaries capital.
extension of the conversion date December 31, 2016, the facility of ArcelorMittal surrender
for the $1 billion privately placed remains fully available. the control, risks and benefits Pension/OPEB liabilities
mandatory convertible bond (the associated with the accounts
“MCB”) issued on December 28, On July 15, 2010, the Company receivable sold; therefore, the The defined benefit liabilities for
2009 by one of its wholly-owned entered into an agreement amount of receivables sold is employee benefits decreased
Luxembourg subsidiaries. This with the EIB for the financing of recorded as a sale of financial $1.0 billion to $8.1 billion as of
amendment to the MCB, which activities for research, engineering assets and the balances are December 31, 2016, as compared
is mandatorily convertible into and technological innovation removed from the consolidated to $9.1 billion as of December
preferred shares of such subsidiary, related to process improvements statements of financial position 31, 2015. The decrease is mainly
was executed on November 20, and new steel product at the moment of sale. The total due to the ratification of the new
2015. The mandatory conversion developments. The full amount amount of receivables sold under labor agreement by the United
date of the bond has been of €250 million was drawn on TSR programs and derecognized Steelworkers “USW” in June 2016
extended to January 31, 2018. September 27, 2011 and repaid at in accordance with IAS 39 for the with changes mainly to healthcare
The other main features of maturity on September 27, 2016. years ended 2016, 2015 and 2014 post-retirement benefits in
the MCB remain unchanged. was $33.5 billion, $33.1 billion ArcelorMittal USA resulting in a
The bond was privately placed On May 23, 2016, ArcelorMittal and $37.8 billion, respectively gain of $832 million, return on
with a Luxembourg affiliate of USA LLC signed a $1 billion senior (with amounts of receivables sold plan assets and other actuarial
Credit Agricole Corporate and secured asset-based revolving converted to U.S. dollars at the assumptions, partially offset by
Investment Bank and is not listed. credit facility maturing on May monthly average exchange rate). an increase due to the decreased
In connection with the extension 23, 2021. Borrowings under the Expenses incurred under the TSR discount rates during 2016. For
of the conversion date of the MCB, facility are secured by inventory programs (reflecting the discount additional information with
ArcelorMittal also extended the and certain other working capital granted to the acquirers of the respect to the Company’s pension
maturities of the equity-linked and related assets of ArcelorMittal accounts receivable) recognized plan and OPEB liabilities, including
notes in which the proceeds of the USA and certain of its subsidiaries in the consolidated statements a breakdown by region and by
MCB issuances are invested. in the United States. The facility of operations for the years ended type of plan, see note 7.2 to the
may be used for general corporate December 31, 2016, 2015 and 2014 consolidated financial statements.
Commercial paper program purposes. The facility is not were $106 million, $116 million
guaranteed by ArcelorMittal. As and $150 million, respectively. Sources and uses of cash
ArcelorMittal has a commercial of December 31, 2016, $0.5 billion
paper program enabling was drawn. Earnings distribution Years ended December 31, 2016,
borrowings of up to €1 billion. 2015 and 2014
As of December 31, 2016, the During the six months ended On February 13, 2015,
outstanding amount was $392 June 30, 2014, ArcelorMittal ArcelorMittal’s Board of Directors The following table presents
million, compared to $71 million as entered into certain short-term announced a gross dividend a summary of cash flow of
of December 31, 2015. committed bilateral credit facilities. payment of $0.20 per share. The ArcelorMittal:
The facilities were extended in dividend was approved by the
2015 and 2016. As of December shareholders at the annual general

Summary of Cash Flow For the year endend December 31,


(in $ millions) 2016 2015 2014
Net cash provided by operating activities 2,708 2,151 3,870
Net cash used in investing activities (1,143) (2,170) (3,077)
Net cash (used in) provided by financing activities (2,926) 395 (2,750)
Management report  27

Net cash provided by operating ArcelorMittal’s major capital Net cash (used in) provided by Dividends paid during the year
activities expenditures in the year ended financing activities ended December 31, 2014 were
December 31, 2016 included the $0.5 billion, including $328 million
For the year ended December following projects: the Indiana Net cash used by financing paid to ArcelorMittal shareholders,
31, 2016, net cash provided by Harbor footprint optimization activities was $2.9 billion for the $22 million paid to holders of
operating activities increased project in NAFTA; an upgrade year ended December 31, 2016, subordinated perpetual capital
to $2.7 billion, as compared HSM and new furnace in Gent as compared to net cash provided securities and $108 million paid
with $2.2 billion for the year and annealing line transformation by financing activities of $0.4 to non-controlling shareholders in
ended December 31, 2015. The in Liège; the conversion of the billion in 2015. The increase in cash subsidiaries.
increase in net cash provided by current galvanizing line #4 used in financing activities was
operating activities is mainly due in ArcelorMittal Dofasco to a primarily due to $6.0 billion net Equity
to decreased costs, a decrease in Galvalume line; the meltshop payments/proceeds for short and
interest paid following the debt expansion in Juiz de Fora; the long-term debt, partially offset by Equity attributable to the equity
repayments as discussed below, HRM extension and HDG increase the $3.1 billion proceeds from the holders of the parent increased
partially offset by an investment in at ArcelorMittal Krakow; the Company’s equity offering. For to $30.1 billion at December 31,
“operating working capital” of $1.0 construction of a new rolling mill in further details, see “Liquidity and 2016, as compared to $25.3 billion
billion which represents changes Acindar and the expansion project capital resources” above. at December 31, 2015, primarily
in cash flows for trade accounts in Liberia. See “Capital expenditure due to net income attributable to
receivable ($0.4 billion), inventories projects” for a summary of these Net cash provided by financing the equity holders of the parent
($2.1 billion) and trade accounts and other projects. activities was $0.4 billion for the of $1.8 billion and the equity
payable and other ($1.4 billion). year ended December 31, 2015, offering for $3.1 billion. See note
Net cash used in investing as compared to net cash used 10 to ArcelorMittal’s consolidated
For the year ended December activities was $2.2 billion for the in financing activities of $2.8 financial statements for the year
31, 2015, net cash provided by year ended December 31, 2015 as billion in 2014. The decrease in ended December 31, 2016.
operating activities decreased compared to $3.1 billion for the cash used in financing activities
to $2.2 billion, as compared with year ended December 31, 2014. was primarily due to $3.8 billion Equity attributable to the equity
$3.9 billion for the year ended This decrease is mainly related to in proceeds from the issuance holders of the parent decreased
December 31, 2014, mainly due a decrease in capital expenditures, of short and long-term debt to $25.3 billion at December 31,
to an operating working capital which amounted to $2.7 billion for partly offset by payments of $3.0 2015, as compared to $42.1 billion
investment. Net cash provided the year ended December 31, 2015 billion for short and long-term at December 31, 2014, primarily
by operating activities for the as compared to $3.7 billion for the debt. Proceeds included receipts due to a $8.2 billion decrease in
year ended December 31, 2015 year ended December 31, 2014. from the issuance of debenture the foreign exchange translation
included an investment in Net inflows from other investing loans amounting to $2.6 billion, reserve as a result of the
operating working capital for $0.4 activities amounted to $0.5 billion including $2.1 billion related to depreciation of most currencies
billion, including a $0.3 billion including an inflow of $0.2 billion the issuance of Notes under the against the U.S. dollar, $0.1 billion
decrease in accounts receivable for the sale of tangible assets Company’s Euro Medium Term of recognized actuarial losses,
and $0.3 billion decrease in (including the Liberté building in Notes Programme (€750 million a $0.3 billion decrease in the
inventories, partially offset by an Luxembourg), $0.1 billion from the 3.125% Notes due January 14, revaluation reserve on derivative
increase in trade payables of $1.0 exercise of the fourth put option 2022, €400 million Floating Rate instruments and available-for-sale
billion. on Hunan Valin shares and $0.1 Notes due April 9, 2018, €500 securities, the net loss attributable
billion for cash collateral received. million 3.00% Notes due April 9, to the equity holders of the parent
Net cash used in investing In 2015, capital expenditure of $2.7 2021 and CHF 225 million 2.5% of $7.9 billion and dividend
activities billion included $2.2 billion related Notes due July 3, 2020) and $1 payments of $0.3 billion. See note
to non-growth projects (including billion in proceeds from the 10 to ArcelorMittal’s consolidated
Net cash used in investing health and safety investments) issuance of $500 million 5.125% financial statements for the year
activities was $1.1 billion for the and $0.5 billion dedicated to Notes due June 1, 2020 and $500 ended December 31, 2016.
year ended December 31, 2016 as growth projects mainly in Mining. million 6.125% Notes due June 1,
compared to $2.2 billion for the ArcelorMittal’s major capital 2025. Payments mainly include the Research and Development,
year ended December 31, 2015. expenditures in the year ended repayment of a $1.0 billion loan Patents and Licenses
This decrease is mainly related to December 31, 2015 included the with a financial institution and the
cash inflows from other investing following major projects: wire redemption of the Company’s $1 Costs relating to research and
activities which includes $1.0 rod production expansion in billion 3.75% Unsecured Notes development, patents and
billion proceeds from the sale of Monlevade; the construction of a due August 5, 2015, and its $500 licenses were not significant as a
ArcelorMittal’s stake in Gestamp, heavy gauge galvanizing line to million 3.75% notes due March percentage of sales. Research and
$0.2 billion proceeds from the sale optimize galvanizing operations 1, 2016, prior to their scheduled development costs expensed (and
of ArcelorMittal’s stake in Hunan in ArcelorMittal Dofasco rebar; maturity. included in selling, general and
Valin, $0.1 billion proceeds from the meltshop expansion in Juiz de administration expenses) in 2016,
the sale of ArcelorMittal Zaragoza Fora; the HRM extension and HDG Dividends paid to non-controlling 2015 and 2014, amounted to $239
and $0.1 billion proceeds from the increase at ArcelorMittal Krakow; shareholders in subsidiaries during million, $227 million and $259
sale of Long Carbon facilities in the construction of a new rolling the year ended December 31, million, respectively.
the U.S., LaPlace and Vinton. These mill in Acindar and the expansion 2016 was $61 million. Dividends
cash inflows are offset by capital project in Liberia. paid during the year ended Trend Information
expenditures of $2.4 billion for the December 31, 2015 were $0.4
year ended December 31, 2016, a In 2017, capital expenditure is billion, including $331 million paid All of the statements in this “Trend
decrease from $2.7 billion for the expected to be approximately $2.9 to ArcelorMittal shareholders and Information” section are subject to
year ended December 31, 2015. billion. See “Capital expenditure $85 million paid to non-controlling and qualified by the information
projects”. shareholders in subsidiaries. set forth under the “Cautionary
28  Management report

Statement Regarding Forward- to $5.0 billion (from $4.5 billion amounts, such amounts have not As part of its financial risk
Looking Statements”. See also in 2016). The Company expects been comprehensively revalued management activities,
“Key factors affecting results of the working capital needs of the for purposes of this annual report ArcelorMittal uses derivative
operations”. business to be largely determined since that date, and therefore, instruments to manage its
by price developments during the the current estimates of fair value exposure to changes in interest
Outlook course of the year. may differ significantly from the rates, foreign exchange rates
amounts presented below. The and commodities prices. These
Global apparent steel Own iron ore production for the estimated fair values of certain instruments are principally interest
consumption (“ASC”) is estimated mining segment is expected financial instruments have been rate, currency and commodity
to have expanded by 1% in 2016. to increase in 2017 with the determined using available swaps, spots and forwards.
Based on the current economic transition to the Gangra deposit market information or other ArcelorMittal may also use futures
outlook, ArcelorMittal expects in Liberia (project under review valuation methodologies that and options contracts.
global ASC to grow further in 2017 and subject to Board of Directors require considerable judgment
by between 0.5% and 1.5%. By approval - additional production to in interpreting market data and Counterparty risk
region: ASC in the U.S. declined potentially reach 3 million tonnes developing estimates.
in 2016 by approximately 1.0% per year, representing an increase ArcelorMittal has established
to 1.5%, driven in large part by a of 1 million tonnes per year as See note 6 to ArcelorMittal’s detailed counterparty limits to
significant destock in the second compared to 2016, until full ramp consolidated financial statements mitigate the risk of default by its
half of 2016. However, underlying up to 5 million tonnes per year in for quantitative information counterparties. The limits restrict
demand continues to expand 2018) and the restart of the Volcan about risks relating to financial the exposure ArcelorMittal may
and the expected absence of a mine in Mexico in the first quarter instruments, including financial have to any single counterparty.
further destock in 2017 should of 2017 for the remainder of 2017 instruments entered into Counterparty limits are calculated
support ASC growth in the U.S. due to economical extraction pursuant to the Company’s risk taking into account a range of
of approximately 3.0% to 4.0% (additional 2 million tonnes) and management policies. factors that govern the approval
in 2017. In Europe, ArcelorMittal production recovery in Ukraine of all counterparties. The factors
expects the pick-up in underlying following resolution of issues Risk management include an assessment of the
demand to continue, supported described above. counterparty’s financial soundness
by the strength of the automotive ArcelorMittal has implemented and its ratings by the major rating
end market, but apparent demand The Board of Directors has strict policies and procedures to agencies, which must be of a high
is expected to grow modestly reviewed the progress made manage and monitor financial quality. Counterparty limits are
by 0.5% to 1.5% in 2017 (versus in 2016, and although not market risks. Organizationally, monitored on a periodic basis.
growth of 1.5% to 2.0% in 2016). concerned by the sustainability supervisory functions are
In Brazil, following the significant of the Company’s performance, it separated from operational All counterparties and their
decline in ASC in 2016 (13.0% to nevertheless wants to see further functions, with proper segregation respective limits require the prior
13.5%) ASC is expected to grow by progress. As such, deleveraging of duties. Financial market approval of the Corporate Finance
3% to 4% in 2017 as the economy remains the near-term priority for activities are overseen by the CFO, and Tax Committee. Standard
mildly recovers as consumer surplus cash flow and the Board the Corporate Finance and Tax agreements, such as those
confidence returns. In the CIS, of Directors decided against Committee and the CEO Office. published by the International
following an ASC decline of 3.5% proposing a dividend from 2016 Swaps and Derivatives Association,
to 4.0% in 2016, the region should earnings. All financial market risks are Inc. (ISDA) are negotiated
stabilize in 2017 with ASC similar managed in accordance with with all ArcelorMittal trading
to 2016 levels (decline from a Disclosures about market risks the Treasury and Financial Risk counterparties.
negative 0.5% to a positive 0.5%). Management Policy. These risks are
In China, following ASC growth ArcelorMittal is exposed to a managed centrally through Group Currency exposure
of 1% to 1.5% in 2016, demand number of different market risks Treasury by a group specializing
is expected to stabilize in 2017 arising from its normal business in foreign exchange, interest rate, ArcelorMittal seeks to manage
(decline of around 0% to 1.0%) activities. Market risk is the commodity, internal and external each of its entities’ exposure to its
as the ongoing weakness in the possibility that changes in raw funding and cash and liquidity operating currency. For currency
real estate sector is expected materials prices, foreign currency management. exposure generated by activities,
to be offset in part by robust exchange rates, interest rates, the conversion and hedging of
infrastructure and automotive end base metal prices (zinc, nickel, All financial market hedges are revenues and costs in foreign
markets. aluminum and tin) and energy governed by ArcelorMittal’s currencies is typically performed
Capital expenditure spend in 2017 prices (oil, natural gas and power) Treasury and Financial Risk using currency transactions on the
is expected to increase to $2.9 will adversely affect the value of Management Policy, which spot market and forward market.
billion (from $2.4 billion in 2016) ArcelorMittal’s financial assets, includes a delegated authority For some of its business segments,
as the Company seeks to capitalize liabilities or expected future cash and approval framework, sets ArcelorMittal hedges future cash
on opportunities to grow value flows. the boundaries for all hedge flows.
and returns. In addition, interest activities and dictates the required
expense is expected to decline The fair value information approvals for all Treasury activities. Because a substantial portion
to $0.9 billion (as compared presented below is based on Hedging activity and limits of ArcelorMittal’s assets,
to $1.1 billion in 2016); while the information available to are monitored on an ongoing liabilities, sales and earnings
cash payments for taxes and management as of the date of basis. ArcelorMittal enters into are denominated in currencies
contributions to fund pensions the consolidated statements transactions with numerous other than the U.S. dollar (its
are expected to increase by $0.2 of financial position. Although counterparties, mainly banks and reporting currency), ArcelorMittal
billion. As a result, the Company ArcelorMittal is not aware of any financial institutions, as well as has exposure to fluctuations in
expects these cash requirements factors that would significantly brokers, major energy producers the values of these currencies
of the business in 2017 to increase affect the estimated fair value and consumers. relative to the U.S. dollar. These
Management report  29

currency fluctuations, especially in a different currency. For ArcelorMittal faces translation risk, on net debt denominated in a
the fluctuation of the value of the example, ArcelorMittal’s non-U.S. which arises when ArcelorMittal currency different than the euro, is
U.S. dollar relative to the euro, subsidiaries may purchase raw translates the financial statements computed based on historical data
the Canadian dollar, Brazilian real, materials, including iron ore and of its subsidiaries, denominated of how such currency would move
South African rand, Kazakh tenge coking coal, in U.S. dollars, but in currencies other than the against the U.S. dollar when the
and Ukrainian hryvnia, as well may sell finished steel products in U.S. dollar for inclusion in U.S. dollar appreciates/depreciates
as fluctuations in the currencies other currencies. Consequently, an ArcelorMittal’s consolidated 10% against the euro. A positive
of the other countries in which appreciation of the U.S. dollar will financial statements. sign means an increase in the net
ArcelorMittal has significant increase the cost of raw materials, debt.
operations and/or sales, could thereby negatively impacting the The tables below illustrate the
have a material impact on its Company’s operating margins, impact of an appreciation and
results of operations. unless the Company is able to pass a depreciation of the U.S. dollar
along the higher cost in the form of 10% against the euro, on the
ArcelorMittal faces transaction of higher selling prices. conversion of the net debt of
risk, where its businesses generate ArcelorMittal into U.S. dollars
sales in one currency but incur as of December 31, 2016 and
costs relating to that revenue December 31, 2015. The impact
Impact on net debt translation of a 10% Impact on net debt translation of a 10% depreciation of
Currency appreciation of the U.S. dollar against the euro the U.S. dollar against the euro
in $ equivalent in $ equivalent
In 2016 (in millions) (in millions)
Chinese renminbi 2 (2)
Euro (392) 392
Moroccan dirham 4 (4)
South African rand (1) 1
Swiss franc (14) 16
Ukrainian hryvnia 1 (1)
Other 8 (5)

Impact on net debt translation of a 10% Impact on net debt translation of a 10% depreciation of
Currency appreciation of the U.S. dollar against the euro the U.S. dollar against the euro
in $ equivalent in $ equivalent
In 2015 (in millions) (in millions)
Brazilian real (13) 17
Canadian dollar 16 (18)
Euro (420) 420
South African rand 1 (1)

Derivative instruments Interest rate sensitivity Commodity price risk For the Company’s tabular
presentation of information
ArcelorMittal uses derivative Cash balances, which are primarily ArcelorMittal utilizes a number of related to its market risk sensitive
instruments to manage its composed of euros and U.S. dollars, exchange-traded commodities instruments, please see note
exposure to movements in interest are managed according to the short in the steel-making process. In 6 to the consolidated financial
rates, foreign exchange rates and term (up to one year) guidelines certain instances, ArcelorMittal is statements.
commodity prices. Changes in the established by senior management the leading consumer worldwide
fair value of derivative instruments on the basis of a daily interest rate of certain commodities. In some In respect of non-exchange traded
are recognized in the consolidated benchmark, primarily through businesses and in certain situations, commodities, ArcelorMittal is
statements of operations or in short-term currency swaps, without ArcelorMittal is able to pass this exposed to volatility in the prices
equity according to nature and modifying the currency exposure. exposure on to its customers. The of raw materials such as iron ore
effectiveness of the hedge. residual exposures are managed as (which is generally correlated
Interest rate risk on debt appropriate. with steel prices with a time lag)
Derivatives used are non-exchange- and coking coal. This exposure is
traded derivatives such as over-the- ArcelorMittal’s policy consists of Financial instruments related to almost entirely managed through
counter swaps, options and forward incurring debt at fixed and floating commodities (base metals, energy, long-term contracts, however some
contracts. interest rates, primarily in U.S. freight and emission rights) are hedging of iron ore exposures is
dollars and euros according to utilized to manage ArcelorMittal’s made through derivative contracts.
For the Company’s tabular general corporate needs. Interest exposure to price fluctuations. For a more detailed discussion of
presentation of information rate and currency swaps are utilized ArcelorMittal’s iron ore and coking
related to its market risk sensitive to manage the currency and/or Hedges in the form of swaps and coal purchases, see “Raw materials”.
instruments, please see note interest rate exposure of the debt. options are utilized to manage
6 to the consolidated financial the exposure to commodity price
statements. For the Company’s tabular fluctuations.
presentation of the fair values of its
short and long term debt, please
see note 6 to the consolidated
financial statements.
30  Management report

Group operational structure

ArcelorMittal is a holding company with no business operations of its own. All of


ArcelorMittal’s significant operating subsidiaries are indirectly owned by ArcelorMittal
through intermediate holding companies. The following chart represents the operational
structure of the Company, including ArcelorMittal’s significant operating subsidiaries and
ArcelorMittal
not its legal or ownership structure.

NAFTA Europe

ArcelorMittal ArcelorMittal AMFCE ArcelorMittal ArcelorMittal


Mexico USA Belgium Belval &
Differdange

ArcelorMittal ArcelorMittal ArcelorMittal ArcelorMittal ArcelorMittal


Las Truchas Dofasco España Eisenhüttenstadt Hamburg

ArcelorMittal ArcelorMittal ArcelorMittal ArcelorMittal


Long Products Ostrava Duisburg Poland
Canada

ArcelorMittal ArcelorMittal ArcelorMittal


Méditerranée Bremen Galati

ArcelorMittal
Atlantique &
Lorraine
Management report  31

Brazil ACIS Mining

ArcelorMittal Acindar ArcelorMittal ArcelorMittal ArcelorMittal ArcelorMittal


Brasil South Africa Kryvyi Rih Mines and Kryvyi Rih
Infrastructure
Canada

ArcelorMittal ArcelorMittal ArcelorMittal ArcelorMittal


Temirtau International Termitau Liberia
Luxembourg
32  Management report

The following table identifies each significant operating subsidiary of ArcelorMittal, including the country of incorporation. Please refer to note
2.2.1 of the consolidated financial statements for the ownership percentages of these subsidiaries. Unless otherwise stated, the subsidiaries
as listed have share capital consisting solely of ordinary shares, which are held directly or indirectly by the Company and the proportion of
ownership interests held equals to the voting rights held by the Company.

Name of Subsidiary Abbreviation Country


NAFTA
ArcelorMittal Dofasco G.P. ArcelorMittal Dofasco Canada
ArcelorMittal México S.A. de C.V. ArcelorMittal Mexico Mexico
ArcelorMittal USA LLC ArcelorMittal USA USA
ArcelorMittal Las Truchas, S.A. de C.V. ArcelorMittal Las Truchas Mexico
ArcelorMittal Long Products Canada G.P. ArcelorMittal Long Products Canada Canada

Brazil and neighboring countries ("Brazil")


ArcelorMittal Brasil S.A. ArcelorMittal Brasil Brazil
Acindar Industria Argentina de Aceros S.A. Acindar Argentina

Europe
ArcelorMittal Atlantique et Lorraine S.A.S. ArcelorMittal Atlantique & Lorraine France
ArcelorMittal Belgium N.V. ArcelorMittal Belgium Belgium
ArcelorMittal España S.A. ArcelorMittal España Spain
ArcelorMittal Flat Carbon Europe S.A. AMFCE Luxembourg
ArcelorMittal Galati S.A. ArcelorMittal Galati Romania
ArcelorMittal Poland S.A. ArcelorMittal Poland Poland
ArcelorMittal Eisenhüttenstadt GmbH ArcelorMittal Eisenhüttenstadt Germany
ArcelorMittal Bremen GmbH ArcelorMittal Bremen Germany
ArcelorMittal Méditerranée S.A.S. ArcelorMittal Méditerranée France
ArcelorMittal Belval & Differdange S.A. ArcelorMittal Belval & Differdange Luxembourg
ArcelorMittal Hamburg GmbH ArcelorMittal Hamburg Germany
ArcelorMittal Ostrava a.s. ArcelorMittal Ostrava Czech Republic
ArcelorMittal Duisburg GmbH ArcelorMittal Duisburg Germany

Africa and Commonwealth of Independent


States ("ACIS")
ArcelorMittal South Africa Ltd. ArcelorMittal South Africa South Africa
JSC ArcelorMittal Temirtau ArcelorMittal Temirtau Kazakhstan
PJSC ArcelorMittal Kryvyi Rih ArcelorMittal Kryvyi Rih Ukraine
ArcelorMittal International Luxembourg S.A. ArcelorMittal International Luxembourg Luxembourg

Mining
ArcelorMittal Mining Canada G.P. and
ArcelorMittal Infrastructure Canada G.P.1 ArcelorMittal Mines and Infrastructure Canada Canada
ArcelorMittal Liberia Ltd ArcelorMittal Liberia Liberia
JSC ArcelorMittal Temirtau ArcelorMittal Temirtau Kazakhstan
PJSC ArcelorMittal Kryvyi Rih ArcelorMittal Kryvyi Rih Ukraine

1
The business formerly carried on by ArcelorMittal Mines Canada Inc. is now carried on by ArcelorMittal Mining Canada G.P. and ArcelorMittal Infrastructure G.P.

Key transactions and events in • During 2016, ArcelorMittal using a new class of notionally Share Trust for the benefit of
2016 completed certain divestment funded shares to a special AMSA employees and AMSA
and other investment purpose vehicle owned by management. All the shares
ArcelorMittal’s principal transactions not listed below. Likamva Resources Proprietary have certain restrictions
investments, acquisitions and Please refer to notes 2.3 and 2.5 Limited (Likamva). Likamva on disposal for a period of
disposals, and other key events to the consolidated financial has undertaken to introduce 10 years (“Lock-in Period”),
that occurred during the year statements within this report for broad-based social and thereby promoting long-term
ended December 31, 2016 are a summary of the transactions. community development sustainable B-BBEE in AMSA.
summarized below. organizations as shareholders The shares were issued on
• On September 28, 2016, to hold an effective 5% interest December 7, 2016.
• During 2016, ArcelorMittal ArcelorMittal South Africa (of the 17%, leaving Likamva
completed several financing (“AMSA”) announced that it with a 12% shareholding)
and repayment transactions. had entered into agreements within 24 months; and a
Please refer to “Liquidity and to implement a Broad-Based 5.1% shareholding in AMSA
capital resources Financings” for Black Economic Empowerment using another new class of
a summary of the transactions. (B-BBEE) transaction which notionally funded shares to
includes: the issuance of a the ArcelorMittal South Africa
17% shareholding in AMSA Employee Empowerment
Management report  33

• On August 2, 2016, the Company Following the equity offering, the HKEx listing requirement. The service to its customer base.
signed an agreement for the sale ArcelorMittal’s issued share trading of China Oriental’s shares, The transaction is subject to
of its 10.08% interest in Hunan capital consists of 3,065,710,869 which had been suspended regulatory approvals in Brazil,
Valin to a private equity fund. shares without nominal value. since April 29, 2014, resumed including the approval of the
On September 14, 2016, the on February 1, 2017. Following Brazilian anti-trust authority
Company transferred the Hunan • On April 4, 2016, ArcelorMittal this share placing, ArcelorMittal’s CADE.
Valin shares and simultaneously completed the sale of its US interest in China Oriental
received the full proceeds of LaPlace and Vinton Long Carbon decreased to 39%. Corporate governance
$165 million (RMB1,103 million) facilities to an affiliate of Black
from the buyer and recorded a Diamond Capital Management • On February 10, 2017, The “Corporate Governance”
gain of $74 million. (‘Black Diamond’). The LaPlace, ArcelorMittal’s announced section of ArcelorMittal’s Annual
Louisiana facility, along with that its Board of Directors has Report 2016 contains a full
• On July 28, 2016, ArcelorMittal a rolling mill in Harriman, proposed a share consolidation overview of the Company’s
signed an agreement with Tennessee, produces billets, based on a ratio 1:3, where every corporate governance practices.
Megasa Siderúrgica S.L. for angles, flats, channels and beams. three current shares will be
the sale of its wholly owned The Vinton facility, located in El consolidated into one share (with Directors and senior management
subsidiary ArcelorMittal Zaragoza Paso, Texas, produces rebar and a change to the number of shares
in Spain for total consideration grinding media. Simultaneously, outstanding and the nominal Board of Directors
of €80 million ($89 million). ArcelorMittal has entered into value of the shares outstanding).
The closing conditions were a transition services agreement This proposal is subject to ArcelorMittal places a strong
completed on September 30, with Black Diamond, in order shareholder approval at an emphasis on corporate
2016. to facilitate a smooth transition Extraordinary General Meeting governance. ArcelorMittal has
period and ensure no business of Shareholders expected to be eight independent directors on its
• On June 30, 2016, ArcelorMittal disruption. held on May 10, 2017 which, if 12 member Board of Directors. The
and Marcegaglia announced approved, will be implemented Board’s Audit & Risk Committee
that they had submitted • On February 1, 2016, shortly thereafter. Details will and Appointments, Remuneration
an indicative offer for the ArcelorMittal completed the be published in the convening and Corporate Governance
acquisition of Ilva (Italy), an sale of its 35% stake in Gestamp notice for the General Meeting of Committee (“ARCG Committee”)
Italian company engaged in Automoción (“Gestamp”) Shareholders that is expected to are each comprised exclusively of
the production and processing to the majority shareholder, be published in April 2017. independent directors.
of steel products, which has the Riberas family, for total
been declared insolvent and cash consideration of €875 • On February 23, 2017, The annual general meeting of
is currently subject to the million ($971 million) received ArcelorMittal and Votorantim shareholders on May 4, 2016
extraordinary administration of in the second quarter of S.A. announced the signing acknowledged the expiration of
the commissioners appointed 2016. In addition to the cash of an agreement, pursuant to the terms of office of Mrs. Vanisha
by the Italian Government. consideration, ArcelorMittal which Votorantim’s long steel Mittal Bhatia, Mrs. Suzanne
The commissioners are received a payment of €10 businesses in Brazil, Votorantim Nimocks and Mr. Jeannot Krecké.
carrying out a procedure for million ($11 million) for the Siderurgia, will become a
the lease and subsequent 2015 dividend in the second subsidiary of ArcelorMittal At the same meeting, the
sale of the businesses of Ilva quarter of 2016. ArcelorMittal will Brasil and Votorantim will hold shareholders re-elected Mrs.
and its subsidiaries through a continue its supply relationship a non-controlling interest in Vanisha Mittal Bhatia, Mrs. Suzanne
competitive bid process, which is with Gestamp through its 35% ArcelorMittal Brasil. Votorantim’s Nimocks and Mr. Jeannot Krecké
ongoing. shareholding in Gonvarri Steel long steel operations in for a new term of three years each.
Industries, a sister company of Argentina (Acerbrag) and The shareholders also elected Mr.
• On June 23, 2016, ArcelorMittal Gestamp. ArcelorMittal sells Colombia (PazdelRío) were not Karel de Gucht for a three-year
announced its new contract with coils to Gonvarri Steel Industries included in the transaction. The term.
the United Steelworkers (USW) for processing before they combination of the businesses The Board of Directors is
was ratified by USW-represented pass to Gestamp and other will result in a long product steel composed of 12 directors, of which
employees. The three-year customers. Further, ArcelorMittal producer with annual crude steel 11 are non-executive directors and
collective bargaining agreement will continue to have a board capacity of 5.6 million tonnes eight are independent directors.
covers more than 12,000 USW- presence in Gestamp, collaborate and annual rolling capacity of 5.4 The Board of Directors comprises
represented employees at 13 in automotive R&D and remain million tonnes. The combined only one executive director, Mr.
of the Company’s United States its major steel supplier. operations include ArcelorMittal Lakshmi N. Mittal, the Chairman
facilities in Indiana, Illinois, Brasil’s production sites at and Chief Executive Officer of
Minnesota, Ohio, Pennsylvania Monlevade, Cariacica, Juiz de ArcelorMittal.
and West Virginia. Recent developments Fora, Piracicaba and Itaúna,
and Votorantim Siderurgia’s Mr. Lewis B. Kaden is the Lead
• On April 8, 2016, ArcelorMittal • On January 27, 2017, China production sites at Barra Mansa, Independent Director. In the
completed an equity offering Oriental, a Chinese integrated Resende and its participation most recent assessment of the
with net proceeds of $3.1 billion. iron and steel conglomerate in Sitrel, in Três Lagoas. The Company’s leadership structure,
New shares of 1,262,351,531 listed on the Hong Kong Stock merger is expected to generate the ARCG Committee reviewed
were issued at a subscription Exchange (“HKEx”) in which cost, logistical and operational the key duties and responsibilities
price of €2.20 per new share. ArcelorMittal held a 47% synergies. The combined of the Company’s Chairman and
The Mittal family trust entities associated interest, announced businesses’ production Chief Executive Officer and its Lead
exercised their rights for the completion of a share placing facilities are geographically Independent Director as follows:
new shares pro rata to their in order to restore the minimum complementary, enabling closer
shareholding of 37.38%. 25% free float requirement as per proximity and higher levels of
34  Management report

Chairman Lead Independent Director


* Chairs the Board of Directors and shareholders’ meetings * Provides independent leadership to the Board of Directors
* Works with the Lead Independent Director to set agenda for the Board of Directors and * Presides at executive sessions of independent directors
review schedule of the meetings
* Advises the Chairman of any decisions reached and suggestions made at the executive
* Serves as a public face of the Board of Directors and of the Company sessions, as appropriate
* Serves as a resource for the Board of Directors * Coordinates the activities of the other independent directors
* Guides discussions at the Board of Directors meetings and encourages directors to * Oversees Board of Directors' governance processes, including succession planning and
express their positions other governance-related matters
* Communicates significant business developments and time-sensitive matters to the * Liaison between the Chairman and the other independent directors
Board of Directors
* Is responsible for managing day-to-day business and affairs of the Company * Calls meetings of the independent directors when necessary and appropriate
* Interacts with the CEO Office and Executive Officers of the Company and frequently * Leads the Board of Directors’ self-evaluation process and such other duties as are
meets stakeholders and provides feedback to the Board of Directors assigned from time to time by the Board of Directors

The members of the Board of Directors are set out below:


Name Age4 Date of joining the Board5 End of Term Position within ArcelorMittal
Chairman of the Board of Directors
Lakshmi N. Mittal 66 May 1997 May 2017 and Chief Executive Officer
Lewis B. Kaden 1 2 3 74 April 2005 May 2017 Lead Independent Director
Vanisha Mittal Bhatia 36 December 2004 May 2019 Director
Narayanan Vaghul1 3 80 July 1997 May 2018 Director
Wilbur L. Ross1 3 79 April 2005 May 2018 Director
Jeannot Krecké 66 January 2010 May 2019 Director
Suzanne P. Nimocks2 3 57 January 2011 May 2019 Director
Bruno Lafont1 3 60 May 2011 May 2017 Director
Tye Burt2 3 59 May 2012 May 2018 Director
Michel Wurth 62 May 2014 May 2017 Director
Karyn Ovelmen1 3 53 May 2015 May 2018 Director
Karel de Gucht1 3 62 May 2016 May 2019 Director
1
Member of the Audit & Risk Committee.
2
Member of the Appointments, Remuneration and Corporate Governance Committee.
3
Non-executive and independent director.
4
Age as of December 31, 2016.
5
Date of joining the Board of ArcelorMittal or, if prior to 2006, its predecessor Mittal Steel Company NV.

Mr. Antoine Spillmann stepped is an active philanthropist and a International and LNM Holdings vision, entrepreneurship,
down from the Board in May 2016. member of various boards and to form Mittal Steel in December leadership and success in global
trusts, including chairman of 2004, with the simultaneous steel development. He was named
Anne van Ysendyck is the Group the board of Aperam and the acquisition of International Steel Fortune magazine’s ‘European
General Counsel and Company boards of Goldman Sachs and Group, he led the formation of Businessman of the Year 2004’.
Secretary and, accordingly, acts as Airbus N.V (previously EADS NV). the world’s steel producer at the Mr. Mittal was awarded ‘Business
secretary of the Board of Directors. He is a member of the Foreign time. In 2006, he orchestrated Person of 2006’ by the Sunday
Investment Council in Kazakhstan, Mittal Steel and Arcelor’s merger Times, ‘International Newsmaker
Lakshmi N Mittal, 66, is the the World Economic Forum’s to form ArcelorMittal. Mr. Mittal of the Year 2006’ by Time Magazine
Chairman and Chief Executive International Business Council then led a successful integration and ‘Person of the Year 2006’ by the
Officer of ArcelorMittal. Mr. and the World Steel Association’s of two large entities to firmly Financial Times for his outstanding
Mittal started his career in steel Executive Committee. He also establish ArcelorMittal as one of business achievements. In January
in 1976 by founding Ispat Indo, a sits on the Board of Trustees of the foremost industrial companies 2007, Mr. Mittal was presented
company that is still held privately Cleveland Clinic in the United in the world. The company with a Fellowship from King’s
by the Mittal family. He founded States. Mr. Mittal began his career continues to be the largest and College London, the college’s
Mittal Steel Company (formerly working in his family’s steelmaking most global steel manufacturer. highest award. He also received
the LNM Group) in 1989 and business in India, and has over More recently, Mr. Mittal has in 2007 the Dwight D. Eisenhower
guided its strategic development, 35 years of experience working been leading ArcelorMittal’s Global Leadership Award, the
culminating in the merger in in steel and related industries. expansion of its mining business Grand Cross of Civil Merit from
2006 with Arcelor, to form the In addition to spearheading the through significant brownfield Spain and was named AIST
world’s largest steelmaker. He steel industry’s consolidation, he and greenfield growth. In 1996, Mr. Steelmaker of the year. In January
is widely recognized for the championed the development of Mittal was awarded ‘Steelmaker 2008, Mr. Mittal was awarded the
leading role he has played in integrated mini-mills and the use of the Year’ by New Steel in the Padma Vibhushan, India’s second
restructuring the steel industry of Direct Reduced Iron (DRI) as a United States and in 1998 the ‘Willy highest civilian honor, by the
towards a more consolidated scrap substitute for steelmaking. Korf Steel Vision Award’ by World President of India. In September
and globalized model. Mr. Mittal Following the merger of Ispat Steel Dynamics for outstanding 2008, Mr. Mittal was chosen for the
Management report  35

third ‘Forbes Lifetime Achievement Vanisha Mittal Bhatia, 36, is a on the Cyprus and Athens Stock February 1, 2012, Mr. Krecké retired
Award’, which honors heroes of non-independent Director of Exchanges and is a Director of Sun from government and decided to
entrepreneurial capitalism and free ArcelorMittal. She was appointed Bancorp (an “Over the Counter” end his active political career in
enterprise. In October 2010, he was as a member of the LNM Holdings - OTC entity), and of Exco, which order to pursue a range of different
awarded World Steel Association’s Board of Directors in June is listed on the New York Stock projects. Mr. Krecké is currently
medal in recognition of his services 2004. Ms. Vanisha Mittal Bhatia Exchange. Mr. Ross has a number the CEO of Key International
to the Association as its Chairman was appointed to Mittal Steel’s of non-profit affiliations. He is on Strategy Services. He is a member
and also for his contribution to the Board of Directors in December the Board of the Yale School of of the boards of JSFC Sistema, of
sustainable development of the 2004, where she worked in the Management and the Harvard East West United Bank, of China
global steel industry. In January Procurement department. She Business School Dean’s Advisory Construction Bank Europe, of
2013, Mr. Mittal was awarded with joined Aperam in April 2011 and is Board. Mr. Ross is Chairman of Calzedonia Finanziara S.A., Jan De
a Doctor Honoris Causa by the the Chief Strategy Officer. She has the Japan Society and of the Nul S.A. and Novenergia Holding
AGH University of Science and a Bachelor of Sciences from the Economic Studies Council of the Company S.A. Mr. Krecké is a
Technology in Krakow, Poland. European Business School. She is Brookings Institution, of which he citizen of Luxembourg.
Mr. Mittal was born in Sadulpur in also the daughter of Mr. Lakshmi is also a Trustee. He is the President
Rajasthan, India on June 15, 1950. N. Mittal. Mrs. Mittal Bhatia is a of the American Friends of the Suzanne P. Nimocks, 57, is a
He graduated from St. Xavier’s citizen of India. Magritte Museum and a member non-executive and independent
College in Kolkata, India where he of the International Council of Director of ArcelorMittal and a
received a Bachelor of Commerce Narayanan Vaghul, 80, is a non- the Musée des Arts Décoratifs. He member of the Appointments,
degree. Mr. Mittal is married to executive and independent also is a Trustee of the Palm Beach Remuneration and Corporate
Usha Mittal. They have a son, Director of ArcelorMittal as well Retirement Funds, the Palm Beach Governance Committee. She
Aditya Mittal, and a daughter, as the chairman of the Audit & Preservation Foundation and the was previously a director (senior
Vanisha Mittal Bhatia. Mr. Mittal is a Risk Committee. He has over 50 Palm Beach Civic Association. partner) with McKinsey &
citizen of India. years of experience in the financial Mr. Ross is a citizen of the United Company, a global management
sector and was the Chairman States of America. consulting firm, from June
Lewis B. Kaden, 74, Lead of ICICI Bank Limited between 1999 to March 2010, and was
Independent Director of 2002 and April 2009. Previously, Jeannot Krecké, 66, is a non- with the firm in various other
ArcelorMittal, member of the Audit he served as the Chairman of the executive and non-independent capacities beginning in 1989,
& Risk Committee and chairman of Industrial Credit and Investment Director of ArcelorMittal. He including as a leader in the
the Appointments, Remuneration Corporation of India, a long-term started his university studies at the firm’s Global Petroleum Practice,
and Corporate Governance credit development bank for 17 Université Libre de Bruxelles (ULB) Electric Power & Natural Gas
Committee. He has approximately years and, prior to that, served as in Belgium in 1969, from where Practice, Organization Practice,
40 years of experience in corporate Chairman of the Bank of India and he obtained a degree in physical and Risk Management Practice.
governance, financial services, Executive Director of the Central and sports education. He decided Ms. Nimocks chaired the
dispute resolution and economic Bank of India. He also served for in 1983 to change professional Environmental Committee of the
policy. He is currently the John brief periods as Consultant to direction. His interests led him to Greater Houston Partnership, the
Harvey Gregory Lecturer on World the World Bank, the International retrain in economics, accounting primary advocate of Houston’s
Organization at Harvard University. Finance Corporation and the Asian and taxation. He enrolled in business community, until
Mr. Kaden was Vice Chairman Development Bank. Mr. Vaghul various courses, in particular in December 31, 2010. She holds
of Citigroup between 2005 and was also a visiting Professor at the the United States. Following the a Bachelor of Arts in Economics
2013. Prior to that, he was a Stern Business School at New York legislative elections of June 13, from Tufts University and a Masters
partner of the law firm Davis Polk University and a Board member 2004, Mr. Krecké was appointed in Business Administration from
& Wardwell, and served as Counsel of Mahindra & Mahindra. Mr. Minister of the Economy and the Harvard Graduate School of
to the Governor of New Jersey, as Vaghul is Chairman of the Indian Foreign Trade of Luxembourg on Business. Ms. Nimocks is currently
a Professor of Law at Columbia Institute of Finance Management July 13, 2004. Upon the return a board member for Encana
University and as director of & Research and is also a Board of the coalition government Corporation, Rowan Companies
Columbia University’s Center for member of Wipro, Piramal formed by the Christian Social Plc, and Owens Corning, all listed
Law and Economic Studies. He has Healthcare Limited and Apollo Party (CSV) and the Luxembourg companies. Encana is a major
served as a director of Bethlehem Hospitals. He was chosen as a Socialist Workers’ Party (LSAP) natural gas exploration and
Steel Corporation for ten years Businessman of the Year in 1992 by as a result of the legislative production company, Rowan
and is currently Chairman of the Business India. He also received a elections of June 7, 2009, Mr. Companies provides drilling
Board of Trustees of the Markle Lifetime Achievement Award from Krecké retained the portfolio services for the oil and gas
Foundation and Vice Chairman the Economic Times. In 2009, he of Minister of the Economy industry and Owens Corning is a
of the Board of Trustees of Asia was awarded the Padma Bhushan, and Foreign Trade on July 23, manufacturer of building products.
Society. He is a member of the India’s third highest civilian honor. 2009. As of July 2004, Mr. Krecké In the non-profit sector, she is a
Council on Foreign Relations and Mr. Vaghul is a citizen of India. represented the Luxembourg member of the board of directors
of the Trilateral Commission being government at the Council of of the Houston Zoo and serves as
a moderator of the Business-Labor Wilbur L. Ross, Jr., 79, is a non- Ministers of the EU in the Internal a Trustee of the Texas Children’s
Dialogue. He is a Faculty Affiliate of executive and independent Market and Industry sections of Hospital. Mrs. Nimocks is a citizen
the Moussavar - Rahmani Center Director of ArcelorMittal and its Competitiveness configuration of the United States of America.
on Business and Government at a member of the Audit & Risk as well as in the Economic and
the Harvard Kennedy School of Committee. He is also the Financial Affairs Council and Bruno Lafont, 60, is a non-
Government and Senior Fellow Chairman of Nexeo Solutions, in the Energy section of its executive and independent
of the Program on Corporate Inc., a large global chemical and Transport, Telecommunications Director of ArcelorMittal and
Governance and the Center on the plastics distributor, which is listed and Energy configuration. He was a member of the Audit & Risk
Legal Profession at Harvard Law on NASDAQ. He is Vice Chairman of also a member of the Eurogroup Committee. He began his career
School. Mr. Kaden is a citizen of the the Bank of Cyprus which is listed from July 2004 to June 2009. On at Lafarge in 1983 and has held
United States of America.
36  Management report

numerous positions in finance of the Cartesian Capital Group UK. Michel Wurth is also doctor of 2014) and for Development
and international operations from 2000 to 2002; Chairman laws honoris causa of the Sacred and Humanitarian Aid in the
with the same company. In 1995, of Deutsche Bank Canada and Heart University, Luxembourg. 1st Barroso Commission (2009-
Mr. Lafont was appointed Group Deutsche Bank Securities Canada; Michel Wurth has served as 2010). He was Minister of Foreign
Executive Vice President, Finance, Global Managing Director of Chairman of the Luxembourg Affairs (2004-2009) and Vice Prime
and, thereafter, Executive Vice Global Metals and Mining for Chamber of Commerce since Minister (2008-2009) of Belgium.
President of the Gypsum Division Deutsche Bank AG from 1997 to 2004. He is also non-executive In addition, he was the Chairman
in 1998. Mr. Lafont joined Lafarge’s 2000; and Managing Director and Chairman of Paul Wurth S.A. and in Office of the Organization
General Management as Chief Co-Head of the Global Mining of BIP Investment Partners and for Security and Cooperation in
Operating Officer between May Group at BMO Nesbitt Burns from non-executive Director of BGL Europe (OSCE) (2006) and Member
2003 and December 2005. Chief 1995 to 1997, holding various BNP Paribas S.A., of SMS Group of the Security Council of the
Executive Officer in January 2006, other positions at BMO Nesbitt and of Brasserie Nationale. Paul United Nations (2007-2008). He
Bruno Lafont was appointed Burns from 1986 to 1995. Mr. Burt Wurth S.A. is controlled by SMS is a Professor of Law at VUB (the
Chairman and Chief Executive is the Chairman of Urthecast Corp., Group, a leading equipment and Dutch-speaking Free University
Officer in May 2007. In July 2015, a Canadian TSX-listed company engineering supplier for the steel of Brussels), a member of the
Bruno Lafont was appointed in the aerospace technology and non-ferrous metal producing Advisory Board of CVC Capital
co-Chairman of the Board of business. The company is focused industry. BIP Investment Partners Partners, a member of the board of
Directors of LafargeHolcim and on the business of streaming color is a Luxembourg based company, directors of Proximus NV (Telecom)
Honorary Chairman of Lafarge. images of the Earth from a suite mainly invested in private equity, and the president of the Board
Mr. Lafont presently chairs the of the company-owned satellites. BGL BNP Paribas is a Luxembourg of IES, the Brussels Institute of
Energy & Climate Change Working He is also the Chair and Principal bank, majority owned by BNP of European Studies. Mr. de Gucht
Group of the ERT (European at Carbon Arc Capital Investments France and Brasserie Nationale is a holds a Master of Law degree from
Roundtable of Industrialists) and Corp. and the Life Sciences privately owned brewery based in the VUB. Mr. de Gucht is a Belgian
the Sustainable Development Research Campaign Chair of the Luxembourg. Mr. Wurth is a citizen citizen.
Commission of the MEDEF University of Guelph’s Better Planet of Luxembourg.
(Mouvement des Entreprises de Project. Mr. Burt is a member of the Senior management
France), the French Employers Duke of Edinburgh’s Award Charter Karyn Ovelmen, 53, is a non-
Association. He is a member of the for Business Board of Governors executive and independent On December 15, 2015, the
Executive Committee of the World and is Vice-Chair of the Governors director of ArcelorMittal and Company announced that it would
Business Council for Sustainable of the Royal Ontario Museum a member of the Audit & Risk simplify its management structure
Development (WBCSD) and a Foundation. He is a graduate Committee. She is the Executive in-line with the ongoing drive to
Board member of the AFEP (French of Osgoode Hall Law School, a Vice President and Chief Financial promote a performance-driven
large companies association). He member of the Law Society of Officer of Flowserve, a leading culture, empowering the segments
is also a Special Adviser to the Upper Canada, and he holds a provider of flow control products to deliver optimum business
Mayor of Chongqing (China) and Bachelor of Arts degree from the and services for the global results. As a result the GMB,
a Board Member of EDF. Born in University of Guelph. Mr. Burt is ainfrastructure market, a position which was established to ensure
1956, Mr. Lafont is a graduate from citizen of Canada. that she has held since June a smooth integration following
the Hautes Etudes Commerciales 2015. Most recently she also the creation of ArcelorMittal,
business school (HEC 1977, Michel Wurth, 62, is a non- served as Chief Financial Officer was replaced, effective January
Paris) and the Ecole Nationale independent director of and Executive Vice President of 1, 2016, with a more flexible
d’Administration (ENA 1982, Paris). ArcelorMittal. He joined Arbed LyondellBasell Industries NV from structure. As of December 31,
Mr. Lafont is a citizen of France. in 1979 and held a variety of 2011 to May 2015, as Executive 2016, ArcelorMittal’s senior
functions before joining the Arbed Vice President and Chief Financial management is comprised of the
Tye Burt, 59, is a non-executive Group Management Board and Officer of Petroplus Holdings AG CEO Office supported by six other
and independent Director of becoming its chief financial officer from May 2006 to September 2010 Executive Officers. ArcelorMittal’s
ArcelorMittal and a member of in 1996. The merger of Aceralia, and as Executive Vice President CEO Office is comprised by the
the Appointments, Remuneration Arbed and Usinor, leading to the and Chief Financial Officer of Chief Executive Officer (“CEO”), Mr.
and Corporate Governance creation of Arcelor in 2002, led Argus Services Corporation from Lakshmi N. Mittal and the Chief
Committee. He was appointed to Mr. Wurth’s appointment as 2005 to 2006. Prior to that, she Financial Officer (“CFO”), Mr. Aditya
President and Chief Executive senior executive vice president was Vice President of External Mittal. Together, the Executive
Officer of Kinross Gold Corporation and CFO of Arcelor. He became Reporting and Investor Relations Officers are responsible for the
in March 2005. He held this a member of ArcelorMittal’s for Premcor Refining Group Inc. implementation of the Company
position until August 1, 2012. Group Management Board in She also spent 12 years with strategy, overall management of
Kinross is listed on the New York 2006, responsible for Flat Carbon PricewaterhouseCoopers, primarily the business and all operational
Stock Exchange and the Toronto Europe, Global R&D, Distribution serving energy industry accounts. decisions.
Stock Exchange. Mr. Burt was also Solutions and Long Carbon Mrs. Ovelmen holds a Bachelor of
a member of the board of directors Worldwide, respectively. Michel Arts degree from the University of
of Kinross. Mr. Burt has broad Wurth retired from the GMB in Connecticut, USA, and is a Certified
experience in the global mining April 2014 and was elected to Public Accountant (“CPA”). Mrs.
industry, specializing in corporate ArcelorMittal’s board of directors in Ovelmen is a citizen of the United
finance, business strategy and May 2014. He holds a Law degree States of America.
mergers and acquisitions. Prior from the University of Grenoble,
to joining Kinross, he held the France, and a degree in Political Mr. Karel de Gucht, 62, is a non-
position of Vice Chairman and Science from the Institut d’Études executive and independent
Executive Director of Corporate Politiques de Grenoble as well director and was the European
Development at Barrick Gold as a Master’s of Economics from Commissioner for Trade in the
Corporation. He was President the London School of Economics, 2nd Barroso Commission (2010-
Management report  37

Name Age1 Position


Lakshmi N. Mittal 66 Chairman and Chief Executive Officer of ArcelorMittal
Chief Financial Officer of ArcelorMittal, Investor Relations, and Chief
Aditya Mittal 40 Executive Officer of ArcelorMittal Europe
Executive vice president, head of strategy, CTO, R&D, CCM, and global
Brian Aranha 61 automotive
Henri Blaffart 61 Executive vice president, group head of HR and corporate services
Jefferson de Paula 58 Executive vice president, CEO ArcelorMittal South America Long
Executive vice president, president and CEO AM/NS Calvert, CEO
Robrecht Himpe 58 ArcelorMittal North America
Geert Van Poelvoorde 51 Executive vice president, CEO ArcelorMittal Europe Flat
Simon C. Wandke 57 Executive vice president, CEO ArcelorMittal Mining
1 Age as of December 31, 2016.

Lakshmi N. Mittal (See “–Board of R&D, Corporate Commercial and for the Group, which he took on most recent appointment. Mr. de
Directors”). Marketing, and Global Automotive. in April 2013. Before taking up Paula graduated in metallurgical
He is also in charge of automotive his position at corporate level, engineering from the Universidade
Aditya Mittal, 40, Prior to the joint ventures in China and India. Mr. Blaffart was head of HR for Federal Fluminense, holds a
merger to create ArcelorMittal, He joined Dofasco in 1979 as a the Company’s Flat Carbon master’s degree in financial
Mr. Aditya Mittal held the position member of the company’s research Europe segment and a member business and marketing from
of President and Chief Financial and development department. of the segment management Universidad Austral and has
Officer of Mittal Steel Company In 1989, he was appointed to the committee, a position he took up attended to senior executive
from October 2004 to 2006. He American Iron & Steel Institute in April 2010. Previously he was business courses from Insead and
joined Mittal Steel in January (AISI) in Washington, D.C. and in CEO of ArcelorMittal Lorraine in Kellogg universities. In addition to
1997 and has held various finance 1991, he was part of a Canadian France, having first been head of his position in the Group, Mr. de
and management roles within consortium, conducting a study for primary for the same operation. Paula is the current President of
the company. In 1999, he was the World Bank on restructuring Mr. Blaffart joined the Cokerill Latin America’s Steel Association
appointed Head of Mergers and the Polish steel industry. In 1992, Sambre group in 1982 in its (Alacero) and sits in the Board
Acquisitions for Mittal Steel. In Mr. Aranha returned to Dofasco as construction business unit. He of Directors of Brazil’s Steel
this role, he led the company’s project manager responsible for has held different positions in the Association (Aço Brasil) and in the
acquisition strategy, resulting the delivery improvement team. Cokerill Sambre group, including Strategic Board of the Industry
in Mittal Steel’s expansion into In 1993, he was appointed general CEO of operational units. After Federation of the State of Minas
Central Europe, Africa and the manager of quality systems and the merger between Usinor and Gerais (FIEMG). Mr. de Paula is a
United States. Besides M&A became purchasing assistant Cokerill Sambre Group, he held citizen of Brazil.
responsibilities, Aditya Mittal director in 1998. He took on the a number of other positions in
was involved in post-integration, role of director of automotive the company including R&D Robrecht Himpe, 58, is a member
turnaround and improvement business in 2001, a position that director for construction and of the group management
strategies. As Chief Financial he held until being named vice CEO of the former Arcelor’s committee and started his career
Officer of Mittal Steel, he also president of commercial in 2003. research division. He is a civil at the Sidmar Gent hot strip mill
initiated and led Mittal Steel’s offer Mr. Aranha took up additional engineer from the University in 1981, and became responsible
for Arcelor to create the first 100 responsibilities as vice president of Liège and holds a masters for its cold rolling department in
million tonnes plus steel company. of NAFTA automotive, after degree in general management 1995. In 2001, he was appointed
He serves on the board of Aperam, integration into ArcelorMittal in from the Ecole D’entreprise operational director of Bremen,
is a board member of Hindustan 2007. He moved to Flat Carbon pour le Perfectionnement au before becoming operational
Mittal Energy Limited (HMEL), is Europe in 2008 as chief marketing Management in Belgium. Mr. director of Asturias in 2003. In
a Board member at the Wharton officer of industry and in 2009 Blaffart is a citizen of Belgium. 2006, he became vice president
School and a Board member at became Chief Marketing Officer FCWE upstream and then chief
Iconiq Capital. He is also a trustee Flat Carbon Europe for all sales as Jefferson de Paula, 58, is a member operating officer in 2007. In 2008,
at Brookings Institute and an well as head of Global Automotive. of the group management he pursued his career as Chief
alumni of the World Economic After a return to NAFTA in 2012, committee and joined the group in Executive Officer of Flat Carbon
Forum Young Global Leader’s he was in charge of Commercial 1993 as general manager of Belgo Europe, before being appointed
Programme. Aditya Mittal holds Integration and Global Mineira’s Vitória plant in Brazil. as head and safety and chief
a Bachelor’s degree of Science in Automotive. He holds a Bachelor of In 2001, he moved to Acindar in technology officer, positions he
Economics with concentrations applied sciences and engineering Argentina as executive industrial held until December 2015. In July
in Strategic Management and from the University of Toronto. Mr. vice president, steel business. 2016, he was appointed Chief
Corporate Finance from the Aranha is a citizen of Canada. He was appointed industrial Executive Officer of ArcelorMittal
Wharton School in Pennsylvania, and commercial vice president North America, a role he has
United States. Mr. Aditya Mittal is Henri Blaffart, 61, is a member of Acindar in 2006. In 2008, he been holding in addition to his
the son of Mr. Lakshmi N. Mittal. of the group management joined Long Carbon Europe as responsibilities as President and
Mr. Aditya Mittal is a citizen of committee. He was appointed head of sections, rails, piles and Chief Executive Officer of AM/NS
India. head of corporate services special sections operations, later Calvert. Mr. Himpe is an electro-
(including currently becoming Chief Executive Officer technical engineer and a graduate
Brian Aranha, 61, is a member communication, corporate of the Long Carbon Americas of the University of Ghent. Mr.
of the group management responsibility, legal, capital goods, Business Unit South. In 2011, Himpe is a citizen of Belgium.
committee, an ArcelorMittal shipping and, IT) in January he was named Chief Executive
executive vice president, Head of 2014, in addition to his role as Officer of Long Carbon Americas,
Strategy, Chief Technology Officer, head of human resources (HR) a position which he held until his
38  Management report

Geert Van Poelvoorde, 51, Board practices/corporate of Directors is composed of a (a) he or she is independent within
is a member of the group governance minimum of three and a maximum the meaning of the New York Stock
management committee and of 18 members, all of whom, Exchange Listed Company Manual,
started his career in 1989 as a This section describes the except the CEO, must be non- as applicable to foreign private
project engineer at the Sidmar corporate governance practices of executive directors. None of the issuers,
Gent hot strip mill, where he ArcelorMittal for the year ended members of the Board of Directors,
held several senior positions December 31, 2016. except for the CEO, may hold an (b) he or she is unaffiliated with
in the automation and process executive position or executive any shareholder owning or
computer department. He moved Board of Directors and senior mandate within ArcelorMittal controlling more than two percent
to Stahlwerke Bremen in 1995 as management or any entity controlled by of the total issued share capital of
senior project manager. Between ArcelorMittal. ArcelorMittal, and
1998 and 2002, he headed a ArcelorMittal is governed by a
number of departments, and in Board of Directors and managed The Articles of Association provide (c) the Board of Directors makes an
2003 he was appointed director of by the senior management. As that directors are elected and affirmative determination to this
Stahlwerke Bremen, responsible described above, ArcelorMittal’s removed by the general meeting effect.
for operations and engineering. In senior management is comprised of shareholders by a simple
2005, Mr. Van Poelvoorde returned of the CEO Office - comprising the majority of votes cast. Other than For these purposes, a person is
to ArcelorMittal Gent to take up CEO, Mr. Lakshmi N. Mittal and the as set out in the Company’s Articles deemed affiliated to a shareholder
the position of Chief Operating CFO, Mr. Aditya Mittal. The CEO of Association, no shareholder has if he or she is an executive officer, a
Officer. In 2008, he became Chief Office is supported by a team of any specific right to nominate, director who also is an employee,
Executive Officer of ArcelorMittal six other Executive Officers, who elect or remove directors. Directors a general partner, a managing
Gent with direct responsibility together encompass the key are elected by the general meeting member or a controlling
for primary operations. He was regions and corporate functions. of shareholders for three-year shareholder of such shareholder.
appointed Chief Executive Officer terms. In the event that a vacancy The 10 Principles of Governance of
of the Business Division North A number of corporate arises on the Board of Directors the Luxembourg Stock Exchange,
within Flat Carbon Europe in governance provisions in for any reason, the remaining which constitute ArcelorMittal’s
2009 and in January 2014, he the Articles of Association of members of the Board of Directors domestic corporate governance
was appointed Chief Executive ArcelorMittal reflect provisions may by a simple majority elect code, require ArcelorMittal to
Officer of Flat Carbon Europe and of the Memorandum of a new director to temporarily define the independence criteria
Purchasing. He graduated from Understanding signed on fulfill the duties attaching to the that apply to its directors, which
the University of Ghent with a June 25, 2006 (prior to Mittal vacant post until the next general are described in article 8.1 of its
degree in civil engineering and Steel Company N.V.’s merger meeting of the shareholders. Articles of Association.
electronics. Mr. Van Poelvoorde is a with Arcelor), amended in
citizen of Belgium. April 2008 and which mostly In 2016, the Board of Directors Specific characteristics of the
expired on August 1, 2009. For proposed Mr. Karel de Gucht director role
Simon C. Wandke, 57, is a member more information about the to serve as a member of the
of the group management Memorandum of Understanding, ArcelorMittal Board of Directors, The Company’s Articles of
committee and he joined see “Memorandum of which was approved at the Association do not require
ArcelorMittal in January 2011 Understanding”. ArcelorMittal annual general directors to be shareholders of the
as chief commercial officer of shareholders’ meeting held on May Company. The Board of Directors
ArcelorMittal Mining. He has ArcelorMittal fully complies with 4, 2016. nevertheless adopted a share
over 30 years’ experience in the the 10 Principles of Corporate ownership policy on October 30,
mining and minerals industry, Governance of the Luxembourg The Board of Directors is 2012, considering that it is in the
starting his career in 1981 at BHP Stock Exchange. This is explained comprised of 12 members, of best interests of all shareholders
Billiton, where he held positions in in more detail in “Other Corporate which 11 are non-executive for all non-executive directors
Governance practices” below. directors and one is an executive to acquire and hold a minimum
mines in Australia and Indonesia
ArcelorMittal also complies with director. The CEO of ArcelorMittal is number of ArcelorMittal ordinary
and other commercial offices
the New York Stock Exchange the sole executive director. shares in order to better align their
globally until 2002. He then
Listed Company Manual as long-term interests with those
joined Destra Consulting Group
applicable to foreign private Mr. Lakshmi N. Mittal was elected of ArcelorMittal’s shareholders.
as Partner before becoming Chief
issuers. Chairman of the Board of Directors The Board of Directors believes
Marketing Officer for Ferrexpo plc
on May 13, 2008. Mr. Mittal is also that this share ownership policy
in 2006 based in Hong Kong and
Board of Directors ArcelorMittal’s CEO. Mr. Mittal will result in a meaningful
Switzerland. Simon is a graduate
was re-elected to the Board of holding of ArcelorMittal shares
of the Australian Institute of
Composition Directors for a three-year term at by each non-executive director,
Company Directors with a diploma the annual general meeting of while at the same time taking
in Company Directorship. He The Board of Directors is in charge shareholders on May 8, 2014. into account the fact that the
also holds a graduate diploma in of the overall governance and share ownership requirement
Corporate Finance from Swinburne direction of ArcelorMittal. It is Eight of the 12 members should not be excessive in order
University as well as a B.A., Psych, responsible for the performance of of the Board of Directors not to unnecessarily limit the
Marketing (Comm) from the all acts of administration necessary are independent. The non- pool of available candidates for
University of Melbourne. Mr. or useful in furtherance of the independent directors are Mr. appointment to the Board of
Wandke is a citizen of Australia. corporate purpose of ArcelorMittal, Lakshmi N. Mittal, Ms. Vanisha Directors. Directly or indirectly,
except for matters reserved by Mittal Bhatia, Mr. Jeannot Krecké and as sole or joint beneficiary
Luxembourg law or the Articles of and Mr. Michel Wurth. A director is owner (e.g., with a spouse or minor
Association to the general meeting considered “independent” if: children), within five years of the
of shareholders. The Articles of earlier of October 30, 2012 or
Association provide that the Board the relevant person’s election to
Management report  39

the Board of Directors, the Lead ArcelorMittal Board of Directors. Share transactions by provided that all members of the
Independent Director should own However, a non-executive management Board of directors agree.
a minimum of 15,000 ordinary Director’s service on the board
shares and each other non- of directors of any subsidiary or In compliance with laws The Board of Directors held seven
executive director should own affiliate of ArcelorMittal or of any
prohibiting insider dealing, meetings in 2016. The average
a minimum of 10,000 ordinary non-publicly listed company is notthe Board of Directors of attendance rate of the directors at
shares. Each director will hold the taken into account for purposes ArcelorMittal has adopted the Board of Directors’ meetings
shares acquired on the basis of of complying with the foregoing insider dealing regulations, was 93%.
this policy for so long as he or she limitation. which apply throughout the
serves on the Board of Directors. ArcelorMittal group. These In order for a meeting of the
Directors purchasing shares in Although non-executive directors regulations are designed to Board of Directors to be validly
compliance with this policy must of ArcelorMittal who change their ensure that insider information held, a majority of the directors
comply with the ArcelorMittal principal occupation or business is treated appropriately within must be present or represented,
Insider Dealing Regulations and, association are not necessarily the Company and avoid insider including at least a majority of
in particular, and refrain from required to leave the Board of dealing and market manipulation. the independent directors. In the
trading during any restricted Directors, the policy requires each Any breach of the rules set out absence of the Chairman, the
period, including any such period non-executive director, in such in this procedure may lead to Board of Directors will appoint
that may apply immediately after circumstances, promptly to inform criminal or civil charges against by majority vote a chairman for
the Director’s departure from the the Board of Directors of the the individuals involved, as well the meeting in question. The
Board of Directors for any reason. action he or she is contemplating. as disciplinary action by the Chairman may decide not to
Should the Board of Directors Company. participate in a Board of Directors’
On October 30, 2012, the Board determine that the contemplated meeting, provided he has given a
of Directors also adopted a policy action would generate a conflict Shareholding requirement for non- proxy to one of the directors who
that places limitations on the terms of interests, such non-executive executive directors will be present at the meeting.
of independent directors as well director would be asked to tender For any meeting of the Board of
as the number of directorships. his or her resignation to the In consideration of corporate Directors, a director may designate
Directors may hold in order to Chairman of the Board of Directors, governance trends indicating that another director to represent
align the Company’s corporate who would decide to accept the a reasonable amount of share him or her and vote in his or her
governance practices with best resignation or not. ownership helps better align the name, provided that the director
practices in this area. The policy interests of the directors with those so designated may not represent
provides that an independent None of the members of the of all shareholders, the Board of more than one of his or her
director may not serve on the Board of Directors, including Directors adopted on October 30, colleagues at any time.
Board of Directors for more than the executive director, have 2012 share ownership guidelines
12 consecutive years, although entered into service contracts for non-executive directors as Each director has one vote and
the Board of Directors may, by way with ArcelorMittal or any of described above under “Specific none of the directors, including
of exception to this rule, make an its subsidiaries that provide characteristics of the director role”. the Chairman, has a casting vote.
affirmative determination, on a for any form of remuneration Decisions of the Board of Directors
case-by-case basis, that he or she or for benefits upon the Operation are made by a majority of the
may continue to serve beyond termination of their term. All directors present and represented
the 12 years rule if the Board of non-executive Directors of the General at a validly constituted meeting,
Directors considers it to be in Company signed the Company’s except for the decisions of the
the best interest of the Company Appointment Letter, which The Board of Directors and the Board of Directors relating to the
based on the contribution of the confirms the conditions of their Board committees may engage issue of any financial instruments
Director involved and the balance appointment by the General the services of external experts or carrying or potentially carrying
between the knowledge, skills, Meeting of the Shareholders advisers as well as take all actions a right to equity pursuant to the
experience and need for renewal including compliance with necessary or useful to implement authorization conferred by article
of the Board. certain non-compete provisions, the Company’s corporate purpose. 5.5. of the Articles of Association,
the 10 Principles of Corporate The Board of Directors (including which shall be taken by a majority
As membership of the Board of Governance of the Luxembourg its two committees) has its own of two-thirds of the directors
Directors represents a significant Stock Exchange and the budget, which covers functioning present or represented at a validly
time commitment, the policy Company’s Code of Business costs such as external consultants, constituted meeting.
requires both executive and Conduct. continuing education activities for
non-executive directors to devote directors and travel expenses. Lead Independent Director
sufficient time to the discharge All members of the Board of
of their duties as a director of Directors are required to sign Meetings In April 2008, the Board of
ArcelorMittal. Directors are the Company’s Code of Business Directors created the role of Lead
therefore required to consult Conduct upon first joining the The Board of Directors meets when Independent Director. His or her
with the Chairman and the Board of Directors and confirm convened by the Chairman of the function is highlighted above.
Lead Independent Director their adherence thereto on an Board or any two members of the
before accepting any additional annual basis thereafter. Board of Directors. The Board of Mr. Lewis B. Kaden was elected
commitment that could conflict Directors holds physical meetings by the Board of Directors
with or impact the time they can The remuneration of the members at least on a quarterly basis as five as ArcelorMittal’s first Lead
devote to their role as a Director of the Board of Directors is regular meetings are scheduled per Independent Director in April 2008
of ArcelorMittal. Furthermore, a determined on a yearly basis by year. The Board of Directors holds and remains Lead Independent
non-executive director may not the annual general meeting of additional meetings if and when Director, having been re-elected as
serve on the boards of directors shareholders. circumstances require, in person a director for a three-year term on
of more than four publicly listed or by teleconference and can take May 8, 2014.
companies in addition to the decisions by written circulation,
40  Management report

The agenda of each meeting of Directors reviewed the practical Each director has an obligation to Each director is required to adhere
the Board of Directors is decidedimplementation of the governance protect and advance the interests to the values set out in, and sign,
jointly by the Chairman of the structure and thought it was of the Company and must refrain the ArcelorMittal Code of Business
Board of Directors and the Lead working well. The Board set new from any conduct that would harm Conduct.
Independent Director. priorities for discussion and review it.
and identified a number of topics Renewal
Separate meetings of independent that it wishes to spend additional In order to govern effectively,
directors time on in 2017. non-executive directors must The Board of Directors plans for its
have a clear understanding of own succession, with the assistance
The independent members of the The Board of Directors believes the Company’s strategy, and of the ARCG Committee. In doing
Board of Directors may schedule that its members have the a thorough knowledge of the this, the Board of Directors:
meetings outside the presence of appropriate range of skills, ArcelorMittal group and the
non-independent directors. Four knowledge and experience, as industries in which it operates. • considers the skills, backgrounds,
meetings of the independent well as the degree of diversity, Non-executive directors must knowledge, experience and
directors outside the presence necessary to enable it to effectively be sufficiently familiar with diversity of geographic location,
of management and non- govern the business. The Board the Company’s core business nationality and gender necessary
independent directors were held of Directors composition is to effectively contribute to the to allow it to meet the corporate
in 2016. reviewed on a regular basis and development of strategy and purpose;
additional skills and experience monitor performance.
Annual self-evaluation are actively searched for in line • assesses the skills, backgrounds,
with the expected development With specific regard to the knowledge, experience and
The Board of Directors decided of ArcelorMittal’s business as and non-executive directors of the diversity currently represented;
in 2008 to start conducting an when appropriate. Company, the composition of
annual self-evaluation of its the group of non-executive • identifies any inadequate
functioning in order to identify Required skills, experience and directors should be such that representation of those attributes
potential areas for improvement. other personal characteristics the combination of experience, and agrees the process necessary
The first self-evaluation process knowledge and independence of to ensure a candidate is selected
was carried out in early 2009. The Diverse skills, backgrounds, its members allows the Board to who brings them to the Board of
self-evaluation process includes knowledge, experience, fulfill its obligations towards the Directors; and
structured interviews between geographic location, nationalities Company and other stakeholders
the Lead Independent Director and gender are required in order in the best possible manner. • reviews how Board performance
and each director and covers the to effectively govern a global might be enhanced, both at an
overall performance of the Board of business the size of the Company’s The ARCG Committee ensures that individual director level and for
Directors, its relations with senior operations. The Board of Directors the Board of Directors is comprised the Board as a whole.
management, the performance and its committees are therefore of high-caliber individuals whose
of individual directors, and the required to ensure that the Board background, skills, experience and The Board believes that orderly
performance of the committees. has the right balance of skills, personal characteristics enhance succession and renewal is achieved
The process is supported by the experience, independence and the overall profile of the Board through careful planning and
Company Secretary under the knowledge necessary to perform and meets its needs and diversity by continuously reviewing the
supervision of the Chairman and its role in accordance with the aspirations by nominating high composition of the Board.
the Lead Independent Director. highest standards of governance. quality candidates for election to
The findings of the self-evaluation the Board by the general meeting When considering new
process are examined by the The Company’s directors must of shareholders. appointments to the Board,
ARCG Committee and presented demonstrate unquestioned the ARCG Committee oversees
with recommendations from the honesty and integrity, Board profile the preparation of a position
ARCG Committee to the Board preparedness to question, specification that is provided
of Directors for adoption and challenge and critique The key skills and experience of the to an independent recruitment
implementation. Suggestions constructively, and a willingness directors, and the extent to which firm retained to conduct a global
for improvement of the Board to understand and commit to the they are represented on the Board search, taking into account, among
of Directors’ process based on highest standards of governance. of Directors and its committees, other factors, geographic location,
the prior year’s performance and They must be committed to are set out below. In summary, the nationality and gender. In addition
functioning are implemented the collective decision-making non-executive directors contribute: to the specific skills, knowledge
during the following year. process of the Board of Directors and experience required of the
and must be able to debate issues • international and operational candidate, the specification
The 2016 Board of Directors’ openly and constructively, and experience; contains the criteria set out in the
self-evaluation was completed question or challenge the opinions ArcelorMittal Board profile.
by the Board on February 8, of others. Directors must also • understanding of the industry
2017. The Board of Directors was commit themselves to remain sectors in which ArcelorMittal Diversity
of the opinion that it and the actively involved in Board decisions operates;
management had cooperated and apply strategic thought to In line with the worldwide effort
successfully during 2016 on matters at issue. They must be • knowledge of world capital to increase gender diversity on the
important matters including clear communicators and good markets and being a company boards of directors of listed and
operational and financial listeners who actively contribute listed in several jurisdictions; and unlisted companies, the Board met
performance, the rights offering, to the Board in a collegial manner. its goal of increasing the number
the ongoing strengthening Each director must also ensure that • an understanding of the health, of women on the Board to at least
of the balance sheet, strategy, no decision or action is taken that safety, environmental, political three by the end of 2015 with the
sustainability, labor relations and places his or her interests in front and community challenges that election of Mrs. Karyn Ovelmen in
health and safety. The Board of of the interests of the business. ArcelorMittal faces. May 2015, based upon a Board of
Management report  41

Directors size of 12 members. The to-date with developments within • the Audit & Risk Committee, and Committee makes decisions by a
ArcelorMittal Board’s diversity not the Company’s segments, as well simple majority with no member
only relates to gender, but also as developments in the markets in • the ARCG Committee. having a casting vote.
to the region, background and which the Company operates.
industry of its members. Audit & Risk Committee At least one member must qualify
During the year, non-executive as an Audit & Risk Committee
Director induction, training and directors participated in the In 2015 the Board decided to “financial expert” as defined by the
development following activities: combine the Audit Committee SEC and determined by the Board.
with the Risk Management
The Board considers that the • comprehensive business Committee in order to provide At least one member must qualify
development of the directors’ briefings intended to provide their members with a more holistic as an Audit & Risk Committee
knowledge of the Company, each director with a deeper view of ArcelorMittal’s current “risk management expert”
the steel-making and mining understanding of the Company’s governance, risks and control having experience in identifying,
industries, and the markets in activities, environment, key systems. assessing, and managing risk
which the Company operates is issues and strategy of the exposures of large, complex
an ongoing process. To further Company’s segments. These • The primary function of the Audit companies.
bolster the skills and knowledge briefings are provided to the & Risk Committee is to assist the
of directors, the Company set up a Board of Directors by senior Board in fulfilling its oversight The Audit & Risk Committee
continuous development program executives, including CEO responsibilities by reviewing; currently consists of six members:
in 2009. Office members. The briefings Mr. Narayanan Vaghul (Chairman),
provided during the course of • the integrity of the financial Mr. Wilbur L. Ross, Mr. Lewis Kaden,
Upon his or her election, each new 2016 covered health and safety reports and other financial Mr. Bruno Lafont, Mrs. Karyn
non-executive director undertakes processes, HR, legal, marketing, information provided by the Ovelmen and Mr. Karel de Gucht,
an induction program specifically steel-making, strategy, mining Company to any governmental each of whom is an independent
tailored to his or her needs and and R&D. Certain business body or the public; director according to the NYSE
includes ArcelorMittal’s long-term briefings were combined with standards and the 10 Principles
vision centered on the concept of site visits and thus took place on- • the Company’s compliance of Corporate Governance of the
“Safe Sustainable Steel”. site and, in other cases, they took with legal and regulatory Luxembourg Stock Exchange.
place at Board meetings; requirements; The Chairman of the Audit & Risk
The Board’s development activities Committee is Mr. Vaghul.
include the provision of regular • briefing meetings with Company • the registered public accounting
updates to directors on each of executives in charge of specific firm’s (Independent Auditor) According to its charter, the Audit
the Company’s products and business segments or markets; qualifications and independence; & Risk Committee is required to
markets. Non-executive directors meet at least four times a year.
may also participate in training • site visits to plants and R&D • the Company’s system of internal During 2016, the Audit & Risk
programs designed to maximize centers; and control regarding finance, Committee met seven times. The
the effectiveness of the directors accounting, legal compliance, Audit & Risk Committee performs
throughout their tenure and link in • development sessions on specific ethics and risk management an annual self-evaluation and
with their individual performance topics of relevance, such as that management and the Board completed its 2016 self-evaluation
evaluations. The training and health and safety, commodity have established; on February 8, 2017. The charter
development program may cover markets, HR, investor relations, of the Audit & Risk Committee is
not only matters of a business accounting, the world economy, • the Company’s auditing, available from ArcelorMittal upon
nature, but also matters falling changes in corporate governance accounting and financial request.
into the environmental, social and standards, directors’ duties and reporting processes generally;
governance area. shareholder feedback. and Appointments, Remuneration and
Corporate Governance Committee
Structured opportunities are The ARCG Committee oversees • the identification and
provided to build knowledge director training and development. management of risks to which The ARCG Committee is comprised
through initiatives such as visits to This approach allows induction the ArcelorMittal group is of three directors, each of whom
plants and mine sites and business and learning opportunities to be exposed. is independent under the New
briefings provided at Board tailored to the directors’ committee York Stock Exchange standards
meetings. Non-executive directors memberships, as well as the Board The Audit & Risk Committee and the 10 Principles of Corporate
also build their Company and of Director’s specific areas of focus. must be composed solely of Governance of the Luxembourg
industry knowledge through the In addition, this approach ensures independent members of the Stock Exchange.
involvement of the CEO Office and a coordinated process in relation Board of Directors. The members
other senior employees in Board to succession planning, Board are appointed by the Board of The members are appointed by
meetings. Business briefings, site renewal, training, development Directors each year after the the Board of Directors each year
visits and development sessions and committee composition, all annual general meeting of after the annual general meeting
underpin and support the Board’s of which are relevant to the ARCG shareholders. The Audit & Risk of shareholders. The ARCG
work in monitoring and overseeing Committee’s role in securing the Committee comprises four to Committee makes decisions by a
progress towards the corporate supply of talent to the Board. six members, all of whom must simple majority with no member
purpose of creating long-term be independent under the having a casting vote.
shareholder value through the company’s corporate governance
development of the ArcelorMittal Board of Directors committees guidelines, the New York Stock The Board of Directors has
business in steel and mining. The Exchange (NYSE) standards and established the ARCG Committee
Company therefore continuously The Board of Directors has two the 10 Principles of Corporate to:
builds directors’ knowledge to committees: Governance of the Luxembourg
ensure that the Board remains up- Stock Exchange. The Audit & Risk
42  Management report

• determine, on its behalf and completed its 2016 self-evaluation transparency, quality of reporting directors of ArcelorMittal in the
on behalf of the shareholders on February 8, 2017. and the balance of powers. exercise of their duties. Each
within agreed terms of reference, ArcelorMittal continually monitors employee of ArcelorMittal is
ArcelorMittal’s compensation The charter of the ARCG U.S., EU and Luxembourg legal required to sign and acknowledge
framework, including short and Committee is available from requirements and best practices the Code of Conduct upon joining
long term incentives for the CEO, ArcelorMittal upon request. in order to make adjustments to the Company. This also applies
the CFO and the members of the its corporate governance controls to the members of the Board
Management Committee; Succession management and procedures when necessary, of Directors of ArcelorMittal,
as evidenced by the new policies who signed the Company’s
• review and approve succession Succession management at adopted by the Board of Directors Appointment Letter in which they
and contingency plans for key ArcelorMittal is a systematic, in 2012. acknowledged their duties and
managerial positions at the level structured process for identifying obligations. Any new member of
of the Management Committee; and preparing employees with ArcelorMittal complies with the Board of Directors must sign
potential to fill key organizational the 10 Principles of Corporate and acknowledge the Code of
• consider any candidate for positions, should the position Governance of the Luxembourg Conduct upon appointment.
appointment or reappointment become vacant. This process Stock Exchange in all respects.
to the Board of Directors at applies to all ArcelorMittal key However, in respect of Employees must always act in
the request of the Board of positions up to and including Recommendation 1.3 under the best interests of ArcelorMittal
Directors and provide advice and the CEO Office. Succession the Principles, which advocates and must avoid any situation in
recommendations to it regarding management aims to ensure the separating the roles of chairman which their personal interests
the same; continued effective performance of the board and the head of conflict, or could conflict, with
of the organization by providing the executive management their obligations to ArcelorMittal.
• evaluate the functioning of the for the availability of experienced body, the Company has made a Employees are prohibited from
Board of Directors and monitor and capable employees who are different choice. This is permitted, acquiring any financial or other
the Board of Directors’ self- prepared to assume these roles as however, as, unlike the 10 interest in any business or
evaluation process; they become available. For each Principles themselves with which participate in any activity that
position, candidates are identified ArcelorMittal must comply, the could deprive ArcelorMittal of
• assess the roles of the Chairman based on performance, potential Recommendations are subject to the time or the attention needed
and CEO and deliberate on the and an assessment of leadership a more flexible “comply or explain” to devote to the performance of
merits of the Board’s leadership capabilities and their “years to standard. their duties. Any behavior that
structure to ensure that the readiness”. Development needs deviates from the Code of Business
most efficient and appropriate linked to the succession plans are The nomination of the same Conduct is to be reported to the
structure is in place; and discussed, after which “Personal person to both positions was employee’s supervisor, a member
Development Plans” are put in approved by the shareholders of the management, the head
• develop, monitor and review place, to accelerate development (with the Significant Shareholder of the legal department or the
corporate governance principles and prepare candidates. Regular abstaining). Since that date, head of the internal assurance
and corporate responsibility reviews of succession plans are the rationale for combining the department.
policies applicable to conducted at different levels of positions of CEO and Chairman of
ArcelorMittal, as well as their the organization to ensure that the Board of Directors has become Code of Business Conduct training
application in practice. they are accurate and up to date, even more compelling. The Board is offered throughout ArcelorMittal
leading to at least once yearly a of Directors is of the opinion that on a regular basis in the form of
The ARCG Committee’s principal formal review by the CEO Office, Mr. Mittal’s strategic vision for the face-to-face trainings, webinars
criteria in determining the of all key positions. Succession steel industry in general and for and online trainings. Employees
compensation of executives management is a necessary ArcelorMittal in particular in his are periodically trained about
is to encourage and reward process to reduce risk of vacant role as CEO is a key asset to the the Code of Business Conduct in
performance that will lead to long- positions or skill gap transitions, Company, while the fact that he each location where ArcelorMittal
term enhancement of shareholder create a pipeline of future leaders, is fully aligned with the interests has operations. The Code of
value. The ARCG Committee may ensure smooth business continuity of the Company’s shareholders Business Conduct is available in
seek the advice of outside experts. and improve employee motivation means that he is uniquely the “Corporate Governance – Code
and engagement. This process has positioned to lead the Board of of Business Conduct” section of
The three members of the ARCG been in place for several years and Directors in his role as Chairman. ArcelorMittal’s website at www.
Committee are Mr. Lewis B. reinforced, widened and made The combination of these roles arcelormittal.com.
Kaden, Mrs. Suzanne P. Nimocks more systematic in all regions of was revisited at the Annual
and Mr. Tye Burt, each of whom the organization. The responsibility General Meeting of Shareholders In addition to the Code of
is independent in accordance to review and approve succession of the Company held in May 2014, Business Conduct, ArcelorMittal
with the NYSE standards and plans and contingency plans at the when Mr. Lakshmi N. Mittal was has developed a Human Rights
the 10 Principles of Corporate highest level rests with the Board’s reelected to the Board of Directors Policy and a number of other
Governance of the Luxembourg ARCG Committee. for another three year term by a compliance policies in more
Stock Exchange. The Chairman of strong majority. specific areas, such as anti-trust,
the ARCG Committee is Mr. Kaden. Other corporate governance anti-corruption, economic
practices Ethics and conflicts of interest sanctions and insider dealing.
The ARCG Committee is required In all these areas, specifically
to meet at least twice a year. ArcelorMittal is committed to Ethics and conflicts of interest targeted groups of employees are
During 2016, this committee met adhere to best practices in terms are governed by ArcelorMittal’s required to undergo specialized
six times. of corporate governance in its Code of Business Conduct, which compliance training. Furthermore,
dealings with shareholders and establishes the standards for ArcelorMittal’s compliance
The ARCG Committee performs aims to ensure good corporate ethical behavior that are to be program also includes a quarterly
an annual self-evaluation and governance by applying rules on followed by all employees and compliance certification process
Management report  43

covering all business segments Committee. The function is staffed may have about the IDR’s Compensation
and entailing reporting to the by full-time professional staff interpretation. The IDR compliance
Audit & Risk Committee. located within each of the principal officer maintains a list of insiders Board of Directors
operating subsidiaries and at the as required by the Luxembourg
Process for Handling Complaints corporate level. Recommendations market manipulation (abus de Directors’ fees
on Accounting Matters and matters relating to internal marché) law of May 9, 2006, as
control and processes are made amended. The IDR compliance The ARCG Committee of the Board
As part of the procedures of the by the Internal Assurance function officer may assist senior executives of Directors prepares proposals
Board of Directors for handling and their implementation is and directors with the filing of on the remuneration to be paid
complaints or concerns about regularly reviewed by the Audit & notices required by Luxembourg annually to the members of the
accounting, internal controls and Risk Committee. law to be filed with the Board of Directors.
auditing issues, ArcelorMittal’s Luxembourg financial regulator,
Anti-Fraud Policy and Code of Independent auditors the CSSF (Commission de At the May 4, 2016 annual general
Business Conduct encourage all Surveillance du Secteur Financier). meeting of shareholders, the
employees to bring such issues The appointment and Furthermore, the IDR compliance shareholders approved the annual
to the Audit & Risk Committee’s determination of fees of the officer has the power to conduct remuneration for non-executive
attention on a confidential independent auditors is the direct investigations in connection with directors for the 2015 financial
basis. In accordance with responsibility of the Audit & Risk the application and enforcement year, based on the following
ArcelorMittal’s Anti-Fraud and Committee. The Audit & Risk of the IDR, in which any employee annual fees:
Whistleblower Policy, concerns Committee is further responsible or member of senior management
with regard to possible fraud for obtaining, at least once each or of the Board of Directors is • Basic director’s remuneration:
or irregularities in accounting, year, a written statement from required to cooperate. €144,000 ($162,880);
auditing or banking matters or the independent auditors that
bribery within ArcelorMittal or their independence has not Selected new employees of • Lead Independent Director’s
any of its subsidiaries or other been impaired. The Audit & Risk ArcelorMittal are required to remuneration: €204,000
controlled entities may also Committee has also obtained a participate in a training course ($230,746);
be communicated through confirmation from ArcelorMittal’s about the IDR upon joining
the “Corporate Governance - principal independent auditors to ArcelorMittal and every three • Additional remuneration for
Whistleblower” section of the the effect that none of its former years thereafter. The individuals the Chair of the Audit & Risk
ArcelorMittal website at www. employees are in a position within who must participate in the IDR Committee: €28,000 ($31,671);
arcelormittal.com, where ArcelorMittal that may impair the training include the members of
ArcelorMittal’s Anti-Fraud Policy principal auditors’ independence. senior management, employees • Additional remuneration for the
and Code of Business Conduct who work in finance, legal, sales, other Audit & Risk Committee
are also available in each of the Measures to prevent insider mergers and acquisitions and members: €17,000 ($19,229);
main working languages used dealing and market manipulation other areas that the Company
within the Group. In recent years, may determine from time to • Additional remuneration for the
ArcelorMittal has implemented The Board of Directors of time. In addition, ArcelorMittal’s Chairs of the other committees:
local whistleblowing facilities, as ArcelorMittal has adopted Insider Code of Business Conduct €16,000 ($18,098); and
needed. Dealing Regulations (“IDR”), which contains a section on “Trading in
are updated when necessary and the Securities of the Company” • Additional remuneration for
During 2016, there were 153 in relation to which training is that emphasizes the prohibition the members of the other
complaints received relating to conducted throughout the Group. to trade on the basis of inside committees: €11,000 ($12,464).
alleged fraud, which were referred The IDR’s most recent version information. An online interactive
to and duly reviewed by the has been updated in light of the training tool based on the IDR The total annual remuneration
Company’s Internal Assurance new Market Abuse Regulation was developed in 2010 and of the members of the Board of
Department. Following review by and is available on ArcelorMittal’s deployed across the group in Directors paid in 2016 and 2015
the Audit & Risk Committee, none website, www.arcelormittal.com. different languages in 2011 was as follows:
of these complaints was found to through ArcelorMittal’s intranet,
be significant. The IDR apply to the worldwide with the aim to enhance the staff’s
operations of ArcelorMittal. The awareness of the risks of sanctions
Internal assurance compliance and data protection applicable to insider dealing. The
officer of ArcelorMittal is also importance of the IDR was again
ArcelorMittal has an Internal the IDR compliance officer and underscored in the Group Policies
Assurance function that, through answers questions that members and Procedures Manual in 2013.
its Head of Internal Assurance, of senior management, the
reports to the Audit & Risk Board of Directors, or employees

Year ended Year ended


Amounts in $ thousands except Long-term incentives information) December 31, 2016 December 31, 2015
Base salary 1
$1,550 $1,746
Director fees $1,900 $1,856
Short-term performance-related bonus1 - $1,910
Long-term incentives 1,2 504,643 179,320
1
Chairman and CEO only. Slight differences between the years are possible, due to foreign currency effects.
2
See “Directors, senior management and employees - Compensation - Remuneration framework - Long-term incentives: Equity based incentives (Share Unit
Plans)”.
44  Management report

The annual remuneration paid for 2016 and 2015 to the current and former members of the Board of Directors for services in all capacities was as
follows:

2016 2015 2016 2015


(Amounts in $ thousands except Short-term Short-term Long-term Long-term
share information) 20161 20151 Performance Related Performance Related Number of PSUs Number of PSUs
Lakshmi N. Mittal 1,550 1,746 — 1,910 504,643 179,320
Vanisha Mittal Bhatia 153 160 — — — —
Narayanan Vaghul 182 204 — — — —
Suzanne P. Nimocks 164 184 — — — —
Wilbur L. Ross, Jr. 171 180 — — — —
Lewis B. Kaden 250 244 — — — —
Bruno Lafont 171 180 — — — —
Tye Burt 164 173 — — — —
Antoine Spillmann2 55 198 — — — —
Karen Ovelmen 171 — — — — —
Jeannot Krecké 153 173 — — — —
Michel Wurth 153 160 — — — —
Karel de Gucht2 114 — — — — —
Total 3,450 3,602 — 1,910 504,643 179,320
1
Remuneration for non-executive Directors with respect to 2016 (subject to shareholder approval at the annual general meeting to be held on May 10, 2017) will be paid in 2017 and is
included in the 2016 column. Remuneration for non-executive Directors with respect to 2015 (paid after shareholder approval at the annual general meeting held on May 4, 2016) is
included in the 2015 column. Slight differences between the years are possible, due to foreign currency effects.
2
Mr. de Gucht was elected to ArcelorMittal’s Board of Directors on May 4, 2016 and Mr. Spillmann stepped down from the Board in May 2016.

As of December 31, 2016, ArcelorMittal did not have any loans or advances outstanding to members of its Board of Directors and ArcelorMittal
had not given any guarantees in favor of any member of its Board of Directors.

None of the members of the Board of Directors, including the Chairman and CEO, benefit from an ArcelorMittal pension plan.

The policy of the Company is not to grant any share-based remuneration to members of the Board of Directors who are not executives of the
Company.

The following tables provide a summary of the options and the exercise price of options and Performance Share Units (“PSUs”) granted to the
Chairman and CEO, who is the sole executive director on the Board of Directors, as of December 31, 2016.

Options granted Options granted Options granted Options granted Weighted Average Exercise
in 2010 in 2009 in 2008 in 2007 Options Total Price of Options
Lakshmi N. Mittal 56,500 60,000 60,000 60,000 236,500 $51.95
Exercise price1 $30.66 $36.38 $78.44 $61.09 — $51.95
Term (in years) 10 10 10 10 — —
Expiration date Aug. 3, 2020 Aug. 4, 2019 Aug. 5, 2018 Aug. 2, 2017 — —
Due to the spin-off of Aperam on January 25, 2011, the strike price of outstanding options was reduced by 5% in line with the spin-off ratio. The table above reflects this adjustment.
1

PSUs granted in 2016 PSUs granted in 2015 PSUs granted in 2014


Lakshmi N. Mittal 504,643 179,320 128,758
Term (in years) 3+2 3 3
Vesting date 1 January 1, 2020 and January 1, 2021 June 30, 2018 June 27, 2017
See “Directors, senior management and employees - Compensation - Remuneration framework - Long-term incentives: Equity based incentives (Share Unit Plans)”, for vesting
1

conditions.

The PSUs granted in 2013 and Remuneration of senior car allowance) and $2 million advances were outstanding as of
2012 have not given right to management in short-term performance- December 31, 2016.
receive ArcelorMittal shares at related variable remuneration The following table shows the
the end of the vesting period as The total remuneration consisting of a bonus linked to remuneration received by the
the performance conditions set paid in 2016 to members the Company’s 2015 results. CEO, the CFO and the Executive
at the date of the grant have not of ArcelorMittal’s senior Officers as determined by the
been met. management listed in “Directors, During 2016, approximately ARCG Committee in relation to
senior management and $900,000 was accrued by 2016 and by the CEO and the
employees - Directors and senior ArcelorMittal to provide pension other GMB members (including
management” (including Mr. benefits to senior management the CFO) in relation to 2015,
Lakshmi N. Mittal in his capacity (other than Mr. Mittal). including all remuneration
as CEO) was $10.5 million in base components.
salary and other benefits paid No loans or advances
in cash (such as health, other to ArcelorMittal’s senior
insurances, lunch allowances, management were made during
financial services, gasoline and 2016, and no such loans or
Management report  45

Chief Financial Officer and Other GMB


Chief Executive Officer Executive Officers Members
(Amounts in $ thousands except for Long-term incentives) 2016 2015 20165 2015
Base salary1 1,550 1,746 8,729 3,497
Retirement benefits - - 898 305
Other benefits2 42 40 225 101
Short-term incentives3 - 1,910 2,029 2,948
Long-term incentives - fair value in $ thousands4 2,297 1,530 6,882 2,431
- number of share units 504,643 179,320 1,528,868 284,985
1
The base salaries of the CEO and CFO have not been increased in 2016. In 2016, base salary also includes vacation, notice period and severance payments.
2
Other benefits comprise benefits paid in cash such as health insurance and other insurances, lunch allowances, financial services, gasoline and car allowances.
3
Short-term incentives are entirely performance-based and are fully paid in cash. The short-term incentive for a given year relates to the Company’s results in
the previous year.
4
Fair value determined at the grant date is recorded as an expense using the straight line method over the vesting period and adjusted for the effect of non-
market based vesting conditions. The remuneration expenses recognized for the PSUs granted to the CEO and to the CFO and Executive Officers was $2
million (net of reversal of expenses relating to unvested PSUs) for the year ended December 31, 2016. The remuneration expenses recognized for the RSUs/
PSUs granted to the CEO and to the other GMB members was $7 million for the year ended December 31, 2015.
5
Jim Baske is included until June 30, 2016, Davinder Chugh is included until July 20, 2016 and Robrecht Himpe is included as from July 1, 2016.

The Company allocated 2016 remuneration according to the following timeline to the CEO and the CFO:
Short term incentive STI payout 2015
performance performance-related
measurement starts Base salary review PSUs allocation

Long term Performance measured for LTI


incentives
3 years + 2 years
Short term Performance measured
incentives (cash)

Base salary and


benefits

1/2015 1/2016 4/2016 6/2016 12/2016

The Company allocated 2016 remuneration according to the following timeline to the Executive Officers:

Short term incentive STI payout 2015


performance performance-related PSUs allocation
measurement starts Base salary review

Long term Performance measured for LTI 3 years + 2 years


incentives

Short term Performance measured


incentives (cash)

Base salary and


benefits

1/2015 1/2016 March/April /2016 6/2016 12/2016


46  Management report

SOX 304 and clawback policy determines that remuneration • review and approve corporate and Mr. Tye Burt. Regular invitees
should be recovered, it may take goals and objectives relevant include Mr. Lakshmi N. Mittal (CEO
Under Section 304 of the appropriate action on behalf of to the CEO Office and Executive and Chairman) and Mr. Henri
Sarbanes-Oxley Act, the SEC may the Company, including, but not Officers and other members Blaffart (Head of Group Human
seek to recover remuneration limited to, demanding repayment of executive management as Resources and Corporate Services).
from the CEO and CFO of the or cancellation of cash bonuses, deemed appropriate by the Ms. Anne van Ysendyck (Company
Company in the event that it is incentive-based or equity-based committee regarding their Secretary) acts as secretary. The
required to restate accounting remuneration or any gains remuneration, and assess relevant persons are not present
information due to any material realized as the result of options performance against goals and when their remuneration is
misstatement thereof or as a being exercised or awarded or objectives; discussed by the ARCG Committee.
result of misconduct in respect of long-term incentives vesting. The The ARCG Committee Chairman
a financial reporting requirement Board may also choose to reduce • make recommendations to the presents its decisions and findings
under the U.S. securities laws (the future remuneration as a means of Board with respect to incentive to the Board of Directors after each
“SOX Clawback”). recovery. remuneration plans and equity- ARCG Committee meeting.
based plans;
Under the SOX Clawback, the Remuneration policy Remuneration strategy
CEO and the CFO may have to • identify candidates qualified to
reimburse ArcelorMittal for any Board oversight serve as members of the Board, Scope
bonus or other incentive- or the CEO Office and Executive
equity-based remuneration The Board is responsible for Officers; ArcelorMittal’s remuneration
received during the 12-month ensuring that the Group’s philosophy and framework apply
period following the first public remuneration arrangements • recommend candidates to the to the following groups of senior
issuance or filing with the are equitable and aligned with Board for appointment by the management:
SEC (whichever occurs first) the long-term interests of the general meeting of shareholders
of the relevant filing, and any Company and its shareholders. It or for appointment by the Board • the CEO and the CFO; and
profits realized from the sale of is therefore critical that the Board to fulfill interim Board vacancies;
ArcelorMittal securities during that of Directors remain independent • the Executive Officers.
12-month period. of management when making • develop, monitor and review
decisions affecting remuneration corporate governance principles The remuneration philosophy and
The Board of Directors, through its of the CEO, the CFO and the applicable to the Company; governing principles also apply,
ARCG Committee, decided in 2012 Executive Officers. with certain limitations, to a wider
to adopt its own clawback policy • facilitate the evaluation of the group of employees including
(the “Clawback Policy”) that applies To this end, the Board of Directors Board; Executive Vice Presidents, Vice
to the members of the former GMB has established the ARCG Presidents, General Managers and
and to the Executive Vice President Committee to assist it in making • review the succession planning Managers.
of Finance of ArcelorMittal. In 2016, decisions affecting employee and the executive development
the Clawback Policy was updated remuneration. All members of the of the members of the CEO Office Remuneration philosophy
to reflect the Company’s structural ARCG Committee are required and Executive Officers;
changes and now applies to the to be independent under the ArcelorMittal’s remuneration
CEO Office and the Executive Company’s corporate governance • submit proposals to the Board philosophy for its senior managers
Officers. guidelines, the NYSE standards on the remuneration of the is based on the following
and the 10 Principles of Corporate members of the CEO Office and principles:
The Clawback Policy comprises Governance of the Luxembourg Executive Officers, and on the
cash bonuses and any other Stock Exchange. appointment of new members • provide total remuneration
incentive-based or equity-based thereto and new directors; and competitive with executive
remuneration, as well as profits The members are appointed remuneration levels of a peer
from the sale of the Company’s by the Board of Directors each • make recommendations to the group composed of a selection of
securities received during the year after the annual general Board of Directors in respect of industrial companies of a similar
12-month period following the meeting of shareholders. The the Company’s framework of size and scope;
first public issuance or filing with members have relevant expertise remuneration for the members
the SEC (whichever first occurs) or experience relating to the of the CEO Office and Executive • encourage and reward
of the filing that contained purposes of the ARCG Committee. Officers and such other members performance that will lead to
the material misstatement of The ARCG Committee makes of the executive management as long-term enhancement of
accounting information. decisions by a simple majority with designated by the committee. In shareholder value;
no member having a casting vote. making such recommendations,
For purposes of determining the committee may take • promote internal pay equity
whether the Clawback Policy The ARCG Committee is chaired into account factors that it and provide “market” median
should be applied, the Board by Mr. Lewis Kaden, Lead deems necessary. This may (determined by reference to its
of Directors will evaluate the Independent Director. include a member’s total cost identified peer group) base pay
circumstances giving rise to of employment (factoring in levels for ArcelorMittal’s senior
the restatement (in particular, Appointments, remuneration and equity/long term incentives, any managers with the possibility
whether there was any fraud or corporate governance committee perquisites and benefits in kind to move up to the third quartile
misconduct), determine when and pension contributions). of the market base pay levels,
any such misconduct occurred The primary function of the ARCG depending on performance over
and determine the amount of Committee is to assist the Board The ARCG Committee met six time; and
remuneration that should be of Directors, among others with times in 2016. Its members
recovered by the Company. In the respect to the following: comprise Mr. Lewis Kaden
event that the Board of Directors (Chairman), Ms. Suzanne Nimocks
Management report  47

• promote internal pay equity and employee reflect the performance For the CEO and the CFO, the 2016 For the Executive Officers, the 2016
target total direct remuneration of the ArcelorMittal group as a bonus formula is based on: bonus formula is based generally
(base pay, bonus, and long term whole and /or the performance on the following as tailored for
incentives) levels for senior of the relevant business units, • Operating income plus their respective positions:
managers at the 75th percentile the achievement of objectives depreciation, impairment
of the market. specific to the department and expenses and exceptional items • Operating income plus
the individual employee’s overall (“EBITDA”) at the Group level: depreciation, impairment
Remuneration framework performance. 60% (this acts as “circuit breaker” expenses and exceptional items
with respect to group-level (“EBITDA”) at the Group, segment
The ARCG Committee develops The calculation of ArcelorMittal’s financial performance measures and / or Business unit level: this
proposals on senior management 2016 performance bonus as explained below); acts as the “circuit breaker” with
remuneration annually for is aligned with its strategic respect to financial performance
consideration by the Board of objectives of improving health and • Free cash flow (“FCF”) at the measures except for Mining
Directors. Such proposals include safety performance and overall Group level: 20%; and where the Mining volume is the
the following components: competitiveness and the following “circuit breaker”;
principles: • Health and safety performance at
• fixed annual salary; the Group level: 20%. • Free cash flow (“FCF”) at the
• no performance bonus will be Group, segment and /or Business
• short-term incentives (i.e., triggered if the achievement level EBITDA operating as a the “circuit unit level;
performance-based bonuses); of the performance measures is breaker” for financial measures
and less than the threshold of 80%; means that the 80% threshold • Health and safety performance;
described above must be met and
• long-term incentives (i.e., stock • achievement of 100% of the for EBITDA in order to trigger any
options (prior to May 2011), RSUs performance measure yields bonus payment with respect to • Business specific measures.
and PSUs (after May 2011), PSUs 100% of the performance bonus the EBITDA and FCF performance
only as from 2016. pay-out; and measures. For the Executive Officers, the
performance bonus at 100%
The Company does not have any • achievement of more than For the CEO, the performance achievement of performance
deferred compensation plans for 100% and up to 120% of the bonus at 100% achievement of targets linked to the business plan
senior management, including the performance measure generates performance targets linked to the is equal to 60% of their base salary.
Chairman and CEO. a higher performance bonus pay- business plan is equal to 100%
out, except as explained below. of his base salary. For the CFO, The achievement level of
Fixed annual salary the performance bonus at 100% performance for performance
The performance bonus for achievement of performance bonus for the CEO, the CFO
Base salary levels are reviewed each individual is expressed as a targets linked to the business plan and the Executive Officers is
annually and compared to the percentage of his or her annual is equal to 80% of his base salary. summarized as follow:
market to ensure that ArcelorMittal base salary. Performance bonus
remains competitive with market pay-outs may range from 50% of The different performance
median base pay levels. the target bonus for achievement measures are combined through a
of performance measures at the cumulative system: each measure
Short-term incentives threshold (80%), to up to 150% is calculated separately and is
for an achievement at or in excess added up for the performance
Annual performance bonus plan of the ceiling of 120%. Between bonus calculation.
the 80% threshold and the 120%
ArcelorMittal has a short-term ceiling, the performance bonus Performance below threshold will
incentive plan consisting of a is calculated on a proportional, result in zero performance bonus
performance-based bonus plan. straight-line basis. payout.
Bonus calculations for each
Target achievement Target achievement Target achievement
Functional level threshold @ 80% @ 100% ≥ ceiling @ 120%
Chief Executive Officer 50% of base pay 100% of base pay 150% of base pay
Chief Financial Officer 40% of base pay 80% of base pay 120% of base pay
Executive Officers 30% of base pay 60% of base pay 90% of base pay

Individual performance and may cause the performance bonus At the end of the financial The 2015 Performance Bonus with
assessment ratings define the pay-out to be higher than 150% year, achievement against the respect to the Executive Officers
individual bonus multiplier that of the target bonus, up to 225% of measures is assessed by the ARCG was paid out in March/April 2016.
will be applied to the performance target bonus being the absolute Committee and the Board and The business bonus multipliers
bonus calculated based on maximum for the CEO. Similarly, a the short-term incentive award for the Executive Officers were
actual performance against the reduction factor will be applied for is determined. There were no between 0 and 1.17 (with an
performance measures. Those those at the lower end. payments made with respect to average of 0.57) depending on
individuals who consistently the 2015 Performance Bonus Plan their business performance.
perform at expected levels will In exceptional cases, there are for the 2015 senior management
have an individual multiplier of 1. some entitlements to a retention (CEO and other GMB members).
For outstanding performers, an bonus or a business specific bonus.
individual multiplier of up to 1.5
48  Management report

Other benefits meeting to the May 2017 annual total cost of employment (in U.S. and measurable metrics for
general shareholders’ meeting, a dollars per tonne) for the steel shareholder value creation.
In addition to the remuneration maximum of 30,000,000 PSUs may business (TCOE) and the mining
described above, other benefits be allocated to eligible employees volume plan and ROCE for the PSU plan for CEO Office (formally
may be provided to senior under the ArcelorMittal Equity Mining segment until the 2013 GMB PSU Plan)
management and, in certain cases, Incentive Plan and the GMB PSU grant. As from 2014, most of the
other employees. These other Plan combined. steel business units have kept The GMB PSU Plan was designed
benefits can include insurance, only ROCE as a performance to enhance the long-term
housing (in cases of international ArcelorMittal equity incentive plan measure and the Mining segment performance of the Company and
transfers), car allowances and tax continued with ROCE and mining align the members of the GMB to
assistance. RSUs. RSUs granted under the volume plan. In case the level the Company’s objectives. The
ArcelorMittal Equity Incentive of achievement of performance GMB PSU Plan is now applicable
Long-term incentives: equity- Plan are designed to provide a is below the threshold, there is to the CEO Office. This PSU Plan
based incentives (share unit plans) retention incentive to eligible no vesting, and the rights are complements ArcelorMittal’s
employees. RSUs are subject to automatically forfeited. existing program of annual
On May 10, 2011, the annual “cliff vesting” after three years, performance-related bonuses
general meeting of shareholders with 100% of the grant vesting In 2016, in order to ensure which is the Company’s reward
approved the ArcelorMittal on the third anniversary of the achievement of the Action system for short-term performance
Equity Incentive Plan, a new grant contingent upon the 2020, ArcelorMittal made a and achievements. The main
equity-based incentive plan continued active employment of special grant (“Special Grant”) to objective of this PSU Plan is to
that replaced the Global Stock the eligible employee within the qualifying employees (including be an effective performance-
Option Plan (see below and note Group. RSUs were an integral part the Executive Officers), instead enhancing scheme for members
7.3 to the consolidated financial of the Company’s remuneration of the standard grant. The value based on the achievement of
statements for a description of framework. Between 500 and of the Special Grant at grant date ArcelorMittal’s strategy aimed at
the Global Stock Option Plan). The 700 of the Group’s most senior is based generally on a specified creating a measurable long-term
ArcelorMittal Equity Incentive Plan managers were eligible for RSUs. percentage of the base salary shareholder value.
is intended to align the interests depending on the position of
of the Company’s shareholders See note 7.3 to the consolidated the employee at grant date. The The members of the CEO Office
and eligible employees by financial statements for amounts vesting is subject to continued will be eligible for PSU grants. This
allowing them to participate in of RSUs granted. active employment within the PSU Plan provides for cliff vesting
the success of the Company. The ArcelorMittal group and to yearly on the third year anniversary of the
ArcelorMittal Equity Incentive PSUs. The grant of PSUs under performance of ROCE targets and grant date, under the condition
Plan provides for the grant the ArcelorMittal Equity other strategic objectives within that the relevant CEO Office
of RSUs and PSUs to eligible Incentive Plan aims to serve the business units. The Special member continues to be actively
Company employees (including as an effective performance- Grant has been split into two parts:employed by the ArcelorMittal
the Executive Officers) and is enhancing scheme based on group on that date. If the CEO
a target grant which will vest if the
designed to incentivize employees, the employee’s contribution to performance is at target and an Office member is retired on
improve the Company’s long- the eligible achievement of the over-performance grant which will that date or in case of an early
term performance and retain Company’s strategy. Awards in vest if the performance is at 120% retirement by mutual consent, the
key employees. On May 8, 2013, connection with PSUs are subject or above. Any PSU gives the right relevant CEO Office member will
the annual general meeting of to the fulfillment of cumulative to a maximum of one ArcelorMittal not automatically forfeit PSUs and
shareholders approved the GMB performance criteria over a three- Share at vesting. pro rata vesting will be considered
PSU Plan, which provides for the year period from the date of the at the end of the vesting period
grant of PSUs to GMB members PSU grant. The target group for The Special Grant provides for at the sole discretion of the
(and is now applicable to the CEO PSU grants initially included the vesting in two parts: ARCG Committee of the Board of
Office). Until the introduction CEO and the other GMB members. Directors. Awards under this PSU
of the GMB PSU Plan in 2013, However, from 2013 onwards, the - 50% would vest after three years Plan are subject to the fulfillment
GMB members were eligible to CEO and other GMB members (in 2019) and of cumulative performance criteria
receive RSUs and PSUs under the (and in 2016, the CEO Office) over a three-year period from the
ArcelorMittal Equity Incentive received PSU grants only under - 50% would vest after five years date of the PSU grant. The value of
Plan. In 2016, a special grant was the GMB PSU Plan instead of the (in 2021). the grant at grant date will equal
approved in order to align the ArcelorMittal Equity Incentive Plan one year of base salary for the
grant with the Action 2020 plan (see “GMB PSU Plan”). The allocation of PSUs to eligible CEO and 80% of base salary for
put in place by ArcelorMittal. employees under ArcelorMittal the other CEO Office members.
See note 7.3 to the consolidated Equity Incentive Plan has Each PSU may give the right to up
The maximum number of PSUs financial statements for amounts been reviewed by the ARCG to two shares of the Company in
(and RSUs previously) available of PSUs granted. Committee, comprised of three 2013, and each PSU from the 2014
for grant during any given year is independent directors, which grant may convey the right to up
subject to the prior approval of PSUs vest three years after their makes a recommendation to to one and a half shares.
the Company’s shareholders at date of grant subject to the the full Board of Directors. The
the annual general meeting. The eligible employee’s continued Committee has also decided See note 7.3 to the consolidated
annual shareholders’ meeting employment with the Company the criteria for granting PSUs financial statements for amounts
on May 4, 2016 approved the and the fulfillment of targets and made its recommendation of PSUs granted under this plan.
maximum to be granted until the related to the following to the Board of Directors. These
next annual shareholders’ meeting. performance measures: return criteria are based on the principle In order to ensure achievement of
For the period from the May 2016 on capital employed (ROCE) and of rewarding for performance the Action 2020 specifically by the
annual general shareholders’ a strategic measure which was upon the achievement of clear CEO Office, ArcelorMittal made a
Management report  49

special grant in 2016 instead of the 120% of the median TSR. None to the Board of Directors. The performance and on generating
standard grant. The value of this of the PSUs will vest if the vesting criteria of the PSUs are sustained shareholder value from
special grant at grant date equaled Company’s TSR performance is also monitored by the ARCG relative performance.
-150% of the base salary for the below 100% of that of the peer Committee.
CEO Office members. group. The following remuneration
• For 25% of the PSUs, For further detail on the stock charts, which illustrate the various
According to this special grant, performance is compared to option plan, RSU Plan and PSU elements of compensation of the
each member of the CEO Office the median of the S&P 500 plan, including the total number of CEO, the CFO and the Executive
was eligible for PSU grants under companies. The percentage of shares outstanding, fair value, and Officers are applicable for 2016.
the PSU plan for CEO Office. PSUs vesting will be 50% for exercise prices, please see note For each of the charts below, the
achieving performance equal to 7.3 to the consolidated financial columns on the left, middle and
Awards under the Special Grant 100% of the index performance statements. on the right, respectively, reflect
are subject to the fulfillment of of the S&P 500 companies the breakdown of compensation
cumulative performance criteria: and 100% for achieving a Global Stock Option Plan if targets are not met, met and
50% would vest after three years performance 2% better than exceeded.
(in 2020) and 50% would vest after the index per annum over Prior to the May 2011 annual
five years (in 2022). 50% of the performance. None of the PSUs general shareholders’ meeting
PSUs granted to each member of will vest if the Company’s TSR adoption of the ArcelorMittal
the CEO Office is eligible to vest performance is below 100% of Equity Incentive Plan described
based on the Company’s Total index performance of the S&P below, ArcelorMittal’s equity-based
Shareholder Return (“TSR”) defined 500 companies. incentive plan took the form of a
as the share price at the end of stock option plan known as the
period minus the share price at The other 50% of the criteria to be Global Stock Option Plan. For
start of period plus any dividend met to trigger vesting of the PSUs further detail on the stock option
paid divided by the share price is based on the development of plan, including the total number
at the start of the period. “Start of Earnings Per Share (EPS), defined of options outstanding, exercise
period” and “end of period” will be as the amount of earnings per prices and maturity dates, please
defined by the ARCG Committee of share outstanding compared to see note 7.3 to the consolidated
the Board of Directors. The TSR will a peer group of companies. The financial statements.
then be compared with the TSR of percentage of PSUs vesting will
a peer group of companies and the be 50% for achievement of 100% Performance consideration
TSR of the companies forming the of the median EPS, 100% for
S&P 500 index, each counting for achieving 120% of the median EPS. Remuneration mix
half of the weighting.
The allocation of PSUs to eligible The target total remuneration
• For 25% of the PSUs, CEO Office members is reviewed of the CEO and the CFO is
performance is compared to by the ARCG Committee of the structured to attract and retain
the peer group. The percentage Board of Directors, which is executives; the amount of the
of PSUs vesting will be 50% for comprised of three independent remuneration actually received is
achieving 100% of the median directors, and which makes a dependent on the achievement of
TSR and 100% for achieving proposal and recommendation superior business and individual

CEO Remuneration MIX Other GMB Members - CEO Remuneration MIX

150% 150%
No pension contribution

75% 75%
180%
225%
80%
100%
13% 13% 13%

100% 100% 100% 100% 100% 100%

Below threshold Target Maximum Below threshold Target Maximum

Base salary Short term incentives Long term incentives Base salary Short term incentives Long term incentives Other benefits
50  Management report

Executive Officer - Remuneration MIX

180%

150%
135%
60%

24% 24% 24%

100% 100% 100%

Below threshold Target Maximum

Base salary Short term incentives Long term incentives Other benefits

Major shareholders and related party transactions

Major shareholders
The following table sets out information as of December 31, 2016 with respect to the beneficial ownership of ArcelorMittal ordinary shares by
each person who is known to be the beneficial owner of more than 5% of the shares and all directors and senior management as a group.
ArcelorMittal Ordinary Shares 1
Number %
Significant Shareholder 2 1,146,687,339 37.40
Treasury Shares 3 7,222,439 0.24
Other Public Shareholders 4 1,911,801,091 62.36
Total 3,065,710,869 100.00
Of which: Directors and Senior Management 5 2,072,445 0.07
1
For purposes of this table, a person or group of persons is deemed to have beneficial ownership of any ArcelorMittal ordinary shares as of a given date on
which such person or group of persons has the right to acquire such shares within 60 days after December 31, 2016 upon exercise of vested portions of stock
options. All stock options that have been granted to date by ArcelorMittal have vested.
2
For purposes of this table, ordinary shares owned directly by Mr. Lakshmi Mittal and his wife, Mrs. Usha Mittal, and options held directly by Mr. Lakshmi Mittal,
are aggregated with those ordinary shares beneficially owned by the Significant Shareholder. At December 31, 2016. Mr. Lakshmi Mittal and his wife, Mrs. Usha
Mittal, had direct ownership of ArcelorMittal ordinary shares and indirect ownership, through the Significant Shareholder, of two holding companies that
own ArcelorMittal ordinary shares—Nuavam Investments S.à r.l. (“Nuavam”) and Lumen Investments S.à r.l. (“Lumen”). Nuavam, a limited liability company
organized under the laws of Luxembourg, was the owner of 190,975,045 ArcelorMittal ordinary shares. Lumen, a limited liability company organized under the
laws of Luxembourg, was the owner of 954,864,984 ArcelorMittal ordinary shares. Mr. Mittal was the direct owner of 534,310 ArcelorMittal ordinary shares and
held options to acquire an additional 236,500 ArcelorMittal ordinary shares, all of which are, for the purposes of this table, deemed to be beneficially owned by
Mr. Mittal due to the fact that these options are exercisable within 60 days. Mrs. Mittal was the direct owner of 76,500 ArcelorMittal ordinary shares. Mr. Mittal,
Mrs. Mittal and the Significant Shareholder shared indirect beneficial ownership of 100% of each of Nuavam and Lumen (within the meaning set forth in Rule
13d-3 of the Exchange Act). Accordingly, Mr. Mittal was the beneficial owner of 1,146,610,839 ArcelorMittal ordinary shares, Mrs. Mittal was the beneficial owner
of 1,145,916,529 ordinary shares and the Significant Shareholder (when aggregated with ordinary shares of ArcelorMittal and options to acquire ordinary
shares of ArcelorMittal held directly by Mr. and Mrs. Mittal) was the beneficial owner of 1,146,687,339 ordinary shares. Excluding options, Mr. Lakshmi Mittal
and Mrs. Usha Mittal together beneficially owned 1,146,450,839 ArcelorMittal ordinary shares at such date. As of December 31, 2015 and 2014, the Significant
Shareholder held 39.39% of the Company’s ordinary shares.
3
Represents ArcelorMittal ordinary shares repurchased pursuant to share repurchase programs in prior years, fractional shares returned in various transactions,
and the use of treasury shares in various transactions in prior years; includes (1) 965,935 stock options that can be exercised by senior management (other than
Mr. Mittal) and (2) 236,500 stock options that can be exercised by Mr. Mittal, in each case within 60 days of December 31, 2016, i.e. 0.04% of the total amount
of outstanding shares. If exercised, the shares underlying these options will either have to be delivered out of Treasury shares or by the issuance of additional
shares.
4
The Capital Group Companies Inc.’s shareholding increased to 168,541,781 shares, corresponding to an interest of 5.49% on April 11, 2016 and subsequently
decreased to 147,321,072 on January 25, 2017, corresponding to an interest of 4.8%.
5
Includes shares beneficially owned by directors and members of senior management; excludes shares beneficially owned by Mr. Mittal. Note that (i) stock
options included in that are exercisable within 60 days are excluded from “Treasury Shares” above (see also note 3 above) and (ii) ordinary shares are included
in “Other Public Shareholders” above.
Aditya Mittal is the direct owner of 146,846 ArcelorMittal ordinary shares and holds options to acquire an additional 189,200 ArcelorMittal ordinary shares,
together representing less than 0.1% of the ArcelorMittal ordinary shares outstanding. Aditya Mittal holds a total of 617,626 PSU’s of which 84,694 may vest
in June 2017, 117,964 may vest in June 2018 and 414,968 of which 50% may vest after 3 years in 2020 and 50% may vest after five years in 2022. As the vesting
of PSU’s is dependent on company performance criteria not fully within the control of the PSU holder, Aditya Mittal does not beneficially own ArcelorMittal
ordinary shares by virtue of his ownership of the PSU’s. Aditya Mittal is the son of Mr. Mittal and Mrs. Mittal and Group CFO and CEO ArcelorMittal Europe.
Vanisha Mittal Bhatia is the direct owner of 25,500 ArcelorMittal ordinary shares, representing less than 0.1% of the ArcelorMittal ordinary shares outstanding.
Vanisha Mittal Bhatia is the daughter of Mr. Mittal and Mrs. Mittal and a member of the Company’s Board of Directors.
Management report  51

On January 16, 2013, ArcelorMittal of the name of the shareholder, shareholder and registration indirectly, any ordinary shares, the
issued $2.25 billion aggregate the number of shares held rights agreement (the acquired MCNs or other securities
principal amount of its 6% by such shareholder and the “Shareholder’s Agreement”) exchangeable for or convertible
Mandatorily Convertible Notes due amount paid up on each share dated August 13, 1997. Pursuant into ordinary shares owned by
2016, of which Lumen subscribed in the shareholder register of to the Shareholder’s Agreement them for a period of at least 180
for $300 million in principal ArcelorMittal. and subject to the terms and days from January 9, 2013, subject
amount. conditions thereof, ArcelorMittal to certain limited exceptions or
At December 31, 2016, 2,349 shall, upon the request of certain the prior written consent of the
As of December 31, 2015, shareholders other than the holders of restricted ArcelorMittal representatives. In connection with
1,817,869 Mandatorily Convertible Significant Shareholder, holding shares, use its reasonable efforts the Share Offering and the offering
Notes had been converted at an aggregate of 48,144,813 to register under the Securities of the MCNs, ArcelorMittal entered
the option of their holders. On ArcelorMittal ordinary shares Act of 1933, as amended, the sale into a share lending agreement
January 15, 2016, ArcelorMittal were registered in ArcelorMittal’s of ArcelorMittal shares intended with Lumen on January 9, 2013,
issued 137,967,116 new ordinary shareholder register, representing to be sold by those holders. pursuant to which Lumen agreed
shares of the Company upon approximately 1.57% of the By its terms, the Shareholder’s to make available for borrowing
conversion as at such date of ordinary shares issued (including Agreement may not be amended, by ArcelorMittal up to a maximum
the 88,182,131 outstanding treasury shares). other than for manifest error, amount of 48.9 million ordinary
Mandatorily Convertible Notes except by approval of a majority of shares in exchange for a loan fee of
at a conversion ratio of 1.56457. At December 31, 2016, there ArcelorMittal’s shareholders (other $0.00046 per lent ordinary share,
Following this issuance, the share were 219 registered shareholders than the Significant Shareholder accruing daily from and including
capital of the Company was holding an aggregate of and certain permitted transferees) the date on which the loaned
comprised of 1,803,359,338 Shares 221,176,196 New York Shares, at a general shareholders’ meeting. ordinary shares were delivered to
and the Significant Shareholder representing approximately the borrower to, but excluding,
(when aggregated with ordinary 7.21% of the ordinary shares Memorandum of Understanding the date of return of the borrowed
shares of ArcelorMittal and options issued (including treasury shares). ordinary shares. Under the share
to acquire ordinary shares of ArcelorMittal’s knowledge of the The Memorandum of lending agreement, deliveries
ArcelorMittal held directly by Mr. number of New York Shares held Understanding entered into in of the loaned shares by Lumen
and Mrs. Mittal) held 37.41% of the by U.S. holders is based solely connection with the Mittal Steel was to occur on the dates an
outstanding shares. on the records of its New York acquisition of Arcelor, certain equal number of ordinary shares
transfer agent regarding registered provisions of which expired in were required to be delivered
Following Company’s equity ArcelorMittal ordinary shares. August 2009 and August 2011, by ArcelorMittal pursuant to the
offering authorized by the EGM is described under “Material terms of the MCNs. The share
which closed on April 8, 2016, the At December 31, 2016, contracts, Memorandum of lending agreement provided that
Company’s issued share capital 1,682,467,041 ArcelorMittal Understanding”. ArcelorMittal could terminate all
was increased from 1,803,359,338 ordinary shares were held through or any portion of any loan made
ordinary shares to 3,065,710,869 the Euroclear/Iberclear clearing Acquisition of ordinary shares and there under at any time and
ordinary shares. system in the Netherlands, France, mandatorily convertible notes that all outstanding loans would
Luxembourg and Spain. in the January 2013 offering of terminate on the date which was
The ArcelorMittal ordinary shares such securities by ArcelorMittal, three business days after the date
may be held in registered form Voting rights and entry into the Lock-Up Letter on which a general meeting of
on the Company’s register only. and Share Lending Agreement in shareholders of ArcelorMittal had
Registered shares are fully fungible Each share entitles the holder to connection therewith approved a resolution approving
and may consist of: one vote at the general meeting of sufficient authorized share capital
shareholders, and no shareholder ArcelorMittal issued 104,477,612 and authorizing the Board of
a. ArcelorMittal Registry Shares, benefits from specific voting ordinary shares in an offering Directors of the Company to cancel
which are registered directly rights. For more information that closed on January 14, 2013 the preferential subscription right
on ArcelorMittal’s Luxembourg relating to ArcelorMittal shares, (the “Share Offering”) and issued of existing shareholders to allow
shareholder register, see “Memorandum and Articles $2,250,000,000 aggregate principal return to Lumen of all borrowed
of Association, Voting and amount of 6.00% Mandatorily ordinary shares. Under the share
b. shares traded on Euronext information rights”. Convertible Subordinated Notes lending agreement, Lumen had
Amsterdam, Euronext Paris, due 2016 (the “MCNs” or each a no rights (including voting or
the regulated market of the Related Party Transactions “Note”) in an offering that closed disposition rights) with respect
Luxembourg Stock Exchange and on January 16, 2013. Lumen to any ordinary shares that had
the Spanish Stock Exchanges, ArcelorMittal engages in certain subscribed for 17,910,448 ordinary been loaned to ArcelorMittal
which are held in Euroclear, or commercial and financial shares in the Share Offering and not yet returned to Lumen.
transactions with related parties, and acquired $300 million in Subject to this condition being
c. shares traded on the NYSE, including associates and joint principal amount of MCNs. The met, it was expected that any
named New York Registry Shares, ventures of ArcelorMittal. Please underwriting agreement entered ordinary shares to be delivered
which are registered (including in refer to note 11 of ArcelorMittal’s into in connection with such by ArcelorMittal to Lumen upon
the name of the nominee of DTC) consolidated financial statements. offerings provided as a closing termination of the loan(s) would
in a register kept by or on behalf condition that Lumen and be newly issued ordinary shares
of ArcelorMittal by its New York Shareholder’s Agreement Nuavam each execute a lock-up issued in favor of Lumen (with a
transfer agent. letter whereby they would each cancellation of the shareholders’
The Significant Shareholder, a agree not to offer, sell, contract to preferential subscription right).
Under Luxembourg law, the holding company owned by sell, pledge, grant any option to The extraordinary general meeting
ownership of registered shares the Significant Shareholder and purchase, make any short sale or of shareholders of ArcelorMittal
is evidenced by the inscription ArcelorMittal are parties to a otherwise dispose of, directly or that took place on May 8, 2013
52  Management report

(the “May 2013 EGM”) approved rights offering launch. The actual exercise its rights under the euro- and Aperam expired at year-end
sufficient authorized share capital amount of the capital increase in denominated rights issuance 2012. The parties agreed to renew
and authorized the Board of USD depended on the exchange gave rise to a foreign exchange a limited number of services
Directors of the Company to cancel rate at closing. The Significant exposure opposite to the one of where expertise and bargaining
the preferential subscription right Shareholder agreed with the the Company. Accordingly, on power created value for each
of existing shareholders to allow underwriters that it would not, the same date, the Significant party. ArcelorMittal will continue
return to Lumen of all borrowed (and would not announce the Shareholder entered into currency to provide certain services in
ordinary shares. Accordingly, the intention to) without the prior forward transactions, with the 2017 relating to areas including
share lending agreement with consent of the three banks on same credit institution as the environmental and technical
Lumen was terminated three behalf of the underwriters until (a) Company, to hedge its foreign support and the administration of
business days after the date of the 180 days following the settlement exchange exposure arising from the shareholders register.
May 2013 EGM. On January 15, of the equity offering or (b) if potential fluctuations in the
2016, upon final maturity of the the underwriting agreement USD/euro exchange rate. The In the area of research and
MCNs, the remaining outstanding terminated prior to such date, transactions, which consisted of development, Aperam entered
88,182,131 Notes were converted the date of such termination, buying euro and selling U.S. dollar into a frame arrangement with
into 137,967,116 new ordinary offer, sell, contract to sell, pledge, at an amount of €1 billion, settled ArcelorMittal to establish a
shares of ArcelorMittal (including grant any option to purchase, on March 30, 2016. structure for future cooperation
Lumen Investments Sàrl’s make any short sale or otherwise in relation to certain ongoing or
allotment). Following this issuance, dispose of any ordinary shares On April 8, 2016, ArcelorMittal new research and development
the share capital of ArcelorMittal of ArcelorMittal, or any options completed the equity offering programs. Currently, only limited
amounted to EUR 7,453,441,006.98 or warrants to purchase any with net proceeds of $3.1 billion. research and development
represented by 1,803,359,338 ordinary shares of ArcelorMittal, New shares of 1,262,351,531 support for existing projects
Shares. For the 1,817,869 Notes or any securities convertible into, were issued at a subscription are implemented through the
previously converted at the option exchangeable for or that represent price of €2.20 per New Share. The agreement, but new collaborative
of their holders, ArcelorMittal the right to receive ordinary shares Significant Shareholder exercised endeavors are foreseen in 2017.
delivered a total of 2,275,026 of ArcelorMittal, whether now its rights for New Shares pro rata
treasury shares. owned or hereinafter acquired, to its shareholding of 37.38%. The purchasing and sourcing
whether owned directly (including Following the equity offering, of raw materials generally were
Acquisition of ordinary shares of holding as a custodian) or through ArcelorMittal’s issued share capital not covered by the Transitional
ArcelorMittal by way of a non- beneficial ownership, subject to consists of 3,065,710,869 shares Services Agreement. Aperam is
statutory preferential subscription certain exceptions. without nominal value. responsible for the sourcing of
rights (the “equity offering”) to its key raw materials, including
holders of its existing ordinary An extraordinary general meeting Agreements with Aperam SA post- nickel, chromium, molybdenum
shares to subscribe for an of shareholders was held on Stainless Steel Spin-Off and stainless steel scrap.
aggregate of up to 1,262,351,531 March 10, 2016 (the “EGM”) in However, under the terms of
newly-issued ordinary shares of order to approve certain matters In connection with the spin-off the 2011 Purchasing Services
ArcelorMittal (the “New Shares”) in connection with ArcelorMittal’s
of its stainless steel division into Agreement, Aperam still relies
and entry into the lock-up announced intention to increase a separately focused company, on ArcelorMittal for services in
agreements in connection its capital through an equity Aperam SA (“Aperam”), which was relation to the negotiation of
therewith. offering. Among other things, completed on January 25, 2011, certain contracts with global or
the proposals to be voted on ArcelorMittal entered into several large regional suppliers, including
On February 5, 2016, ArcelorMittal included a reduction of the par agreements with Aperam and/ or those relating to the following key
announced a proposed capital value per share to €0.10 and an certain Aperam subsidiaries. These categories: operating materials
increase of approximately $3 increase in the authorized share agreements include a Master (rolls, electrodes and refractory
billion subject to shareholder capital to €3,199,585,721.30. Both
Transitional Services Agreement materials), spare parts, industrial
approval by way of a rights issue resolutions were approved by the dated January 25, 2011 (the products and services. The
structured as non-statutory EGM. “Transitional Services Agreement”) Purchasing Services Agreement
preferential subscription rights for for support for/from corporate also permits Aperam to avail itself
ArcelorMittal shareholders. The Following the EGM held on activities, a purchasing services of the services and expertise of
Significant Shareholder committed March 10, 2016, when the final agreement for negotiation services ArcelorMittal for certain capital
to take up its pro-rata entitlement terms of the rights issuance from ArcelorMittal Purchasing (the expenditure items. The Purchasing
corresponding to approximately were defined, the Company “Purchasing Services Agreement”), Services Agreement and the
$1.1 billion. decided, in accordance with its a sourcing services agreement Sourcing Services Agreement were
risk management policies, to for negotiation services from each entered into for an initial term
ArcelorMittal entered into hedge part of its foreign exchange ArcelorMittal Sourcing (the of two years, which was to expire
a standby underwriting exposure arising from the euro “Sourcing Services Agreement”), on January 24, 2013. However,
commitment with three banks denominated proceeds of the certain commitments regarding since that date, the Purchasing
acting as joint global coordinators, rights issuance. Accordingly, on cost-sharing in Brazil and certain Services Agreement has been
pursuant to which the latter March 10, 2016, the Company other ancillary arrangements extended successively, while the
undertook to underwrite the entered into currency forward governing the relationship Sourcing Services Agreement
capital increase for the remaining transactions with a credit between Aperam and was limited to IT services as of
amount, subject to customary institution to sell euro and ArcelorMittal following the spin- October 2013. The term of the
conditions. As the subscription buy U.S. dollar at an amount off, as well as certain agreements Purchasing Services Agreement
price was denominated in euros, of €1 billion. The transactions relating to financing. was further extended until January
the capital increase amount settled on March 30, 2016. In 25, 2017 and is expected to be
corresponded to the euro parallel, the commitment by The Transitional Services extended with a revised scope for
equivalent of $3 billion upon the the Significant Shareholder to Agreement between ArcelorMittal an additional year. As from January
Management report  53

1, 2016, purchasing services for with costs being shared on the in any companies or partnerships, or a professional depositary of
metallics (carbon scrap) were basis of cost allocation parameters membership in any associations, securities may be transferred
removed from the Purchasing agreed between the parties. From consortia and joint ventures. in accordance with customary
Services Agreement. The Sourcing the demerger of ArcelorMittal procedures for the transfer of
Service Agreement (already limited BioEnergia Ltda on July 1, 2011, In general, the Company’s securities in book-entry form.
to IT services) was ended by its payroll functions were also corporate purpose comprises
mutual agreement of the parties handled by ArcelorMittal Brasil. the participation, in any form The ArcelorMittal ordinary shares
on December 31, 2014, when The real estate, insurance activities whatsoever, in companies and may be held in registered form
Aperam Sourcing SCA switched and payroll functions of Aperam’s partnerships and the acquisition on the Company’s register only.
to its own IT system. New specific Brazilian subsidiaries have not by purchase, subscription or in Registered shares are fully fungible
IT service agreements are being been handled by ArcelorMittal any other manner as well as the and may consist of:
put in place with Aperam, one Brasil since January 1, 2013, June transfer by sale, exchange or in any
for Asset Reliability Maintenance 30, 2013, and June 27, 2014 other manner of shares, bonds, a. ArcelorMittal Registry Shares,
Program (ARMP) in its Brazilian respectively. debt securities, warrants and other which are registered directly
entities, and two others for the securities and instruments of any on ArcelorMittal’s Luxembourg
use in Europe of ARMP and for Acquisition of inventories kind. shareholder register,
the use of the global wide area
network (WAN). In Europe, Aperam Mr. Lakshmi N. Mittal acquired It may grant assistance to any b. shares traded on Euronext
purchased most of its electricity inventories on February 18, 2015 affiliated company and take Amsterdam, Euronext Paris,
and natural gas though energy from ArcelorMittal Luxembourg any measure for the control and the regulated market of the
supply contracts put in place pertaining to the Company’s supervision of such companies. Luxembourg Stock Exchange and
for the period 2014-2019 with former headquarters. Such the Spanish Stock Exchanges,
ArcelorMittal Energy SCA and inventories were valued by an It may carry out any commercial, which are held in Euroclear, or
ArcelorMittal Purchasing SCA. independent expert and acquired financial or industrial operation
at arm’s length. or transaction that it considers to c. shares traded on the NYSE,
Purchasing activities will continue be directly or indirectly necessary named New York Registry Shares,
to be provided to Aperam Memorandum and Articles of or useful in order to achieve or which are registered in a register
pursuant to existing contracts with Association further its corporate purpose. (including in the name of the
ArcelorMittal entities that it has nominee of DTC) kept by or on
specifically elected to assume. Below is a summary of Form and transfer of shares behalf of ArcelorMittal by its New
ArcelorMittal’s Articles of York transfer agent.
In addition, in September Association, filed as an exhibit The shares of ArcelorMittal are
2016, a services term sheet to this annual report on Form issued in registered form only and Since March 2009, ArcelorMittal
agreement has been concluded 20-F and incorporated by are freely transferable. There are has used the services of BNP
between ArcelorMittal Shared reference herein. The full text no restrictions on the rights of Paribas Securities Services to
Service Center Europe Sp z.o.o. of the Company’s Articles of Luxembourg or non-Luxembourg assist it with certain administrative
Sp.k. and Aperam according Association is also available on residents to own ArcelorMittal tasks relating to the day-to-day
to which ArcelorMittal Shared www.arcelormittal.com under shares. administrative management of the
Service Center Europe Sp z.o.o. “Investors,Corporate Governance- shareholders’ register.
Sp.k.SSC Poland will prepare in Board of Directors.” Under Luxembourg law, the
close cooperation with Aperam, ownership of registered shares The law of April 6, 2013 concerning
transfer pricing documentation Corporate purpose is evidenced by the inscription dematerialized securities allows
for the financial years 2015, 2016 of the name of the shareholder, Luxembourg issuers to opt for the
and 2017 for specific Aperam Article 3 of the Articles of the number of shares in the full dematerialization of shares. If
entities. The transfer pricing Association provide that the shareholders’ register. Each transfer
ArcelorMittal were to opt for full
of shares is made by a written dematerialization in the future,
documentation shall be compliant corporate purpose of ArcelorMittal
is the manufacture, processing and declaration of transfer recorded shareholders would be required
with OECD transfer pricing
in the shareholders’ register of to hold their shares in a securities
guidelines and in line with country marketing of steel, steel products
ArcelorMittal, dated and signed by account at a bank or other financial
specific legal requirements as well and all other metallurgical
the transferor and the transferee intermediary, which would in turn
as respecting the country specific products, as well as all products
and materials used in their or by their duly appointed agent. hold the shares via an account
deadlines. The work shall include
manufacture, their processing and ArcelorMittal may accept and enter with a securities depository such
also the update of benchmark
their marketing, and all industrial into its shareholders’ register any as Clearstream or Euroclear.
studies.
and commercial activities transfer based on an agreement Dematerialized securities would
connected directly or indirectly between the transferor and the be solely represented by account
In connection with the spin-off,
with those objects, including transferee provided a true and entries with the securities
management also renegotiated complete copy of the agreement is depositary and would therefore
an existing Brazilian cost-sharing mining and research activities
provided to ArcelorMittal. exist only in electronic form. If
agreement between ArcelorMittal and the creation, acquisition, ArcelorMittal were to opt for the
Brasil and Aperam Inox América holding, exploitation and sale of
patents, licenses, know-how and, The Articles of Association provide full dematerialization of its shares,
do Sul S.A. (formerly known that shares may be held through it would no longer be possible
as ArcelorMittal Inox Brasil), more generally, intellectual and
industrial property rights. a securities settlement (clearing) for shareholders to hold shares
pursuant to which, starting as of system or a professional depositary through a direct, nominative
April 1, 2011, ArcelorMittal Brasil of securities. Shares held in this registration in the Company’s
continued to perform purchasing, The Company may realize manner have the same rights register of shareholders as is
insurance and real estate activities its corporate purpose either and obligations as the registered currently the case.
for the benefit of certain of directly or through the creation
of companies, the acquisition, shares. Shares held through a
Aperam’s Brazilian subsidiaries, securities settlement system
holding or acquisition of interests
54  Management report

Issuance of shares statutory preferential subscription Article 5 of the Articles of of the issued share capital and
rights of the existing shareholders Association has been amended to the reserves that ArcelorMittal
The issuance of shares by and to authorize the granting of reflect this change. The Articles of must maintain pursuant to
ArcelorMittal requires either preferential subscription rights to Association have been published Luxembourg law or its Articles of
an amendment of the Articles existing shareholders on terms to on www.arcelormittal.com Association;
of Association approved by an be determined based on market and filed with the Luxembourg
extraordinary general meeting practice and conditions (the Register of Commerce and • only fully paid-up shares may be
of shareholders (an “EGM”) or a “equity offering”). Companies on May 6, 2016. repurchased. At December 31,
decision of the Board of Directors 2016, all of ArcelorMittal’s issued
that is within the limits of the The EGM of ArcelorMittal Preemptive rights ordinary shares were fully paid-
authorized share capital set out in shareholders, held on March up; and
the Articles of Association. In the 10, 2016, approved the two Unless limited or cancelled by the
latter case, the Board of Directors resolutions on its agenda: Board of Directors as described • the acquisition offer is made on
may determine the conditions for below or by an EGM, holders of the same terms and conditions
the issuance of shares, including • to reduce the share capital of the ArcelorMittal shares have a pro to all the shareholders who are in
the consideration (cash or in kind) Company without distribution to rata preemptive right to subscribe the same position, it being noted
payable for such shares. shareholders, in order to reduce for newly issued shares, except for however that listed companies
the par value of the shares in the shares issued for consideration may repurchase their own shares
The EGM may not validly Company to an amount of 10 other than cash (i.e., in kind). on the stock exchange without
deliberate unless at least half of euro cents per share and an acquisition offer having to be
the share capital is present or The Articles of Association provide made to the shareholders.
represented upon the first call. • to increase the Company’s that preemptive rights may
If the quorum is not met, the authorized share capital be limited or cancelled by the In addition, Luxembourg law
meeting may be reconvened as including the authorization to Board of Directors in the event allows the Board of Directors
described in “General Meetings of limit or cancel the shareholders’ of an increase in the Company’s to approve the repurchase of
Shareholders” below. The second preferential subscription rights. issued share capital until the ArcelorMittal shares without the
meeting will be held regardless date being five years from the prior approval of the general
of the proportion of share capital The above authorization expires date of publication in the Official meeting of shareholders if
represented. At both meetings, five years from the date of Luxembourg Gazette Mémorial C necessary to prevent serious and
resolutions, in order to be adopted, publication of the EGM minutes in of the relevant meeting minutes, imminent harm to ArcelorMittal.
must be carried by at least two- the Official Luxembourg Gazette which publication occurred on In such a case, the next general
thirds of the votes cast. Mémorial C, which occurred on March 23, 2016 with respect to meeting of shareholders must
March 23, 2016. This authorization the minutes of the EGM held on be informed by the Board of
The Company’s authorized share may be renewed from time to March 10, 2016. This power of the Directors of the reasons for and
capital was €8,249,049,316.38 time by an EGM for periods not to Board of Directors may from time the purpose of the acquisitions
represented by 1,995,857,213 exceed five years each. to time be renewed by an EGM for made, the number and nominal
shares through 2014 and 2015 subsequent periods not to exceed values, or in the absence thereof,
while its total issued share capital Following such approval, the five years each. the accounting par value of the
stood at €6,883,209,119.84, Company’s share capital was shares acquired, the proportion of
represented by 1,665,392,222 decreased on March 10, 2016 Repurchase of shares the issued share capital that they
ordinary shares in 2014 and from €7,453,441,006.98 to represent, and the consideration
2015. Following the mandatory €180,335,933.80 represented by ArcelorMittal is prohibited by paid for them.
conversion on January 15, 1,803,359,338 ordinary shares Luxembourg law from subscribing
2016 of outstanding Notes of without nominal value. The for its own shares. ArcelorMittal The general meeting of
the Company’s $2.25 billion Company’s authorized share may, however, repurchase its own shareholders held on May 5, 2015
6% Mandatorily Convertible capital, including the issued shares or have another person (the “General Meeting”) decided
Notes due 2016, the Company’s share capital, amounted to repurchase shares on its behalf, (a) to cancel with effect as of the
issued share capital was €3,199,585,721.30 represented by subject to certain conditions, date of the General Meeting the
increased by €570,231,887.14 31,995,857,213 ordinary shares including: authorization granted to the
from €6,883,209,119.84 to without nominal value. Board of Directors by the general
€7,453,441,006.98 represented • a prior authorization of the meeting of shareholders held on
by 1,803,359,338 shares without As a result of the Company’s equity general meeting of shareholders May 11, 2010 with respect to the
nominal value. offering authorized by the EGM setting out the terms and share buy-back program, and (b)
and which closed on April 8, 2016 conditions of the proposed to authorize, effective immediately
On February 5, 2016, the Company at a price of €2.20 per share, the repurchase, including the after the General Meeting, the
announced its intention to Company’s issued share capital maximum number of shares to Board of Directors, with option to
increase its capital through a rights increased from €180,335,933.80 be repurchased, the duration delegate, and the corporate bodies
issue with shareholders benefiting to €306,571,086.90 represented of the period for which the of the other companies in the
from non-statutory preferential by 3,065,710,869 ordinary shares authorization is given (which ArcelorMittal group in accordance
subscription rights on terms to be without nominal value and may not exceed five years) and with the Luxembourg law of
determined by the Company. At remained unchanged at December the minimum and maximum August 10, 1915 on commercial
its meeting on February 3, 2016, 31, 2016. The Company’s consideration per share; companies, as amended (the
the Board of Directors resolved authorized share capital, including “Law”), to acquire and sell shares in
among others and subject to the issued share capital, amounted • the repurchase may not reduce the Company in accordance with
approval by an EGM, to authorize to €337,228,195.60 represented the net assets of ArcelorMittal the Law and any other applicable
the issue of up to 30,000,000,000 by 3,372,281,956 ordinary shares on a non-consolidated basis laws and regulations, including
new ordinary shares, to cancel the without nominal value. to a level below the aggregate but not limited to entering into
Management report  55

off-market and over-the-counter into Luxembourg law Directive • any transaction or matter The Board of Directors may decide
transactions and to acquire shares 2007/36/EC of the European requiring an amendment of the to arrange for shareholders to
in the Company through derivative Parliament and of the Council of Articles of Association. be able to participate in the
financial instruments. July 11, 2007 on the exercise of general meeting by electronic
certain rights of shareholders in The extraordinary general means by way, among others, of
Any acquisitions, disposals, listed companies of July 14, 2007 meeting must reach a quorum (i) real-time transmission to the
exchanges, contributions came into force on July 1, 2011 of shares present or represented public of the general meeting,
or transfers of shares by the (the “Shareholder’s Rights Law”). at the meeting of 50% of the (ii) two-way communication
Company or other companies in share capital in order to validly enabling shareholders to
the ArcelorMittal group must be The Shareholders’ Rights Law deliberate. If this quorum is not address the general meeting
in accordance with Luxembourg abolished the blocking period and reached, the meeting may be from a remote location, or (iii)
laws transposing Directive 2003/6/ introduced the record date system reconvened and the second a mechanism allowing duly
EC regarding insider dealing into Luxembourg law. As set out meeting will not be subject to any identified shareholders to cast
and market manipulation as in the Articles of Association, quorum requirement. In order to their votes before or during the
repealed and replaced by (EU) the record date applicable to be adopted by the extraordinary general meeting without the need
Regulation No. 596/2014 of the ArcelorMittal is the 14th day at general meeting (on the first or for them to appoint a proxyholder
European Parliament and of midnight before the general the second call), any resolution who would be physically present
the Council of April 16, 2014 on meeting date. Only the votes of submitted must be approved by at at the meeting.
market abuse and Commission shareholders who are shareholders least two-thirds of the votes cast
Delegated EC Regulation No. of the Company on the record except for certain limited matters A shareholder may act at any
596/2014 with regard to regulatory date will be taken into account, where the Articles of Association general meeting of shareholders
technical standards for the regardless of whether they remain require a higher majority (see by appointing another person
conditions applicable to buy-back shareholders on the general “Amendment of the Articles (who need not be a shareholder)
programmes and stabilisation meeting date. Shareholders who of Association”). Votes cast do as his or her attorney by means
measures. intend to participate in the general not include votes attaching to of a written proxy using the form
meeting must notify the Company shares with respect to which the made available on the website
Such transactions may be carried at the latest on the date indicated shareholder has not taken part of the Company. The completed
out at any time, including during in the convening notice of their in the vote, has abstained or has and signed proxy must be sent
a tender offer period, subject to intention to participate (by proxy returned a blank or invalid vote. to the Company in accordance
applicable laws and regulations or in person). with the instructions set out in the
including Section 10(b) and Voting and information rights convening notice.
Section 9(a)(2) of the Securities Ordinary general meetings of
Exchange Act of 1934, as amended shareholders. The voting and information rights General meetings of shareholders
(the “Exchange Act”), and Rule of ArcelorMittal’s shareholders are convened by the publication
10b-5 promulgated under the At an ordinary general meeting of have been further expanded of a notice at least 30 days before
Exchange Act. shareholders there is no quorum since the entry into force of the the meeting date in a Luxembourg
requirement and resolutions are Shareholders’ Rights Law on July newspaper, via the online platform
The authorization is valid for adopted by a simple majority, 1, 2011. called Recueil électronique des
a period of five years, i.e., until irrespective of the number of sociétés et associations (“RESA”)
the annual general meeting of shares represented. Ordinary There are no restrictions on the which replaced as of June 1, 2016
shareholders to be held in May general meetings deliberate on rights of Luxembourg or non- the Luxembourg official legal
2020, or until the date of its any matter that does not require Luxembourg residents to vote gazette, the Mémorial, Recueil des
renewal by a resolution of the the convening of an extraordinary ArcelorMittal shares. Each share Sociétés et Associations, and by
general meeting of shareholders general meeting. entitles the shareholder to attend a way of press release sent to the
if such renewal date is prior to the general meeting of shareholders in major news agencies. Ordinary
expiration the five-year period. Extraordinary general meetings of person or by proxy, to address the general meetings are not subject
shareholders. general meeting of shareholders to any minimum shareholder
Capital reduction and to vote. Each share entitles the participation level. Extraordinary
An extraordinary general meeting holder to one vote at the general general meetings, however, are
The Articles of Association provide must be convened to deliberate on meeting of shareholders. There subject to a minimum quorum
that the issued share capital of the following types of matters: is no minimum shareholding of 50% of the share capital. In the
ArcelorMittal may be reduced (beyond owning a single share event the 50% quorum is not met
subject to the approval of at least • an increase or decrease of the or representing the owner of a upon the first call, the meeting
two-thirds of the votes cast at an authorized or issued share single share) required to be able may be reconvened by way of
extraordinary general meeting capital, to attend or vote at a general convening notice published in the
of shareholders where at first meeting of shareholders. same manner as the first notice, at
call at least 50% of the issued • a limitation or exclusion least 17 days before the meeting
share capital is required to be of existing shareholders’ The Board of Directors may also date. No quorum is required upon
represented, with no quorum preemptive rights, decide to allow shareholders to the second call.
being required at a reconvened vote by correspondence by means
meeting. • the acquisition by any person of of a form providing for a positive or
25% or more of the issued share negative vote or an abstention on
capital of ArcelorMittal, each agenda item. The conditions
General meeting of shareholders • approving a merger or similar for voting by correspondence
transaction such as a spin-off, are set out in the Articles of
The shareholders’ rights law of and Association and in the convening
May 24, 2011, which transposes notice.
56  Management report

Shareholders whose share during the general meeting’s (b) the directors’ power, in the between the knowledge, skills,
ownership is directly registered questions and answers session absence of an independent experience and need for renewal
in the shareholders’ register of prior to the vote on the agenda quorum, to vote compensation of the Board.
the Company must receive the items. Although the Articles to themselves or any members of
convening notice by regular mail, of Association of ArcelorMittal their body; (e) number of shares, if any,
unless they have accepted to do not specifically address this required for director’s qualification.
receive it through other means point, shareholders may ask The remuneration of the Directors
(i.e., electronically). In addition, questions in writing ahead of a is determined each year by Article 8.2 of the Articles of
all materials relating to a general general meeting, which are taken the annual general meeting of Association states that the
meeting of shareholders must be into account in preparing the shareholders subject to Article members of the Board of Directors
made available on the website of general meeting’s questions and 17 of the Articles of Association. do not have to be shareholders
ArcelorMittal from the first date answers session. With regard to The annual shareholders meeting in the Company. However, the
of publication of the convening the May 4, 2016 general meeting, of the Company decides on Board of Directors has introduced
notice. shareholders were expressly the directors’ remuneration. on April 27, 2015 a policy that
encouraged to send questions The Chairman & CEO is not requires members of the Board of
Based on an amendment voted and comments to the Company in remunerated for his membership Directors to hold 10,000 shares in
by the extraordinary general advance by writing to a dedicated of the Board of Directors. The the Company (15,000 for the Lead
meeting of shareholders on May e-mail address indicated in the remuneration of the Chairman & Independent Director). For more
8, 2012, the Articles of Association convening notice. CEO is determined by the Board’s information, see “Board practices/
of ArcelorMittal provide that ARCG Committee, which consists Corporate Governance Specific
the annual general meeting of Election and removal of directors. solely of independent directors. characteristics of the Director role”.
shareholders is held each year at Members of the Board of Directors For more information, see
a date and time set by the Board are elected by simple majority “Compensation”. ArcelorMittal’s Articles of
of Directors during the second of the represented shareholders Association provide that, from
or third week of May, between at an ordinary general meeting (c) borrowing powers exercisable August 1, 2009, the Significant
9.00 a.m. and 4.00 p.m. Central of shareholders. Directors are by the directors and how such Shareholder is entitled to
European Time, in Luxembourg. elected for a period ending on a borrowing powers can be varied; nominate a number of candidates
date determined at the time of for election by the shareholders
Luxembourg law requires the their appointment. The directors Any transaction between to the Board of Directors in
Board of Directors to convene a of ArcelorMittal are elected for ArcelorMittal or a subsidiary of proportion to its shareholding. The
general meeting of shareholders three-year terms. Any director may ArcelorMittal and a Director (or Significant Shareholder has not
if shareholders representing be removed with or without cause an affiliate of a Director) must be exercised this right to date.
in the aggregate 10% of the by a simple majority vote at any conducted on arm’s length terms
issued share capital so require general meeting of shareholders. and, if material, must obtain the Amendment of the Articles of
in writing with an indication of approval of the Independent Association
the requested agenda. In this (a) a director’s power to vote on a Directors.
case, the general meeting of proposal, arrangement or contract Any amendments to the Articles of
shareholders must be held within in which the director is materially (d) retirement or non-retirement Association must be approved by
one month of the request. If the interested; of directors under an age limit an extraordinary general meeting
requested general meeting of requirement of shareholders held in the
shareholders is not so convened, If a Director has an interest in presence of a Luxembourg notary,
the relevant shareholder or group a transaction that is submitted There is no retirement or non- followed by the publications
of shareholders may petition the to the Board of Directors for retirement of directors under an required by Luxembourg law.
competent court in Luxembourg approval and this interest conflicts age limit requirement. However,
to have a court appointee convene with that of ArcelorMittal (other on October 30, 2012, the Board In order to be adopted,
the general meeting. than transactions which are part of Directors adopted a policy that amendments of the Articles
of current operations and are places limitations on the terms of Association of ArcelorMittal
Shareholders representing in the entered into under, arms’ length of independent directors as well relating to the size and the
aggregate 5% of the issued share conditions), the Director must as the number of directorships requisite minimum number of
capital may also request that advise the Board of Directors of Directors may hold in order to independent and non-executive
additional items be added to the the existence and nature of the align the Company’s corporate directors of the Board of Directors,
agenda of a general meeting and conflict and cause a record of his/ governance practices with best the composition of the Audit
may draft alternative resolutions her statement to be included in practices in this area. The policy & Risk Committee, and the
to be submitted to the general the minutes of the meeting. In provides that an independent nomination rights to the Board
meeting regarding existing addition, the Director may not take director may not serve on the of Directors of the Significant
agenda items. The request must part in the deliberations on the Board of Directors for more than Shareholder require a majority
be made in writing and sent either transaction. At the next following 12 consecutive years, although of votes representing two-thirds
to the electronic address or to the general meeting of shareholders the Board of Directors may, by way of the voting rights attached to
Company’s postal address set out of ArcelorMittal, before any other of exception to this rule, make an the shares in ArcelorMittal. The
in the convening notice. resolution is put to a vote, a special affirmative determination, on a same majority rule would apply to
report will be made by the Board case-by-case basis, that he or she amendments of the provisions of
The Shareholders’ Rights Law of Directors to the shareholders’ may continue to serve beyond the Articles of Association that set
provides that a company’s meeting on any such transaction. the 12 years rule if the Board of out the foregoing rule.
articles of association may allow Directors considers it to be in
shareholders to ask questions prior the best interest of the Company
to the general meeting which will based on the contribution of the
be answered by management Director involved and the balance
Management report  57

Annual accounts Merger and division Directive 2004/25/EC of the squeeze-out proceedings if the
European Parliament and the offeror acquired at least 90% of
Each year before submission A merger whereby the Council of April 21, 2004 on the ArcelorMittal shares carrying
to the annual ordinary general Luxembourg company being takeover bids ( the “Takeover voting rights that were the subject
meeting of shareholders, the acquired transfers to an existing or Law”), provides that, if a person of the offer. The price paid in a
Board of Directors approves the newly incorporated Luxembourg acting alone or in concert acquires mandatory offer is deemed a fair
parent company accounts for company all of its assets and securities of ArcelorMittal which, price. The consideration paid in
ArcelorMittal, the parent company liabilities in exchange for the when added to any existing the squeeze-out proceedings
of the ArcelorMittal group as issuance to the shareholders of holdings of ArcelorMittal securities, must take the same form as the
well as the annual consolidated the company being acquired of give such person voting rights consideration offered in the offer
accounts of the ArcelorMittal shares in the acquiring company, representing at least one third of or consist solely of cash. Moreover,
group, each of which are prepared and a division whereby a company all of the voting rights attached to an all-cash option must be offered
in accordance with IFRS. The Board (the company being divided) the issued shares in ArcelorMittal, to the remaining ArcelorMittal
of Directors also approves the transfers all its assets and liabilities this person is obliged to make shareholders. Finally, the right to
management reports on each of to two or more existing or an offer for the remaining shares initiate squeeze-out proceedings
the stand-alone audited annual newly incorporated companies in ArcelorMittal. In a mandatory must be exercised within three
accounts and the consolidated in exchange for the issuance bid situation the “fair price” is in months following the expiration of
annual accounts, and in respect of shares in the beneficiary principle considered to be the the offer.
of each of these sets of accounts companies to the shareholders highest price paid by the offeror or
a report must be issued by the of the company being divided a person acting in concert with the Sell-out right.
independent auditors. or to such company, and certain offeror for the securities during the The Takeover Law provides that,
similar restructurings must be 12–month period preceding the when an offer (mandatory or
The annual accounts, the annual approved by an extraordinary mandatory bid. voluntary) is made to all of the
consolidated accounts, the general meeting of shareholders holders of voting securities of
management reports and the of the relevant companies held ArcelorMittal’s Articles of ArcelorMittal and if after such
auditor’s reports will be available in the presence of a notary. These Association provide that any offer the offeror holds securities
on request from the Company transactions require the approval person who acquires shares giving carrying more than 90% of the
and on the Company’s website of at least two-thirds of the them 25% or more of the total voting rights, the remaining
from the date of publication of the votes cast at a general meeting voting rights of ArcelorMittal must security holders may require that
convening notice for the annual of shareholders of each of the make or cause to be made, in each the offeror purchase the remaining
ordinary general meeting of companies where at least 50% of country where ArcelorMittal’s securities of the same class. The
shareholders. the share capital is represented securities are admitted to trading price offered in a voluntary offer
upon first call, with no such on a regulated or other market would be considered “fair” in
The parent company accounts quorum being required at a and in each of the countries in the sell-out proceedings if the
and the consolidated accounts, reconvened meeting. which ArcelorMittal has made offeror acquired at least 90% of
after their approval by the annual a public offering of its shares, the ArcelorMittal shares carrying
ordinary general meeting of Liquidation an unconditional public offer voting rights and which were the
shareholders, are filed with the of acquisition for cash to all subject of the offer. The price paid
Luxembourg register of trade and In the event of the liquidation, shareholders for all of their shares in a mandatory offer is deemed
companies. dissolution or winding-up of and also to all holders of securities a fair price. The consideration
ArcelorMittal, the assets remaining giving access to capital or linked paid in the sell-out proceedings
Dividends after allowing for the payment to capital or whose rights are must take the same form as the
of all liabilities will be paid out to dependent on the profits of consideration offered in the offer
Except for shares held in the shareholders pro rata to their ArcelorMittal. The price offered or consist solely of cash. Moreover,
treasury by the Company, each respective shareholdings. The must be fair and equitable and an all-cash option must be offered
ArcelorMittal share is entitled to decision to liquidate, dissolve or must be based on a report drawn to the remaining ArcelorMittal
participate equally in dividends if wind-up requires the approval up by a leading international shareholders. Finally, the right to
and when declared out of funds of at least two-thirds of the votes financial institution or other initiate sell-out proceedings must
legally available for such purposes. cast at a general meeting of internationally recognized expert. be exercised within three months
The Articles of Association provide shareholders where at first call following the expiration of the
that the annual ordinary general at least 50% of the share capital Squeeze-out right. offer.
meeting of shareholders may is represented, with no quorum The Takeover Law provides that,
declare a dividend and that the being required at a reconvened when an offer (mandatory or Disclosure of significant ownership
Board of Directors may declare meeting. Irrespective of whether voluntary) is made to all of the in ArcelorMittal shares
interim dividends within the limits the liquidation is subject to a holders of voting securities of
set by Luxembourg law. vote at the first or a subsequent ArcelorMittal and after such offer Holders of ArcelorMittal shares
extraordinary general meeting the offeror holds at least 95% and derivatives or other financial
Declared and unpaid dividends of shareholders, it requires the of the securities carrying voting instruments linked to ArcelorMittal
held by ArcelorMittal for the approval of at least two-thirds of rights and 95% of the voting shares may be subject to the
account of its shareholders do not the votes cast at the extraordinary rights, the offeror may require the notification obligations of the
bear interest. Under Luxembourg general meeting of shareholders. holders of the remaining securities Luxembourg law of January
law, claims for dividends lapse to sell those securities (of the 11, 2008, as last amended by
in favor of ArcelorMittal five Mandatory bid, squeeze-out right, same class) to the offeror. The the law dated May 10, 2016,
years after the date on which the sell-out right price offered for such securities on transparency requirements
dividends have been declared. must be a fair price. The price regarding information about
Mandatory bid. The Luxembourg offered in a voluntary offer would issuers whose securities are
law of May 19, 2006 implementing be considered a fair price in the admitted to trading on a regulated
58  Management report

market (the “Transparency ArcelorMittal being crossed controlled by that person or a high level management
Law”). The following description upwards or downwards, and entity; position with regular access to
summarizes these obligations. non-public material information
ArcelorMittal shareholders are • with respect to any shareholder • voting rights attaching to shares relating, directly or indirectly,
advised to consult with their holding at least 3.0% of the voting deposited with that person to ArcelorMittal and have the
own legal advisers to determine rights in ArcelorMittal, to any or entity which the person authority to make management
whether the notification acquisition or disposal of shares or entity may exercise at its decisions about the future
obligations apply to them. resulting in successive thresholds discretion in the absence of development of the Company
of 1% of voting rights being specific instructions from the and its business strategy (see
The Transparency Law provides crossed upwards or downwards. shareholders; “Key transactions and events in
that, if a person acquires or 2016” for a discussion of recent
disposes of a shareholding in Pursuant to the Articles of • voting rights held by a third party management changes). Persons
ArcelorMittal, and if following Association of ArcelorMittal, in its own name on behalf of that closely associated with them
the acquisition or disposal the any person who acquires person or entity; and include their respective family
proportion of voting rights held shares giving him or her 5% members.
by the person reaches, exceeds or or more or a multiple of 5% or • voting rights which that person
falls below one of the thresholds more of the voting rights must or entity may exercise as a proxy Both information on trading
of 5%, 10%, 15%, 20%, 25%, inform ArcelorMittal within 10 where the person or entity may in Financial Instruments by
one-third, 50% or two-thirds of Luxembourg Stock Exchange exercise the voting rights in its “Persons Discharging Senior
the total voting rights existing trading days following the date on sole discretion. Managerial Responsibilities” and
when the situation giving rise to which the threshold was crossed ArcelorMittal’s Insider Dealing
a declaration occurs, the relevant by registered letter with return In addition, the Articles of Regulations are available on www.
person must simultaneously notify receipt requested as to whether Association provide that, for the arcelormittal.com under “Investors,
ArcelorMittal and the CSSF (the he or she intends to acquire or purposes of calculating a person’s Corporate Governance, Share
Luxembourg securities regulator) dispose of shares in ArcelorMittal voting rights in ArcelorMittal, the Transactions by Management”.
of the proportion of voting rights within the next 12 months or voting rights attached to shares
held by it further to such event intends to seek to obtain control underlying any other financial In 2016, four notifications were
within four Luxembourg Stock over ArcelorMittal or to appoint a instruments owned by that person received by ArcelorMittal from
Exchange trading days of the day member to ArcelorMittal’s Board of (such as convertible notes) must such persons and filed with the
of execution of the transaction Directors. be taken into account for purposes CSSF.
triggering the threshold crossing. of the calculation described above.
For the purposes of calculating Publication of regulated
A person must also notify the percentage of a shareholder’s Disclosure of insider dealing information
ArcelorMittal of the proportion voting rights in ArcelorMittal, the transactions
of his or her voting rights if that following are taken into account: Since January 2009, disclosure
proportion reaches, exceeds or Members of the Board of Directors to the public of “regulated
falls below the above mentioned • voting rights held by a third party and the members of the CEO information” (within the meaning
thresholds as a result of events with whom that person or entity Office, Executive Officers and of the Luxembourg Transparency
changing the breakdown of voting has concluded an agreement other executives fulfilling senior Law) concerning ArcelorMittal
rights. and which obliges them to management responsibilities has been made by publishing
adopt, by concerted exercise of within ArcelorMittal and falling the information through the
The above notification obligations the voting rights they hold, a with the definition of “Persons centralized regulated information
also apply to persons who lasting common policy towards Discharging Senior Managerial filing and storage system managed
directly or indirectly hold financial ArcelorMittal; Responsibilities” set out below by the Luxembourg Stock
instruments linked to ArcelorMittal and persons closely associated Exchange and accessible in English
shares. Pursuant to article 12 a. • voting rights held by a third party with them must disclose to the and French on www.bourse.lu,
of the Transparency Law, persons under an agreement concluded CSSF and to ArcelorMittal all in addition to the publication by
who hold ArcelorMittal shares with that person or entity transactions relating to shares or ArcelorMittal of the information
and financial instruments linked providing for the temporary debt instruments of ArcelorMittal by way of press release. All news
to ArcelorMittal Shares must transfer for consideration of the or derivatives or other financial and press releases issued by the
aggregate their holding. voting rights in question; instruments linked to any shares or Company are available on www.
debt instruments of ArcelorMittal arcelormittal.com in the “News and
ArcelorMittal’s Articles of • voting rights attaching to shares (together the “Financial Media” section.
Association also provide that the pledged as collateral with that Instruments”) conducted by them
above disclosure obligations also person or entity, provided the or for their account. Limitation of directors’ liability/
apply to: person or entity controls the indemnification of Directors and
voting rights and declares its Such notifications shall be made the members of the CEO Office
• any acquisition or disposal of intention to exercise them; promptly and not later than three
shares resulting in the threshold business days after the date of the The Articles of Association
of 2.5% of voting rights in • voting rights attaching to shares transaction. of ArcelorMittal provide that
ArcelorMittal in which a person or entity holds ArcelorMittal will, to the broadest
being crossed upwards or a life interest; “Persons Discharging Senior extent permitted by Luxembourg
downwards, Managerial Responsibilities” within law, indemnify every director
• voting rights which are held or ArcelorMittal are the members and member of the CEO Office as
• any acquisition or disposal of may be exercised within the of the Board of Directors, and the well as every former director or
shares resulting in the threshold meaning of the four foregoing CEO Office, the Executives Officers, member of the CEO Office for fees,
of 3.0% of voting rights in points by an undertaking and other executives occupying costs and expenses reasonably
Management report  59

incurred in the defense or (as defined in the Articles of Company or other companies in relevant stock exchange during
resolution (including a settlement) Association) may, at its discretion, the ArcelorMittal group must be 30 consecutive days on which the
of all legal actions or proceedings, exercise the right of proportional in accordance with Luxembourg relevant stock exchange is open
whether civil, criminal or representation and nominate laws transposing Directive for trading preceding the three
administrative, he or she has been candidates for appointment to 2003/6/ EC regarding insider trading days prior to the date of
involved in his or her role as former the Board of Directors (defined as dealing and market manipulation purchase. In the event of a share
or current director or member of “Mittal Shareholder Nominees”). and EC Regulation 2273/2003 capital increase by incorporation
the CEO Office. The Mittal Shareholder has not, to regarding exemptions for buy- of reserves or issue premiums and
date, exercised that right. back programs and stabilization the free allotment of shares as
The right to indemnification of financial instruments and may well as in the event of the division
does not exist in the case of gross Articles 11(1) (e) and (f) of the be carried out by all means, on or or regrouping of the shares, the
negligence, fraud, fraudulent Takeover Law are not applicable off-market, including by a public purchase price indicated above
inducement, dishonesty or for a to the Company. However, the offer to buy-back shares, or by shall be adjusted by a multiplying
criminal offense, or if it is ultimately
sanction of suspension of voting the use of derivatives or option coefficient equal to the ratio
determined that the director or rights automatically applies, strategies. The fraction of the between the number of shares
members of the CEO Office has subject to limited exceptions set capital acquired or transferred in comprising the issued share capital
not acted honestly, in good faith out in the Transparency Law (as the form of a block of shares may prior to the transaction and such
and with the reasonable belief that defined below), to any shareholder amount to the entire program. number following the transaction.
he or she was acting in the best (or group of shareholders) who has Such transactions may be The total amount allocated for
interests of ArcelorMittal. (or have) crossed the thresholds carried out at any time, including the Company’s share repurchase
set out in article 7 of the Articles during a tender offer period, program may not in any event
Luxembourg takeover law of Association and articles 8 to in accordance with applicable exceed the amount of the
disclosure 15 of the Luxembourg law of 11 laws and regulations. Any share Company’s then available equity.
January 2008 on the transparency buy-backs on the New York Stock
The following disclosure is requirements regarding issuers Exchange must be performed in Articles 11(1) (j) and (k) of the
provided based on article 11 of the of securities (the “Transparency compliance with Section 10(b) and Takeover Law are not applicable to
Luxembourg law of 19 May 2006 Law”) but have not notified Section 9(a)(2) of the U.S. Securities the Company.
transposing Directive 2004/25/EC the Company accordingly. The Exchange Act of 1934, as amended
of 21 April 2004 on takeover bids sanction of suspension of voting (the “Exchange Act”), and Rule Material contracts
(the “Takeover Law”). The Articles rights will apply until such time 10b-5 promulgated under the
of Association of the Company are as the notification has been Exchange Act. The authorization is The following are material
available on www.arcelormittal. properly made by the relevant valid for a period of five years, i.e., contracts, not entered into in the
com, under Investors - Corporate shareholder(s). until the annual general meeting ordinary course of business, to
Governance. of shareholders to be held in which ArcelorMittal has been a
Article 11(1) (g) of the Takeover May 2020, or until the date of its party during the past two years.
With regard to articles 11 (1) (a) Law is not applicable to the renewal by a resolution of the
and (c) of the Takeover Law, the Company. general meeting of shareholders ArcelorMittal Equity Incentive Plan,
Company has issued a single if such renewal date is prior to the Performance Share Unit Plan and
category of shares (ordinary With regard to article 11(1) (h) of expiration the five-year period. Special Grant
shares), and the Company’s the Law, the Articles of Association The maximum number of own
shareholding structure showing provide that the directors are shares that the Company may hold For a description of such plans,
each shareholder owning 2.5% elected by annual general meeting at any time directly or indirectly please refer to “Compensation”.
or more of the Company’s share of shareholders for a term that may may not have the effect of
capital is available elsewhere not exceed three years, and may reducing its net assets (“actif net”) Memorandum of Understanding
in this report and on www. be re-elected. The rules governing below the amount mentioned
arcelormittal.com under amendments to the Articles in paragraphs 1 and 2 of Article On June 25, 2006, Mittal Steel,
Investors, Corporate Governance, of Association are described 72-1 of the Law. The purchase the Significant Shareholder
Shareholding Structure, where elsewhere in this report and are set price per share to be paid shall and Arcelor signed a binding
the shareholding structure chart is out in article 19 of the Articles of not represent more than 110% Memorandum of Understanding
updated monthly. Association. of the trading price of the shares (“MoU”) to combine Mittal Steel
on the New York Stock Exchange and Arcelor in order to create the
With regard to article 11(1) (b) of With regard to article 11(1) (i) of and on the Euronext markets world’s leading steel company. In
the Takeover Law, the ordinary the Takeover Law, the general where the Company is listed, the April 2008, the Board of Directors
shares issued by the Company are meeting of shareholders held Luxembourg Stock Exchange approved resolutions amending
listed on various stock exchanges on May 05, 2015 granted the or the Spanish stock exchanges certain provisions of the MoU in
including NYSE and Euronext and Board of Directors a new share of Barcelona, Bilbao, Madrid order to adapt it to the Company’s
are freely transferable. buy-back authorization whereby and Valencia, depending on the needs in the post-merger and
the Board may authorize the market on which the purchases post-integration phase, as
With regard to article 11(1) acquisition or sale of Company are made, and no less than one described under “Board practices/
(d), each ordinary share of the shares including, but not limited cent. For off-market transactions, Corporate Governance, Operation,
Company gives right to one to, entering into off-market and the maximum purchase price Lead Independent Director”.
vote, as set out in article 13.6 of over-the-counter transactions and shall be 110% of the reference
the Articles of Association, and the acquisition of shares through price on the Euronext markets On the basis of the MoU, Arcelor’s
there are no special control rights derivative financial instruments. where the Company is listed. The Board of Directors recommended
attaching to the shares. Article 8 of Any acquisitions, disposals, reference price will be deemed Mittal Steel’s offer for Arcelor and
the Articles of Association provides exchanges, contributions to be the average of the final the parties to the MoU agreed
that the Mittal Shareholder or transfers of shares by the listing prices per share on the to certain corporate governance
60  Management report

and other matters relating to the preceding paragraph or the acquisition by the Significant In addition to ArcelorMittal,
combined ArcelorMittal group. 45% limit mentioned above, if Shareholder or (2) the Significant the securities of one other
Certain provisions of the MoU such ownership results from (1) Shareholder acquires such shares ArcelorMittal group company
relating to corporate governance subscription for shares or rights in an offer for all of the shares of are listed on the Luxembourg
were incorporated into the Articles in proportion to its existing the Company. Stock exchange. ArcelorMittal
of Association of ArcelorMittal at shareholding in the Company Finance S.C.A. is a société en
the extraordinary general meeting where other shareholders have Non-compete commandite par actions with
of the shareholders on November not exercised the entirety of their registered office address at 24-26,
5, 2007. rights or (2) any passive crossing For so long as the Significant boulevard d’Avranches, L-1160
of this threshold resulting from Shareholder holds and controls Luxembourg, Grand Duchy of
Certain additional provisions a reduction of the number of at least 15% of the outstanding Luxembourg, registered with
of the MoU expired effective Company shares (e.g., through self- shares of the Company or has the Registre du Commerce et
August 1, 2009 and on August 1, tender offers or share buy-backs) if, representatives on the Company’s des Sociétés Luxembourg under
2011. ArcelorMittal’s corporate in respect of (2) only, the decisions Board of Directors or CEO Office, number B 13.240. ArcelorMittal
governance rules will continue to to implement such measures were the Significant Shareholder and its Finance is indirectly 100% owned
reflect, subject to those provisions taken at a shareholders’ meeting in affiliates will not be permitted to by ArcelorMitta group and, in this
of the MoU that have been which the Significant Shareholder invest in, or carry on, any business connection, it issued a number of
incorporated into the Articles of did not vote or by the Company’s competing with the Company, bonds listed on the Luxembourg
Association, the best standards Board of Directors with a majority except for PT ISPAT Indo. Stock Exchange. ArcelorMittal
of corporate governance for of independent directors voting Finance’s CSSF issuer number is
comparable companies and in favor. Additional information E-0025.
to conform with the corporate
governance aspects of the NYSE Once the Significant Shareholder ArcelorMittal produces a range Other listings
listing standards applicable to non- exceeds the threshold mentioned of publications to inform its
U.S. companies and Ten Principles in the first paragraph of this shareholders. These documents ArcelorMittal is listed on the
of Corporate Governance of the “Standstill” subsection or the are available in various formats: stock exchanges of New York
Luxembourg Stock Exchange. 45% limit, as the case may be, as they can be viewed online, (MT), Amsterdam (MT), Paris
a consequence of any corporate downloaded or obtained on (MT), Luxembourg (MT) and on
The following summarizes the event set forth in (1) or (2) above, it request in paper format. Please the Spanish stock exchanges of
main provisions of the MoU that shall not be permitted to increase refer to www.arcelormittal.com, Barcelona, Bilbao, Madrid and
remain in effect or were in effect the percentage of shares it owns to the Investors menu, under Valencia (MTS).
in 2016. or controls in any way except as a Financial Reports.
result of subsequent occurrences Indexes
Standstill of the corporate events described Sustainable development
in (1) or (2) above, or with the prior ArcelorMittal is a member of
The Significant Shareholder written consent of a majority of ArcelorMittal’s sustainable more than 120 indices including
agreed not to acquire, directly or the independent directors on the development information is the following leading indices: DJ
indirectly, ownership or control Company’s Board of Directors. detailed in the online Annual SOTXX 50, DJ EURO STOXX 50,
of an amount of shares in the Review that will be published CAC40, AEX, FTSE Eurotop 100,
capital stock of the Company If subsequently the Significant during the second quarter of MSCI Pan-Euro, DJ Stoxx 600, S&P
exceeding the percentage of Shareholder sells down below 2017 and available on http:// Europe 500, Bloomberg World
shares in the Company that it the threshold mentioned in the annualreview2016.arcelormittal. Index, IBEX 35 index, and NYSE
will own or control following first paragraph of this “Standstill” com. Composite Index. Recognized for
completion of the Offer (as defined subsection or the 45% limit, as its commitments to sustainable
in the MoU) for Arcelor and any the case may be, it shall not be ArcelorMittal as parent company development, ArcelorMittal is
subsequent offer or compulsory permitted to exceed the threshold of the ArcelorMittal group also included in the FTSE4Good
buy-out, except with the prior mentioned in the first paragraph Index and VBSDO’s Benchmark of
written consent of a majority of of this “Standstill” subsection or ArcelorMittal, incorporated Circular business Practices 2015.
the independent directors on the the 45% limit, as the case may under the laws of Luxembourg, Further, ArcelorMittal has been
Company’s Board of Directors. be, other than as a result of any is the parent company of the participating in CDP since 2005
Any shares acquired in violation corporate event set out in (1) or ArcelorMittal group and is and the United National Global
of this restriction will be deprived (2) above or with the prior written expected to continue this role Compact since 2003.
of voting rights and shall be consent of a majority of the during the coming years. The
promptly sold by the Significant independent directors. Company has no branch offices.
Shareholder. Notwithstanding
the above, if (and whenever) the Finally, the Significant Shareholder
Significant Shareholder holds, is permitted to own and vote Group companies listed on the
directly and indirectly, less than shares in excess of the threshold Luxembourg Stock Exchange
45% of the then-issued Company mentioned in the first paragraph
shares, the Significant Shareholder of this “Standstill” subsection or ArcelorMittal’s securities are traded
may purchase (in the open market the 45% limit mentioned above on several exchanges, including
or otherwise) Company shares if it acquires the excess shares in the Luxembourg Stock Exchange,
up to such 45% limit. In addition, the context of a takeover bid by and its primary stock exchange
the Significant Shareholder is a third party and (1) a majority regulator is the Luxembourg CSSF
also permitted to own and vote of the independent directors of (Commission de Surveillance du
shares in excess of the threshold the Company’s Board of Directors Secteur Financier). ArcelorMittal’s
mentioned in the immediately consents in writing to such CSSF issuer number is E-0001.
Management report  61

Share price performance

During 2016 the price of ArcelorMittal shares increased by 190% in EUR terms; the chart below shows a comparison between the performance of
ArcelorMittal’s shares and the Eurostoxx600 Basic Resource (SXPP) which increased by 62% over the period.
Since August 1, 2006 (EUR)
250.00

200.00

150.00

100.00

50.00

AM share EUR Eurostoxx600 Basic Resource (SXPP)

Dividend Individual investors Credit and fixed income investors or please visit www.arcelormittal.
com/corp/investors/contact.
In February 2017, ArcelorMittal’s ArcelorMittal’s senior management Credit, fixed income investors and
board of directors reviewed plans to meet individual investors rating agencies are followed by Controls and procedures
the progress made towards and shareholder associations in dedicated team from investors
management’s key financial road shows throughout 2017. A relations. Disclosure controls and procedures
objective of returning to an dedicated toll free number for creditfixedincome@arcelormittal.
investment grade credit rating. individual investors is available com Management maintains disclosure
While pleased with the significant at +352 4792 3198. Requests controls and procedures that
improvements achieved in 2016, for information or meeting and Financial calendar are designed to ensure that
the board of directors determined conference center may also information required to be
that it is appropriate to continue to be sent to: privateinvestors@ The schedule is available on disclosed in the Company’s reports
use surplus cash for deleveraging arcelormittal.com. ArcelorMittal’s website www. under the Securities Exchange
until credit metrics consistent with arcelormittal.com under Act of 1934, as amended (the
an investment grade rating are Analysts and institutional investors Investor>Financial calendar. “Exchange Act”) is recorded,
achieved. As a result, the board processed, summarized and
of directors proposes, subject As the world’s leading steel Financial results* reported within time periods
to approval at the next annual company and major investment specified in the SEC’s rules and
general meeting on May 10, 2017, vehicle in the steel sector, February 10, 2017 - Results for the forms, and that such information is
not to declare any dividend in ArcelorMittal constantly seeks 4th quarter 2016 and 12 months accumulated and communicated
respect to the 2016 financial year. to develop relationships with 2016. to management, including the
financial analysts and international Chief Executive Officer and Chief
Investor relations investors. Depending on their May 12, 2017 - Results for the 1st Financial Officer, as appropriate,
geographical location, investors quarter 2017. to allow timely decisions
By implementing high standards may use the following e-mails:
regarding required disclosures.
of financial information disclosure July 28, 2017 - Results for the 2nd
ArcelorMittal’s controls and
and providing clear, regular, institutionalamericas@ quarter 2017 and 6 months 2017.
procedures are designed to
transparent and even-handed arcelormittal.com
provide reasonable assurance of
information to all its shareholders, November 10, 2017 - Results for
ArcelorMittal aims to be the first investor.relations@arcelormittal. the 3rd quarter 2017 and 9 months achieving their objectives.
choice for investors in the sector. com 2017.
Management carried out an
To meet this objective and Sustainable responsible investors *Earnings results are issued evaluation, under the supervision
provide information to fit the before the opening of the stock and with the participation of
needs of all parties, ArcelorMittal The Investor Relations team is also exchanges on which ArcelorMittal its Chief Executive Officer and
implements an active and broad a source of information for the is listed. Chief Financial Officer, of the
investor communications policy: growing sustainable responsible effectiveness of the design and
conference calls, road shows investment community. The Meeting of shareholders operation of the Company’s
with the financial community, team organises special events disclosure controls and procedures
regular participation at investor on ArcelorMittal’s corporate May 10, 2017 - General Meeting of (as defined in Exchange Act Rule
conferences, plant visits and responsibility strategy and answers Shareholders. 13a-15(e)) as of December 31,
meetings with individual investors. all requests for information sent to 2016. Based upon that evaluation,
the Group crteam@arcelormittal. Contact the investor relations team the Company’s Chief Executive
com. on the information detailed above Officer and Chief Financial
62  Management report

Officer concluded that the Management’s Annual Report on prevented or detected on a Changes in Internal Control over
Company’s disclosure controls Internal Control Over Financial timely basis. Financial Reporting
and procedures were effective Reporting
as of December 31, 2016 so as Because of its inherent limitations, There have been no changes in the
to provide reasonable assurance Management is responsible for internal control over financial Company’s internal control over
that (1) information required to establishing and maintaining reporting is not intended to financial reporting that occurred
be disclosed by the Company in adequate internal control over provide absolute assurance that during the year ending December
the reports that the Company financial reporting. Internal a misstatement of the Company’s 31, 2016 that have materially
files under the Exchange Act is control over financial reporting financial statements would be affected or are reasonably likely
recorded, processed, summarized is a process designed to provide prevented or detected. In addition, to have materially affected the
and reported within the time reasonable assurance regarding projections of any evaluation of Company’s internal control over
periods specified in the SEC’s the reliability of financial reporting effectiveness to future periods are financial reporting.
rules and forms, and (2) that such and the preparation of financial subject to the risk that controls
information is accumulated and statements for external purposes may become inadequate because
communicated to the Company’s in accordance with generally of changes in conditions, or that
management, including its Chief accepted accounting principles. the degree of compliance with
Executive Officer and its Chief the policies or procedures may
The Company’s internal control
Financial Officer, as appropriate, to deteriorate.
allow timely decisions regarding over financial reporting includes
required disclosures. those policies and procedures that: Management assessed the
effectiveness of internal control
There are inherent limitations • pertain to the maintenance of over financial reporting as of
to the effectiveness of any records that, in reasonable detail, December 31, 2016 based upon
system of disclosure controls accurately and fairly reflect the the framework in Internal Control,
and procedures, including the transactions and dispositions of Integrated Framework (2013)
possibility of human error and the assets of ArcelorMittal; issued by the Committee of
the circumvention or overriding Sponsoring Organizations of the
of the controls and procedures. • provide reasonable assurance Treadway Commission (“COSO”).
Accordingly, even effective that transactions are recorded, as Based on this assessment,
disclosure controls and procedures necessary, to permit preparation management concluded that
can only provide reasonable of financial statements in ArcelorMittal’s internal control over
assurance of achieving their accordance with IFRS; financial reporting was effective as
control objectives. of December 31, 2016.
• provide reasonable assurance
that receipts and expenditures The effectiveness of management’s
of ArcelorMittal are made in internal control over financial
accordance with authorizations reporting as of December 31,
of ArcelorMittal’s management 2016 has been audited by
and directors; and the Company’s independent
registered public accounting firm,
• provide reasonable assurance Deloitte Audit, and their report
that unauthorized acquisition, as of February 23, 2017 below
use or disposition of expresses an unqualified opinion
ArcelorMittal’s assets that could on the Company’s internal control
have a material effect on the over financial reporting.
financial statements would be
Management report  63

Chief executive officer and chief financial officer’s responsibility statement

We confirm, to the best of our knowledge, that:

1. the consolidated financial statements of ArcelorMittal presented in this Annual Report and prepared in conformity with International Financial
Reporting Standards as issued by the International Accounting Standards Board and as adopted by the European Union, give a true and fair
view of the assets, liabilities, financial position, profit or loss of ArcelorMittal and the undertakings included within the consolidation taken as a
whole; and

2. the management report includes a fair review of the development and performance of the business and position of ArcelorMittal and
undertakings included within the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

By order of the Board of Directors

Chief executive officer Chief financial officer

Lakshmi N. Mittal Aditya Mittal

February 28, 2017 February 28, 2017


64  Consolidated financial statements

Consolidated financial statements


Consolidated financial statements  65

ArcelorMittal and Subsidiaries


Consolidated Statements of Operations
(millions of U.S. dollars, except share and per share data)

Year ended December 31,


Notes 2016 2015 2014
Sales 4.1 and 11.1 56,791 63,578 79,282
(including 5,634, 6,124 and 6,606 of sales to related parties for 2016, 2015 and
2014, respectively)
Cost of sales 4.2 and 11.2 50,428 65,196 73,288
(including 1,390, 1,460 and 1,355 of purchases from related parties for 2016,
2015 and 2014, respectively)
Gross margin 6,363 (1,618) 5,994
Selling, general and administrative expenses 2,202 2,543 2,960
Operating income (loss) 4,161 (4,161) 3,034
Income (loss) from investments in associates, joint ventures and other
investments 2.6 615 (502) (172)
Financing costs - net 6.2 (2,056) (2,858) (3,382)
Income (loss) before taxes 2,720 (7,521) (520)
Income tax expense 9.1 986 902 454
Net income (loss) (including non-controlling interests) 1,734 (8,423) (974)
Net income (loss) attributable to equity holders of the parent 1,779 (7,946) (1,086)
Net income (loss) attributable to non-controlling interests (45) (477) 112
Net income (loss) (including non-controlling interests) 1,734 (8,423) (974)

Year ended Year ended Year ended


December 31, 2016 December 31, 2015 December 31, 2014
Earnings (loss) per common share (in U.S. dollars) 1
Basic and diluted 0.62 (3.43) (0.48)
Weighted average common shares outstanding (in millions) 10.3
Basic 2,860 2,316 2,312
Diluted 2,865 2,316 2,312
1
Following the Company’s equity offering in April 2016, the earnings (loss) per common share for prior periods has been recasted in accordance
with IFRS. Please refer to note 10 for more information.

The accompanying notes are an integral part of these consolidated financial statements.
66  Consolidated financial statements

ArcelorMittal and Subsidiaries


Consolidated Statements of Other Comprehensive Income
(millions of U.S. dollars, except share and per share data)

Year ended December 31,


2016 2015 2014
Net income (loss) (including non-controlling interests) 1,734 (8,423) (974)
Items that can be recycled to the consolidated statements of
operations
Available-for-sale investments:
Gain (loss) arising during the period 333 (439) 449
Reclassification adjustments for loss (gain) included in the
consolidated statements of operations (74) 70 44
259 (369) 493
Derivative financial instruments:
Gain (loss) arising during the period 40 107 181
Reclassification adjustments for loss (gain) included in the
consolidated statements of operations (14) (93) (2)
26 14 179
Exchange differences arising on translation of foreign
operations:
Gain (loss) arising during the period (398) (7,876) (4,198)
Reclassification adjustments for loss (gain) included in the
consolidated statements of operations (13) (11) (55)
(411) (7,887) (4,253)
Share of other comprehensive income (loss) related to
associates and joint ventures
Gain (loss) arising during the period (79) (666) (601)
Reclassification adjustments for (gain) loss included in the
consolidated statements of operations 86 4 (61)
7 (662) (662)
Income tax benefit (expense) related to components of other
comprehensive income (loss) that can be recycled to the
consolidated statements of operations (26) 79 (11)

Items that cannot be recycled to the consolidated statements


of operations:
Employee benefits - Recognized actuarial gains (losses) 9 24 (1,531)
Share of other comprehensive income (loss) related to
associates and joint ventures (24) (36) 4
Income tax benefit (expense) related to components of
other comprehensive income that cannot be recycled to the
consolidated statements of operations 1 (47) 94
Total other comprehensive income (loss) (159) (8,884) (5,687)
Total other comprehensive income (loss) gain attributable to:
Equity holders of the parent (186) (8,554) (5,536)
Non-controlling interests 27 (330) (151)
(159) (8,884) (5,687)
Total comprehensive income (loss) 1,575 (17,307) (6,661)
Total comprehensive income (loss) attributable to:
Equity holders of the parent 1,593 (16,500) (6,622)
Non-controlling interests (18) (807) (39)
Total comprehensive income (loss) 1,575 (17,307) (6,661)

The accompanying notes are an integral part of these consolidated financial statements.
Consolidated financial statements  67

ArcelorMittal and Subsidiaries


Consolidated Statements of Financial Position
(millions of U.S. dollars, except share and per share data)

December 31, 
Notes 2016 2015
Assets
Current assets:
Cash and cash equivalents 6.1.3 2,501 4,002
Restricted cash 6.1.3 114 100
Trade accounts receivable and other (including 322 and 216 from related parties at December
31, 2016 and 2015, respectively) 4.3 and 11.1 2,974 2,679
Inventories 4.4 14,734 13,424
Prepaid expenses and other current assets 4.5 1,665 1,859
Assets held for sale 2.3 259 262
Total current assets 22,247 22,326
Non-current assets:
Goodwill and intangible assets 5.1 5,651 5,592
Property, plant and equipment and biological assets 5.2 34,831 35,780
Investments in associates and joint ventures 2.4 4,297 4,911
Other investments 2.5 926 692
Deferred tax assets 9.4 5,837 6,625
Other assets 4.6 1,353 920
Total non-current assets 52,895 54,520
Total assets 75,142 76,846

Liabilities and equity


Current liabilities:
Short-term debt and current portion of long-term debt 6.1.2.1 1,885 2,308
Trade accounts payable and other (including 179 and 256 to related parties at December 31,
2016 and 2015, respectively) 4.7 and 11.2 11,633 10,416
Short-term provisions 8.1 426 770
Accrued expenses and other liabilities 4.8 3,943 4,194
Income tax liabilities 133 133
Liabilities held for sale 2.3 95 220
Total current liabilities 18,115 18,041
Non-current liabilities:
Long-term debt, net of current portion 6.1.2.2 11,789 17,478
Deferred tax liabilities 9.4 2,529 2,496
Deferred employee benefits 7.2 8,297 9,216
Long-term provisions 8.1 1,521 1,434
Other long-term obligations 566 611
Total non-current liabilities 24,702 31,235
Total liabilities 42,817 49,276
Contingencies and commitments 8.2 and 8.3

Equity: 10
Common Shares (no par value, 3,372,281,956 and 1,995,857,213 shares authorized,
3,065,710,869 and 1,665,392,222 shares issued, and 3,058,488,430 and 1,656,811,132 shares
outstanding at December 31, 2016 and 2015, respectively) 401 10,011
Treasury shares (7,222,439 and 8,581,090 common shares at December 31, 2016 and 2015,
respectively, at cost) (371) (377)
Additional paid-in capital 34,826 20,294
Mandatorily convertible notes - 1,800
Retained earnings 16,049 13,902
Reserves (20,770) (20,358)
Equity attributable to the equity holders of the parent 30,135 25,272
Non-controlling interests 2,190 2,298
Total equity 32,325 27,570
Total liabilities and equity 75,142 76,846

The accompanying notes are an integral part of these consolidated financial statements.
68  Consolidated financial statements

ArcelorMittal and Subsidiaries


Consolidated Statements of Changes in Equity
(millions of U.S. dollars, except share and per share data)

Reserves
Items that
cannot be
recycled
to the
Consolidated
Items that can be recycled to the Statements of
Consolidated Statements of Operations Operations
Unrealized Unrealized Equity
gains gains attributable
Subordinated Foreign (losses) on (losses) on Recognized to the
perpetual Mandatorily Additional currency derivative available actuarial equity Non-
Share Treasury capital convertible paid-in Retained translation financial for sale (losses) holders of controlling
Shares 1, 2 capital shares securities notes capital earnings adjustments instruments securities gains the parent interests Total equity
Balance at December 31, 2013 1,654 10,011 (414) 650 1,838 20,248 24,037 (2,910) (324) (105) (3,238) 49,793 3,380 53,173
Net loss (including non-
controlling interests) - - - - - - (1,086) - - - (1,086) 112 (974)
Other comprehensive income
(loss) - - - - - - - (4,717) 104 510 (1,433) (5,536) (151) (5,687)
Total comprehensive income (loss) - - - - - - (1,086) (4,717) 104 510 (1,433) (6,622) (39) (6,661)
Redemption of subordinated
perpetual capital securities - - - (650) - - (7) - - - (657) - (657)
Option premiums on treasury
shares (note 10.2) - - - - - - (309) - 309 - - - - -
Mandatory convertible bonds
extension (note 10.2) - - - - - - - - - - - - (47) (47)
Other changes in non-controlling
interests (note 10.5) - - - - - - (34) - - - - (34) (75) (109)
Recognition of share based
payments (note 7.3) - - 15 - - 10 - - - - - 25 - 25
Dividend (note 10.4) - - - - - - (333) - - - - (333) (118) (451)
Coupon on subordinated
perpetual capital securities - - - - - - (22) - - - - (22) - (22)
Other movements - - - - - - (64) - - - - (64) (27) (91)
Balance at December 31, 2014 1,654 10,011 (399) - 1,838 20,258 22,182 (7,627) 89 405 (4,671) 42,086 3,074 45,160
Net loss (including non-
controlling interests) - - - - - - (7,946) - - - (7,946) (477) (8,423)
Other comprehensive income
(loss) - - - - - - - (8,166) 25 (354) (59) (8,554) (330) (8,884)
Total comprehensive income (loss) - - - - - - (7,946) (8,166) 25 (354) (59) (16,500) (807) (17,307)
Other changes in non-controlling
interests (note 10.5) - - - - - - - - - - - - 148 148
Recognition of share based
payments (note 7.3) - - 4 - - 16 - - - - - 20 - 20
Voluntary conversion of
mandatorily convertible notes
(note 10.2) 3 - 18 - (38) 20 - - - - - - - -
Mandatory convertible bonds
extension (note 10.2) - - - - - - - - - - - - (20) (20)
Dividend (note 10.4) - - - - - - (331) - - - - (331) (86) (417)
Other movements - - - - - - (3) - - - - (3) (11) (14)
Balance at December 31, 2015 1,657 10,011 (377) - 1,800 20,294 13,902 (15,793) 114 51 (4,730) 25,272 2,298 27,570
Net income (including non-
controlling interests) - - - - - - 1,779 - - - 1,779 (45) 1,734
Other comprehensive income
(loss) - - - - - - - (471) 28 271 (14) (186) 27 (159)
Total comprehensive income (loss) - - - - - - 1,779 (471) 28 271 (14) 1,593 (18) 1,575
Equity offering (note 10.1) 1,262 144 - - - 2,971 - - - - - 3,115 - 3,115
Reduction of the share capital par
value (note 10.1) - (10,376) - - - 10,376 - - - - - - - -
Conversion of the mandatorily
convertible notes (note 10.2) 138 622 - - (1,800) 1,178 - - - - - - - -
Recognition of share based
payments (note 7.3) 1 - 6 - - 7 - - - - - 13 - 13
Dividend (note 10.4) - - - - - - - - - - - - (63) (63)
Equity offering in ArcelorMittal
South Africa ("AMSA")(note 10.5.2) - - - - - - 437 (301) - - - 136 (80) 56
Equity share option plan in AMSA
(note 10.5.2) - - - - - - (36) 21 - - - (15) 15 -
AMSA B-BBEE transaction (note
10.5.2) - - - - - - 44 - - - - 44 19 63
Other movements - - - - - - (77) - - - 54 (23) 19 (4)
Balance at December 31, 2016 3,058 401 (371) - - 34,826 16,049 (16,544) 142 322 (4,690) 30,135 2,190 32,325

1 Excludes treasury shares


2 In million of shares

The accompanying notes are an integral part of these consolidated financial statements.
Consolidated financial statements  69

ArcelorMittal and Subsidiaries


Consolidated Statements of Cash Flows
(millions of U.S. dollars, except share and per share data)

Year ended December 31,


Notes 2016 2015 2014
Operating activities:
Net income (loss) (including non-controlling interests) 1,734 (8,423) (974)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Depreciation and amortization 5.1 and 5.2 2,721 3,192 3,939
Impairment 5.1, 5.2 and 5.3 205 4,764 264
Interest expense 6.2 1,172 1,383 1,565
Interest income 6.2 (58) (105) (96)
Income tax expense (benefit) 9.1 986 902 454
Provisions for labor agreements and separation plans 44 37 90
Remeasurement gain relating to US deferred employee benefits 7.2 (832) - -
Net gain on disposal of subsidiaries (23) (72) (192)
(Income) loss from investments in associates, joint ventures and other investments 2.6 (615) 502 172
Provision on pensions and OPEB 7.2 439 558 591
Change in fair value adjustment on call options on Mandatory Convertible Bonds 6.2 (171) 108 (112)
Income tax amnesty expenses 6.2 - - 161
Unrealized foreign exchange effects 486 425 413
Write-downs (reversal) of inventories to net realizable value, provisions and other non-
cash operating expenses net 4.4 (212) 1,383 674
Changes in assets and liabilities that provided (required) cash, net of acquisitions:
Trade accounts receivable (373) 335 537
Inventories 4.4 (2,055) 288 (398)
Trade accounts payable and other 4.7 1,405 (1,012) (305)
Interest paid (1,354) (1,561) (1,713)
Interest received 60 89 97
Income taxes paid (296) (398) (337)
Dividends received from associates, joint ventures and other investments 176 227 209
Cash contributions to plan assets and benefits paid for pensions and OPEB 7.2 (395) (556) (674)
VAT and other amounts received (paid) from/to public authorities 46 166 (112)
Other working capital and provisions movements (382) (81) (383)
Net cash provided by operating activities 2,708 2,151 3,870
Investing activities:
Purchase of property, plant and equipment and intangibles (2,444) (2,707) (3,665)
Disposal (acquisition) of net assets of subsidiaries, net of cash (disposed) acquired of 63,
(10) and (85) in 2016, 2015 and 2014, respectively 2.3.1 and 2.2.4 192 - 232
Acquisition of associates and joint ventures 2.4 - - (258)
Disposals of associates and joint ventures 2.4.2 and 2.5 1,017 23 522
Disposals of financial assets 165 172 10
Other investing activities net (73) 342 82
Net cash used in investing activities (1,143) (2,170) (3,077)
Financing activities:
Payments of subordinated perpetual capital securities 10.2 - - (657)
(Acquisition) disposal of non-controlling interests 10.5.2 56 - (17)
Proceeds from short-term debt 1,516 543 1,855
Proceeds from long-term debt 110 3,256 2,419
Payments of short-term debt (2,721) (2,490) (4,545)
Payments of long-term debt (4,912) (501) (1,282)
Equity offering 10.1 3,115 - -
Dividends paid (includes 61, 85 and 108 of dividends paid to non-controlling
shareholders in 2016, 2015 and 2014 respectively) (61) (416) (458)
Other financing activities net (29) 3 (65)
Net cash (used in) provided by financing activities (2,926) 395 (2,750)
Effect of exchange rate changes on cash (127) (267) (230)
Net (decrease) increase in cash and cash equivalents (1,488) 109 (2,187)
Cash and cash equivalents:
At the beginning of the year 4,002 3,893 6,072
Reclassification of the period-end cash and cash equivalent (to) from held for sale 2.3 (13) - 8
At the end of the year 2,501 4,002 3,893

The accompanying notes are an integral part of these consolidated financial statements.
70  Consolidated financial statements

Summary of notes to consolidated financial statements

Note 1: Accounting principles Note 6: Financing and financial instruments


1.1 Basis of presentation 6.1 Financial assets and liabilities
1.2 Use of estimates 6.2 Financing costs
1.3 Accounting standards applied 6.3 Risk management policy

Note 2: Scope of consolidation Note 7: Personnel expenses and employee benefits


2.1 Basis of consolidation 7.1 Employees and key management personnel
2.2 Investments in subsidiaries 7.2 Deferred employee benefits
2.3 Divestments and assets held for sale 7.3 Share-based payments
2.4 Investment in associates and joint arrangements
2.5 Other investments Note 8: Provisions, contingencies and commitments
2.6 Income (loss) from investments in associates, joint ventures and 8.1 Provisions overview
other investments 8.2 Environmental liabilities and legal proceedings
8.3 Commitments
Note 3: Segment reporting
3.1 Reportable segments Note 9: Income taxes
3.2 Geographical information 9.1 Income tax expense (benefit)
3.3 Sales by type of products 9.2 Income tax recorded directly in equity
9.3 Uncertain tax positions
Note 4: Other operating data 9.4 Deferred tax assets and liabilities
4.1 Revenue 9.5 Tax losses, tax credits and other tax benefits carried forward
4.2 Cost of sales
4.3 Trade accounts receivable and other Note 10: Equity
4.4 Inventories 10.1 Share details
4.5 Prepaid expenses and other current assets 10.2 Equity and hybrid instruments
4.6 Other assets 10.3 Earnings per common share
4.7 Trade accounts payable and other 10.4 Dividends
4.8 Accrued expenses and other liabilities 10.5 Non-controlling interests

Note 5: Goodwill, intangible and tangible assets Note 11: Related parties
5.1 Goodwill and intangible assets 11.1 Sales and trade receivables
5.2 Property, plant and equipment and biological assets 11.2 Purchases and trade payables
5.3 Impairment of intangible assets, including goodwill, and tangible 11.3 Other transactions with related parties
assets
Note 12: Principal accountant fees and services
Consolidated financial statements  71

Note 1: Accounting Principles 1.3 Accounting standards applied December 18, 2014, which 1.3.2 New IFRS standards,
clarify various presentation amendments and interpretation
ArcelorMittal (“ArcelorMittal” or 1.3.1 Adoption of new IFRS and disclosure requirements applicable from 2017 onward
the “Company”), together with its standards, amendments and related to materiality, subtotals,
subsidiaries, owns and operates interpretations applicable from disaggregation and accounting On May 28, 2014, the IASB issued
steel manufacturing and mining January 1, 2016 policies. IFRS 15 “Revenue from Contracts
facilities in Europe, North and with Customers” which provides a
South America, Asia and Africa. On January 1, 2016, the • Annual Improvements 2012- unified framework for determining
Collectively, these subsidiaries Company adopted the following 2014 published by the IASB on the timing, measurement and
and facilities are referred to in the amendments which did not September 25, 2014 as part of recognition of revenue. The
consolidated financial statements have any material impact on its annual improvement process focus of the new standard is to
as the “operating subsidiaries”. the financial statements of the make amendments to the recognize revenue as performance
These consolidated financial Company: following standards: obligations are met rather than
statements were authorized for based on the transfer of risks
issuance on February 28, 2017 by • Amendments to IFRS 11 “Joint o IFRS 5 “Non-current Assets and rewards. IFRS 15 includes a
the Company’s Board of Directors. Arrangements”, issued on May Held for Sale and Discontinued comprehensive set of disclosure
6, 2014, clarify the accounting Operations” introduces guidance requirements including qualitative
1.1 Basis of presentation for acquisitions of an interest relating to changes in methods and quantitative information
in a joint operation when the of disposal. about contracts with customers to
The consolidated financial operation constitutes a business. understand the nature, amount,
statements have been prepared o IFRS 7 “Financial Instruments: timing and uncertainty of revenue.
on a historical cost basis, except • Amendments to IAS 16 “Property, Disclosures” provides additional The standard supersedes IAS 18
for available-for-sale financial Plant and Equipment” and IAS guidance to clarify whether a “Revenue”, IAS 11 “Construction
assets, derivative financial 38 “Intangible Assets”, issued on servicing contract is continuing Contracts” and a number of
instruments, biological assets May 12, 2014, clarify that the involvement in a transferred revenue-related interpretations.
and certain assets and liabilities use of revenue-based methods asset and clarifies the On September 11, 2015, the IASB
held for sale, which are measured to calculate the depreciation applicability of the amendments issued an amendment formalizing
at fair value less cost to sell, of an asset is not appropriate to IFRS 7 on offsetting disclosure a one-year deferral of the effective
inventories, which are measured because revenue generated to condensed interim financial date for annual periods beginning
at the lower of net realizable by an activity that includes statements. on or after January 1, 2018, with
value or cost and the financial the use of an asset generally early application permitted.
statements of the Company’s reflects factors other than the o IAS 19 clarifies determination of The Company’s revenue is
Venezuelan operations, for consumption of the economic the discount rate in a regional predominantly derived from the
which hyperinflationary benefits embodied in the asset. market sharing the same sale of goods under arrangements
accounting is applied (see The IASB also clarified that currency. in which the transfer of risks and
note 2.2.2). The consolidated revenue is generally presumed rewards of ownership and the
financial statements have been to be an inappropriate basis for o IAS 34 “Interim Financial fulfillment of the Company’s
prepared in accordance with measuring the consumption of Reporting” clarifies the meaning performance obligations occur
International Financial Reporting the economic benefits embodied of ‘elsewhere in the interim at the same time. Therefore, the
Standards (“IFRS”) as issued by in an intangible asset. This report’ and the requirements Company does not expect that
the International Accounting presumption, however, can relating to cross-reference the adoption of this new standard
Standards Board (“IASB”) and as be rebutted in certain limited disclosure in the interim will have a material impact to its
adopted by the European Union circumstances. financial report. consolidated financial statements.
and are presented in U.S. dollars
with all amounts rounded to the • Amendments to IAS 16 and IAS Also, on January 1, 2016, the On July 24, 2014, the IASB issued
nearest million, except for share 41 “Agriculture”, issued on June Company adopted the following the final version of IFRS 9 “Financial
and per share data. 30, 2014, which change the amendments which did not Instruments (2014)” which replaces
financial reporting for bearer have any impact on the financial IAS 39, bringing together the
1.2 Use of estimates plants, such as grape vines, statements of the Company: classification and measurement,
rubber trees and oil palms. The impairment and hedge
The preparation of consolidated IASB decided that bearer plants • Amendments to IAS 27, accounting. The final version of the
financial statements in conformity should be accounted for and published on August 12, 2014, standard contains requirements in
with IFRS recognition and measured after initial recognition which allow entities to use the the following areas:
measurement principles and, on a cost or revaluation basis in equity method to account for
in particular, making the critical accordance with IAS 16, because investments in subsidiaries, joint
• Classification and measurement:
accounting judgments require the their operation is similar to that ventures and associates in their Financial assets are classified
use of estimates and assumptions of manufacturing. Consequently, separate financial statements. and measured by reference
that affect the reported amounts the amendments include them to the business model within
of assets, liabilities, revenues and within the scope of IAS 16 • Amendments to IFRS 10, IFRS which they are held and
expenses. Management reviews instead of IAS 41. The produce 12 and IAS 28, published on their contractual cash flow
its estimates on an ongoing growing on bearer plants will December 18, 2014, which clarify characteristics. Financial liabilities
basis using currently available remain within the scope of IAS the scope and measurement are classified in a similar manner
information. Changes in facts and 41. method regarding consolidation to IAS 39, however there are
circumstances or obtaining new and disclosure of investment differences in the requirements
information or more experience
• Amendments to IAS 1 entities. regarding the measurement of
may result in revised estimates,
“Presentation of Financial an entity’s own credit risk.
and actual results could differ from
Statements”, issued on
those estimates.
72  Consolidated financial statements

• Impairment: The standard of these new amendments will On January 29, 2016, the IASB volatility in reported results arising
introduces an ‘expected credit have a material impact to its issued amendments to IAS 7 from implementing the new
loss’ model for the measurement consolidated financial statements. “Statement of Cash Flows”. financial instruments Standard
of the impairment of financial These amendments clarify that IFRS 9 before implementing the
assets; it is therefore no longer On January 13, 2016, the IASB entities shall provide disclosures replacement Standard that the
necessary for a credit event to issued IFRS 16 “Leases” which that enable users of financial Board is developing for IFRS 4.
have occurred before a credit loss will replace IAS 17 “Leases”. statements to evaluate changes These amendments to IFRS 4
is recognized. This new standard specifies in liabilities arising from financing supplement existing options in the
how to recognize, measure, activities, including non-cash Standard that can already be used
• Hedge accounting: The present and disclose leases. The changes and changes arising from to address the temporary volatility.
standard introduces a new standard provides a single lessee cash flows. These amendments These amendments are effective
hedge accounting model that accounting model, requiring are effective for annual periods when an insurer first applies IFRS
is designed to be more closely lessees to recognize assets and beginning on or after January 9 (overlay approach) or during
aligned with how entities liabilities for all leases unless the 1, 2017, with early application the three years period beginning
undertake risk management lease term is 12 months or less permitted. The Company does not on January 1, 2018 (deferral
activities when hedging financial or the underlying asset has a low expect that the adoption of these approach). The Company does not
and non-financial risk exposures. value. This standard is effective amendments will have a material expect that the adoption of these
for annual periods beginning impact to its consolidated financial amendments will have a material
• Derecognition: The requirements on or after January 1, 2019, with statements. impact to its consolidated financial
for derecognition of financial early application permitted if statements.
assets and liabilities are carried IFRS 15 has also been applied. At On April 12, 2016, the IASB
forward from IAS 39. December 31, 2016, the Company issued amendments to IFRS 15 On December 8, 2016, the IASB
has non-cancellable operating which clarify how to identify issued Annual Improvements 2014
IFRS 9 is effective for annual lease commitments of 1,312 a performance obligation, – 2016 to make amendments to
periods beginning on or after (see note 8.3). A preliminary determine whether a company the following standards:
January 1, 2018, with early assessment indicates that most of is a principal or an agent and
application permitted. The these arrangements will meet the determine when the revenue • IFRS 12 “Disclosure of Interests in
Company does not expect that definition of a lease under IFRS from granting a license should be Other Entities” clarifies the scope
the adoption of this new standard 16 and, hence the Company will recognized. These amendments of the standard by specifying that
will have a material impact to its recognize a right-of-use asset and are also effective for annual the disclosure requirements in
consolidated financial statements. corresponding liability in respect periods beginning on or after the standard apply to an entity’s
of the net present value of these January 1, 2018, with early interests that are classified
The Company does not expect leases unless they qualify for low application permitted. as held for sale, as held for
that the adoption of these value or short-term leases upon distribution or as discontinued
amendments will have a material the application of IFRS 16. The On June 20, 2016, the IASB operations in accordance with
impact to its consolidated financial Company has not yet quantified issued amendments to IFRS 2 IFRS 5 “Non-current Assets
statements. the impact of the application “Share-based Payment”. These Held for Sale and Discontinued
of IFRS 16 on the consolidated amendments clarify the effects Operations”.
The Company does not plan to financial statements. The of vesting and non-vesting
early adopt the new accounting quantitative effect will depend on,conditions on the measurement • IFRS 1 “First-time Adoption of
standards and amendments. inter alia, the transition method of cash-settled share-based International Financial Reporting
chosen, the extent to which payments; the treatment of Standards” deletes the short-term
1.3.3 New IFRS standards, the Company uses the practical share-based payment transactions exemptions related to financial
amendments and interpretation expedients and recognition with a net settlement feature for instruments, employee benefits
not yet endorsed by the European exemptions, and any additional withholding tax obligations; and and investment entities because
Union leases that the Company enters the treatment of a modification they have now served their
into. to the terms and conditions of intended purpose.
On September 11, 2014, the IASB a share-based payment that
issued amendments to IFRS 10 and On January 19, 2016, the changes the classification of the • IAS 28 “Investments in Associates
IAS 28 “Investments in Associates IASB issued amendments to transaction from cash-settled to and Joint Ventures” clarifies that
and Joint Ventures” which address IAS 12 “Income Taxes”. These equity-settled. These amendments for an investment in an associate
an inconsistency between the amendments clarify how to are effective for annual periods or a joint venture held by a
requirements in IFRS 10 and those account for deferred tax assets beginning on or after January venture capital organization,
in IAS 28 in dealing with the sale related to debt instruments 1, 2018, with early application or other qualifying entity, the
or contribution of assets between measured at fair value and how permitted. The Company does not measurement at fair value
an investor and its associate or to recognize deferred tax assets expect that the adoption of these through profit or loss is available
joint venture. The amendments for unrealized losses. These amendments will have a material for each investment in an
set out that a full gain or loss amendments are effective for impact to its consolidated financial associate or joint venture on an
is recognized when the assets annual periods beginning on statements. investment-by-investment basis,
constitute a business or a partial or after January 1, 2017, with upon initial recognition.
gain or loss is recognized when the early application permitted. The On September 12, 2016, the
assets do not constitute a business. Company does not expect that the IASB issued amendments to The amendments to IFRS 1 and IAS
On December 17, 2015, the IASB adoption of these amendments IFRS 4 “Insurance Contracts”. 28 are effective for annual periods
issued an amendment formalizing will have a material impact to its These amendments propose beginning on or after January,
the deferral of these amendments consolidated financial statements. two approaches (an overlay 1 2018, the amendment to IFRS
indefinitely. The Company does approach and a deferral approach) 12 for annual periods beginning
not expect that the adoption in order to address temporary on or after January 1, 2017. The
Consolidated financial statements  73

Company does not expect that the and has rights to the net assets of Investments in other entities, 2.2 Investments in subsidiaries
adoption of these amendments the arrangement. The investment over which the Company and/
will have a material impact to its is accounted for under the or its operating subsidiaries do 2.2.1 List of subsidiaries
consolidated financial statements. equity method. The investment not have the ability to exercise
is recognized at cost at the date significant influence and have a The table below provides a list of
On December 8, 2016, the IASB of acquisition and subsequently readily determinable fair value, the Company’s principal operating
issued IFRIC 22 “Foreign Currency adjusted for ArcelorMittal’s share are accounted for as available- subsidiaries at December 31,
Transactions and Advance in undistributed earnings or for-sale at fair value with any 2016. Unless otherwise stated,
Consideration”. This interpretation losses since acquisition, less any resulting gain or loss, net of the subsidiaries as listed below
provides guidance about which impairment incurred. Any excess related tax effect, recognized in have share capital consisting
exchange rate to use in reporting of the cost of the acquisition the consolidated statements of solely of ordinary shares, which
foreign currency transactions over the Company’s share of the other comprehensive income, are held directly or indirectly by
(such as revenue transactions) net fair value of the identifiable until realized. Realized gains and the Company and the proportion
when payment is made or received assets, liabilities, and contingent losses from the sale of available- of ownership interests held
in advance. This interpretation liabilities of the associate or joint for-sale securities are determined equals to the voting rights held
is effective for annual periods venture recognized at the date on an average cost method. To the by the Company. The country of
beginning on or after January of acquisition is considered as extent that these investments do incorporation corresponds to their
1, 2018, with early application goodwill. The goodwill is included not have a readily determinable principal place of operations.
permitted. in the carrying amount of the fair value, they are accounted for
investment and is evaluated under the cost method.
Also, on December 8, 2016, the for impairment as part of the
IASB issued amendments to IAS investment. The consolidated While there are certain limitations
40 “Investment Property”. These statements of operations include on the Company’s operating
amendments clarify that transfers the Company’s share of the and financial flexibility arising
to, or from, investment properties profit or loss of associates and from the restrictive and financial
require an evidence of a change joint ventures from the date covenants of the Company’s
in use. that significant influence or joint principal credit facilities described
control commences until the in note 6.1.2, there are no
Note 2: Scope of Consolidation date significant influence or joint significant restrictions resulting
control ceases, adjusted for any from borrowing agreements or
2.1 Basis of consolidation impairment losses. Adjustments regulatory requirements on the
to the carrying amount may also ability of consolidated subsidiaries,
The consolidated financial be necessary for changes in the associates and jointly controlled
statements include the Company’s proportionate interest entities to transfer funds to
accounts of the Company, its in the investee arising from the parent in the form of cash
subsidiaries and its interests changes in the investee’s equity dividends to pay commitments as
in associated companies and that have not been recognized in they come due.
joint arrangements. Subsidiaries the investee’s profit or loss. The
are consolidated from the date Company’s share of those changes Inter-company balances and
the Company obtains control is recognized directly in equity. transactions, including income,
(ordinarily the date of acquisition) expenses and dividends, are
until the date control ceases. The Company assesses the eliminated in the consolidated
The Company controls an entity recoverability of its investments financial statements. Gains
when it is exposed to or has accounted for using the equity and losses resulting from inter-
rights to variable returns from method whenever there is an company transactions are also
indication of impairment. In
its involvement with the entity eliminated.
determining the value in use of
and has the ability to affect those
its investments, the Company
returns through its power over the Non-controlling interests
estimates its share in the present
entity. represent the portion of profit or
value of the projected future cash
loss and net assets not held by
flows expected to be generated
Associated companies are the Company and are presented
by operations of associates and
those companies over which separately in the consolidated
joint ventures. The amount of
the Company has the ability to statements of operations, in the
any impairment is included in
exercise significant influence consolidated statements of other
income (loss) from associates, joint
on the financial and operating comprehensive income and
ventures and other investments
policy decisions, which it does in the consolidated statements of within equity in the consolidated
not control. Generally, significant operations. statements of financial position.
influence is presumed to exist
when the Company holds more For investments in joint operations,
than 20% of the voting rights. Joint in which ArcelorMittal exercises
arrangements, which include joint joint control and has rights to
ventures and joint operations, the assets and obligations for
are those over whose activities the liabilities relating to the
the Company has joint control, arrangement, the Company
typically under a contractual recognizes its assets, liabilities and
arrangement. In joint ventures, transactions, including its share of
ArcelorMittal exercises joint control those incurred jointly.
74  Consolidated financial statements

Name of Subsidiary Country % of Ownership


NAFTA
ArcelorMittal Dofasco G.P. Canada 100.00%
ArcelorMittal México S.A. de C.V. Mexico 100.00%
ArcelorMittal USA LLC United States 100.00%
ArcelorMittal Las Truchas, S.A. de C.V. Mexico 100.00%
ArcelorMittal Long Products Canada G.P. Canada 100.00%
Brazil and neighboring countries (“Brazil”)
ArcelorMittal Brasil S.A. Brazil 100.00%
Acindar Industria Argentina de Aceros S.A. Argentina 100.00%
Europe
ArcelorMittal Atlantique et Lorraine S.A.S. France 100.00%
ArcelorMittal Belgium N.V. Belgium 100.00%
ArcelorMittal España S.A. Spain 99.85%
ArcelorMittal Flat Carbon Europe S.A. Luxembourg 100.00%
ArcelorMittal Galati S.A. Romania 99.70%
ArcelorMittal Poland S.A. Poland 100.00%
ArcelorMittal Eisenhüttenstadt GmbH Germany 100.00%
ArcelorMittal Bremen GmbH Germany 100.00%
ArcelorMittal Méditerranée S.A.S. France 100.00%
ArcelorMittal Belval & Differdange S.A. Luxembourg 100.00%
ArcelorMittal Hamburg GmbH Germany 100.00%
ArcelorMittal Ostrava a.s. Czech Republic 100.00%
ArcelorMittal Duisburg GmbH Germany 100.00%
Africa and Commonwealth of Independent States (“ACIS”)
ArcelorMittal South Africa Ltd. ("AMSA") South Africa 69.22%1
JSC ArcelorMittal Temirtau Kazakhstan 100.00%
PJSC ArcelorMittal Kryvyi Rih ("AM Kryvyi Rih") Ukraine 95.13%
ArcelorMittal International Luxembourg S.A. Luxembourg 100.00%
Mining
ArcelorMittal Mining Canada G.P. and ArcelorMittal
Infrastructure G.P. ("AMMIC") Canada 85.00%2
ArcelorMittal Liberia Ltd Liberia 85.00%
JSC ArcelorMittal Temirtau Kazakhstan 100.00%
PJSC ArcelorMittal Kryvyi Rih Ukraine 95.13%
In 2016, AMSA issued shares in the context of a B-BBEE (“broad-based black economic empowerment”) transaction resulting in a decrease in ArcelorMittal’s voting rights to 53.92%
1

(see note 10.5).


The business formerly carried on by ArcelorMittal Mines Canada Inc. is now carried on by ArcelorMittal Mining Canada G.P. and ArcelorMittal Infrastructure G.P.
2
Consolidated financial statements  75

2.2.2 Translation of financial reported in the consolidated In February 2015, next to the Since 2013, Unicon has been able
statements denominated in statements of comprehensive official exchange rate established to settle certain of its U.S. dollar
foreign currency income. by the National Center for obligations for imported materials
Foreign Commerce (“CENCOEX”) at the official rate SICAD or DIPRO
The functional currency of Upon consolidation, the results honored only for certain priority rate and records the gains related
ArcelorMittal S.A. is the U.S. dollar. of operations of ArcelorMittal’s transactions and the weekly to such transactions when the
The functional currency of each of subsidiaries, associates and joint auction mechanism under funds are authorized by CENCOEX
the principal operating subsidiaries arrangements whose functional the Supplementary Currency and the liabilities are paid.
is the local currency, except for currency is other than the U.S. Administration System (“SICAD”),
ArcelorMittal México, AMMIC dollar are translated into U.S. it introduced a new, alternative In 2015 and 2014, the Company
and ArcelorMittal International dollars at the monthly average currency market, the Foreign translated its Venezuelan
Luxembourg, whose functional exchange rates and assets and Currency Marginal System operations at the SICAD rate
currency is the U.S. dollar and liabilities are translated at the year- (“SIMADI”), which was created with because it concluded this rate
ArcelorMittal Ostrava, ArcelorMittal end exchange rates. Translation a floating exchange rate generally corresponds to the dividend
Poland and ArcelorMittal Galati, adjustments are recognized based on supply and demand. As remittance rate in accordance
whose functional currency is directly in other comprehensive a reference, the SIMADI exchange with IFRS requirements and it
the euro. In 2015, ArcelorMittal income and are included in net rate started at 170.0 Bs.F. per U.S. has been able to settle certain
Kryvyi Rih and ArcelorMittal income (including non-controlling dollar in February 2015, and closed of its U.S. dollar obligations for
Temirtau changed their functional interests) only upon sale or at 198.7 Bs.F. as of December 31, imported materials at the SICAD
currencies from U.S. dollar to their liquidation of the underlying 2015. The SICAD exchange rate rate. Nevertheless, conversion
local currencies due to changes foreign subsidiary, associate or was set to 13.5 Bs.F. per U.S. dollar of dividends at the SICAD rate
in the regulatory and economic joint arrangement. until February 17, 2016, when the or at any other rate was difficult
environment and transactional Venezuelan government devalued as authorization for dividend
currencies of the operations in Since 2010 Venezuela has been its currency by changing the remittance is very rare.
Ukraine and Kazakhstan. considered a highly inflationary CENCOEX rate from 6.3 to 10 Bs.F.
country and therefore the financial per U.S. dollar and announced Effective January 1, 2016, the
Transactions in currencies other statements of the Company’s the elimination of the SICAD rate. Company discontinued the use
than the functional currency of Venezuelan tubular production Beginning February 18, 2016, of the SICAD rate and applied
a subsidiary are recorded at the facilities Industrias Unicon CA the SIMADI rate was allowed to the DICOM rate to translate its
rates of exchange prevailing at the (“Unicon”) are adjusted to reflect float freely beginning at a rate of Venezuelan operations. As a result
date of the transaction. Monetary the changes in the general approximately 203 Bs.F. per U.S. of this change, ArcelorMittal’s net
assets and liabilities in currencies purchasing power of the local dollar. Effective March 10, 2016, equity in Unicon decreased from
other than the functional currency currency before being translated the Venezuelan government 628 to 43 at January 1, 2016.
are remeasured at the rates of into U.S. dollars. The Company replaced the SIMADI rate with two
exchange prevailing on the date used estimated general price new exchange systems: Protected For the years ended December
of the consolidated statements of indices of 533.9%, 146.7% and Exchange rate (“DIPRO”), which 31, 2016, 2015 and 2014, the
financial position and the related 67.6% for the years ended was fixed at a rate of 10 Bs.F. per financial statements of Unicon
translation gains and losses are December 31, 2016, 2015 and U.S. dollar and is used primarily for were translated into U.S. dollars
reported within financing costs 2014, respectively, for this purpose. priority food and medicine sectors, at the rates the Company
in the consolidated statements As a result of the inflation-related and Complementary Floating deemed appropriate for dividend
of operations. Non-monetary adjustments on monetary items, Exchange Market Rate (“DICOM”), remittance which were 674, 13.5
items that are carried at cost losses of 8, 161 and 47 were which is allowed to float freely and and 12.0 Bs.F. per U.S. dollar,
are translated using the rate of recognized in net financing costs applies for most other sectors. The respectively. The following table
exchange prevailing at the date for the years ended December 31, DICOM rate was originally set at presents selected consolidated
of the transaction. Non-monetary 2016, 2015 and 2014, respectively. 206 Bs.F. per U.S. dollar on March financial information of Unicon
items that are carried at fair value 10, 2016, before falling to 674 Bs.F. as of and for the years ended
are translated using the exchange In recent years, the Venezuelan per U.S. dollar at December 31, December 31, 2016, 2015 and
rate prevailing when the fair value government enacted changes 2016. 2014.
was determined and the related affecting the country’s currency
translation gains and losses are exchange and other controls.

For the year endend December 31,


2016 2015 2014
Revenue 88 1,325 552
Cost of sales 91 1,085 404
Operating income (11) 143 112
Net income (loss) (44) (121) 20

It is possible that the Venezuelan statements of its Venezuelan and ArcelorMittal’s Venezuelan
government will further refine or operations. This could have an operations’ ability to remit
alter mechanisms through which unfavorable but insignificant dividends and pay intercompany
companies are able to access U.S. impact on the Company’s operating balances at any official exchange
dollar, which could change the rate results and financial position. In rate or at all.
at which ArcelorMittal can access addition, the foreign exchange
U.S. dollar and the rate used by the controls in Venezuela may limit
Company to translate the financial the ability to repatriate earnings
76  Consolidated financial statements

2.2.3 Business combinations acquired of 50). Both reinsurance part of the Europe reportable entities were part of the NAFTA
companies are reinsurers segment. reportable segment. ArcelorMittal
Business combinations are incorporated in Luxembourg and expects to complete the sale of
accounted for using the will operate through a series of On August 7, 2016, ArcelorMittal Steelton during the first half of
acquisition method as of the reinsurance agreements with the completed the sale of the 2017 and therefore the assets
acquisition date, which is the date Company’s subsidiaries. Company’s 49% interest in the and liabilities subject to the sale
on which control is transferred associates ArcelorMittal Algérie remained classified as held for sale
to ArcelorMittal. The Company The Company concluded that and ArcelorMittal Tebessa and at December 31, 2016 (see note
controls an entity when it is both acquisitions were not its 70% interest in the subsidiary 2.3.2).
exposed to or has rights to variable business combinations mainly ArcelorMittal Pipes and Tubes
returns from its involvement with as the transactions did not Algeria, which was announced Divestments in 2015
the entity and has the ability to include the acquisition of any on October 7, 2015 as part
affect those returns through its strategic management processes, of an outline agreement for On March 30, 2015, following an
power over the entity. operational processes and restructuring the shareholding agreement signed on October 21,
resource management processes. of its Algerian activities. As part 2014, the Company established
The Company measures goodwill of the agreement, ArcelorMittal the joint venture ArcelorMittal CLN
at the acquisition date as the total There were no significant transferred such interests to Distribuzione Italia S.r.l. (“AMCDI”)
of the fair value of consideration acquisitions in 2015 nor 2014. IMETAL, an Algerian state-owned with Coils Lamiere Nastri S.P.A.
transferred, plus the proportionate entity. ArcelorMittal Pipes and (“CLN”) through the contribution
amount of any non-controlling 2.3 Divestments and assets held Tubes Algeria and ArcelorMittal of assets and liabilities of its wholly
interest, plus the fair value of any for sale Algérie were part of the ACIS owned subsidiary ArcelorMittal
previously held equity interest in reportable segment while Distribution Solutions Italia S.R.L
the acquiree, if any, less the net Non-current assets and disposal ArcelorMittal Tebessa was part of (“AMDSI”). ArcelorMittal holds
recognized amount (generally at groups that are classified as the Mining reportable segment. a 49% stake in AMCDI, which is
fair value) of the identifiable assets
held for sale are measured at Previously, on January 10, 2015, accounted for under the equity
acquired and liabilities assumed. the lower of carrying amount ArcelorMittal had completed the method. Assets and liabilities of
and fair value less costs to sell. sale of a 21% controlling stake in AMDSI subject to the transaction
In a business combination in which Assets and disposal groups are ArcelorMittal Tebessa, which holds were classified as held for sale at
the fair value of the identifiable classified as held for sale if their two iron ore mines in Ouenza December 31, 2014. AMDSI was
net assets acquired exceeds the carrying amount will be recovered and Boukadra, Tebessa, to Sider part of the Europe reportable
cost of the acquired business, through a sale transaction rather and the Ferphos Group, two segment.
the Company reassesses the than through continuing use. This Algerian state-owned entities.
fair value of the assets acquired condition is regarded as met only The Company accounted for its On February 26, 2015, following an
and liabilities assumed. If, after when the sale is highly probable remaining 49% stake under the agreement signed on September
reassessment, ArcelorMittal’s and the asset, or disposal group, is equity method. This sale had been 18, 2014, ArcelorMittal established
interest in the net fair value available for immediate sale in its contractually agreed on November the investment ArcelorMittal RZK
of the acquiree’s identifiable present condition and is marketed 25, 2014 in the framework of Celik Servis Merkezi Sanayi ve
assets, liabilities and contingent for sale at a price that is reasonable a strategic agreement signed Ticaret Anonim Sirketi (“AM RZK”)
liabilities exceeds the cost of the in relation to its current fair value. on October 5, 2013. Assets and with a local partner in Turkey
business combination, the excess Assets held for sale are presented liabilities of ArcelorMittal Pipes and through the contribution of assets
(bargain purchase) is recognized separately in the consolidated Tubes Algeria and ArcelorMittal and liabilities of the Company’s
immediately as a reduction of statements of financial position Tebessa were classified as held for wholly owned subsidiary Rozak
cost of sales in the consolidated and are not depreciated. Gains sale at December 31, 2015 and Demir Profil Ticaret ve Sanayi
statements of operations. (losses) on disposal are recognized 2014, respectively. Anonim Sirketi (“Rozak”).
in cost of sales. ArcelorMittal holds a 50% stake
Any contingent consideration On April 4, 2016, ArcelorMittal in AM RZK and the investment is
payable is recognized at fair 2.3.1 Divestments completed the sale of the LaPlace accounted for under the equity
value at the acquisition date and and Vinton Long Carbon facilities method. Assets and liabilities of
any costs directly attributable Divestments in 2016 in the United States. The total Rozak subject to the transaction
to the business combination are consideration was 96 and the were classified as held for sale at
expensed as incurred. On September 30, 2016, result on disposal was nil. Assets December 31, 2014. Rozak was
ArcelorMittal completed the sale and liabilities of the LaPlace, part of the Europe reportable
2.2.4 Acquisitions of its wholly owned subsidiary Steelton and Vinton Long Carbon segment.
ArcelorMittal Zaragoza in Spain to facilities in the United States
On December 21, 2016 Megasa Siderúrgica S.L. for a total were classified as held for sale On January 23, 2015, ArcelorMittal
ArcelorMittal acquired from consideration of €80 million (89). at December 31, 2015 and the completed the disposal of
Skanska Financial Services AB Prior to the disposal, the Company Company recorded in cost of sales the building on Avenue de la
the reinsurance company SCEM recorded in cost of sales an an impairment charge of 231 (of Liberté in Luxembourg city (the
Reinsurance S.A. (“SCEM”) for a impairment charge of 49 (of which which 13 relating to allocated “Liberté Building”), formerly the
total consideration of €54 million 2 relating to allocated goodwill) goodwill) to write their carrying headquarters of the Company, to
(56; cash inflow was 7 net of cash to write the net carrying amount amount down to the expected the Banque et Caisse d’Epargne
acquired of 63). On January 18, down to the net proceeds from the net proceeds from the sale. The de l’Etat (“BCEE”) following a
2017, the Company also acquired sale. The fair value measurement fair value measurement of the memorandum of understanding
from Parfinada B.V. the reinsurance of ArcelorMittal Zaragoza was Long Carbon facilities in the signed on November 14, 2014. The
company Artzare S.A. for a total determined using the contract United States was determined property was classified as held for
consideration of €43 million (45; price, a Level 3 unobservable using the contract price, a Level 3 sale at December 31, 2014.
cash inflow was 5 net of cash input. ArcelorMittal Zaragoza was unobservable input. These various
Consolidated financial statements  77

The result on disposal for the with Tauron Group (see note 2.4). On May 30, 2014, ArcelorMittal partnership with Bekaert in Latin
above mentioned disposals Upon contribution, the interest completed the sale of its 50% America to Costa Rica and Ecuador,
in 2015 was immaterial. The in the new joint venture was stake in the joint venture Kiswire the Company sold to Bekaert 73%
aggregate net assets disposed of measured at fair value for 120. ArcelorMittal Ltd. (“Kiswire”) in of its wire drawing business in
amounted to 97. South Korea and certain other ArcelorMittal Costa Rica and Cimaf
On July 31, 2014, ArcelorMittal entities of its steel cord business Cabos, a cable business in Osasco
Divestments in 2014 completed the sale of all in the United States, Europe and (São Paulo) Brazil, previously a
of the shares of Circuit Foil Asia to Kiswire Ltd. These various branch of Belgo Bekaert Arames
On December 31, 2014, Luxembourg, which manufactures entities were part of the Europe (“BBA”). BBA is a consolidated
ArcelorMittal completed the electrodeposited copper foils reportable segment. The fair entity in which ArcelorMittal holds
disposal of the Kuzbass coal for the electronics industry, and value measurement of the steel a 55% controlling interest. The two
mines (“Kuzbass”) located in the certain of its subsidiaries (“Circuit cord business was determined businesses were part of the Brazil
Kemerovo region in Russia to the Foil”) to Doosan Corporation, a using the contract price, a Level 3 reportable segment. ArcelorMittal
Russian National Fuel Company. South Korean conglomerate. The unobservable input. On the closing also acquired on the same date
The existing intra group debt of cash consideration amounted to date, the Company received a a 27% non-controlling interest in
138 was assumed by the buyer 50 (49 net of cash of 1 disposed preliminary cash consideration of the Ideal Alambrec Ecuador plant
who will repay a net amount of of). Circuit Foil was included in the 55 (39 net of cash of 16 disposed) controlled by Bekaert.
RUB 1.5 billion (25) in monthly Europe reportable segment. subsequently revised to 57 after
installments until June 2017. final determination of net debt The result on disposal for
Kuzbass was part of the Mining On June 30, 2014, ArcelorMittal and working capital situation on the disposals of Circuit Foil
reportable segment. completed the sale of its 78% stake closing date. The existing intra Luxembourg, ATIC, the Bekaert
in the European port handling and group debt of the sold subsidiaries and Kiswire transactions was
On December 11, 2014, the logistics company ATIC Services of 102 was assumed by Kiswire immaterial. The aggregate net
Company contributed the shares S.A. (“ATIC”) for €155 million (144 and was repaid during the first half assets disposed of amounted to
of an energy production facility in net of cash of 68 disposed of) to of 2015. 250.
the Czech Republic and a second H.E.S. Beheer. ATIC was part of
energy production facility in the Europe reportable segment. On April 30, 2014, in the There were no significant
Poland (Europe segment) with As a result of the disposal, non- framework of an agreement divestments during 2015. The
a total carrying amount of 43 controlling interests decreased signed with Bekaert Group table below summarizes the
into the new joint venture Tameh by 81. (“Bekaert”) on December 9, significant divestments made in
Holding Sp.Z.o.o (“Tameh”) created 2013 to extend ArcelorMittal’s 2016 and 2014:

2016 2014
LaPlace and
ArcelorMittal Vinton Long
ArcelorMittal Tubular Products Carbon
Zaragoza Algeria facilities Kuzbass
Current assets 53 15 118 6
Property, plant and equipment 74 2 13 62
Intangible assets - - - 2
Other assets - - 7 1
Total assets 127 17 138 71
Current liabilities 38 16 33 151
Other long-term liabilities - 12 9 70
Total liabilities 38 28 42 221
Total net assets / (liabilities) 89 (11) 96 (150)
Allocated goodwill - - - 3
% of net assets sold 100% 100% 100% 99%
Total net assets / (liabilities) disposed of 89 (11) 96 (147)
Cash consideration received 89 - 96 -
Write-off of the intra group debt not assumed by the buyer - - - (113)
Reclassification of foreign exchange translation difference 8 4 - 45
Gain on disposal 8 15 - 79

2.3.2 Assets held for sale under the equity method. AMTBA subject to the transaction were In addition, the assets and
was part of the NAFTA reportable classified as held for sale. The liabilities of the Steelton facility
During the first quarter of segment. At December 31, 2016, Company recorded in cost of in the United States remained
2017, ArcelorMittal and the the assets and liabilities of AMTBA sales an impairment charge of 18. classified as held for sale except
management of ArcelorMittal were classified as held for sale. ArcelorMittal completed the sale of for a 53 other post-employment
Tailored Blanks Americas the above mentioned operations benefit obligation retained by the
(“AMTBA”), comprising the In December 2015, ArcelorMittal on February 10, 2017 and therefore Company at December 31, 2016
Company’s tailored blanks committed to a plan to sell certain the assets and liabilities subject to (see note 2.3.1 and 7.2).
operations in Canada, Mexico and of its ArcelorMittal Downstream the sale remained classified as held
the United States, intend to enter Solutions operations in the for sale at December 31, 2016.
into a joint venture agreement Europe segment. Accordingly, at
following which the Company will December 31, 2015, the carrying
account for its interest in AMTBA amount of assets and liabilities
78  Consolidated financial statements

The tables below provide details of the assets and liabilities held for sale after elimination of intra-group balances in the consolidated statements
of financial position:
December 31, 2016
Downstream
Solutions
AMTBA Europe Steelton Total
ASSETS
Current assets:
Cash and cash equivalents 13 - - 13
Trade accounts receivable and other 24 15 18 57
Inventories 18 6 15 39
Prepaid expenses and other current assets 4 1 - 5
Total current assets 59 22 33 114
Non-current assets:
Property, plant and equipment 55 - 76 131
Other assets 12 2 - 14
Total non-current assets 67 2 76 145
Total assets 126 24 109 259
LIABILITIES
Current liabilities:
Short-term debt and current portion of long-term debt 2 - - 2
Trade accounts payable and other 30 10 9 49
Accrued expenses and other liabilities 4 6 2 12
Total current liabilities 36 16 11 63
Non-current liabilities:
Long-term debt net of current portion 7 - - 7
Long-term provisions - 5 20 25
Total non-current liabilities 7 5 20 32
Total liabilities 43 21 31 95
December 31, 2015
Long Carbon Downstream
facilities in Solutions Algerian
the US Europe operations Total
ASSETS
Current assets:
Trade accounts receivable and other 39 5 4 48
Inventories 116 14 9 139
Prepaid expenses and other current assets 2 2 8 12
Total current assets 157 21 21 199
Non-current assets:
Intangible assets 7 - - 7
Property, plant and equipment 54 - 1 55
Other assets - 1 - 1
Total non-current assets 61 1 1 63
Total assets 218 22 22 262
LIABILITIES
Current liabilities:
Trade accounts payable and other 57 12 14 83
Accrued expenses and other liabilities 17 14 2 33
Total current liabilities 74 26 16 116
Non-current liabilities:
Long-term provisions 79 7 18 104
Total non-current liabilities 79 7 18 104
Total liabilities 153 33 34 220

2.4 Investment in associates and joint arrangements

The carrying value of the Company’s investments accounted for under the equity method, at December 31, 2016 and 2015 were as follows:
December 31,
Category 2016 2015
Joint ventures 1,507 1,443
Associates 2,000 2,688
Individually immaterial joint ventures and associates1 790 780
Total 4,297 4,911
1
Individually immaterial joint ventures and associates represent in aggregate less than 20% of the total carrying amount of investments in joint ventures and associates at December
31, 2016 and 2015, and none of them has a carrying amount exceeding 100 at December 31, 2016 and 2015.
Consolidated financial statements  79

2.4.1 Joint ventures

The following tables summarize the latest available financial information and reconcile it to the carrying amount of each of the Company’s
material joint ventures at December 31, 2016 and 2015, as well as the income statement of the Company’s material joint ventures as of December
31, 2014:

December 31, 2016


Joint Ventures Calvert Macsteel Baffinland VAMA Tameh Borçelik Total
Place of incorporation and operation* United States Netherlands Canada China Poland Turkey
Steel Energy Manufacturing
Automotive trading and Extraction of Automotive production and sale of
Principal Activity steel finishing distribution iron ore steel finishing and supply steel
Ownership and voting rights % at
December 31, 2016 ** 50.00% 50.00% 44.54% 49.00% 50.00% 45.33%
Current assets 836 636 197 230 120 404 2,423
of which cash and cash equivalents 45 77 7 75 47 39 290
Non-current assets 1,287 374 1,506 721 354 325 4,567
Current liabilities 490 312 354 362 83 254 1,855
of which trade and other payables
and provisions 160 170 190 248 83 112 963
Non-current liabilities 984 41 262 302 159 45 1,793
of which trade and other payables
and provisions - 3 37 - 19 - 59
Net assets 649 657 1,087 287 232 430 3,342
Company's share of net assets 325 328 484 141 116 195 1,589
Adjustments for differences in
accounting policies and other 6 - (59)a - 2 (31)b (82)
Carrying amount in the statements
of financial position 331 328 425 141 118 164 1,507
Revenue 2,358 2,353 116 335 254 845 6,261
Depreciation and amortization (59) (1) (3) (30) (20) (20) (133)
Interest income - 12 - 1 - 1 14
Interest expense (31) (9) (20) (28) (1) (7) (96)
Income tax benefit (expense) - (4) (26) 18 (10) (28) (50)
Net income (loss) 148 15 (43) (58) 29 75 166
Other comprehensive income (loss) - 10 - - 3 - 13
Total comprehensive income (loss) 148 25 (43) (58) 32 75 179
Cash dividends received by the
Company 19 - - - 6 16 41
* The country of incorporation corresponds to the country of operation except for Tameh whose country of operation is also the Czech Republic and
Macsteel whose countries of operation are mainly United States, United Arab Emirates and China.
** The ownership stake is equal to the voting rights percentage.
a
Adjustment in Baffinland relates primarily to differences in accounting policies regarding revaluation of fixed assets, preferred shares and locally
recognized goodwill.
b
Adjustment in Borcelik relates primarily to differences in accounting policies regarding revaluation of fixed assets.
80  Consolidated financial statements

December 31, 2015


Joint Ventures Calvert Macsteel Baffinland VAMA Tameh Borçelik Total
Place of incorporation and operation * United States Netherlands Canada China Poland Turkey
Steel Development Energy Manufacturing
Automotive trading and of iron ore Automotive production and sale of
Principal Activity steel finishing distribution mine steel finishing and supply steel
Ownership and voting rights % at
December 31, 2015 ** 50.00% 50.00% 46.08% 49.00% 50.00% 45.33%
Current assets 742 709 115 276 88 353 2,283
of which Cash and cash equivalents 40 132 7 144 4 59 386
Non-current assets 1,230 368 1,501 735 331 339 4,504
Current liabilities 416 396 168 443 97 253 1,773
of which trade and other payables
and provisions 105 154 123 289 96 153 920
Non-current liabilities 1,017 50 406 259 97 47 1,876
of which trade and other payables
and provisions - 2 30 - 7 - 39
Net assets 539 631 1,042 309 225 392 3,138
Company's share of net assets 270 315 480 151 113 178 1,507
Adjustments for differences in
accounting policies and other 7 - (38)a - - (33)b (64)
Carrying amount in the statements of
financial position 277 315 442 151 113 145 1,443
Revenue 2,094 2,722 - 152 308 838 6,114
Depreciation and amortization (58) (1) - (26) (33) (20) (138)
Interest income - 13 - 1 - 1 15
Interest expense (31) (10) - (16) (1) (7) (65)
Income tax benefit (expense) - (5) (2) 34 (4) (17) 6
Net income (loss) (23) 32 (66) (88) 14 32 (99)
Other comprehensive income (loss) - 8 - - - (1) 7
Total comprehensive income (loss) (23) 40 (66) (88) 14 31 (92)
Cash dividends received by the
Company 22 10 - - - 9 41
* The country of incorporation corresponds to the country of operation except for Tameh whose country of operation is also the Czech Republic and
Macsteel whose countries of operation are mainly United States, United Arab Emirates and China.
** The ownership stake is equal to the voting rights percentage.
a
Adjustment in Baffinland relates primarily to differences in accounting policies regarding revaluation of fixed assets, preferred shares and locally
recognized goodwill.
b
Adjustment in Borcelik relates primarily to differences in accounting policies regarding revaluation of fixed assets.
Consolidated financial statements  81

December 31, 2014


ArcelorMittal
Gonvarri Brasil
Produtos Kalagadi
Joint Ventures Siderúrgicos Calvert Macsteel Manganese Baffinland VAMA Tameh Total
Place of incorporation
and operation * Brazil United States Netherlands South Africa Canada China Poland
Production and Steel Development Energy
distribution of Automotive trading and of iron ore Automotive production and
Principal Activity metal products steel finishing distribution Mining mine steel finishing supply
Ownership and voting
rights % at December
31, 2014 ** 50.00% 50.00% 50.00% 50.00% 50.00% 49.00% 50.00%
Revenue 235 2,150 3,434 - - - - 5,819
Depreciation and
amortization (5) (40) (1) - - - - (46)
Interest income 6 - 11 - - 3 - 20
Interest expense - (19) (8) - - - - (27)
Income tax benefit
(expense) (4) - (6) (2) 3 - - (9)
Net income (loss) 15 89 44 (6) (21) (6) - 115
Other comprehensive
income (loss) - - 18 - - - - 18
Total comprehensive
income (loss) 15 89 62 (6) (21) (6) - 133
Cash dividends
received by the
Company 20 - 5 - - - - 25
* The country of incorporation corresponds to the country of operation except for Tameh whose country of operation is also the Czech Republic and Macsteel whose countries of
operation are mainly United States, United Arab Emirates and China.
** The ownership stake is equal to the voting rights percentage.

ArcelorMittal Gonvarri Brasil Kalagadi Manganese completion of the sale is subject Baffin Island in Nunavut (Canada).
Produtos Siderúrgicos to various closing conditions and During 2016, ArcelorMittal’s
Kalagadi Manganese (Propriety) regulatory approvals. The South shareholding in Baffinland
ArcelorMittal Gonvarri Brasil Ltd (“Kalagadi Manganese”) African Competition Commission decreased from 46.08% to 44.54%
Produtos Siderúrgicos S.A. is is a joint venture between approved the sale on January following a capital increase
engaged in the manufacturing and ArcelorMittal and Kalahari 16, 2017. The Company expects subscribed by Nunavut Iron Ore.
sale of flat rolled steel, to serve, Resource (Proprietary) Ltd that to complete the sale during the
among others, the automotive, is engaged in exploring, mining, first half of 2017 and classified Calvert
metal and mechanics industries. ore processing, and smelting its investment as held for sale at
The entity processes and manganese in the Kalahari Basin December 31, 2016. On February 26, 2014, the
distributes steel primarily in Brazil, in South Africa. In addition, the Company together with Nippon
and is the result of the acquisition Company has granted loans for Steel & Sumitomo Metal
of Gonvarri Brasil Produtos VAMA
the funding of the mining project Corporation (“NSSMC”) completed
Siderúrgicos S.A. by ArcelorMittal amounting to 78 including the acquisition of ThyssenKrupp
Spain Holding`S.L. and Gonvarri accrued interest, which have been
Valin ArcelorMittal Automotive Steel USA (“TK Steel USA”), a
Steel Industries in 2008. As of fully impaired in 2015 (see note
Steel (“VAMA”) is a joint venture steel processing plant in Calvert,
December 31, 2015 the carrying 2.4.4). As of December 31, 2015
between ArcelorMittal and Alabama, United States, for a total
value of ArcelorMittal Gonvarri the carrying value of Kalagadi
Hunan Valin which produces consideration of 1,550 financed
Brasil Produtos Siderúrgicos was as such no longer considered
steel for high-end applications in through a combination of debt
S.A. was no longer considered significant and therefore no
the automobile industry. VAMA at the joint venture level and
significant and therefore no longer longer separately disclosed. The
supplies international automakers equity, of which 258 was paid
separately disclosed. Company’s unrecognized share
and first-tier suppliers, as well as by ArcelorMittal. The Company
of accumulated losses in Kalagadi
Chinese car manufacturers and concluded that it has joint
Macsteel Manganese amounted to 9 for the
their supplier networks. The plant control of the arrangement, AM/
year ended December 31, 2016.
was inaugurated on June 15, 2014. NS Calvert (“Calvert”), together
Macsteel International Holdings with NSSMC, and accounts for
B.V. (“Macsteel”) is a joint venture On October 21, 2016, ArcelorMittal Baffinland its 50.00% interest in the joint
between Macsteel Holdings signed an agreement with venture under the equity method.
Luxembourg S.à r.l. and AMSA Kgalagadi Alloys (Proprietary) Baffinland is a joint venture The transaction includes a six-
which provides the Company with Ltd for the sale of its 50.00% since October 1, 2013 between year agreement to purchase two
an international network of traders investment in Kalagadi Manganese ArcelorMittal and Nunavut Iron million tonnes of slab annually
and trading channels including the for a deferred consideration to Ore. Baffinland owns the Mary from TK CSA, an integrated steel
shipping and distribution of steel. be paid during the life of the River project, which has direct mill complex located in Rio de
mine and capped at 150. The shipping, high grade iron ore on Janeiro, Brazil, using a market-
82  Consolidated financial statements

based price formula. TK CSA has an Tameh Borçelik 2.4.2 Associates


option to extend the agreement
for an additional three years on On December 11, 2014, Borçelik Çelik Sanayii Ticaret The following tables summarize
terms that are more favorable to ArcelorMittal and Tauron Anonim Şirketi (“Borçelik”), the financial information and
the joint venture, as compared Group contributed four energy incorporated and located in reconciles it to the carrying
with the initial time period. The production facilities located in Turkey, is a joint venture between amount of each of the Company’s
remaining slab balance is sourced Poland and the Czech Republic ArcelorMittal and Borusan Holding material associates at December
from ArcelorMittal plants in the into the new arrangement Tameh. involved in the manufacturing and 31, 2016 and 2015, as well as
United States, Brazil and Mexico. The Company concluded that it sale of cold-rolled and galvanized the income statement of the
ArcelorMittal is principally has joint control over Tameh and flat steel products. Company’s material associates as
responsible for marketing the accounted for its 50.00% interest of December 31, 2014:
product on behalf of the joint in the joint venture under the
venture. Calvert serves the equity method. Tameh’s objective
automotive, construction, pipe is to ensure energy supply to the
and tube, service center, and Company’s steel plants in these
appliance/ HVAC industries. countries as well as the utilization
of steel plant gases for energy
production processes.

December 31, 2016


Gonvarri Steel
Associates China Oriental DHS GROUP Industries Total
Financial statements reporting date Jun 30, 2015 Sep 30, 2015 Sep 30, 2015
Place of incorporation and operation * Bermuda Germany Spain
Iron and steel Steel Steel
Principal Activity manufacturing manufacturing manufacturing
Ownership and voting rights % at December 31, 2015 46.99% 33.43% 35.00%
Current assets 1,422 1,624 1,481 4,527
Non-current assets 1,504 2,999 1,178 5,681
Current liabilities 1,275 609 608 2,492
Non-current liabilities 240 1,052 299 1,591
Non controlling interests 47 132 218 397
Net assets attributable to equity holders of the parent 1,364 2,830 1,534 5,728
Company's share of net assets 641 946 537 2,124
Adjustments for differences in accounting policies and other - 17 a (51)b (34)
Other adjustments ** (18) (61) (11) (90)
Carrying amount in the statements of financial position 623 902 475 2,000
Revenue 1,751 1,396 2,258 5,405
Profit or loss from continuing operations 123 (91) 145 177
Net income (loss) 83 (96) 145 132
Other comprehensive income - (3) 4 1
Total comprehensive income (loss) 83 (99) 149 133
Cash dividends received by the Company - - 16 16
* The country of incorporation corresponds to the country of operation except for China Oriental whose country of operation is China.
** Other adjustments correspond to the difference between the carrying amount at December 31, 2016 and the net assets situation corresponding to the latest financial
statements ArcelorMittal is permitted to disclose.
a The amount for DHS GROUP includes an adjustment to align the German GAAP financial information with the Company’s accounting policies and is mainly linked to property,
plant and equipment, inventory and pension.
b Adjustment in Gonvarri Steel Industries relate primarily to differences in accounting policies regarding revaluation of fixed assets.
Consolidated financial statements  83

December 31, 2015


Gonvarri Steel
Associates China Oriental DHS GROUP Gestampc Industries Stalprodukt S.A.c Total
Financial statements
reporting date Jun 30, 2015 Sep 30, 2015 Sep 30, 2015 Sep 30, 2015 Sep 30, 2015
Place of incorporation and
operation * Bermuda Germany Spain Spain Poland
Production and
Iron and steel Steel Manufacturing of Steel distribution of steel
Principal Activity manufacturing manufacturing metal components manufacturing products
Ownership and voting
rights % at December 31,
2015 ** 46.99% 33.43% 35.00% 35.00% 28.47%
Current assets 2,049 1,630 2,360 1,381 346 7,766
Non-current assets 1,558 2,948 3,790 999 525 9,820
Current liabilities 1,822 564 1,890 536 147 4,959
Non-current liabilities 186 936 2,360 289 162 3,933
Non controlling interests 90 139 441 133 27 830
Net assets attributable
to equity holders of the
parent 1,509 2,939 1,459 1,422 535 7,864
Company's share of net
assets 709 983 511 498 152 2,853
Adjustments for
differences in accounting
policies and other - 43a - (54)b 7 (4)
Other adjustments *** (105) (34) (15) (3) (4) (161)
Carrying amount in the
statements of financial
position 604 992 496 441 155 2,688
Revenue 1,768 1,603 5,642 2,194 628 11,835
Profit or loss from
continuing operations 6 (47) 169 102 61 291
Net income (loss) 10 (45) 109 102 47 223
Other comprehensive
income (1) - (35) (53) - (89)
Total comprehensive
income (loss) 9 (45) 74 49 47 134
Cash dividends received by
the Company - 4 15 14 - 33
* The country of incorporation corresponds to the country of operation except for China Oriental whose country of operation is China.
** The ownership stake is equal to the voting rights percentage, except for Stalprodukt whose voting rights correspond to 28.26%.
*** Other adjustments correspond to the difference between the carrying amount at December 31, 2015 and the net assets situation corresponding to the latest financial statements
ArcelorMittal is permitted to disclose.
a The amount for DHS GROUP includes an adjustment to align the German GAAP financial information with the Company’s accounting policies, and is mainly linked to property,
plant and equipment, inventory and pension.
b Adjustment in Gonvarri Steel Industries relate primarily to differences in accounting policies regarding revaluation of fixed assets.
c Date of the latest available financial statements is September 30, 2015.
84  Consolidated financial statements

December 31, 2014


Gonvarri Steel
Associates China Oriental DHS GROUP Gestampc Industries Stalprodukt S.A.a Total
Financial statements reporting date Jun 30, 2014 Sep 30, 2014 Sep 30, 2014 Sep 30, 2014 Sep 30, 2014
Place of incorporation and
operation * Bermuda Germany Spain Spain Poland
Production and
Iron and steel Steel Manufacturing of Steel distribution of steel
Principal Activity manufacturing manufacturing metal components manufacturing products
Ownership and voting rights % at
December 31, 2014 ** 47.01% 33.43% 35.00% 35.00% 33.77%
Revenue 2,545 2,000 6,196 2,550 684 13,975
Profit or loss from continuing
operations 22 (68) 153 102 33 242
Post-tax profit or loss from
discontinued operations - - (2) - - (2)
Net income (loss) 6 (75) 98 99 24 152
Other comprehensive income - - 40 14 - 54
Total comprehensive income (loss) 6 (75) 138 113 24 206
Cash dividends received by the
Company - - 16 10 - 26
* The country of incorporation corresponds to the country of operation except for China Oriental whose country of operation is China.
** The ownership stake is equal to the voting rights percentage, except for Stalprodukt whose voting rights correspond to 38.20%.
a
Date of the latest available financial statements is September 30, 2014.

China Oriental January 27, 2017, in order to On February 1, 2016, ArcelorMittal Stalprodukt S.A.
restore the minimum free float completed the sale of its 35.00%
China Oriental Group Company requirement, China Oriental issued stake in Gestamp Automoción Stalprodukt S.A. is a leading
Limited (“China Oriental”) is a 586,284,000 new shares resulting (“Gestamp”) to the majority manufacturer and exporter of
Chinese integrated iron and steel in a decrease of the Company’s shareholder, the Riberas family, for highly processed steel products
conglomerate listed on the Hong interest from 46.99% to 39.16%. total cash consideration of €875 based in Poland.
Kong Stock Exchange (“HKEx”). On Public trading resumed on million (971). The gain on disposal
November 8, 2007, ArcelorMittal February 1, 2017. was recorded in income (loss) On December 16, 2015, the
acquired a 28.02% interest in China from investments in associates, Company sold 356,424 shares in
Oriental for a total consideration DHS GROUP joint ventures and other Stalprodukt S.A., which resulted
of 644. On February 4, 2008, investments and amounted to in a decrease in the ownership
upon closing of its tender offer, DHS - Dillinger Hütte Saarstahl AG 329 including the reclassification percentage from 33.77% to
ArcelorMittal increased its interest (“DHS GROUP”), incorporated and of the accumulated foreign 28.47%. The Company recorded
to 46.99%. On April 29, 2014, China located in Germany, is a leading exchange translation losses and a loss on disposal of 6 in income
Oriental’s shares were suspended producer of heavy steel plate, unrealized losses on derivative (loss) from investments in
from trading as a consequence cast slag pots and semi-finished financial instruments from other associates, joint ventures and
of China Oriental not meeting products, such as pressings, comprehensive income to the other investments (see note
the minimum free float listing pressure vessel heads and shell statements of operations of 90 and 2.6). As of December 31, 2015,
requirement of 25% of the HKEx. In sections in Europe. The DHS 12, respectively. In addition to the the investment had a market
order to restore the minimum free GROUP also includes a further cash consideration, ArcelorMittal value of 155. In 2016, following
float, the Company sold a 17.40% rolling mill operated by Dillinger received a payment of €10 an additional sale of shares, the
stake to ING Bank N.V. (“ING”) and France in Dunkirk (France). million (11) for the 2015 dividend. Company classified the investment
Deutsche Bank Aktiengesellschaft ArcelorMittal will continue its as available-for-sale securities (see
(“Deutsche Bank”) together with Gestamp supply relationship with Gestamp note 2.5).
put option agreements. The through its 35.00% shareholding
Company had not derecognized Gestamp Automoción (“Gestamp”) in Gonvarri Steel Industries, a 2.4.3 Other associates and joint
the 17.40% stake in China Oriental is a Spanish multi-national sister company of Gestamp. ventures that are not individually
as it retained its exposure to company, which is a leader in the ArcelorMittal sells coils to Gonvarri material
significant potential risks and European automotive industry. Steel Industries for processing
rewards of the investment The activities of Gestamp and before they pass to Gestamp The Group has interests in a
through the put options. On its subsidiaries are focused and other customers. Further, number of other joint ventures
April 30, 2014, Deutsche Bank on the design, development, ArcelorMittal will continue to have and associates, none of which are
exercised its put option with and manufacturing of metal a board presence in Gestamp, regarded as individually material.
respect to a 7.50% stake in China components for the automotive collaborate in automotive R&D and The following table summarizes
Oriental. Simultaneously, the industry via stamping, tooling, remain its major steel supplier. the financial information of all
Company sold this investment to assembly, welding, tailor welded individually immaterial joint
Macquarie Bank and entered into blanks, and die cutting. The entity Gonvarri Steel Industries ventures and associates that are
a put option arrangement with also includes other companies accounted for using the equity
the latter maturing on April 30, dedicated to services such as Holding Gonvarri SL (“Gonvarri method:
2015. On April 30, 2015, both put research and development of new Steel Industries”) is dedicated to
options were exercised, resulting technologies. the processing of steel. The entity
in a decrease of accrued expenses is a European leader in steel service
and other liabilities and prepaid centers and renewable energy
expenses and other current assets components, with strong presence
by 96 and 112, respectively. On in Europe and Latin America.
Consolidated financial statements  85

December 31, 2016 December 31, 2015


Associates Joint Ventures Associates Joint Ventures
Carrying amount of interests in associates and joint ventures 291 499 297 483
Share of:
Income (loss) from continuing operations 56 (2) 11 (15)
Other comprehensive income (loss) (2) 1 (8) 6
Total comprehensive income (loss) 54 (1) 3 (9)
As at December 31, 2016, For the year ended December growth rate not exceeding the 2.4.5 Investments in joint
there were no unrecognized 31, 2015, the Company tested average long-term growth rate for operations
accumulated losses in respect its investment in Kalagadi for the relevant markets. In addition
of AM RZK. The Company’s impairment and determined to the impairment of the carrying In addition to subsidiaries, joint
unrecognized share of that the value in use was lower value, the Company recorded an ventures and associates as
accumulated losses in AM RZK than the carrying amount. In impairment charge on the loans described above, the Company
amounted to 7 for the year determining the value in use, the related to Uttam Galva for 69 and also had investments in the
ended December 31, 2015. Company estimated its share in an impairment charge of 22 with following joint operations as of
The Company’s unrecognized the present value (using a pre- respect of its 25.00% interest in the December 31, 2016 and 2015:
share of accumulated losses in tax discount rate of 12.48%) of Northern Cape Iron Ore Mining
ArcelorMittal Algérie amounted the projected future cash flows Project, an associate in South Peña Colorada
to 8, and 49 for the years expected to be generated over Africa.
ended December 31, 2015, and the current life-of-the-mine plan Peña Colorada is an iron ore
December 31, 2014, respectively. or long term production plan. The For the year ended December mine located in Mexico in which
ArcelorMittal Algérie was sold on key assumptions for the value in 31, 2014, following a revision ArcelorMittal holds a 50.00%
August 7, 2016 (see note 2.3). use calculations are primarily the of business assumptions in the interest. Peña Colorada operates
discount rates, capital expenditure,context of continuing growth an open pit mine as well as
In 2016, the Company’s share of expected changes to average slowdown in China, the Company concentrating facility and two-line
net losses has reduced the carrying selling prices, shipments and tested its investment in China pelletizing facility.
amount of its 40.80% interest in direct costs during the period. Oriental for impairment on a fair
the joint venture ArcelorMittal Based on the analysis of value value basis and concluded that Hibbing Taconite Mines
Tubular Products Jubail (“Al Jubail”) in use, the Company recognized such fair value was lower than the
to nil. Furthermore, the Company an impairment charge of 283 in carrying amount. The results of the The Hibbing Taconite Mines
recognized 19 corresponding to its income (loss) from investments fair value analysis principally based in which the Company holds a
share of additional losses against in associates, joint ventures and on market multiples indicated 62.30% interest are iron ore mines
its 168 shareholder loans, which other investments (see note 2.6) that the carrying value recognized located in the USA and operations
resulted in a carrying amount of for the full carrying amount of the was in excess of the estimated fair consist of open pit mining,
such loans of 149. investment (205) and loans (78) value of the investment, which crushing, concentrating and
as a result of a downward revision approximated the Company’s pelletizing.
2.4.4 Impairment of associates and of cash flow projections resulting share in China Oriental’s net equity.
joint ventures from the expectation of the The recoverable amount of the I/N Tek
persistence of a lower manganese Company’s investment in China
For the year ended December 31, price outlook. Oriental amounted to 697. Based I/N Tek in which the Company
2016, the Company identified an on this analysis, the Company holds a 60.00% interest operates
impairment indicator with respect In addition, the Company recorded recognized an impairment charge a cold-rolling mill in the United
to its shareholders loans in Al an impairment charge of 69 in of 621 in income (loss) from States.
Jubail. Accordingly, it performed respect of its investment in Uttam investments in associates, joint
a value in use calculation but Galva Steels Ltd (“Uttam Galva”) (a ventures and other investments. Double G Coatings
concluded the carrying amount manufacturer of cold rolled steel The Company classified the
of the loans was recoverable. In and galvanized steel based in India measurement at fair value into ArcelorMittal holds a 50.00%
addition, the Company recorded in which the Company holds a Level 3. interest in Double G Coating, a hot
an impairment charge of 14 in 29.00% interest). In determining dip galvanizing and Galvalume
respect of the its shareholder loan the value in use of its investment The Company is not aware of any facility in the United States.
to Kalagadi, and 14 in respect of in Uttam Galva, the Company material contingent liabilities
the Company’s 28.24% interest in estimated its share in the present related to associates and joint Hibbing Taconite Mines and Peña
Comvex, a deep sea harbor facility value (using a pre-tax discount ventures for which it is severally Colorada are part of the Mining
on the Black Sea in Romania for the rate of 13.91%) of the projected liable for all or part of the liabilities segment; other joint operations
year ended December 31, 2016. future cash flows expected to be of the associates, nor are there are part of NAFTA.
For the remaining investments generated by operations. The value any contingent liabilities incurred
the Company concluded that no in use was based on cash flows for jointly with other investors. 2.5 Other investments
impairment was required. a period of five years, which were See note 8.3 for disclosure of
extrapolated for the remaining commitments related to associates The Company holds the following
years based on an estimated and joint ventures. other investments:
December 31,
2016 2015
Available-for-sale securities (at fair value) 894 646
Investments accounted for at cost 32 46
Total 926 692
86  Consolidated financial statements

The following are the Company’s remeasurement of the remaining positive reserve for available- and concluded that there was no
material available-for-sale interest of 21.20% and a loss of 11 for-sale investments from other impairment trigger, other than
investments at December 31, 2016 and a gain of 11 resulting from the comprehensive income to the disclosed above.
and 2015. reclassification of the accumulated statements of operations of 12.
foreign exchange translation Unconsolidated structured entities
Ereĝli Demir ve Çelik Fabrikalari losses and unrealized gains on As of December 31, 2015, the fair
T.A.S. (“Erdemir”) derivative financial instruments value of ArcelorMittal’s stake in ArcelorMittal has operating lease
from other comprehensive income Hunan Valin amounted to 153. arrangements for six vessels
As of December 31, 2016 to the statements of operations, Unrealized gains recognized in (Panamax Bulk Carriers) involving
and 2015, the fair value of respectively. other comprehensive income structured entities whose main
ArcelorMittal’s remaining stake amounted to 62 for the year ended purpose is to hold legal title of
in Erdemir amounted to 618 and As of December 31, 2016, the December 31, 2015. the six vessels and to lease them
441, respectively. Unrealized gains fair value of ArcelorMittal’s stake to the Company. The operating
(losses) recognized in reserves in Stalprodukt S.A. amounted to On August 2, 2016, the Company lease arrangements for five vessels
amounted to 183 and nil for 148. Unrealized gains recognized signed an agreement for the sale were entered in 2013 and for a
the year ended December 31, in other comprehensive income of its 10.08% interest in Hunan sixth vessel in 2014. These entities
2016 and 2015, respectively. The amounted to 66 for the year ended Valin to a private equity fund. are wholly-owned and controlled
Company reviewed the investment December 31, 2016. On September 14, 2016, the by a financial institution. They
in Erdemir for impairment Company transferred the Hunan are funded through equity
during the first quarter of 2014 Hunan Valin Valin shares and simultaneously instruments by the financial
and concluded that there was a received the full proceeds of institution.
prolonged decline in fair value As a result of the exercise of the 165 (RMB1,103 million) from the
that remained continuously third put option on February buyer and recorded a gain of 74 as The aforesaid operating leases
below cost for more than two 8, 2014 following a share swap income (loss) from investments in have been agreed for a 12
years. Accordingly, it recorded arrangement finalized on June associates, joint ventures and other year period, during which the
an impairment charge of 56 in 6, 2012 between ArcelorMittal investments which corresponded Company is obliged to pay to the
income (loss) from investments and Valin Group which enabled to the reclassification of structured entities minimum fees
in associates, joint ventures and ArcelorMittal to exercise over accumulated unrealized gains equivalent to approximately 4 per
other investments. During the the subsequent two years four from other comprehensive income year and per vessel. In addition,
fourth quarter of 2015, the fair put options granted by the Valin to the statements of operations. ArcelorMittal holds call options
value of Erdemir decreased further Group with respect to Hunan Valin to buy each of the six vessels
and the Company accordingly shares, the Company’s interest Gerdau from the structured entities at
recorded an additional impairment in Hunan Valin decreased to pre-determined dates and prices
charge of 101 in income (loss) from 15.05%. Accordingly, the Company On July 14, 2015, ArcelorMittal as presented in the table below.
investments in associates, joint discontinued the accounting for entered into a share swap The structured entities hold put
ventures and other investments its investment under the equity agreement with Gerdau whereby options enabling them to sell
for the year ended December 31, method and reclassified its interest ArcelorMittal exchanged unlisted each of the vessels at the end of
2015. as available-for-sale within other shares of Gerdau against listed the lease terms at 6 each to the
investments in the statements of shares and a cash consideration Company.
Stalprodukt S.A. financial position. The resulting of 28. The share swap resulted
loss on disposal was recorded in in a gain of 55 recorded as
Following the sale of 729,643 income (loss) from investments income (loss) from investments
shares including the subsequent in associates, joint ventures and in associates, joint ventures and
capital reduction of Stalprodukt other investments and amounted other investments. The unlisted
S.A. during the first six months of to 76. This amount consisted of a shares were accounted for at
2016, for a total cash consideration gain of 13 on disposal of the 5% cost, whereas the exchanged
of 46, ArcelorMittal’s ownership stake and the reclassification of listed shares are accounted for
interest and voting rights in the accumulated positive foreign at fair value. As of December 31,
Stalprodukt S.A. decreased from exchange translation difference 2016 and 2015, the fair value of
28.47% to 21.20% and from from other comprehensive income ArcelorMittal’s stake in Gerdau
28.26% to 11.61%, respectively. As to the statements of operations amounted to 99 and 36. Unrealized
a result of the loss of significant of 61, offset by a loss of 150 with gains and losses recognized in
influence, the Company respect to the remeasurement at other comprehensive income
discontinued the accounting for fair value of the remaining interest amounted to 38 and 28 for the
its investment under the equity of 15.05%. year ended December 31, 2016
method and reclassified its interest and 2015, respectively.
as available-for-sale within other On August 6, 2014, the Company
investments in the statements exercised its fourth and last put At December 31, 2016, the
of financial position (see note option, which subsequently led to Company reviewed the
2.4). The Company recorded an the decrease in its stake in Hunan investments in Erdemir,
aggregate loss on disposal of 26 Valin from 15.05% to 10.08%. The Gerdau and Stalprodukt S.A.
in income (loss) from investments Company recognized a net gain of for impairment and concluded
in associates, joint ventures and 62 including a gain of 64 in relation that there was no impairment
other investments including a loss to the option, which was a Level trigger. At December 31, 2015,
of 13 with respect to the above 2 financial instrument, a loss on the Company reviewed the
mentioned transaction, a loss of disposal of 14 and a proportional investments in Erdemir, Gerdau
13 with respect to the fair value reclassification of the accumulated and Hunan Valin for impairment
Consolidated financial statements  87

Call options’ strike prices


at the 60th at the 72nd at the 84th at the 96th at the 108th at the 120th at the 132nd at the 144th
Exercise dates month month month month month month month month
Amounts per vessel*
First four vessels 28 26 25 23 21 19 17 14
Fifth vessel 29 27 26 24 22 20 17 14
Sixth vessel 31 30 28 27 26 24 20 14
* If actual fair values of each vessel are higher than strike prices at each of the exercise dates, ArcelorMittal is then obliged to share (50%/50%) the gain with the
structured entities.

In addition, pursuant to these arrangements, the Company had a receivable (classified as “Other assets”) of 30 and 33 at December 31, 2016
and 2015, respectively, which does not bear interest, is forgiven upon default and will be repaid by the structured entities quarterly in arrears
throughout the lease term. The outstanding balance will be used to offset payment of any interim call options, if exercised.

2.6 Income (loss) from investments in associates, joint ventures and other investments

Income (loss) from investments in associates, joint ventures and other investments for the years ended December 31, 2016, 2015 and 2014
consisted of the following:
Year ended December 31,
2016 2015 2014
Share in net earnings of equity-accounted companies 207 (59) 267
Impairment charges1 (28) (565) (677)
Gain (loss) on disposal2 377 46 179
Dividend income 59 76 59
Total 615 (502) (172)
1
Includes impairment charges of 14 and 14 relating to Kalagadi and Comvex for the year ended December 31, 2016, respectively (see note 2.4.4).
Mainly includes impairment charges in respect of the Company’s investments in Kalagadi, Uttam Galva and Northern Cape Iron Ore Mining Project
(see note 2.4.4), and 101 in respect of the Company’s investment in Erdemir (see note 2.5) for the year ended December 31, 2015.
Includes impairment charges of 56 relating to Erdemir (see note 2.5) and 621 relating to the Company’s 46.99% stake in the associate China Oriental
(see note 2.4.4) for the year ended December 31, 2014.
2
Mainly includes a gain of 329 relating to the disposal of Gestamp (see note 2.4), a gain of 74 relating to the disposal of Hunan Valin (see note 2.5) and a
loss of 26 relating to the disposal of Stalprodukt S.A. shares (see note 2.5) for the year ended December 31, 2016.
Mainly includes a net gain of 55 relating to the Gerdau share swap (see note 2.5) for the year ended December 31, 2015.
Includes a 193 gain on disposal of the Company’s 50.00% interest in Gallatin and a net loss of 14 related to the disposal of the Hunan Valin shares (see
note 2.5) for the year ended December 31, 2014.

Note 3: Segment reporting

3.1 Reportable segments

The Company is organized in five operating and reportable segments, which are components engaged in business activities from which they may
earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Company), for which
discrete financial information is available and whose operating results are evaluated regularly by the chief operating decision maker “CODM” to
make decisions about resources to be allocated to the segment and assess its performance. As of January 1, 2016, the Group Management Board
“GMB” (ArcelorMittal’s previous CODM) was replaced by the CEO Office - comprising the CEO, Mr. Lakshmi N. Mittal and the CFO, Mr. Aditya Mittal.

These operating segments include the attributable goodwill, intangible assets, property, plant and equipment, and equity method investments.
They do not include cash and short-term deposits, short-term investments, tax assets and other current financial assets. Attributable liabilities are
also those resulting from the normal activities of the segment, excluding tax liabilities and indebtedness but including post retirement obligations
where directly attributable to the segment. The treasury function is managed centrally for the Company and is not directly attributable to
individual operating segments or geographical areas.

ArcelorMittal’s segments are structured as follows:

• NAFTA represents the flat, long and tubular facilities of the Company located in North America (Canada, United States and Mexico). NAFTA
produces flat products such as slabs, hot-rolled coil, cold-rolled coil, coated steel and plate. These products are sold primarily to customers in the
following industries: distribution and processing, automotive, pipe and tubes, construction, packaging, and appliances. NAFTA also produces
long products such as wire rod, sections, rebar, billets, blooms and wire drawing, and tubular products;

• Brazil includes the flat operations of Brazil and the long and tubular operations of Brazil and neighboring countries including Argentina, Costa
Rica and Venezuela. Flat products include slabs, hot-rolled coil, cold-rolled coil and coated steel. Long products consist of wire rod, sections, bar
and rebar, billets, blooms and wire drawing;

• Europe is the largest flat steel producer in Europe, with operations that range from Spain in the west to Romania in the east, and covering the
flat carbon steel product portfolio in all major countries and markets. Europe produces hot-rolled coil, cold-rolled coil, coated products, tinplate,
plate and slab. These products are sold primarily to customers in the automotive, general industry and packaging industries. Europe produces
88  Consolidated financial statements

also long products consisting of sections, wire rod, rebar, billets, blooms and wire drawing, and tubular products. In addition, it includes
Distribution Solutions, primarily an in-house trading and distribution arm of ArcelorMittal. Distribution Solutions also provides value-added and
customized steel solutions through further steel processing to meet specific customer requirements;

• ACIS produces a combination of flat, long products and tubular products. Its facilities are located in Asia, Africa and Commonwealth of
Independent States; and

• Mining comprises all mines owned by ArcelorMittal in the Americas (Canada, United States, Mexico and Brazil), Asia (Kazakhstan), Europe
(Ukraine and Bosnia & Herzegovina) and Africa (Liberia). It supplies the Company and third party customers with iron ore and coal.

The following table summarizes certain financial data relating to ArcelorMittal’s operations in its different reportable segments.

NAFTA Brazil Europe ACIS Mining Others* Elimination Total


Year ended December 31, 2014
Sales to external customers 21,030 9,558 39,224 8,032 1,320 118 - 79,282
Intersegment sales** 132 479 328 236 3,650 419 (5,244) -
Operating income (loss) 386 1,388 737 95 565 (264) 127 3,034
Depreciation and amortization 706 457 1,510 525 703 38 - 3,939
Impairment 114 - 57 - 63 30 - 264
Capital expenditures 505 497 1,052 573 993 45 - 3,665
Year ended December 31, 2015
Sales to external customers 17,225 7,954 31,586 5,932 824 57 - 63,578
Intersegment sales** 68 549 307 196 2,563 311 (3,994) -
Operating income (loss) (705) 628 171 (624) (3,522) (140) 31 (4,161)
Depreciation and amortization 616 336 1,192 408 614 26 - 3,192
Impairment 526 176 398 294 3,370 - - 4,764
Capital expenditures 392 422 1,045 365 476 7 - 2,707
Year ended December 31, 2016
Sales to external customers 15,769 5,526 28,999 5,675 781 41 - 56,791
Intersegment sales** 37 697 273 210 2,333 260 (3,810) -
Operating income (loss) 2,002 614 1,270 211 366 (208) (94) 4,161
Depreciation and amortization 549 258 1,184 311 396 23 - 2,721
Impairment - - 49 156 - - - 205
Capital expenditures 445 237 951 397 392 22 - 2,444

* Others include all other operational and non-operational items which are not segmented, such as corporate and shared services, financial activities,
and shipping and logistics.
** Transactions between segments are reported on the same basis of accounting as transactions with third parties except for certain mining products
shipped internally and reported on a cost plus basis.

The reconciliation from operating income (loss) to net income is as follows:

Year ended December 31,


2016 2015 2014
Operating income (loss) 4,161 (4,161) 3,034
Loss from investments in associates and joint ventures 615 (502) (172)
Financing costs - net (2,056) (2,858) (3,382)
Income (loss) before taxes 2,720 (7,521) (520)
Income tax expense 986 902 454
Net loss (including non-controlling interests) 1,734 (8,423) (974)

The Company does not regularly provide assets for each reportable segment to the CODM.

3.2 Geographical information

Geographical information, by country or region, is separately disclosed and represents ArcelorMittal’s most significant regional markets.
Attributed assets are operational assets employed in each region and include items such as pension balances that are specific to a country. Unless
otherwise stated in the table heading as a segment disclosure, these disclosures are specific to the country or region stated. They do not include
goodwill, deferred tax assets, other investments or receivables and other non-current financial assets. Attributed liabilities are those arising within
each region, excluding indebtedness.
Consolidated financial statements  89

Sales (by destination)

Year ended December 31,


2016 2015 2014
Americas
United States 12,284 13,619 17,312
Brazil 3,506 3,809 6,299
Canada 2,818 2,913 3,462
Mexico 1,806 1,913 2,216
Argentina 858 1,370 1,161
Venezuela 105 1,334 612
Others 830 951 1,235
Total Americas 22,207 25,909 32,297
Europe
Germany 4,768 5,473 6,649
France 3,655 3,743 4,499
Spain 3,015 3,406 3,907
Poland 2,997 3,023 3,815
Italy 2,067 2,278 2,701
Turkey 1,789 1,962 2,576
United Kingdom 1,159 1,246 1,480
Czech Republic 1,107 1,476 1,579
Netherlands 1,030 867 917
Belgium 929 1,108 1,268
Russia 688 638 1,216
Romania 526 583 728
Others 3,886 4,024 4,948
Total Europe 27,616 29,827 36,283
Asia & Africa
South Africa 2,026 2,111 2,629
Egypt 499 404 564
Morocco 498 533 696
Rest of Africa 658 945 1,374
China 549 557 941
Kazakhstan 350 456 668
South Korea 184 242 593
India 85 197 225
Rest of Asia 2,119 2,397 3,012
Total Asia & Africa 6,968 7,842 10,702
Total 56,791 63,578 79,282

Revenues from external customers attributed to the country of domicile (Luxembourg) were 88, 85, 53 for the years ended December 31, 2016,
2015 and 2014, respectively.
90  Consolidated financial statements

Non-current assets* per significant country:

Year ended December 31,


2016 2015
Americas
Canada 5,208 5,274
Brazil 4,471 3,770
United States 4,209 4,289
Mexico 906 952
Argentina 152 179
Venezuela 43 376
Others 21 24
Total Americas 15,010 14,864
Europe
France 4,194 4,468
Belgium 2,458 2,493
Germany 2,395 2,546
Poland 2,112 2,140
Ukraine 2,110 2,439
Spain 1,797 1,945
Luxembourg 1,142 1,266
Czech Republic 585 632
Romania 573 610
Bosnia and Herzegovina 182 202
Italy 158 174
Others 236 251
Total Europe 17,942 19,166
Asia & Africa
Kazakhstan 1,223 1,168
South Africa 788 767
Morocco 104 118
Liberia 49 25
Others 116 121
Total Africa & Asia 2,280 2,199
Unallocated assets 17,663 18,291
Total 52,895 54,520

*Non-current assets do not include goodwill (as it is not allocated to the geographic regions), deferred tax assets, investment in associate and joint
ventures, other investments and other non-current financial assets. Such assets are presented under the caption “Unallocated assets”.
3.3 Sales by type of products
The table below presents sales to external customer by product type. In addition to steel produced by the Company, amounts include material
purchased for additional transformation and sold through distribution services. Others include mainly non-steel sales and services.

Year ended December 31,


2016 2015 2014
Flat products 34,215 36,226 44,863
Long products 12,104 13,996 18,671
Tubular products 1,500 2,809 2,518
Mining products 781 824 1,319
Others 8,191 9,723 11,911
Total 56,791 63,578 79,282
Consolidated financial statements  91

Note 4: Operating data has transferred to the buyer the Revenue from the sale of iron final pricing and final product
significant risks and rewards of ore is recognized when the risk specifications.
4.1 Revenue ownership of the goods, no longer and rewards of ownership are
retains control over the goods transferred to the buyer. The ArcelorMittal records amounts
Revenue is measured at the fair sold, the amount of revenue can selling price is contractually billed to a customer in a sale
value of the consideration received be measured reliably, it is probable determined on a provisional basis, transaction for shipping and
or receivable. Revenue is reduced that the economic benefits based on a reliable estimate of the handling costs as sales and the
for estimated customer returns associated with the transaction selling price and adjustments in related shipping and handling
and other similar allowances. will flow to the Company, and the the price may subsequently occur costs incurred as cost of sales.
costs incurred or to be incurred in depending on movements in the
Revenue from the sale of goods respect of the transaction can be reference price or contractual
is recognized when the Company measured reliably. iron ore prices to the date of the
4.2 Cost of sales

Cost of sales recognized in the years ended December 31, 2016, 2015 and 2014 is as follows:
Year ended December 31,
2016 2015 2014
Materials 34,276 41,788 50,760
Labor costs* 7,572 9,125 10,722
Logistic expenses 3,760 4,252 5,020
Depreciation and amortization 2,721 3,192 3,939
Impairment 205 4,764 264
Other 1,894 2,075 2,583
Total 50,428 65,196 73,288
* Includes a 832 gain relating to changes in post-employment benefit plans in the United States (see note 7.2)

4.3 Trade accounts receivable and allowance for doubtful accounts, ArcelorMittal’s policy is to record of trade receivables between 60
other ArcelorMittal considers multiple an allowance and a charge in days and 180 days overdue are
factors including historical bad selling, general and administrative provided for based on past default
Trade accounts receivable are debt experience, the current expense when a specific account experience.
initially recorded at their fair value economic environment and is deemed uncollectible and
and do not carry any interest. the aging of the receivables. to provide for each receivable Trade accounts receivable and
ArcelorMittal maintains an Recoveries of trade receivables overdue by more than 180 days allowance for doubtful accounts as
allowance for doubtful accounts at previously reserved in the because historical experience is of December 31, are as follows:
an amount that it considers to be a allowance for doubtful accounts such that such receivables are
reliable estimate of losses resulting are recognized as gains in selling, generally not recoverable, unless it
from the inability of its customers general and administrative can be clearly demonstrated that
to make required payments. In expenses. the receivable is still collectible.
judging the adequacy of the Estimated unrecoverable amounts
December 31,
2016 2015
Gross amount 3,158 2,849
Allowance for doubtful accounts (184) (170)
Total 2,974 2,679

The carrying amount of the customer’s credit quality and to are reviewed periodically. There are Exposure to credit risk by
trade accounts receivable and define credit limits by customer. no customers who represent more reportable segment
other approximates fair value. For all significant customers the than 5% of the total balance of
Before granting credit to any new credit terms must be approved trade accounts receivable. The maximum exposure to credit
customer, ArcelorMittal uses an by the credit committees of each risk for trade accounts receivable
internally developed credit scoring individual segment. Limits and by reportable segment at
system to assess the potential scoring attributed to customers December 31 is as follows:

December 31,
2016 2015
NAFTA 308 277
Brazil 693 610
Europe 1,464 1,447
ACIS 395 274
Mining 114 69
Other activities - 2
Total 2,974 2,679
92  Consolidated financial statements

Aging of trade accounts receivable

The aging of trade accounts receivable as of December 31 is as follows:

December 31,
2016 2015
Gross Allowance Total Gross Allowance Total
Not past due 2,476 (6) 2,470 1,966 (6) 1,960
Overdue 1-30 days 292 (1) 291 335 (2) 333
Overdue 31-60 days 63 (1) 62 106 (1) 105
Overdue 61-90 days 32 (1) 31 47 (1) 46
Overdue 91-180 days 50 (6) 44 114 (2) 112
More than 180 days 245 (169) 76 281 (158) 123
Total 3,158 (184) 2,974 2,849 (170) 2,679

The movement in the allowance for doubtful accounts in respect of trade accounts receivable during the periods presented is as follows:
Balance as of December 31, 2013 Additions Deductions/Releases Foreign exchange and others Balance as of December 31, 2014
218 43 (44) (42) 175

Balance as of December 31, 2014 Additions Deductions/ Releases Foreign exchange and others Balance as of December 31, 2015
175 41 (19) (27) 170

Balance as of December 31, 2015 Additions Deductions/ Releases Foreign exchange and others Balance as of December 31, 2016
170 34 (25) 5 184

The Company has established accounts receivable) recognized based on normal capacity with During the current year,
a number of programs for in the consolidated statements the remaining costs incurred the Company modified the
sales without recourse of trade of operations for the years ended recorded as a component of consolidated statements of cash
accounts receivable to various December 31, 2016, 2015 and cost of sales in the consolidated flows to present the change in
financial institutions (referred 2014 were 106, 116 and 150, statements of operations. inventories at their net realizable
to as True Sale of Receivables respectively. value. Accordingly, amounts
(“TSR”)). Through the TSR Net realizable value represents for the year ended December
programs, certain operating 4.4 Inventories the estimated selling price at 31, 2016, 2015 and 2014 were
subsidiaries of ArcelorMittal which the inventories can be reclassified for (905), (637)
surrender the control, risks Inventories are carried at the realized in the normal course and (276) from “write-downs
and benefits associated with lower of cost and net realizable of business after allowing (reversal) of inventories to net
the accounts receivable sold; value. Cost is determined using for the cost of conversion realizable value, provisions
therefore, the amount of the average cost method. Costs from their existing state to a and other non-cash operating
receivables sold is recorded as of production in process and finished condition and for the expenses net” to “inventories”,
a sale of financial assets and finished goods include the cost of marketing, selling, and respectively.
the balances are removed from purchase costs of raw materials distribution. Net realizable value
the consolidated statements of and conversion costs such as is estimated based on the most Inventories, net of allowance for
financial position at the moment direct labor and an allocation of reliable evidence available at the slow-moving inventory, excess of
of sale. The total amount of fixed and variable production time the estimates were made of cost over net realizable value and
receivables sold under TSR overheads. Raw materials and the amount that the inventory is obsolescence of 1,097 and 1,707
programs and derecognized in spare parts are valued at cost, expected to realize, taking into as of December 31, 2016 and
accordance with IAS 39 for the inclusive of freight, shipping, account the purpose for which 2015, respectively, are comprised
years ended 2016, 2015 and 2014 handling as well as any other the inventory is held. of the following:
was $33.5 billion, $33.1 billion costs incurred in bringing the
and $37.8 billion, respectively inventories to their present Previous write-downs
(with amounts of receivables sold location and condition. Interest are reversed in case the
converted to U.S. dollars at the charges, if any, on purchases circumstances that previously
monthly average exchange rate). have been recorded as financing caused inventories to be written
Expenses incurred under the TSR costs. Costs incurred when down below cost no longer exist.
programs (reflecting the discount production levels are abnormally
granted to the acquirers of the low are capitalized as inventories

December 31,
2016 2015
Finished products 4,861 4,777
Production in process 3,264 2,971
Raw materials 5,141 4,032
Manufacturing supplies, spare parts and other 1,468 1,644
Total 14,734 13,424
Note 4.2 discloses the cost of inventories recognized as an expense during the year.
Consolidated financial statements  93

The movement in the inventory reserve is as follows:

Balance as of December 31, 2013 Additions* Deductions/Releases** Foreign exchange and others Balance as of December 31, 2014
1,495 459 (491) (170) 1,293

Balance as of December 31, 2014 Additions* Deductions/ Releases** Foreign exchange and others Balance as of December 31, 2015
1,293 1,256 (637) (205) 1,707

Balance as of December 31, 2015 Additions* Deductions/ Releases** Foreign exchange and others Balance as of December 31, 2016
1,707 473 (964) (119) 1,097
* Additions refer to write-downs of inventories including those utilized or written back during the same financial year.
** Deductions/releases correspond to write-backs and utilizations related to the current and prior periods.
Prior period figures have been adjusted retrospectively.

4.5 Prepaid expenses and other current assets


Prepaid expenses and other current assets consisted of the following:

December 31, 
2016 2015
VAT receivables 672 850
Income tax receivable 111 115
Derivative financial instruments 243 128
Prepaid expenses and non-trade receivables 369 406
Other1 270 360
Total 1,665 1,859
1
Other includes mainly advances to employees, accrued interest, amounts receivable from public authorities and other miscellaneous receivables.

4.6 Other assets


Other assets consisted of the following:
December 31, 
2016 2015
Financial amounts receivable 297 166
Long-term VAT receivables 196 197
Cash guarantees and deposits 187 181
Accrued interest 91 74
Assets in pension funds1 21 18
Income tax receivable 55 9
Derivative financial instruments 189 90
Other2 317 185
Total 1,353 920
1
The pension funds are mainly related to units in Canada.
2
Other mainly includes receivables from public authorities and receivables from the sale of fixed assets.

4.7 Trade accounts payable and agreements. The carrying value which resulted in 1,439 being ended December 31, 2016, 2015
other of trade accounts payable reclassified from “accrued and 2014, respectively.
approximates fair value. expenses and other liabilities”
Trade accounts payable are to “trade accounts payable and 4.8 Accrued expenses and other
obligations to pay for goods During the current year other” at December 31, 2015. liabilities
that have been acquired in the the Company modified the In addition, amounts in the
ordinary course of business from presentation of collection under consolidated statements of cash Accrued expenses and other
suppliers. Trade accounts payable TSR programs (1,385 at December flows were similarly reclassified, liabilities are comprised of the
have maturities from 15 to 180 31, 2016) to more appropriately which resulted in 80, (279) and following as of December 31:
days depending on the type of reflect the nature of these 258 being reclassified from “other
material, the geographic area in liabilities. The comparative amount working capital and provisions
which the purchase transaction in the consolidated balance sheets movements” to “trade accounts
occurs and the various contractual was reclassified for consistency, payable and other” for the years
December 31, 
2016 2015
Accrued payroll and employee related expenses 1,560 1,568
Accrued interest and other payables 781 1,026
Payable from acquisition of intangible, tangible & financial assets 833 852
Other amounts due to public authorities 504 559
Derivative financial instruments 226 133
Unearned revenue and accrued payables 39 56
Total 3,943 4,194
94  Consolidated financial statements

Note 5: Goodwill, intangible and thangible assets

5.1 Goodwill and intangible assets


The carrying amounts of goodwill and intangible assets are summarized as follows:
December 31, 
2016 2015
Goodwill on acquisitions 5,248 5,143
Concessions, patents and licenses 252 266
Customer relationships and trade marks 120 170
Other 31 13
Total 5,651 5,592

Goodwill

Goodwill arising on an acquisition is recognized as previously described within the business combinations section in note 2.2.3. Goodwill is
allocated to those groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose and in
all cases is at the operating segment level, which represents the lowest level at which goodwill is monitored for internal management purposes.

Goodwill acquired in business combinations for each of the Company’s operating segments is as follows:

Impairment and Foreign exchange


reduction of differences and other
December 31, 2014 goodwill movements Divestments December 31, 2015
NAFTA 2,336 - (127) - 2,209
Brazil 2,057 - (631) - 1,426
Europe 604 - (57) - 547
ACIS 1,457 - (496) - 961
Mining 868 (854) (14) - -
Total 7,322 (854) (1,325) - 5,143

Impairment and Foreign exchange


reduction of differences and other
December 31, 2015 goodwill movements Divestments1 December 31, 2016
NAFTA 2,209 - 6 (13) 2,202
Brazil 1,426 - 242 - 1,668
Europe 547 - (16) (2) 529
ACIS 961 - (112) - 849
Total 5,143 - 120 (15) 5,248
1
See note 2.3.1

Intangible assets

Intangible assets are recognized only when it is probable that the expected future economic benefits attributable to the assets will accrue to the
Company and the cost can be reliably measured. Intangible assets acquired separately by ArcelorMittal are initially recorded at cost and those
acquired in a business combination are initially recorded at fair value at the date of the business combination. These primarily include the cost of
technology and licenses purchased from third parties and operating authorizations granted by governments or other public bodies (concessions).
Intangible assets are amortized on a straight-line basis over their estimated economic useful lives, which typically do not exceed five years.
Amortization is included in the consolidated statements of operations as part of depreciation.

ArcelorMittal’s industrial sites which are regulated by the European Directive 2003/87/EC of October 13, 2003 on carbon dioxide (“CO2”) emission
rights, effective as of January 1, 2005, are located primarily in Belgium, Czech Republic, France, Germany, Luxembourg, Poland, Romania and
Spain. The emission rights allocated to the Company on a no-charge basis pursuant to the annual national allocation plan are recorded at nil
value and purchased emission rights are recorded at cost. Gains and losses from the sale of excess rights are recognized in cost of sales in the
consolidated statements of operations.
Consolidated financial statements  95

Other intangible assets are summarized as follows:

Concessions, Customer
patents and relationships
licenses and trade marks Other Total
Cost
At December 31, 2014 969 1,348 60 2,377
Acquisitions 11 - 3 14
Disposals (8) - (1) (9)
Foreign exchange differences (160) (206) (6) (372)
Transfers to assets held for sale (note 2.3) - (52) (29) (81)
Transfers and other movements 10 (13) 9 6
Fully amortized intangible assets ** (92) - - (92)
At December 31, 2015 730 1,077 36 1,843
Acquisitions 5 - 30 35
Disposals (2) - (5) (7)
Foreign exchange differences (1) 22 (1) 20
Transfers and other movements * 15 3 (4) 14
Fully amortized intangible assets ** (71) (2) - (73)
At December 31, 2016 676 1,100 56 1,832

Accumulated amortization and impairment losses


At December 31, 2014 481 1,070 44 1,595
Disposals (7) - - (7)
Amortization charge 37 65 7 109
Impairment charge 157 - - 157
Foreign exchange differences (107) (163) (6) (276)
Transfers to assets held for sale (note 2.3) - (52) (22) (74)
Transfers and other movements (5) (13) - (18)
Fully amortized intangible assets ** (92) - - (92)
At December 31, 2015 464 907 23 1,394
Amortization charge 28 60 5 93
Foreign exchange differences 3 15 (1) 17
Transfers and other movements - - (2) (2)
Fully amortized intangible assets ** (71) (2) - (73)
At December 31, 2016 424 980 25 1,429

Carrying amount
At December 31, 2015 266 170 13 449
At December 31, 2016 252 120 31 403

* Transfers and other movements correspond mainly to transfer from assets under construction into patents and licenses in 2016.
** Fully amortized assets correspond mainly to licenses in 2016 and to concessions in 2015.

Research and development costs not meeting the criteria for capitalization are expensed as incurred. These costs amounted to 239, 227 and 259
in the years ended December 31, 2016, 2015, and 2014, respectively and were recognized in selling, general and administrative expenses.

5.2 Property, plant and equipment and biological assets

Property, plant and equipment is recorded at cost less accumulated depreciation and impairment. Cost includes all related costs directly
attributable to the acquisition or construction of the asset. Except for land and assets used in mining activities, property, plant and equipment is
depreciated using the straight-line method over the useful lives of the related assets as presented in the table below.

Asset Category Useful Life Range


Land Not depreciated
Buildings 10 to 50 years
Property plant & equipment 15 to 50 years
Auxiliary facilities 15 to 45 years
Other facilities 5 to 20 years
96  Consolidated financial statements

During 2014, the Company deployment of these practices Mining assets comprise: estimates of reserves may change
performed a review of the useful across the Company’s principal from period to period. Changes in
lives of its assets and determined production units. Depreciation • Mineral rights acquired; reported reserves may affect the
its maintenance and operating charge for the year ended • Capitalized developmental Company’s financial results and
practices enabled a change in December 31, 2014 decreased stripping (as described below financial position in a number of
the useful lives of plant and by 702 as a result of changes in in “Stripping and overburden ways, including the following:
equipment. Maintenance practices estimated useful lives. removal costs”).
employed served to preserve and • Asset carrying amounts may
extend the operating life of certain Major improvements, which add Property, plant and equipment be affected due to changes in
of these assets, while operating to productive capacity or extend used in mining activities is estimated future cash flows.
practices in the current economic the life of an asset, are capitalized,
depreciated over its useful life • Depreciation, depletion and
environment also contributed to while repairs and maintenance or over the remaining life of the amortization charged in the
the extension of asset useful life are expensed as incurred. Where mine, if shorter, and if there is no consolidated statements of
beyond previous estimates. The a tangible fixed asset comprises alternative use. For the majority of operations may change where
Company thus revised the useful major components having assets used in mining activities, the such charges are determined by
lives due to its determination that different useful lives, these economic benefits from the asset the units of production basis, or
certain of its existing assets had components are accounted for as are consumed in a pattern which is where the useful economic lives
been used longer than previously separate items. linked to the production level and of assets change.
anticipated and therefore, the accordingly, assets used in mining • Overburden removal costs
estimated useful lives of certain Property, plant and equipment activities are primarily depreciated recognized in the consolidated
plant and equipment were under construction is recorded on a units-of-production basis. A statements of financial position
lengthened. as construction in progress until unit-of-production is based on the or charged to the consolidated
it is ready for its intended use; available estimate of proven and statements of operations may
The Company’s annual review thereafter it is transferred to the probable reserves. change due to changes in
of useful lives leverages on related class of property, plant and stripping ratios or the units of
the experience gained from equipment and depreciated over Capitalization of pre-production production basis of depreciation.
the above mentioned review, its estimated useful life. Interest expenditures ceases when the • Decommissioning, site
any significant change in the incurred during construction is mining property is capable of restoration and environmental
expected pattern of consumption capitalized if the borrowing cost commercial production as it is provisions may change where
embodied in the asset and is directly attributable to the intended by management. General changes in estimated reserves
the specialized knowledge of construction. Gains and losses on administration costs that are not affect expectations about the
ArcelorMittal’s network of chief retirement or disposal of assets are directly attributable to a specific timing or cost of these activities.
technical officers. The chief recognized in cost of sales. exploration area are charged to
technical officer network includes the consolidated statements of Stripping and overburden removal
engineers with facility-specific Property, plant and equipment operations. costs
expertise relating to plant and acquired by way of finance leases
equipment used in the principal is stated at an amount equal to Mining Reserves In open pit and underground
production units of the Company’s the lower of the fair value and the mining operations, it is often
operations. In performing this present value of the minimum Reserves are estimates of the necessary to remove overburden
review, the Company gathered lease payments at the inception amount of product that can and other waste materials to
and evaluated data, including of the lease. Each lease payment be economically and legally access the deposit from which
commissioning dates, designed is allocated between the finance extracted from the Company’s minerals can be extracted. This
capacities, maintenance records charges and a reduction of the properties. In order to estimate process is referred to as stripping.
and programs, and asset lease liability. The interest element reserves, estimates are required Stripping costs can be incurred
performance history, among of the finance cost is charged to for a range of geological, technical before the mining production
other attributes. In accordance the consolidated statements of and economic factors, including commences (“developmental
with IAS 16, Property, Plant operations over the lease period quantities, grades, production stripping”) or during the
and Equipment, the Company so as to achieve a constant rate of techniques, recovery rates, production stage (“production
considered this information at the interest on the remaining balance production costs, transport costs, stripping”).
level of components significant of the liability. commodity demand, commodity
in relation to the total cost of the prices and exchange rates. A mine can operate several open
item of plant and equipment. The residual values and useful lives pits that are regarded as separate
Other factors the Company of property, plant and equipment Estimating the quantity and/or operations for the purpose of mine
considered in its determination of are reviewed at each reporting grade of reserves requires the size, planning and production. In this
useful lives included the expected date and adjusted if expectations shape and depth of ore bodies case, stripping costs are accounted
use of the assets, technical or differ from previous estimates. to be determined by analyzing for separately, by reference to the
commercial obsolescence, and Depreciation methods applied to geological data such as drilling ore extracted from each separate
operational factors that led to property, plant and equipment samples. This process may require pit. If, however, the pits are highly
improvements in monitoring and are reviewed at each reporting complex and difficult geological integrated for the purpose of
process control that contribute date and changed if there has judgments to interpret the data. mine planning and production,
to longer asset lives. In addition, been a significant change in the stripping costs are aggregated.
the Company considered the expected pattern of consumption Because the economic
accumulated technical experience of the future economic benefits assumptions used to estimate The determination of whether
and knowledge sharing programs embodied in the asset. reserves change from period to multiple pit mines are considered
that allowed for the exchange period, and because additional separate or integrated operations
of best practices within the chief geological data is generated depends on each mine’s specific
technical officer network and the during the course of operations, circumstances. The following
Consolidated financial statements  97

factors would point towards the (“stripping activity assets”) to the when management has a high component of property, plant
stripping costs for the individual extent it is probable that future degree of confidence in the and equipment. All subsequent
pits being accounted for economic benefit in terms of project’s economic viability and it development expenditures
separately: improved access to ore will flow to is probable that future economic are capitalized and classified
the Company, the components of benefits will flow to the Company. as construction in progress. On
• If mining of the second and the ore body for which access has completion of development, all
subsequent pits is conducted been improved can be identified Capitalized exploration and assets included in construction
consecutively with that of the and the costs relating to the evaluation expenditures in progress are individually
first pit, rather than concurrently. stripping activity associated with are generally recorded as a reclassified to the appropriate
• If separate investment decisions that component can be measured component of property, plant and category of property, plant and
are made to develop each pit, reliably. equipment at cost less impairment equipment and depreciated
rather than a single investment charges, unless their nature accordingly.
decision being made at the All stripping costs assets (either requires them to be recorded as
outset. stripping activity assets or an intangible asset. As the asset Biological assets
• If the pits are operated as capitalized developmental is not available for use, it is not
separate units in terms of mine stripping costs) are presented depreciated and all capitalized Biological assets are part of the
planning and the sequencing within a specific “mining assets” exploration and evaluation Brazil operating segment and
of overburden and ore mining, class of property, plant and expenditure is monitored for consist of eucalyptus forests
rather than as an integrated unit. equipment and then depreciated indications of impairment. To the located in the Brazilian state of
• If expenditures for additional on a units-of-production basis. extent that capitalized expenditure Minas Gerais exclusively from
infrastructure to support the is not expected to be recovered, renewable plantations and
second and subsequent pits are Exploration and evaluation it is recognized as an expense in intended for the production of
relatively large. expenditure the consolidated statements of charcoal to be utilized as fuel
• If the pits extract ore from operations. and a source of carbon in the
separate and distinct ore bodies, Exploration and evaluation direct reduction process of pig
rather than from a single ore activities involve the search Cash flows associated with iron production in some of the
body. for iron ore and coal resources, exploration and evaluation Company’s blast furnaces in Brazil.
the determination of technical expenditure are classified as
The relative importance of each feasibility and the assessment operating activities when they Biological assets are measured at
factor is considered by local of commercial viability of an are related to expenses or as an their fair value, net of estimated
management to determine identified resource. Exploration investing activity when they are costs to sell at the time of harvest.
whether the stripping costs should and evaluation activities include: related to a capitalized asset in the The fair value is determined based
be attributed to the individual pit consolidated statements of cash on the discounted cash flow
or to the combined output from • researching and analyzing flows. method, taking into consideration
the several pits. historical exploration data; the cubic volume of wood,
• conducting topographical, Development expenditure segregated by plantation year,
Developmental stripping costs geological, geochemical and and the equivalent sales value
contribute to the future economic geophysical studies; Development is the establishment of standing trees. The average
benefits of mining operations • carrying out exploratory drilling, of access to the mineral reserve sales price was estimated based
when the production begins and trenching and sampling and other preparations for on domestic market prices. In
so are capitalized as tangible activities; commercial production. determining the fair value of
assets (construction in progress), • drilling, trenching and sampling Development activities often biological assets, a discounted
whereas production stripping is activities to determine the continue during production and cash flow model was used, with a
a part of on-going activities and quantity and grade of the include: harvest cycle of six to seven years.
commences when the production deposit;
stage of mining operations begins • examining and testing extraction • sinking shafts and underground
and continues throughout the life methods and metallurgical or drifts (often called mine
of a mine. treatment processes; and, development);
• detailed economic feasibility • making permanent excavations;
Capitalization of developmental evaluations to determine • developing passageways and
stripping costs ends when the whether development of the rooms or galleries;
commercial production of the reserves is commercially justified • building roads and tunnels; and
minerals commences. and to plan methods for mine • advance removal of overburden
development. and waste rock.
Production stripping costs are
incurred to extract the ore in the Exploration and evaluation Development (or construction)
form of inventories and / or to expenditure is charged to the also includes the installation
improve access to an additional consolidated statements of of infrastructure (e.g., roads,
component of an ore body operations as incurred except utilities and housing), machinery,
or deeper levels of material. in the following circumstances, equipment and facilities.
Production stripping costs are in which case the expenditure
accounted for as inventories is capitalized: (i) the exploration When reserves are determined
to the extent the benefit from and evaluation activity is within and development is approved,
production stripping activity is an area of interest which was expenditures capitalized as
realized in the form of inventories. previously acquired in a business exploration and evaluation are
Production stripping costs are combination and measured at reclassified as construction in
recognized as a non-current asset fair value on acquisition; or (ii) progress and are reported as a
98  Consolidated financial statements

Property, plant and equipment and biological assets are summarized as follows:

Land, buildings and Machinery Construction Mining


Improvements and equipment 2 in progress Assets Total
Cost
At December 31, 2014 13,830 54,008 4,546 4,087 76,471
Additions 24 305 2,446 18 2,793
Foreign exchange differences (2,196) (11,205) (810) (594) (14,805)
Disposals (104) (980) (6) (4) (1,094)
Transfers to assets held for sale (note 2.3) (66) (518) (11) - (595)
Other movements 1 244 2,324 (2,655) 152 65
At December 31, 2015 11,732 43,934 3,510 3,659 62,835
Additions 16 299 2,074 37 2,426
Foreign exchange differences (606) (1,122) (57) (13) (1,798)
Disposals (129) (1,386) (24) (4) (1,543)
Divestments (note 2.3) (64) (186) (4) - (254)
Transfers to assets held for sale (note 2.3) (3) (97) (18) - (118)
Other movements 1 162 1,875 (2,224) 72 (115)
At December 31, 2016 11,108 43,317 3,257 3,751 61,433

Accumulated depreciation and impairment


At December 31, 2014 3,957 24,243 142 1,536 29,878
Depreciation charge for the year 367 2,481 - 235 3,083
Impairment (note 5.3) 179 1,530 940 1,104 3,753
Disposals (83) (899) (4) (4) (990)
Foreign exchange differences (1,039) (6,679) (19) (379) (8,116)
Transfers to assets held for sale (note 2.3) (40) (499) (1) - (540)
Other movements 1 3 43 2 (61) (13)
At December 31, 2015 3,344 20,220 1,060 2,431 27,055
Depreciation charge for the year 339 2,178 - 111 2,628
Impairment (note 5.3) (14) 219 - - 205
Disposals (103) (1,336) (24) (9) (1,472)
Foreign exchange differences (414) (1,083) (15) (1) (1,513)
Divestments (note 2.3) (14) (168) - - (182)
Transfers to assets held for sale (note 2.3) - (63) - - (63)
Other movements 1 - 13 (28) (41) (56)
At December 31, 2016 3,138 19,980 993 2,491 26,602

Carrying amount
At December 31, 2015 8,388 23,714 2,450 1,228 35,780
At December 31, 2016 7,970 23,337 2,264 1,260 34,831
1
Other movements predominantly represent transfers from construction in progress to other categories and retirement of fully amortized assets.
2
Machinery, equipment and other includes biological assets of 49, 54 and 95 as of December 31, 2016 , 2015 and 2014 respectively, and bearer plants of
36, 26 and 33 as of December 31, 2016 , 2015 and 2014 respectively.

The carrying amount of Lease arrangements classified as finance leases. On in the consolidated statements
temporarily idle property, plant initial recognition, the leased of financial position. Payments
and equipment at December 31, The Company may enter into asset and its related liability are made under operating leases
2016 and 2015 was, respectively, arrangements that do not take measured at an amount equal to are recognized in cost of sales in
359 and 368 including 298 and 253 the legal form of a lease, but may the lower of its fair value and the the consolidated statements of
in Brazil, 43 and 80 in NAFTA and contain a lease. This will be the present value of the minimum operations on a straight-line basis
18 and 35 in the Europe segment, case if the following two criteria lease payments. Subsequent to over the lease terms.
respectively. are met: initial recognition, the asset is
accounted for in accordance with The carrying amount of capitalized
The carrying amount of property, • The fulfillment of the the accounting policy applicable leases was 467 and 552 as of
plant and equipment retired arrangement is dependent on to that asset while the minimum December 31, 2016 and 2015,
from active use and not classified the use of a specific asset and lease payments are apportioned respectively. The 467 and 552
as held for sale was 75 and • The arrangement conveys a right between financing costs and include 421 and 513 related to
74 at December 31, 2016 and to use the asset. reduction of the lease liability. machinery and equipment and 46
2015, respectively. Such assets and 39 to buildings respectively.
are carried at their recoverable Assets under lease arrangements Assets held under lease
amount. which transfer substantially arrangements that are not finance The total future minimum lease
all of the risks and rewards of leases are classified as operating payments related to finance leases
ownership to the Company are leases and are not recognized are as follows:
Consolidated financial statements  99

The total future minimum lease payments related to finance leases are as follows:
2017 133
2018 – 2021 467
2022 and beyond 221
Total 821
The present value of the future minimum lease payments was 529 and 602 for the year ended December 31, 2016 and 2015, respectively. The
2016 calculation is based on an average discount rate of 13.1% (13.1% in 2015) considering maturities from 1 to 15 years (from 1 to 16 years in
2015) including the renewal option when intended to be exercised.

5.3 Impairment of intangible assets, including goodwill, and tangible assets

Impairment charges recognized for the years ended December 31, 2016, 2015 and 2014 were as follows:

Year ended December 31,


Type of asset 2016 2015 2014
Goodwill - 854 -
Intangible assets - 157 -
Tangible assets 205 3,753 264
Total 205 4,764 264
Impairment test of goodwill units are tested first and any expected changes to average Company extrapolates cash flows
impairment of the assets is selling prices, shipments and for the remaining years based on
Goodwill is tested for impairment recorded prior to the testing of direct costs during the period. an estimated growth rate of 2%.
annually, as of October 31 goodwill. Assumptions for average selling This rate does not exceed the
or whenever changes in prices and shipments are based average long-term growth rate for
circumstances indicate that the The recoverable amounts of the on historical experience and the relevant markets.
carrying amount may not be GCGUs are mainly determined expectations of future changes
recoverable, at the level of the based on their value in use. The in the market. In addition, with Management estimates discount
groups of cash-generating units value in use of each GCGU is respect to raw material price rates using pre-tax rates that
(“GCGU”) which correspond determined by estimating future assumptions, the Company reflect current market rates for
to the operating segments cash flows. The 2016 impairment applied a range ($/t) of $48 to $63 investments of similar risk. The
representing the lowest level test of goodwill did not include for iron ore and $110 to $224 for rate for each GCGU was estimated
at which goodwill is monitored the GCGU corresponding to the coking coal. Cash flow forecasts from the weighted average cost
for internal management Mining segment as goodwill adjusted for the risks specific to of capital of producers, which
purposes. Whenever the cash- allocated to this GCGU was the tested assets are derived from operate a portfolio of assets similar
generating units comprising the fully impaired in 2015. The key the most recent financial plans to those of the Company’s assets.
operating segments are tested assumptions for the value in approved by management for Once recognized, impairment
for impairment at the same time use calculations are primarily the next five years. Beyond the losses for goodwill are not
as goodwill, the cash-generating the discount rates, growth rates, specifically forecasted period, the reversed.
NAFTA Brazil Europe ACIS
GCGU weighted average pre-tax
discount rate used in 2016 (in %) 11.7 16.0 10.9 18.7

NAFTA Brazil Europe ACIS Mining


GCGU weighted average pre-tax
discount rate used in 2015 (in %) 10.5 15.4 10.3 16.8 13.3
reasonably possible changes in which are volatile, reflecting selling prices in the model are
There was no impairment charge key assumptions could cause an the cyclical nature of the global expected to increase in 2017 due
recognized with respect to impairment loss to be recognized steel industry, developments to higher raw material prices and
goodwill following the Company’s in respect of ACIS and the Brazil in particular steel consuming stabilize subsequently in line with
impairment test as of October segments. industries and macroeconomic long-term raw material prices.
31, 2016. The total value in use trends of emerging markets, such
calculated for all GCGUs decreased ACIS produces a combination of as economic growth and foreign The Brazil segment produces
overall in 2016 as compared to flat and long products. Its facilities exchange rates. Discount rates a combination of flat and long
2015. are located in Asia, Africa and may be affected by changes products. Its facilities are mainly
Commonwealth of Independent in countries’ specific risks, in located in Brazil and Argentina.
In validating the value in use States. ACIS is significantly self- particular in Ukraine due to the The Company believes that sales
determined for the GCGUs, the sufficient in raw materials. The current political and economic volumes, prices, discount rates
Company performed a sensitivity Company believes that sales situation. The ACIS value in use and foreign exchange rates are the
analysis of key assumptions volumes, prices, discount rates model anticipates a limited key assumptions most sensitive to
used in the discounted cash- and foreign exchange rates increase in sales volumes in change. It is also exposed to export
flow model (such as discount are the key assumptions most 2017 compared to 2016 (13.3 markets and international steel
rates, average selling prices, sensitive to change. ACIS is also million tonnes for the year ended prices which are volatile, reflecting
shipments and terminal growth exposed to export markets December 31, 2016) and marginal the cyclical nature of the global
rate). The Company believes that and international steel prices improvements thereafter. Average steel industry, developments
100  Consolidated financial statements

in particular steel consuming declines in steel consumption and 2016 (10.8 million tonnes for the earnings in every year of initial
industries and macroeconomic steel prices but where a rebound year ended December 31, 2016) five-year period and perpetuity,
trends of emerging markets, such in confidence following moves and continuous improvements at the GCGU level, assuming
as economic growth and foreign to alleviate political uncertainty, thereafter. Average selling prices unchanged values for the other
exchange rates. Discount rates combined with improved terms in the model are expected to assumptions, would cause the
may be affected by changes of trade, helped to slow the increase in 2017 following higher recoverable amount to equal
in countries’ specific risks, in pace of output contraction. raw material prices and adjust to a respective carrying value as of the
particular in Brazil, which suffered The Brazil value in use model stable level subsequently. impairment test date (i.e.: October
in 2016 a second consecutive anticipates an increase in sales The following changes in key 31, 2016).
year of recession with significant volumes in 2017 compared to assumptions in projected
ACIS Brazil
Excess of recoverable amount over carrying amount 705 555
Increase in pre-tax discount rate (change in basis points) 191 93
Decrease in average selling price (change in %) 1.72 1.03
Decrease in shipments (change in %) 5.10 2.36
Decrease in terminal growth rate used in for the years beyond the five year plan (change in basis points) 305 113

Impairment test of intangible In estimating its value in use, also be an operating subsidiary. Impairment charges relating to
assets the estimated future cash flows Further, a manufacturing facility property, plant and equipment
are discounted to their present may be operated in concert with were as follows for the years ended
In 2015, in connection with value using a pre-tax discount another facility with neither facility December 31, 2016, 2015 and
management’s annual test for rate that reflects current market generating cash flows that are 2014:
impairment of goodwill as of assessments of the time value of largely independent from the cash
October 31, 2015, intangible assets money and the risks specific to the flows of the other. In this instance, 2016
were also tested for impairment asset (or cash-generating unit). For the two facilities are combined
at that date. Accordingly, an asset that does not generate for purposes of testing for In 2016, the Company recognized
ArcelorMittal recognized cash inflows largely independent impairment. As of December 31, a total impairment charge related
impairment charges of 94 and 63 of those from other assets, the 2016, the Company determined it to property, plant and equipment
with respect to mining permits recoverable amount is determined has 59 cash-generating units. amounting to 205.
and concessions in ArcelorMittal for the cash-generating unit to This charge included 49 in
Princeton in the United States which the asset belongs. The cash- An impairment loss, related to connection with the sale on
and ArcelorMittal Liberia (Mining), generating unit is the smallest intangible assets other than September 30, 2016 of the
respectively. identifiable group of assets goodwill and tangible assets ArcelorMittal Zaragoza facility in
corresponding to operating units recognized in prior years is Spain (Europe segment) (see note
Impairment test of property, plant that generate cash inflows. If the reversed if, and only if, there has 2.3.1).
and equipment recoverable amount of an asset (or been a change in the estimates
cash-generating unit) is estimated used to determine the asset’s In connection with management’s
At each reporting date, to be less than its carrying amount, recoverable amount since the last annual test for impairment of
ArcelorMittal reviews the carrying an impairment loss is recognized. impairment loss was recognized. goodwill as of October 31, 2016,
amounts of its intangible assets An impairment loss is recognized However, the increased carrying property, plant and equipment
(excluding goodwill) and tangible as an expense immediately as amount of an asset due to a was also tested for impairment at
assets to determine whether there part of operating income in reversal of an impairment loss that date. The Company concluded
is any indication that the carrying the consolidated statements of will not exceed the carrying that the value in use of property,
amount of those assets may not be operations. amount that would have been plant and equipment in AMSA was
recoverable through continuing determined (net of amortization or lower than its carrying amount
use. If any such indication exists, In the case of permanently idled depreciation) had no impairment following a revised competitive
the recoverable amount of the assets, the impairment is measured loss been recognized for the outlook. Accordingly, the Company
asset (or cash generating unit) is at the individual asset level. asset in prior years. A reversal of recognized a total impairment
reviewed in order to determine Otherwise, the Company’s assets an impairment loss is recognized charge of 156 consisting mainly of
the amount of the impairment, if are measured for impairment at immediately as part of operating the following:
any. The recoverable amount is the the cash-generating unit level. income in the consolidated
higher of its net selling price (fair In certain instances, the cash- statements of operations.
value reduced by selling costs) and generating unit is an integrated
its value in use. manufacturing facility which may
Carrying Value of
property, plant and
Impairment 2016 Pre-Tax 2015 Pre-Tax equipment as of
Cash-Generating Unit Country Operating Segment Recorded Discount Rate Discount Rate December 31, 2016
Vanderbijlpark facility South Africa ACIS 125 14.97% 14.71% 330

2015 This charge included 335 relating the Vereeniging meltshop closure and Vinton) in the United States
to the idling for an indefinite in South Africa (ACIS). Additionally, (NAFTA) and the intended sale of
In 2015, the Company recognized time of the Sestao facility in the Company recognized certain activities of ArcelorMittal
a total impairment charge of Spain (Europe segment), 19 in impairment charges of 231 and 18 Downstream Solutions (Europe
property, plant and equipment connection with the closure of the in connection with the intended segment), respectively.
amounting to 3,753. Georgetown facility in the United sale of the Long Carbon facilities
States (NAFTA) and 27 related to (ArcelorMittal Laplace, Steelton
Consolidated financial statements  101

In addition, the Company recorded In connection with management’s downward revision of cash flow recognized a total impairment
impairment charges of 176, 276 annual test for impairment of projections primarily resulting charge of 2,617 consisting of the
and 45 relating to the ArcelorMittal goodwill as of October 31, 2015, from the expected persistence of following:
Point Lisas facility currently idled property, plant and equipment a lower coking coal and iron ore
in Trinidad and Tobago (Brazil was also tested for impairment at price outlook. The Company also
segment), Indiana Harbor East and that date. Management concluded concluded that the value in use of
West facilities in the United States that the recoverable amount of property, plant and equipment of
(NAFTA) following deployment certain of the Company’s property, the Saldanha plant in AMSA was
of asset optimization programs plant and equipment in the lower than its carrying amount
and other assets in Spain (Europe Mining segment was lower than following a revised competitive
segment), respectively. their carrying amount due to a outlook. Accordingly, the Company
2015 2014
Impairment Pre-Tax Discount Pre-Tax Discount Carrying Value as of
Cash-Generating Unit Country Operating Segment Recorded Rate Rate December 31, 2015
ArcelorMittal Liberia Liberia Mining 1,363 14.71% 17.80% 25
ArcelorMittal Princeton United States Mining 590 8.50% 11.00% 4
Las Truchas Mines Mexico Mining 220 10.96% 12.26% -
ArcelorMittal Serra Azul Brazi Mining 176 9.90% 14.56% -
Volcan mine Mexico Mining 10 10.25% 9.42% -
Saldanha facility South Africa ACIS 258 14.18% 11.90% 64
2014 steel shop and rolling facilities In connection with management’s carrying amount due to the end
of Indiana Harbor Long carbon annual test for impairment of of life of the mine. Accordingly,
In 2014, the Company recognized operations in the United States goodwill as of October 31, 2014, an impairment charge of 63 was
an impairment charge of property, (NAFTA). The Company recorded property, plant and equipment recognized:
plant and equipment amounting also an impairment charge of 57 was also tested for impairment at
to 264. with respect to the closure of mill C that date. Management concluded
in Rodange, Luxembourg (Europe that the value in use of the Volcan
This charge included 114 primarily segment). iron ore mine in Mexico (Mining
relating to the idling of the segment) was lower than its
2014 2013
Impairment Pre-Tax Discount Pre-Tax Discount Carrying Value as of
Cash-Generating Unit Operating Segment Recorded Rate Rate December 31, 2014
Volcan mine Mining 63 9.42% 23.77% 19

Note 6: Financing and financial instruments

6.1 Financial assets and liabilities

Financial assets and liabilities mainly comprise:


• gross debt (see note 6.1.2)
• cash, cash equivalents and restricted cash (see note 6.1.3)
• net debt (see note 6.1.4)
• derivative financial instruments (see note 6.1.5)
• other non-derivative financial assets and liabilities (see note 6.1.6)

6.1.1 Fair values versus carrying amounts

The estimated fair values of certain financial instruments have been determined using available market information or other valuation
methodologies that require judgment in interpreting market data and developing estimates.

The following table summarizes assets and liabilities based on their categories at December 31, 2016.
102  Consolidated financial statements

December 31,
2016
Carrying amount
in the consolidated Fair value
statements of Non-financial Loan and Liabilities at recognized in Available-for-
financial position assets and liabilities receivables amortized cost profit or loss sale assets Derivatives
ASSETS
Current assets:
Cash and cash equivalents 2,501 - 2,501 - - - -
Restricted cash 114 - 114 - - - -
Trade accounts receivable and other 2,974 - 2,974 - - - -
Inventories 14,734 14,734 - - - - -
Prepaid expenses and other current
assets 1,665 967 455 - - - 243
Assets held for sale 259 259 - - - - -
Total current assets 22,247 15,960 6,044 - - - 243

Non-current assets:
Goodwill and intangible assets 5,651 5,651 - - - - -
Property, plant and equipment and
biological assets 34,831 34,782 - - 49 - -
Investments in associates and joint
ventures 4,297 4,297 - - - - -
Other investments 926 - - - - 926 -
Deferred tax assets 5,837 5,837 - - - - -
Other assets 1,353 408 756 - - - 189
Total non-current assets 52,895 50,975 756 - 49 926 189
Total assets 75,142 66,935 6,800 - 49 926 432

LIABILITIES AND EQUITY


Current liabilities:
Short-term debt and current portion of
long-term debt 1,885 - - 1,885 - - -
Trade accounts payable and other 11,633 - - 11,633 - - -
Short-term provisions 426 410 - 16 - - -
Accrued expenses and other liabilities 3,943 880 - 2,837 - - 226
Income tax liabilities 133 133 - - - - -
Liabilities held for sale 95 95 - - - - -
Total current liabilities 18,115 1,518 - 16,371 - - 226

Non-current liabilities:
Long-term debt, net of current portion 11,789 - - 11,789 - - -
Deferred tax liabilities 2,529 2,529 - - - - -
Deferred employee benefits 8,297 8,297 - - - - -
Long-term provisions 1,521 1,518 - 3 - - -
Other long-term obligations 566 186 - 310 - - 70
Total non-current liabilities 24,702 12,530 - 12,102 - - 70

Equity:
Equity attributable to the equity holders
of the parent 30,135 30,135 - - - - -
Non-controlling interests 2,190 2,190 - - - - -
Total equity 32,325 32,325 - - - - -
Total liabilities and equity 75,142 46,373 - 28,473 - - 296
Consolidated financial statements  103

The following table summarizes assets and liabilities based on their categories at December 31, 2015.
December 31,
2015
Carrying amount
in the consolidated Fair value
statements of Non-financial Loan and Liabilities at recognized in Available-for-
financial position assets and liabilities receivables amortized cost profit or loss sale assets Derivatives
ASSETS
Current assets:
Cash and cash equivalents 4,002 - 4,002 - - - -
Restricted cash 100 - 100 - - - -
Trade accounts receivable and
other 2,679 - 2,679 - - - -
Inventories 13,424 13,424 - - - - -
Prepaid expenses and other
current assets 1,859 1,202 529 - - - 128
Assets held for sale 262 262 - - - - -
Total current assets 22,326 14,888 7,310 - - - 128

Non-current assets:
Goodwill and intangible assets 5,592 5,592 - - - - -
Property, plant and equipment 35,780 35,700 - - 80 - -
Investments in associates and
joint ventures 4,911 4,911 - - - - -
Other investments 692 - - - - 692 -
Deferred tax assets 6,625 6,625 - - - - -
Other assets 920 268 562 - - - 90
Total non-current assets 54,520 53,096 562 - 80 692 90
Total assets 76,846 67,984 7,872 - 80 692 218

LIABILITIES AND EQUITY


Current liabilities:
Short-term debt and current
portion of long-term debt 2,308 - - 2,308 - - -
Trade accounts payable and
other 10,416 - - 10,416 - - -
Short-term provisions 770 529 - 241 - - -
Accrued expenses and other
liabilities 4,194 1,005 - 3,056 - - 133
Income tax liabilities 133 133 - - - - -
Liabilities held for sale 220 220 - - - - -
Total current liabilities 18,041 1,887 - 16,021 - - 133

Non-current liabilities:
Long-term debt, net of current
portion 17,478 - - 17,478 - - -
Deferred tax liabilities 2,496 2,496 - - - - -
Deferred employee benefits 9,216 9,216 - - - - -
Long-term provisions 1,434 1,421 - 13 - - -
Other long-term obligations 611 185 - 355 - - 71
Total non-current liabilities 31,235 13,318 - 17,846 - - 71

Equity:
Equity attributable to the
equity holders of the parent 25,272 25,272 - - - - -
Non-controlling interests 2,298 2,298 - - - - -
Total equity 27,570 27,570 - - - - -
Total liabilities and equity 76,846 42,775 - 33,867 - - 204

The Company classifies the bases The levels are as follows: Level 2: Significant inputs other Level 3: Inputs for the assets or
used to measure certain assets and than within Level 1 that are liabilities that are not based on
liabilities at their fair value. Assets Level 1: Quoted prices in active observable for the asset or liability, observable market data and
and liabilities carried or measured markets for identical assets or either directly (i.e.: as prices) or require management assumptions
at fair value have been classified liabilities that the entity can access indirectly (i.e.: derived from prices); or inputs from unobservable
into three levels based upon a fair at the measurement date; markets.
value hierarchy that reflects the
significance of the inputs used in
making the measurements.
104  Consolidated financial statements

The following tables summarize the bases used to measure certain assets and liabilities at their fair value.
As of December 31, 2016
Level 1 Level 2 Level 3 Total
Assets at fair value:
Available-for-sale financial assets 894 - - 8941
Derivative financial current assets - 243 - 243
Derivative financial non-current assets - 14 175 189
Total assets at fair value 894 257 175 1,326

Liabilities at fair value:


Derivative financial current liabilities - 226 - 226
Derivative financial non-current liabilities - 37 33 70
Total liabilities at fair value - 263 33 296
1
The balance does not include equity investments of 32 carried at cost

As of December 31, 2015


Level 1 Level 2 Level 3 Total
Assets at fair value:
Available-for-sale financial assets 646 - - 6461
Derivative financial current assets - 128 - 128
Derivative financial non-current assets - 86 4 90
Total assets at fair value 646 214 4 864

Liabilities at fair value:


Derivative financial current liabilities - 133 - 133
Derivative financial non-current liabilities - 71 - 71
Total liabilities at fair value - 204 - 204
1
The balance does not include equity investments of 46 carried at cost

Available-for-sale financial assets foreign exchange rates, raw and reliability of input data, the that relevant observable inputs
classified as Level 1 refer to listed materials (base metals), freight, accuracy of the valuation model are not available. Specifically the
securities quoted in active markets. energy and emission rights. The and the knowledge of the staff Company computes unobservable
A quoted market price in an active total fair value is based on the performing the valuations. volatility data based mainly on the
market provides the most reliable price a dealer would pay or receive movement of stock market prices
evidence of fair value and is used for the security or similar securities,
ArcelorMittal establishes the fair observable in the active market
without adjustment to measure adjusted for any terms specific to valuation of the call option on over 90 working days.
fair value whenever available, with that asset or liability. Market inputs
the 1,000 mandatory convertible
limited exceptions. The total fair are obtained from well-established bonds through the use of binomial Derivative financial non-current
value is either the price of the most and recognized vendors of market valuation models based on the liabilities classified as Level 3 refer
recent trade at the time of the data and the fair value is calculated
estimated values of the underlying to a special payment included
market close or the official close using standard industry models equity spot price of $170 and in the pellet sale and purchase
price as defined by the exchange based on significant observable volatility of 10.13%. Binomial agreement effective October
on which the asset is most actively market inputs such as foreign valuation models use an iterative 31, 2016 between ArcelorMittal
traded on the last trading day exchange rates, commodity prices, procedure to price options, and Cliffs Natural Resources
of the period, multiplied by the swap rates and interest rates. allowing for the specification of Inc. This special payment varies
number of units held without nodes, or points in time, during the according to the price of steel
consideration of transaction costs. Derivative financial non-current time span between the valuation in the United States domestic
The increase in available-for-sale assets classified as Level 3 refer date and the option’s expiration market (“domestic steel price”).
financial assets is related to the to the call option on the 1,000 date. In contrast to the Black- The Company concluded that
reclassification of the investment mandatory convertible bonds (see Scholes model, which provides a this feature was an embedded
in Stalprodukt S.A. as available-for- note 10.2). The fair valuation of numerical result based on inputs, derivative not closely related to
sale following the partial disposal Level 3 derivative instruments is the binomial model allows for the the host contract. ArcelorMittal
of the Company’s shareholding in established at each reporting date calculation of the asset and the establishes the fair value of the
Stalprodukt S.A. on April 28, 2016 in relation to which an analysis is option for multiple periods along special payment by comparing the
(see note 2.5) and the increase in performed in respect of changes in with the range of possible results current forecasted domestic steel
the fair value of the available-for- the fair value measurement since for each period. price to the projected domestic
sale investments, partly offset by the last period. ArcelorMittal’s steel price at the inception of the
the sale of the Company’s 10.08% valuation policies for Level 3 Observable input data used contract. This price difference is
shareholding in Hunan Valin (see derivatives are an integral part of in the valuations include zero multiplied by the minimum pellet
note 2.5). its internal control procedures and coupon yield curves, stock volume ArcelorMittal is required to
have been reviewed and approved market prices, European Central take under the purchase contract.
Derivative financial assets and according to the Company’s Bank foreign exchange fixing An increase of $10 per metric
liabilities classified as Level 2 principles for establishing such rates and Libor interest rates. tonne in the domestic steel price
refer to instruments to hedge procedures. In particular, such Unobservable inputs are used to in 2017 would result in adverse
fluctuations in interest rates, procedures address the accuracy measure fair value to the extent change of 7 in the fair value of the
Consolidated financial statements  105

special payment. Observable input data includes third-party forecasted domestic steel prices. Unobservable inputs are used to measure fair value
to the extent that relevant observable inputs are not available or not consistent with the Company’s views on future prices and refer specifically to
domestic steel prices beyond the timeframe of available third-party forecasts.

The following table summarizes the reconciliation of the fair value of the conversion option classified as Level 3 with respect to the call option on
the 1,000 mandatory convertible bonds and the fair value of the special payment included in the pellet sale and purchase agreement for the years
ended December 31, 2016 and 2015, respectively:
Special payment in
Call option on 1,000 mandatory pellet purchase and sale
convertible bonds agreement Total
Balance as of December 31, 2014 112 - 112
Change in fair value (108) - (108)
Balance as of December 31, 2015 4 - 4
Change in fair value