Daniel Fairclough – Investor Relations Lakshmi Mittal – Chairman and Chief Executive Officer Aditya Mittal – Group Chief Financial Officer and Chief Executive Officer of our European segment Genuino Christino – Head of Finance Simon Wandke – Chief Executive Officer of Mining segment.

Mike Shillaker – Credit Suisse Alain Gabriel – Morgan Stanley Carsten Reik – UBS Christian Eric – SocGen Bastian Synagowitz – Deutsche Bank Luc Pez – Exane Kevin Hellegsrd Nielsen – Goldman Sachs Novid Rassouli – Cowen and Company Phil Gibbs – KeyBanc.

Good morning and good afternoon, everybody. This is Daniel Fairclough from the last ArcelorMittal Investor Relation team. Thank you very much for joining us on this call today to discuss the Fourth Quarter and Full Year 2017 Results.

This call is being recorded and, hopefully, everybody saw the presentation and the details speaking out some Q&A document that was published this morning. You all have a good chance to review these documents. So our intention now is to move – to your questions around results and strategic progress of the business.

And the attention is that question will last about an hour. [Operator Instructions] With that I'll hand over to Mr. Mittal for some introductory remarks. .

Thank you. Good morning, good afternoon, everyone. Thank you for joining to this call to discuss ArcelorMittal's 2017 results. I'm joined today by Aditya Mittal, Group CFO and CEO of our European segment; Simon Wandke, our Mining segment CEO; Genuino, our Head of Finance; and Daniel, Head of Investor Relations.

Before we start our Q&A session, I want to provide some opening comments on the results and our outlook for the year ahead. Starting with safety, the injury frequency rating 2017 improved relative to 2016. And in the organization, we continue to prioritize further improvement in our safety performance and strive to zero harm.

Group EBITDA increased by 24% year-on-year and significant improvement in net income. The improved results reflect not only the strengthening market backdrop but also the ongoing benefit from our Action 2020 plan. After two years, the total benefits from Action 2020 have been $1.5 billion, which is halfway to our $3 billion target.

This is encouraging, and I expect to see more progress in this area in 2018. We have also strengthen the financial foundations of the business over the past two years. Net debt has reduced to $10.1 billion and would have been lower gain, did not been for a negative Forex impact of $700 million and $400 million of premiums incurred on bond buybacks.

Our net debt to EBITDA ratio is now 1.2 times. We put our financial progress in context. Two years ago this ratio was 3 times. Given this progress, we have to the outlined a new capital allocation policy.

Mostly, we will continue to prioritize deleveraging, we believe that a net debt level of $6 billion with an appropriate target to sustain investment-grade rating metrics and support positive free cash flow even in the low point on the cycle.

Secondly, we will selectively invest in high return projects that will increase EBITDA and enhance future returns. And finally, we have been strategic dividend of $0.10 per share. Once we achieve net debt at or below our target, we are committed to returning a portion of annual free cash flow to shareholders.

Now to conclude with some comments on the outlook. Market conditions are favorable. We expect steel demand outside China to accelerate in 2018, with growth rate of between 3% and 4%. This bodes well for our shipments and also for capacity utilization this continues to held in the right direction. With that, we are happy to take your questions. .

Thanks, Mr. Mittal. [Operator Instructions] And we'll move to the first question which comes from Mike Shillaker, Credit Suisse..

Just on the China situation. Clearly, the export cuts from China on the capacity reductions have been huge up through the market in the last 18 months or so. And I think you've been very vocal about the structural changes taking place in China.

I think one of the other things that's clearly been beneficial is demand has been very strong in China also in the last 18 months or so.

Can you now give us your road map for the next 12 months to 24 months in terms of what you believe is going to happen in China, A, to capacity; B, to exports and put that also if you could within the context of any risk demand may slow in the next 12 months to 18 months. How you think China would respond to that? It's my first question.

My second question on capital allocation, can you give us a sense of how your potential interest Bamesa fits into this in terms of how that may shape the balance sheet with cash out debt in and also future CapEx in terms of how you look to that possible acquisition? And also in terms of capital acquisition, we've had a debt target, which I think is usually helpful to build a road map.

We've had the change in CapEx, which is helpful and obviously, a small dividend.

But can you give us more sense of when you're likely to be ready to give us a greater sense of your likely dividend policy going forward, Ala, Aperam did a couple of years ago when they gave a very, very clear road map for their shareholder return structure? Thanks very much..

Thank you, Michael. I'll answer on China and then we'll move on to your second question on capital allocation. Clearly, the Chinese demand in 2017 has been quite strong and it was stronger than we anticipated. At the same time, China has continued to reduce capacity, which is really encouraging.

We have seen 115 million tons of capacity reduction against promise of 150 million and the rest 25 million, 35 million ton is expected this year. We have also seen that export in 2017 were lowered by 30%.

But this is very encouraging but we still believe that China to believe we had 300 million ton of over capacity, excluding the 120 million tons, which has been shutdown based on industrial – induction furnaces, which was never accounted. So 150 million still remains to be shut and I hope that Chinese government as we move forward.

We will continue to implement environmental loss and continue to deleverage the Chinese steel companies. So all those actions we think that should help them to moderate their production to demand.

The demand could slowdown, but we only hope that if it could moderate the production to demand, otherwise they will increase their exports, which will be unfair to the rest of the world. But looking today, next 2018, we think it is broadly stable.

Last year, there was strong [indiscernible] 4%, 5%, but this year we think that it will broadly stable for this year. Our 2018 apparent steel consumption forecast is more or less neutral to 2017. And we think that they will continue for next 24 months also I do not see a major change in China consumption type.

Aditya?.

Sure, great. Thank you. Good afternoon, Michael. So in terms of capital allocation, we're not obviously going to comment on any specific opportunity and you correctly laid out our priorities.

Our priority number one is to continue deleveraging to be arrive at a net debt target of $6 billion or lower, which will allow us to have investment-grade metrics through the cycle annual points, as well as generate free cash flow through the cycle. We would then be focused on opportunities with higher return, so CapEx is a good example.

M&A could be another example. As we've done in the past, we have been able to grow and continue to manage our balance sheet. Calvert is a good example. Ilva is a good example. So I will not necessarily take away from this discussion that we would now start and acquire companies and then delever the balance sheet.

The focus remains to delever the balance sheet, we're conscious of that. And we would plan growth whether its CapEx or acquisitions with that priority in mind.

In terms of the dividend question, I think we have laid out a road map in terms of what we intend to do, we're starting with $0.10, we would move to a percentage of free cash flow when we were to hit the level of $6 billion of net debt.

To comment whether this would be like Aperam or not, I think, at this point in time is inappropriate, this is discussion we continue to have with our Board of Directors and then the appropriate time and we hit that target, we will let all of you know what our thoughts are..

That’s great. Thanks very much. And this is a follow-up, as you mentioned it. Is there any update on the other situation and also any thoughts on the profitability available on the current market situation..

Yes. So in terms of the overall situation, no update on the profitability, it's still losing similar amounts of cash that will be able to losing in the year before, so 2017 performance of Ilva is similar to 2016 and 2015.

In terms of the situation, as you're aware, we are in Phase 2 discussions with the European Commission in terms of the competition department. Phase 2 is expected to be completed by April. And post that, we would move to….

Okay, thank you..

Thanks, Mike. So we'll move to the next question from Alain at Morgan Stanley..

Yes, good afternoon, gentlemen. Two questions from my side. One is on the group EBITDA per ton outlook or into Q1 and Q2.

What are different moving parts that we need to take into account while looking at the group of stability per ton? And the second question is on the shipments, you expect shipments ex-China – steel growth ex-China to be at 3% to 4%? Is that a good proxy for your own shipment growth into 2018? And how does that -- how is that distributed between H1 and H2? Thank you..

Okay. Thank you. We have not provided specific shipment guidance for 2018. I think it's fair to assume that we would mirror global growth ex-China, because that's a good proxy for ArcelorMittal. But specifically to answer the question, we're not providing shipment guidance.

In terms of the moving parts, I think we have a good sense on – into Q1, how the demand pattern is for 2018, we're seeing demand ex-China at levels higher than 2017. In terms of the specific moving parts, I'm not sure I can provide more color, unless you want to talk a little bit about what's happening by region..

Yes, please. By region, that's what I meant..

Okay. So in terms of NAFTA, we should see it would increase of shipments in Q1.

Q4 was light, in terms of shipments as you may read through in our earnings release, we faced on issues in our Mexican and Canadian operations in terms of outages, it cost at some money about $15 million to $20 million, and we lost about 200,000 shipments due to those effects.

That should reverse the market we'll obviously perform better, because in Q4, we had a market slowdown in terms of demand volumes. And -- sorry, I think I lost my mic. I'm back. So shipments up in NAFTA, price margin up in NAFTA in Q1.

Moving on to Brazil, Brazil shipments are down in Q1, seasonally prices are slightly up, especially in the slab business. Europe shipments are rising marginally into Q1. Prices are up, but to our costs we saw a little bit of spread improvement towards the back-end of Q4, but not really impacting Q1 results, [indiscernible] are actually stable into Q1.

In terms of ACIS shipments, we’ll have the seasonal factors, South Africa should be up. Prices clearly did very well in Q4. And we should have a flat crossly a slight performance in terms of spread and we also have a big blast furnace realign in Ukraine, which will affect some degree profitability in CIS operations..

Thank you..

Thanks, Alain. So we’ll move to the next question from Jason of Bank of America..

Thanks, gentlemen. Thanks for the call. A bit of a big picture question for me. Over the years, we've seen different strategic initiatives and directions from Mittal. We have the aggressive and transformational growth through M&A, we have the moves into EM. We have vertical integration by building and buying mining assets.

More recently, we've had the consolidation to the core developed market business of high value at steel. And, of course, we've got the focus on the balance sheet and balance sheet repair. The other day, an investor asked me he said, what is Mittal strategy. And I really have to confess, I couldn't answer it.

So how would you answer the question? What is your strategy now today? Where is this company five years from now?.

So I'm glad you asked the question, because I hope next time someone asked you can answer it. From our perspective, it's very clear. We are the world leader in terms of technology and capability in the steel business.

What does that mean? We make the most demanding products into the most demanding applications, 22 out of 23 OEMs, our rank as number one from the technology perspective.

And that's a growth market for us as we were transforms itself, whether it's electrification or other areas, renewable energy, other transportation requirements, ArcelorMittal will continue to play a leading role. Number two, we have very strong businesses in three core markets, Europe, NAFTA, Brazil.

We also have very strong businesses in our ACIS division as well. And those businesses continue to outperform the competition. They continue to make progress. As you know, we have a very strong transformation program in Europe, which will continue beyond Action 2020 the same in our NAFTA and Brazilian business.

So this is a business which is leading in terms of technology, high-quality and in terms of its performance and the gap to competition should only improve over time. Thirdly, I believe we have very interested in growth opportunities, and that should put value over the next five years.

We announced today -- we announced it before, but we have highlighted the investment in Mexico, it's a brand-new hot strip mill. We have a 4 million slab operation in Mexico we can setup a hot strip mill, which can utilize the growth in the domestic market. It's an interesting market.

It's got good margins and we think we can be strong player with the high quality steel. That's just one example of the things that we're doing. We also talked about Ilva. Ilva is another opportunity. We're able to bring our technical management and capability to turnaround an operation.

And Ilva have strong prospects because this is a low-cost operation, a large-scale low-cost operation. Lastly, and we have a very strong foundation, a very strong financial foundation where our interest cost keep on declining, our level or ability to convert EBITDA into free cash flow is increasing.

And that provides a good value proposition for our shareholders and our key stakeholders..

So to kind of paraphrase it and tell me if this is the right way to think about that for choice, you're moving up on the quality spectrum and you're becoming more focused, is that a fair way to characterize it?.

Yes, I think – we’ve always had been doing that. But I think it's good to emphasize that routinely. So yes, we are moving up the quality chain, we're becoming more focused. We're also capitalizing on high-return growth opportunities, while at the same time we ensuring that we continue to delever the balance sheet and return value to shareholders..

Okay, all right. Thanks for that. Appreciate it..

Sure. So we’ll move to the next question from Carsten of UBS..

Thank you very much. Two questions from my side. The first one is on the outlook statement because it's simply or quite positive on the 2018 outlook. But what is actually your visibility right now into the orders? Are you fully booked for the first half? Or how much is still out? That's the first one.

The second one is more on ACIS and Brazil because that is what surprised me most. We see quite a bit of change in profitability in those two segments. What has changed? Is there more than market movement? Did you do something in the underlying business? Just try to understand it a little bit better. Thank you..

Sorry, I missed the last part of your question, ACIS and Brazil and….

The profitability improved quite substantially.

Did you actually changed something structurally or is the move predominantly market related?.

Sure. So in terms of visibility question, as you know, it’s different by business and we’ve got some order books here. So clearly, we have much longer order books in Europe and our NAFTA business and much shorter order books in our ACIS business and even I would argue that in our Brazilian business our order books are much shorter as well.

There is some contract business, but not through same level of proportion at NAFTA or EU. So in terms of visibility normally in Europe and NAFTA, we will be taking second quarter orders right now and the other businesses we’re still taking orders for February and March, maybe more March, but that’s roughly how it works throughout ArcelorMittal.

In terms of ACIS and Brazil, yes, you are right. The market has also done well and that has into our results, but there are also structural improvements to the business.

And just talking about ACIS, I think this has been a story which has not performed well in the past, but through all the actions and initiatives we undertook, picking in a new management team, I think we now see a turnaround in Kazakhstan. Kazakhstan as you know hit that shipment ever, production records were set and it continues to outperform.

And South Africa has been an issue for us for the last 18 months. Again, we doubled our efforts and along with the management team in South Africa, they’re now turning the corner. So South Africa which has negative EBITDA in Q3 has become positive in Q4.

In Brazil, we continue to make improvements on reducing the cost base of our business and improving our product mix as we change as we can..

Very quickly on Kazakhstan because there were recently some news articles about emission problems in Temirtau.

Could that lead potentially to higher CapEx and/or production stuffs because it sounded – it was like black snow and so on and so forth?.

Yeah, in Kazakhstan, we are continuing to invest. There is no additional investment program for these environmental initiatives. We have already planned which was approved by the local authorities. It was a very peculiar situation in last winter and it’s still being investigated what could be the cause for such a black smoke.

There are some different theories. The wind situation had dramatically changed due to a very strong winter dues in a couple of days. And then there is also – if you read that there is also speculation that it could be caused by people in that area using a lot of coal for heating as well as for cooking.

And plus there has been some change in the winter which allowed the smoke not to dissipate. So – and there is a discussion going on and we are also investigating this matter and I am sure we put this to rest..

Okay, perfect. Thank you very much..

Thank, Scott. And we will move to the next question from Christian Eric of SocGen..

Yes, thank you gentlemen. On [indiscernible] of your guidelines, so there is a timetable in Q1. Just if you could tell us again what you are looking at now in terms of clearance? And also I think – there seems to have been some change in the group association you had with massive area.

I mean are you still involving that deal or is there a change – articles are suggesting that you maybe now having to sell one of your plants to them and then able to stay with that. And my second question is on NAFTA. Obviously, you are relating that the prices are improving and volume outlook is favorable.

In that context, do you feel that possible additional tariff, so Section [indiscernible] and if not, are they becoming furthermore interest in the outlook? Thank you..

I will answer Ilva. Just on Ilva, I think what I have suggested was we are Phase 2 negotiations with the European Commission, specifically with the Competition Department of the European Commission. So there's a Phase 2 investigation ongoing and that is expected to close in April. And post that, we would expect to close our Ilva transaction.

In terms of [indiscernible] I think at this point in time, I'm not able to make any comments. There have been and there are, as of date, a shareholder in the consortium, which is acquiring Ilva that may or may not change depending on our discussions the competition authorities..

On Section 232, as we all know that the matter has been – the recommendation has gone from Commerce Department to White House and it being investigated and hopefully, that very soon, we will have some results or some decision from [indiscernible] the White House soon and as ArcelorMittal, we always believe in fair trade and we will continue to fight where we see on fair trade.

At the same – while this is going on, we still see that the imports in U.S. all-time high 2017, so we believe that it is important to have some favorable decision from Section 232, but we do not know what the decision is..

Thanks Christian. So we move to the next question from Seth of Jefferies..

Good afternoon. Just a couple of questions on your European business, please. In the quarter Q4, you noted the blast furnace of Bremen maintenance cost at Galati as well.

Can you help us better understand how to quantify the scale of those costs and perhaps according to your reversal of that going into the first quarter? Second, looking at your European Long business, can you give us a sense of where you think realized margins or demand could go in that business looking forward given that over the past couple of years, Long seemed to be trailing from your Flat operations within that region? Thank you..

Sure. In terms of the benefit in Q1, it's more shipment story. I would not forecast that much of cost reversal into Q1 versus Q4. In terms of the Long margins, I’m not sure why you suggest that Long business had been trailing, I think the Long business has performed quite well over the last few years.

2017 obviously, has been harder, especially for the Integrated Long, primarily because the cost of ore and coal is much more than scrap, but that has not normalized and some Integrated Long business seems to be doing well. In terms of Long margin, I think there are two effects that we're seeing in 2018.

We're seeing that the commodity side is doing better. And on the HAV side, we have not yet seen the full translation of the price pickup on the commodity side. But suffice to say, relative to 2017 what we're seeing today is that the Long business in Europe is doing better in 2018..

Great. Thank you very much. And just one last question I guess within the European business. You've spoken very positively about demand in that area for the last several quarters. Your margins have been quite stable, while many of your peers with pretty similar business models have seen sequential margin expansion within Europe.

Many of those are more focused on the Flat side than the Long, that's what I was thinking maybe some of the pressure in the Long business.

Can you talk a little bit about where you see directionally your European margins going in the medium term throughout the European region, where your Flat has been through the European region? Is there a reason to think that you will not see the same scale of margin expansion that your peers have witnessed in recent quarters?.

Yes. So I can now understand what you're suggesting. I think what you have seen is the Long business not necessarily improved its margins over the last few years. The margins have remained relatively stable at decent levels. And at the same time, we have seen our Flat business improve its margins in the transformation program as kicked through.

So we have some blended basis and you may draw that conclusion. But it's very clear to us when we look at our Flat performance versus our peer group, we have done very, very well. We look at it on an EBITDA per ton, and we can see that the transformation program is kicking through and the business continues to perform very well.

That's not changing, so I would expect the same thing to not to continue into 2018 and beyond..

Great. Thank you very much. .

Thanks. So we’ll move to the next question from Bastian at Deutsche Bank..

Yes. Good afternoon gentlemen. My first question is on Europe. Just was curious whether there was any cost effect from the – of your coke battery in Belgium and whether there was anything we have to keep in mind with regards to the first quarter there.

And also whether you provision for anything here on the CapEx side in your budget? And then my last question is just briefly on your debt rating. Clearly your efforts to improve both your cash flow as well as your balance sheet metrics have been very visible.

And I guess although we can certainly debate on the macro side is quite hard to be agnostic to the fact that they have some sort of improvement in the fundamentals compared to what we have the last year. And I remember that was one of the main I’d say, critical points for the rating agencies as well.

Now given what you have delivered so far and so as the capital allocation policy, which you just laid out today, which seems to be rating friendly, is it fair to assume that an upgrade of the rating agencies could be more imminent in such an event? Also would there be any impact on your financing cost in terms of stepped on towards the line? Thank you..

Okay, great. Thank you for the question. The coke fire incident was very tragic, and it's unfortunate that it has occurred. However, it was – and it was very dramatic since you saw initiatives very dramatic. But the impact was very minimal. I think we lost 20,000 tons of coke production and there’s been no impact on operating performance.

In terms of the rating, I mean, I guess two points. The first is the capital allocation policy announcement today was not all rating agencies. This is what we believe is the right strategy and the audiences, our shareholders and our broader stakeholders, and it helps the rating agencies and their assessment ratings.

In terms of the cost I think fundamentally, the two rating agency – two ratings agencies upgrade us to investment grade. As you know, all rating agencies have positive outlook, the interest saving per year is about $20 million..

Okay, thank you..

Thanks, Bastin. So we’ll move to Luc Pez from Exane..

Can you give us a bit more color on Brazil, which to me seems one of the area where I do [indiscernible] in terms of EBITDA pattern and margin is going to be the greatest within the group given that the positive sides we are seeing in the economy there.

Could you maybe frame a bit more what you're seeing on the ground? And to what extent the recovery is impacting at this stage the flat business all the way along? Thank you..

I’m going to ask Genuino to answer this..

Yes, Lucas. So in Brazil, I think as we've been highlighting, so remember our last call I mean we were quite pleased with the recovery already in our flat business, which is going already well, the consumption perhaps by almost 10% driven by automotive.

We also highlighted some already some improvement in construction, which was positive in quarter three, it remained positive in quarter four so overall shipments in loans was kind of flat. So despite a weak first half, it was offset in the second half.

And looking forward, looking at our consumption forecast for 2018, so the prospects for both business are quite encouraging..

Thank you. If I may have let’s say a follow-up one on the working capital requirements, I understand the volatile nature of the number of parameters.

But is it fair to say that this year should see more investment in working capital requirement, even hopefully smaller magnitude than the one we saw in 2017?.

Fundamentally, I think you’re right. And perhaps I’ll provide some more color as to what I think about it. Clearly if the business is growing raw material prices are moving up and there’s an investment in working capital, no loss because its value sitting on our balance sheet.

So in terms of 2018 what we're seeing is increased demand of what we talked about global growth ex-China. And so from that perspective, it's natural to expect more investment in working capital..

Thank you..

Great thanks. We’ll move to a question from Kevin at Goldman Sachs..

Yes I just had a quick question on automotive. A lot of your U.S. competitors are talking about ramping more volumes to the automotive market.

Are you seeing any fierce competition here? And what is your outlook on that market for ArcelorMittal? And also on auto contracts in general, how are they being renegotiated for 2018 versus 2017 levels?.

So as you know we are always relatively guided in terms of our comments on pricing. I think when we look at the business from a margin perspective, we're very comfortable when we look at the overall margins of automotive 2018 into 2017. And the comment applies to both our NAFTA as well as our Europe business.

In terms of volumes also, we know how the market shapes there, there has been some change in the mix of automotive, less passenger vehicles, we have a bit more exposure to passenger vehicles. So on a like-to-like basis, maybe there are some loss just because of a mixed perspective in NAFTA.

But other than that as I mentioned at the beginning of the call, and as you’ve seen in our strategy we remain the leader in terms of automotive capability, having the best products to offer in the world.

We also have if you go through our presentation, some nice slides on electric vehicles and some discussion on how some new electric vehicles that are being produced and manufactured. Historically we are using all aluminum and now we’re using the combination of primarily steel.

And these are advanced high strength steel, and those are high strength steels exactly the strength and specialty of ArcelorMittal..

Thank you very much..

Thanks Kevin. So we’ll move to the next question from Novid Rassouli from Cowen and Company..

Thanks for taking my questions. On your segments we saw pretty significant improvements in EBITDA year-over-year for all segments except for NAFTA. So I just wanted to see what can be done on this front to kind of get the needle moving? Clearly, the step up in prices in flat should help in 2018.

But is it necessary to see a prohibitive Section 232 relative to imports or other measures to really see a step change in this segment. And then second question was on the iron ore side. You guys provided iron ore market price shipment guidance forecasting up 10% in 2018 year-over-year.

I was just wondering if you guys can give any comments on the cost side of the equation? Thank you..

Sure. I'll talk about mining – sorry, [indiscernible] talk about mining. In terms of NAFTA year-on-year, I think you're right, we've had flat EBITDA in 2017 versus 2016. Clearly, there's a level of dissatisfaction on that performance. I'll walk you through regions.

And I think that satisfaction and I’m suggesting that on an operating basis we perform plurally. But, clearly, when you look at it on a global basis, it's an outlier. In terms of NAFTA I mentioned earlier on and when we talked about the long business in Europe. That integrated long business has suffered in 2017 relative to its EFA-based counterparts.

As part of our NAFTA results, we have a significant long business, which is integrated, which is our Mexican business and to some degree, our operations in Canada are DRI based. So those businesses have performed much worse in 2017 versus 2016 clearly the prognosis for 2018 is much better.

Second, we’ve had some mix effects in our NAFTA business in 2017 versus 2016, more slab production than in the past. The other effect that you don't see is that some of the EBITDA that is in Calvert, gets recycled into the equity income line. And so there's a small impact of that.

But fundamentally, when we look into 2018, we see increasing shipments into Q1, we see prices improving in the NAFTA environment, the positive impacts of our Action 2020 getting through. So we have some – in terms of 2017 is flat, but we have a much more constructive perspective on our NAFTA business into 2018..

Thanks. Thanks.

And then just on the iron ore side, on the cost side?.

Sure, it’s Simon here. So I think if you sort of step right back, we’re still maintaining our statement that will be cash flow breakeven $40 above China on the pricing. That said, we still have pressures on our cost. We have inflation costs, input costs, exchange rates.

So really what you’re seeing is if it’s across those suites in terms of more structured cost reductions, the 10% promise on 2018 above the 2017 market shipments most of it is Liberia. And that’s new production from the Gangra mine at 5 million ton rates already as we stated in Q4 and Q4 into Q1.

Those costs are moving down choppy from where we were at lower volumes with a lower strip ratio and higher [indiscernible] product. And then if you go to the big assets like AMMC, we’ve got quite significant programs underway focused actively on the debottlenecking. But on our plant, we’ve got autonomous drills commencing operations this year.

Our productivity gains, very focused on across how we operate, we have a next-generation program in place in terms of fleet optimization, movement around the pits.

And a lot of the projects under Action 2020, some of those are around just maybe simple but very big outcome in terms of the standard deviation of fleet and concentrate, giving us some of their outputs, low costs and less surprises.

So a lot of work going on and really the headline statement still states that we will be maintaining the cash flow breakeven of $40..

Great. Thank you..

Great. So we’ll move to the next question from [indiscernible] of Citi..

Thanks a lot. My question is on your cash needs for 2018. One, how much of the CapEx do you have considered in $3.8 billion number guidance. And second is the cash need for other businesses – other is increasing from $0.8 billion to $1.2 billion predominantly on taxes.

So can you give us some idea, which of the region are contributing into higher cash taxes and does it take into account the impact of lower tax rate in U.S.?.

So what was your first question on the CapEx?.

How much of the Ilva CapEx you have taken in $3.8 billion?.

Okay. So Ilva CapEx is $0.2 billion, so $200 million so without Ilva that would be $3.6 billion. And there is change in other cash requirement, so a portion is timing differences because you end up paying in 2018 some of the tax 2017 and some jurisdictions other that’s in the same year.

In terms of the U.S., there is no significant pronounced effect into 2018 or into 2017 for various reason and if you are really keen you can get into it. But I think the headline is that there is no major impact on our business. I mean the major impact is really hopefully it spurs more investment in the U.S.

more consumers I read about all the tax bonuses, so I hope they will buy more cars..

Yes..

Thanks, Kisan. So we’ll move to the next question from Rochus at Kepler Cheuvreux. Hi, Rochus can we take your question please..

Can you hear me?.

Yes, we can..

Okay, sorry. I have a question again on your acceleration to CapEx.

I think you kept saying that the deleveraging towards the $6 billion remains a top priority, at the same time, after a couple of years of high CapEx discipline you’re not consider re-stepping up your CapEx and it’s not just the Ilva, the Mexican project, the various things you’re doing in context, there’s Action 2020 and we still haven’t heard about the potential engagement with the sales joint venture when you are seeing which could else happen in India.

So can you maybe elaborate a bit deeper how we shall see the $6 billion net debt targets? Is this now something which can stretch further into the future because you have made this progress now? The second question is you didn’t give any volume guidance and you implied it the market gross would be a good indicator.

It depends on – you are saying, Action 2020 is also stronger key to the volume so in what destination shall we believe or shall we think that – that you could out grow the market because of your specific initiatives?.

Okay. Thank you for your questions. So let’s talk a little bit more about the CapEx. So if you look at the CapEx it’s a $1 billion increase. I would say, net-net $800 million because $100 million was carryover from 2017, so 2017 was actually suppose to be $2.9 billion but we ended up with $2.8 billion and the remainder $100 million is Forex.

So this is ArcelorMittal strengthening so as a result, our European CapEx translates back into dollars – there is more dollars.

So that’s $800 million, I would then deduct $200 million for Ilva because that’s a new acquisition, so that was flat before we had just put into the case, we are assuming a closure in the later part of the first half and then the CapEx starts to decline. So then we get to the $600 million delta.

The $600 million delta, $350 million so the lion share is really Mexico. And I did talk about Mexico a little bit but maybe we can talk about more.

So we have a high quality flat facility, which is on the coast of Mexico electric furnace based it has it’s own vitalizer, it has two DRI modules and it has linkages to ownership in iron ore operation, which supplies pellets as well as iron ore locally that is available. So a low cost slab operation out of Mexico.

As you know, Mexico is a growing market, Mexico is importing a lot of hot band the price is similar too or even higher than the U.S. marketplace.

And so if you think of a business which is exporting slab and has the opportunity to convert that slab into hot band for domestic market, which has price level similar to NAFTA, that’s a good business proposition.

We didn’t do it before because we’re very focused on deleveraging the balance sheet, we continue to deleverage the balance sheet but we thought this was the right time to begin that investment. So I guess the message I am trying to suggest you is don’t think that new CapEx that we’re starting now is because of the cycle.

These are not cycle-based CapEx, these are CapEx which we return value and create value for ArcelorMittal whether we are in a high cycle or low cycle environment.

Now the reminder is about $250 million and this is accelerating the journey we have begun in Europe and in NAFTA on improving our leadership when it comes to HAV and what we have call downstream optimization in Europe. So there’s a level beyond Action 2020.

And the $250 million but there are some examples of the Zone B projects that we are doing, it’s really getting ready for new demanding products, it’s further optimizing our downstream operations in Europe and making sure that we have bigger scale operations and what we have today.

We begun to clustering on those operations about two years ago and now we’re moving to the next phase and making sure that the downstream operations have larger scale. So $250 million increase excluding Ilva, Mexico, Forex and carryover on a $2.8 billion CapEx is not that significant.

The other area where some of this $250 million is going it’s seems like digitalization where we are making a lot of progress on taking our business forward. We did have a good investor discussion and investor meet back in our facility in Belgium, Ghent in the summer where we walkthrough some of the technology that we are deploying.

And we can spend more time on that so that you have a better flavor what we are doing. So moving onto your next question, sorry that was a long answer. It’s good to give everyone a flavor of how we are responsibly investing our capital and making sure it’s really high return projects up or down cycle.

In terms of when we achieve that target, we’ve not provided the timeline, I think you have a good sense of how the steel markets are performing, what are the earnings potential on cash requirements you can do the math. I think there is some differences in 2018 versus 2017.

One is, if you look at the net debt we had $700 million impact in 2017 because of Forex. Maybe there will be Forex impact in 2018, but perhaps not at the similar level. Because that reflects from €1.05 to €1.2.

The other thing is we paid $4 million in premiums for bond buybacks and I’m not suggesting that loan paying premiums, but perhaps the amount is not that significant.

So that gives you a sense of how the net debt numbers are actually coming down, in spite of investment of working capital of almost $2 billion, the earnings potential, yet at the same time, we remain focused on those priorities that we've talked about. So I can't give you a guidance as to when we achieve it.

But that gives you clear of how we're doing it as a business..

And on the volume..

On the volume, no change. Yes, on the volume actually….

No, I mean, because of Action 2021..

Yes. So in terms of volume, at this point in time, we have not provided a regional breakdown. I think I’ve discussed it with Daniel as to how best we do that, because there are – that there is also competitive impact, if we talked about increasing in certain market volumes versus other markets and we are adjusting to walk through that.

But I think in knowing any change in share just participating in the growth that we're seeing in demand in some of these markets, I think it is an important achievements that there is – that requires the ability of assets around customers growth and it's not the given. And so that's what we can say at this point in time on volume..

Okay. That’s fair enough.

Please follow-up on the tax frame as you say, you would feel comfortable with the $6 billion of net debt even on the trough of the cycle, you've already kind of a sense of what the average net debt free cash flow would be going forward through the cycle?.

Sorry, what was the question exactly?.

I was saying, if you now guide for $6 billion target net debt figure, which would be – also good enough for low point in the cycle, do you have a sense of an average net debt free cash through the cycle between the ups and downs where you feel comfortable?.

So maybe I'm not understood the question, but I think the takeaway is that we’re suggesting that when we hit a net debt level of $6 billion, we will then begin dividend, which would be a percentage of free cash flow. We're not suggesting that. We stop at $6 billion.

To the extent that we have excess cash flow, I think there is the highlight that we'll continue to delever as well.

The last point of clarification is that the $6 billion number is the right debt because when we looked at credit metrics, investment with credit metrics, we found that, at that level, we have investment grade ratios in all years during the crisis that we have seen.

So that was the idea behind the $6 billion, as well as the fact that we're generating positive free cash flow in all those years as well. So it was – how do we make sure, we have a business that's generating positive free cash flow in all environments, down cycles, up cycles and we arrived that number, investment grade ratios, some of the other..

Okay, that’s clear. Thank you very much..

Thanks. We will move to then last question actually, which is from Phil of KeyBanc..

Thanks very much.

Aditya, when we think about the pickup in coal, consumables, iron ore pellets in NAFTA, how should we think about the magnitude of the increase in per ton cost in 2018 versus 2017?.

So in terms of coal, in terms of NAFTA, as you know, we enter into long-term contracts. So the impact in 2018 versus 2017 is not significant. In terms of iron ore, we have a long-term purchase contract, as you know. The details of how that works has been previously disclosed. If you want, one of us can walk you through it again.

It's just a proxy of market, both of – it roughly when I think about it, there is market price of iron ore and then there is also the market price of band, hot band..

Okay. I think, I'm good on that, I appreciate it. And then the timing of Action 2020, how much benefit of that remaining $1.5 billion because I think you said, you're about halfway down right now is baked into your 2018 view..

So we’re three years left and $1.5 billion to go, so without being very specific about it. But if you were just to do a simple division, I think that kind of captures the spur of 2018..

And my last one here is just more kind of a strategic or philosophical question.

And basically, are you concerned that the NAFTA free trade agreement right now is going to be altered based on the President's commentary and some of the investments that you are making in the Mexican sheet business right now, is that a way for you to hedge against any quality issue disruption. Thank you..

We do not know in what we – this Mexico and Canadian negotiations will evolve and a lot of moving parts here in this time. But we believe that our Mexican investment was planned much before this NAFTA negotiations begin.

And we clearly believe that in view of our flats really competitive situation in terms of price, cost and quality, and converting those slabs into high validated products through downstream investment with the right decision, irrespective of the NAFTA conclusion..

Thanks, I appreciate it..

There being no other question, I'd like to thank you all for your attention and interest. As I mentioned in my opening remarks and from the discussion on this call today, it is clear that we continue to head in the right direction.

The industry backdrop has structurally improved, our market trends are positive and ArcelorMittal is making progress both financially and strategically. Thank you once again and talk to you next quarter. Thank you. All the best..