Thank you. Hi. Good afternoon and good morning, everybody. This is Daniel Fairclough from the ArcelorMittal Investor Relations team. This morning we published our results for the fourth quarter and full year 2018 alongside the Q&A document and presentation with detailed speaker notes.

So the intention of today's call was not to go through that presentation, but rather answer any of the questions that you might have. So the whole call today is scheduled to last about 45 minutes. [Operator Instructions] As with that brief opening, I'll hand over to our Chairman and CEO, Mr. Mittal..

Thank you. Good day, everyone and welcome to today's call to discuss our results and the strategic progress achieved in 2018. I am joined on today's call by Aditya Mittal, CFO, CEO of ArcelorMittal Europe and President of ArcelorMittal; Simon Wandke, CEO of our Mining Business, as well as Genuino, our Head of Finance.

Before we move to Q&A, I would like to start today's call with a few remarks. My first point is that 2018 was a year of good progress for ArcelorMittal. Our financial results were the strongest for many years. We regained our investment grade rating. We undertook a number of strategic initiatives to strengthen and expand our operating footprint.

And most importantly, we achieved our best ever health and safety performance. Turning to our financials. Our EBITDA increased by 22% and our net income of $5.1 billion is 13% higher year-on-year. This performance was largely driven by our steel business, which operated in a positive market environment in 2018.

Turning to our balance sheet, net debt of $10.2 billion was stable year-on-year, primarily due to a larger than anticipated investment in working capital of $4.4 billion. Nevertheless, our balance sheet is stronger than it has been at any time since the creation of ArcelorMittal.

This is best highlighted by our net debt-to-EBITDA ratio which stood at one time at year-end. This strong financial footing did enable us to progress several initiatives to invest in projects, which we believe will create long-term sustainable value.

We completed the acquisition of Votorantim and Ilva both of which enhance our leading position in key markets. We now await ratification of our offer for Essar Steel in India, which will provide us with a new exciting growth pillar in the world's fastest-growing steel market.

Organically, we are investing in high return opportunities unique to us AcelorMittal. Our investments in Mexico and Brazil are good example of projects that will enhance our ability to better serve our customers. These projects will increase the proportion of higher added value products in our portfolio and will improve our profitability.

Turning to the outlook for 2019, we expect steel demand growth in each of our markets with ex-China demand growth similar to the pace we saw in 2018. While the issue of global overcapacity persist, the structural change we have seen in industry over the past two years has delivered positive changes, resulting in healthier doable utilization rates.

We must - we take full advantage of this in 2019, focused on improving our operational liability and ensure the strategic growth initiatives we are undertaking are well executed in order that they deliver on their value creation potential. Thank you. Now, we are happy to take your questions..

Thanks, Mr. Mittal. So, we'll move to the first question please from Seth at Jefferies..

To start out, obviously we've seen significant weakness in global steel prices over the past few months including some of your core markets like Europe and NAFTA. I realize that your realized prices in the fourth quarter only fell quite modestly.

Can you please give us a bit of a sense of how you expect realized prices to progress in the course of Q1 and Q2? And beyond that, with the current raw materials cost inflation from iron ore, what would that imply for your metal spreads over that time period? Obviously, with partial vertical integration, you're in unique position versus your peers on a group level, how should we consider that going forward? Start there, please..

So, thanks for your question. So, in terms of pricing, you're right. The impact of price weakness primarily in the December month will be reflected in Q1 results. This is the spot price impact. However, do recognize that we also have contract exposure, contract prices reset, and that's a positive headwind as we enter 2019.

The other factors in terms of 2019 is our shipment performance. So, as we highlighted in our release, we had operational disruptions which impacted performance in Q4. And we also had demand weakness which also impacted shipments performance in Q4. We expect both not to repeat themselves in 2019.

We expect to do better from an operational perspective and expect to have higher shipment performance into 2019. In terms of metal spreads, I think its early days. But as you're aware, there also have been price increase announcements in some of our core markets.

And clearly that should - our expectation is that more than offsets raw material price cost increases..

When we consider the lead time to your orders in those different markets I noticed you just commented that that price increases would more than increase raw materials pressure.

Would that in your opinion be a benefit for Q2 or something that likely we need to wait to the back half of the year? And secondly on the shipment performance, you had 1.9 million tonnes of lost shipments in 2018 due to some planned and unplanned issues.

Is the implication that we should expect that full 1.9 million tonnes back in 2019 or is that a more medium-term goal?.

So in terms of price increases I think clearly the price increases that you announced in January of this year impact the second quarter performance, right? That's the lag. The lag is not greater than that. In terms of shipment performance, yes, our expectation is that we reversed the shipment loss of that amount.

Plus, there's also growth in our markets, right? So, it's a combination of the two reversing of the shipment loss as well as growing as our core markets grow. So, it's not a medium-term objective. It’s a 2019 objective..

Thanks, Seth. So, we'll take the next question please from Alain at Morgan Stanley..

Two questions from my side. Firstly on Slide 9, you highlight one-off profit loss due to shipments of $0.3 billion.

While thinking about the EBITDA bridges into 2019, is that the total amount that we should add back as a one-off or is there more to it? And how much of that amount was incurred in Q4 alone? And then the second question is on the remedial asset sales.

Can you give us an update on the process? You seem to have written down the value of those assets again by $400 million. What has driven this impairment? And can you confirm that the total balance sheet amount is now at $900 million of those assets? Thank you..

So in terms of the shipment loss, yes, we have quantified that at about $300 million, which impacted our progress in terms of Action 2020. So that should reverse itself in 2019 as we perform better in terms of operational performance. But on top of it, as I mentioned earlier, the markets are also growing.

So, we will also have growth in shipments from - and demand in the core markets in which we operate. So, I think that's the volume uplift that we are forecasting at this point in time for 2019 relative to 2018. In terms of the remedy assets, as you know, this is not a bilateral negotiation. It's a trilateral negotiation. So, we are the seller.

We have announced our buyer which is Liberty and the third party is the commission which is the regulator. And clearly, they have had their review of our sale process.

And as a result of their sales process we have had to modify terms of the transaction, which has resulted in the higher remedy loss which we have - which has resulted in impairment loss which we have recorded in the fourth quarter due to these remedies.

We have not quantified the exact number as to what it means in terms of the net asset liability, but you're in the ballpark..

So, we'll take the next question please from Cedar at Bank of America..

Just a question on Essar, I'm sure that you're aware that a lot of investors have been disappointed by the decision to grow in India. Obviously, you internally have a different view on the long-term growth story in the Indian market, which I think we can appreciate.

But can you just talk more broadly again about the case for growth in steel? Obviously you’re paying a price tag for Essar that’s at a significant premium to your own valuation. And I think a lot of people are of the view that steel in general is an ex-growth market, maybe not in India but globally.

Can you just talk strategically again about where we are with Essar and how that fits again into your capital allocation? Thank you..

So, there are a lot of points but maybe from the first, the most basic point. If you just look at the value of our transaction, there actually is a competing bid which has not been allowed by the courts which is higher than the offer that we have made.

If you look at the other transactions that have taken place in India, they mirror the values that we have paid. In terms of the asset that we are acquiring, to-date, it has 14 million tonnes of pelletizing capacity. With smaller CapEx, it actually has 20 million tonnes of pelletizing capacity on the eastern coast of India.

And on the western coast of India, which is where all the growth occurs, you have an 8.5 million tonne flat steel producer. In terms of India growth, I think today India is already the second largest steel market in the world. So the only market which eclipses India is actually China. India is the fastest growing steel market in the world.

And if you look at the per capita consumption of steel in India, it is actually very low compared to any global standards or even developing country standard. So the potential is there and we can see the growth actually occurring. Fourthly, there are natural barriers in India, trade barriers. They have minimum import pricing. They have tariffs.

And I think India is very focused on developing its own industrial backbone and not reliant on imports. So I think the growth that exists in India is not really a growth that is available to imports, but primarily to domestic players. Lastly in terms of capital allocation, as you know, this is a joint venture with Nippon Steel.

The impact on our balance sheet, the debt to equity would be about 3 -- 2 to 1. So the impact on the equity is about 60% which is like $1.6 billion. We've already spent a $1 billion of that $1.6 billion in investments we made for Uttam Galva and KSS. So the incremental M&A outflow in 2019 is $600 million for completion of ESIL transaction..

And then maybe one follow-up question. I appreciate the commentary around your own balance sheet implication, but I think a lot of people are concerned about the actual date that the asset will carry. We don't have earnings for Essar for a while, obviously because it's not listed.

But if you do some assumptions, you get to sort of maybe 6, 7 times net debt to EBITDA at the asset level.

How do we get comfortable that that kind of leverage is actually sustainable at Essar and that Mittal and Nippon are not necessarily on the hook for further capital injections in the future?.

So, Cedar, that's a good question. I think it's fair to highlight as we have in the presentation that SR is a profitable company. We have looked at its profit potential. It's a free cash flow generation the amount of leverage we're taking – putting on the balance sheet.

We're very comfortable with the debt equity ratio and the debt equity we're putting on SR. And as soon as the transaction closes we can actually talk to you about EBITDA of the company. Today, it's all governed by confidentiality.

And what we are seeing in terms of the EBITDA potential and the amount of leverage we're putting on SR to your balance sheet..

So, we’ll move the next question please from Ioannis Masvoulas at Macquarie..

A couple of questions from my side. The first on the automotive, automotive steel contracts you signed in Europe and the U.S. earlier this year. Are there any raw material pricing clauses that allow you to pass on a higher raw material costs? And the second question on the working capital.

Given the volume guidance for this year and assuming raw material prices stay up their currently elevated prices, is it unrealistic to expect another year of investment in working capital that will more than offset the $1 billion reversal that you've highlighted? Thank you..

So, let's talk about auto. So, in terms of auto when we look at our automotive business on a global basis, as I mentioned earlier, we are seeing improvement year-on-year. So 2018 versus 2019 the automotive business and ArcelorMittal will do better.

This is for various reasons, but clearly it's based on the new contracts that we have entered and our product capability that continues to surpass competitors. In terms of raw material adjustments, primarily these contracts are our fixed-priced contracts. So, there is no raw material adjustment.

In terms of working capital, as you know, we had operational disruptions and we had a seasonal slowdown in Q4 and some inefficiency or opportunities that we see in terms of receivable management. And therefore, all things being equal, we expect $1 billion reversal in working capital in 2019.

This is also the exact delta between our guidance for 2018 versus what we actually invested in working capital in 2019.

In terms of working capital impacts going forward, I think you can model your own material assumptions, you can model our volume increases, and you can also model steel spreads and come up with a number of what working capital would be for 2019..

So, we'll move to the next question please from Kevin at Goldman Sachs..

Given your assumptions of somewhat lower growth of steel shipments this year in most regions, do you expect to be able to - like how much of the 1.9 million tonnes of extra production do you expect to translate into shipments? And do you think there is any risk to that unless there is a pickup in the macroeconomic environment?.

So, Kevin, that's a good question. And if you were to turn to Page 19 of our slide, you would see that global growth excluding China is not so different than 2018, right. 2018, excluding China, growth was 2.1%. Excluding China, we're forecasting in 2019 2% to 3%. So that's just on the macro.

Clearly, China grew very strongly in 2018 and we have a more moderate or conservative forecast for 2019, and that's really impacting the global numbers. In terms of our expectation of shipments, so clearly we will grow as the market grows. But as we have these operational disruptions in 2018, we retreated from our natural export markets.

So when I say natural export markets, these are markets which are near to our operating facilities. For example, in Europe, it's Northern Africa, it's Turkey, could be also some higher value-added products and in neighboring markets. And we would be re-entering those markets with our tonnages..

And maybe one more question on the automotive like you said fixed pricing. Given the ongoing raw material pressure, would those margins be up year-on-year, flat year-on-year? Can you give any color on that..

So overall, we're still expecting automotive to do better in 2019 versus 2018. Recognize that the raw material cost inflation doesn’t impact us so directly in our North American business. It’s an impact more in Europe, as well as in our Brazilian business..

So we’ll take the next question please from Charles at Bradford Research..

In the U.S., obviously, there are now tariffs impacting Dofasco. Could you give us a figure on how much that cost you last year and whether your new contracts for this year allow you to pass through the tariff, which I understand weren't allowed last year..

So, when we look at a business roughly we are paying $100 million a quarter of additional tariffs of steel that we sell into the United States. That's primarily Dofasco. In terms of passing on the tariffs I think fundamentally we get the U.S. price and then we pay the tariff. So that's our netback that we get for our Canadian business.

So roughly - so there's no change to that. It's costing us about $100 million per quarter..

Is there any impact on your CST operations from the valley production cuts on iron ore?.

So, at this point in time there is no impact on our operations. We call it AcelorMittal Brazil flat or [indiscernible]..

So, we'll move to the next question please from Rochus at Kepler..

The one on the other, if I get the math right, then your volume contribution in Q4 was just a couple of hundred million. And if that's the right figure then it means that you operate very much below the capacity of your blast furnace in operation.

Can you give a bit of color what's really driving the business? Why it has been so weak over the last quarter? And is there any risk that you have to take down one of the blast furnaces? And the second question is can you give us a bit of a color on the excessive inventory you hold, to what extent this is on the raw material side and to what extent it is on the steel product side? Third question is on your CapEx, are there any projects you have put on hold at that point in time in reflection to what was going on in the market?.

So, in terms of Ilva, look, we acquired the company 1st of November. The first order of business has been safety. If you look at Ilva safety performance, it is much worse than what ArcelorMittal does, and we had set the right tone at the top, and we intend to make improvement in Ilva safety performance.

The second order of business has been to demonstrate that we're very focused on creating sustainable operations and are very conscious of our environmental footprint, and we pursue an accelerated timeline to make sure that the emissions coming out of Ilva are contained.

And I think in the slide, there's a nice photograph of the raw material yard that we are building. The third order of business is clearly to make the operational turnaround. There are two aspects of the turnaround. One is the commercial.

I think that's much easier because we can plug and play into our raw material prices as well as into our sales and marketing infrastructure that we have in Europe. Now, clearly, the harder is the operational turnaround. So, Ilva was producing at a rate of 4.5 million tonnes.

I think by the time we acquired it, it was slightly lower than 4.5 million tonnes. Our focus has been to bring that production up to 6 million tonnes. That's our target for Year 1. So far, there’s no reason or issue that we have seen why we can't achieve that.

So our focus is to achieve 6 million tonnes of production capacity and shipments in Ilva in 2019. Also, from everything that we have seen, we are still very comfortable and confident that we will achieve €310 million of synergy at Ilva, and there's another €40 million of synergy for other group companies, so the total is €350 million.

In terms of excessive inventory, I would say that we talked about a $1 billion or reversal of 2019. That's the overspend in 2018. A majority of that is inventory and there's a small bit, which has to do with more efficient receivable collection. Out of that majority, half is stuck in raw materials and the other half is in finished goods.

The known CapEx, what’s the other question?.

I understand..

In terms of CapEx, look, when we look at these projects, we have a very strong gated approach. And often we want to find projects which are unique to our ArcelorMittal. And we look at these projects through the cycle, right. These are projects that we start because the steel cycle is strong.

These are projects that we start because we believe that there is a market opportunity, and we as a player in that market have an opportunity to capitalize on that regardless of the steel cycle. So the short answer is, no, there has been no change to our CapEx strategy..

Maybe one final one on the Action 2020. I think you highlighted again that the volume component of the program hasn't been achieved that much.

Is this now more a question, apart from the operational performance issues, is this kind of a cyclical issue not getting there yet, or is this more of a structural thing?.

Sorry, what do you mean by cyclical or structural.

What's the difference with cyclical or structural in your mind?.

You know you have said that up as a multi-year program and so is the reason – the fact that you haven't got there apart from the operational issues is this because you could not launch enough product yet or you couldn't gain market share as much as you wanted, or do you have as a more structural objection here?.

So let's go through it, so that we're all clear. We lost year-on-year about 1.9 million tons of production volume. That's the operational losses that we suffered, if you look at the data year-on-year actually we've done a bit better because other segments have performed better. But 1.9 million is a good number.

Those are operational issues that we have faced primarily in our CIA operations, as well as in Mexico. Going forward, we don't expect that to repeat, and therefore we expect to get back on to our action 2020 volumes. This is not because we could not produce the volume or we have product development issues.

There was some slowdown in Q4, but that was a smaller amount in the context of things..

What I meant is - when you're targeting this growth, is it primarily because you were anticipating a certain market growth, or is it more based on company specific initiatives which are bit independent of market growth, which could not be delivered yet?.

So, that's a good question. It's a combination of both. But fundamentally, Action 2020 is company specific initiatives because a lot of our facilities are also competitive on the export market. And to the extent that some of these markets do not grow as much, then clearly we have that opportunity.

Having said that, when we look at the data that we have forecast for 2019 and what we would expect for 2020, I believe the markets in which we’re operating are growing, and therefore, they should capture the growth of volume that we are forecasting in our 2020 action plan..

Next question please from Phil at KeyBanc..

I just wanted an update on Mexico and that project I know it's part of the budget this year and just wanted to try to frame what the incremental volume potential is for that $1 billion investment and what we should expect in terms of when those volumes or incremental capabilities will hit?.

So, the project is completed in 2020. So, you’ll start seeing the EBITDA pickup in 2021. Full ramp up is on the 12 to 18 months after. So, you see the full impact 2022, 2023 – 2022 and 2023. In terms of the project very quickly, as you know Mexico is a net importer of steel. They import about 8 million tonnes of steel.

So, we have an opportunity of converting our slabs into hot band. We export hot band out of Mexico - slabs out of Mexico and we can sell that into domestic market.

If we just look at the margins between a slab export and a domestic hot band, It’s very healthy, and obviously the cost of rolling is not that significant and that provides the EBITDA uplift..

So, you think the spending will be done by the end of next year, but we’re not going to see really the incremental volume until 2021, and it will fully ramp in 2022, 2023, is that how we should think about it?.

I would say that when you do CapEx, you also have payables and things like that. So, there would be some CapEx spending obviously in 2019, a significant amount; in 2020, a significant amount; and a small amount in 2021, residual CapEx payments..

And this is 2.5 million tonnes?.

That’s right..

And then just a second question if I may. I think you had China down a bit this year from an apparent steel consumption standpoint. Just curious what's driving that at a high level, and what are you seeing there right now given I think visibility for us all is pretty low given the holiday? Thanks..

For us as well given the holiday. But I think the anecdote on China is very simple that I think almost every year, based on the data that we have at that point in time, we forecast a moderate apparent steel consumption or apparent steel consumption of zero. And China surprises on the upside. The same happened in 2018.

I think there is some discussion on some of those measures and construction coming back quite strongly. So, there is a potential that it actually surprises on the upside..

So, we’ll take the next question please from Carsten at UBS..

Only a few questions left for my side please. The first one is again on Essar. Could you give us a little bit more clarity what is the current profitability in that business? And do you stick to your target that this operation would be EBITDA accretive in year one? That's the first one. The second one maybe again on the volume increases you aim for.

I don’t know if you heard about the $1.9 million which you lost in CIS and Mexico. We heard about the $1.5 million from Ilva and we heard there some kind of additional growth in the other operations.

If I assume somewhere around 2% in the other operations we talked about 4 million to 5 million tonnes for 2019 as a growth target which is not small given what we see in the demand outlook for steel this year.

Given the markets you are targeting which is clearly Europe, Mexico, a little bit Asia but that is not that strong either, could that not disturb some pricing in some areas in your view? Thank you..

So let's break that down. In terms of production losses and shipment losses, the most significant for us clearly our CIS operations, right? Our CIS business is primarily export-oriented. So, then the question moves on to how are the export markets performing in 2019 and we see growth on a global basis.

We continue to see Southeast Asia developing, and therefore we find a home for our products, even the CIS market is growing in 2019 to 2018. So that's a big chunk of the operational and production losses. In terms of Ilva, we said we will hit the run rate of 6 million tonnes.

We're not necessarily suggesting that the full year will be 6 million tonne of crude steel production. It may still be 6 million tonne of shipment because we could send some hot band that we have in our existing operations and FOS for example to the downstream facilities of Novi and Genova, etcetera, etcetera.

So the idea is to get 6 million tonne production run rate and the level of shipments closer to 6 million tonnes. In terms of EBITDA, we’re on target. In terms of EBITDA we expect Ilva to be EBITDA positive in year 1. And clearly it's highly dependent on increasing and achieving the 6 million tonne production target.

So if you break it down, Ilva has run rate of 6 million, CIS is recovering from operational issues. And then the 2% on the rest of the tonnage reflects the market growth..

Maybe a follow up on Brazil which surprised me a little bit on the downside. It was a very weak performance, not only because of the $17 million one-off, what was actually the additional cost here which you had to book in the fourth quarter and do you believe that this pressure is easing into the first quarter or is it recurring on..

So in terms of Brazil, you're right. The provision is only $17 million. So it doesn't explain the full delta, what happened in our Brazil business as we found that the export markets were very weak in the fourth quarter. As you know, we export a lot of slaps from Brazil.

We have some long carb a long steel exports as well but not such a significant amount. So really the slab exports as well as other exports are Brazil impacted. Other results from the third to the fourth quarter, also our business in Argentina did not perform as well primarily because inflation is still running very high.

And so the converted EBITDA is not that significant. We also had some higher repairs there one-offs in Q4. We tend to repair our Are one off in Q4. We tend to repair hot strip mill and other aspects of a Brazilian business and so that also impacted fourth quarter results and some other impacts.

So, I don't expect the higher costs to repeat themselves into Q1 and I expect as global spreads continue to move up the impact on exports to be less muted..

So, we’ll move to next question please from Luc at Exane..

I have lost my voice so I’m not able to speak very loud. Two questions on my side. First of all on the U.S. market outlook, we've seen a number of your competitors announcing capacity increase which will hit the market post 2021.

Do you have any comments with regards to how you see the outlook there and is there any medium-term risk let's say to what has remained the market pretty tight so far especially with the trade actions? That's my first question.

And secondly, can you explain the reason why you're still not committing on the time table for the $6 billion that prediction target? Thank you..

So let's talk about capacity announcements in the U.S. clearly Section 232 was designed to maximize capacity utilization of the U.S. steel industry and we can see that being effective in 2018. I think these capacity announcements are Section 232 where there is a strong U.S. market as imports are less competitive.

In terms of our net debt target, we have always provided you with a framework to build your own assumptions, and we're doing the same in 2019. And in terms of the key assumptions that you should take away, is that our cash requirements is about $6.4 billion for 2019. This includes the growth CapEx, interest taxes and other cash charges.

We expect a $1 billion reversal in working capital in 2019. Clearly, we have announced an increase in our dividend and we have our share buyback, and we also payout to minority dividends. We also payout dividends to certain minorities. This is, for example, our shareholder in Mines Canada or our shareholder in -- our wire operation in Brazil.

So you should deduct that. In terms of M&A, I expect that the investment in 2019 would be lower than what we have incurred in 2018..

So may I have the two follow-ups? First of all, on the U.S. capacity increase. I do appreciate that it's not a near-term concern, but the fact is that post 2021 potentially the Section 232 will not be there anymore and you will be left with the increased capacity. So is there not a risk? And secondly my questions on the net debt date.

Let's say, timetable commitment is more given the number of push back I think all of us as analysts we are facing when we took ArcelorMittal capital allocation policy, et cetera , that I think the number of investors as to, let’s say, specific time frame and dated commitment from your side as to the deleveraging priority you’re stating in your release?.

So, just only capital allocation that's very interesting feedback. But from our point of view I think we our job is to lay out the building blocks and then to always ensure that capital allocation is our number one priority. I think we have also laid out what we – how we think of capital allocation.

So, clearly, the first focus is to continue to delever our business and we continue to make progress on that. Secondly, we also want to make sure that we do not miss out on unique opportunities whether that's growth in terms of M&A or whether that's a unique CapEx opportunities like Mexico and Brazil.

And clearly, the third is as we achieve our deleveraging objective or net debt target we’ll be returning excess cash to shareholders. So, I think we're very conscious as a company on the responsibility to delever, achieve that target.

But we're also cognizant that we need to make sure that we, for example, in 2018 the biggest consumer of capital was not really M&A or CapEx, it was working capital and these are requirements of the business and we have to be responsive so that we can make sure that our mills and raw materials that they need and we can deliver on time to our customer base Going back to your points on Section 232, look it’s clear that Section 232 if you’ll just look at from a capacity addition has been a success because the idea was to maximize capacity utilization and to encourage investments in the steel business in the U.S.

So, there's a little bit of a chicken or egg where you have the capacity now which is because of Section 232and therefore hopefully it demonstrates to U.S. stakeholders that it is important to keep 232 for a longer period of time..

So, we’ll move to the next question please from Bastian at Deutsche..

My first question is just on the inventory cycle and apparent demand.

Could you please talk about the various markets in the first quarter and whether you do believe that the destocking which I guess we've seen at the end of the last year has come to an end already in your key markets? And my second one, and this is on the mining business and maybe one for Simon, you guide for flat volumes and my understanding is that you still have close to 20 million tonnes in pellet production.

Firstly, do you have any ability to push this a little bit further or do you have any plans to expand capacity here given the continuous rise in Crimea which we have seen over the standard grades? Of course I can see that nothing so far is at least in your budget.

And then lastly, could you please remind us how much of these pellets you sell externally, and how your contracts are structured in terms of your ability to capture the highest spot prices in pellets? Thank you..

Bastian, yes, thanks. So, just step back on pellets itself. So, we have pellet production in several locations. The main marketable volumes, two external markets come out of Canada from AMMC, and it’s a very small, extremely small volumes. So, we had some through to joint venture partners. Otherwise, it goes to the group.

So, at the moment, if you are willing to - wanting to take advantage of spot markets, it’s not something typically available to us..

So, in terms of destocking and in terms of our customer base, I think as the steel prices are not going down, their prices are increasing. I think you would see a reversal of that trend..

And then just on essentially the situation on the pellet production.

Is there any ability to push this a little bit further or is the production actually fully maxed out which I would expect? I mean is there anything on the horizon in terms of potentially extending this given that the phenomenon of high pellet premium is something which has been very, say, dominating in the last two years at least and it seems like that may last a little bit longer?.

So, I mean if you step right back, I mean, the company has a focus, a strategy on low impurity high grade direct charge. And so current pellets we push all our plants and our plant in Port-Cartier at AMMC, as I mentioned, that was originally built about 6.5 million tonnes. It's operating at 10.2 million tonnes.

Obviously with capital increases along the way but with consistent debottlenecking. There's a bit more to squeeze from that plant. But yes.

We are actively looking at global locations for potential pellet expansion because we do have significant amount of concentrates that can be converted into pellet feeds and therefore into pellets, and we see that as a value addition to the group in direct charge. And, yeah, that work will carry on in 2019 next year, Bastian..

And what would be the time frame for construction of those plants?.

Well, that would be most likely brown. That would be in the sites that we would look at would be typically the close to steelworks or close to an iron ore mine. And you're talking typically permitting being the biggest challenge these days.

But there are ways around that, well, depending on where you want to do your grinding flotation, and also particularly around your methodology for producing pellets. So typically, 36 months if you're looking at something like a startup on a pellet plant.

But given that would be potentially on a brownfield site where we do have existing facilities on port exit inbound raw materials etcetera, it could be a little bit shorter. But I would err on the longer side because of permitting frankly..

So we’ll move to our final question please, which is from Christian at SocGén..

Yes. Thank you very much. Just a couple of short ones. The first one that revised quarter formula in Europe, which was introduced, I don’t know, a few days ago. When we speak to [indiscernible] I think they’ve got a degree of optimism that this will have a favorable impact on domestic volumes for domestic producers.

Do you see that also as actually a development in carbon steel, and would that be specifically perhaps more helpful to expand your market share out of Ilva is the first question? And the second question is looking at those iron ore disruptions in Brazil, I mean, assuming that there may be a risk that more mines housed specifically in Brazil get shut down, are you considering that there may be a risk sometimes in 2019 that there would be a shortage of iron ore in the market and that would be an issue not just on prices but on the availability of your volume industry? Thank you..

So let's talk about the safeguard first. As you know, the safeguard is an arrangement which reflects the average level of steel imports between 2015 and 2017. For certain products, this is more beneficial than other products.

I think the biggest weakness of the safeguard is the fact that it allows that level to increase by 5% per annum and if you if you look at the steel consumption growth or apparent steel demand growth that we're forecasting in Europe, it is much lower than that amount.

So by definition it implies that there will be a higher level of imports into the European steel industry and that level of imports will grow faster than the level of steel supply - steel demand.

So that's the negative but at the end of the day it's still there is a measure, there’s a safeguard, it's quarterly administered certain products are better off than others. So net-net I do believe it is a positive for the European steel industry but perhaps not as much as much as it should have been.

In terms of the mining impact, I think look this is a fluid situation and it's dynamic and it's developing on a daily basis at this point in time, we have not seen supply disruption to our steel facilities..

Thank you everyone, for dialing in today. If you have any follow-up questions you can always contact Daniel and his team and maybe perhaps all of you are aware that there is a site visit in Toronto that is [indiscernible] ArcelorMittal Italia between 19th and 20th of March.

So analysts and investors could enroll themselves to visit the plant and can get in touch with our higher department. With this I close this call today and looking forward to talk to you in the second quarter - first quarter earnings call. Thank you..