ArcelorMittal: Steel the Deal

ArcelorMittal is leading the steel industry's green transition with concrete investments in hydrogen-based steelmaking and electric arc furnaces. The company's new 1.5Mt EAF at Calvert represents the first facility in North America capable of producing "domestically melted and poured" exposed automotive grades. This strategic positioning capitalizes on the growing demand for low-carbon steel, particularly from the automotive sector where manufacturers are increasingly committing to green steel to meet their net-zero targets. The company's Carbalyst carbon capture program, launched in 2015, demonstrates its early commitment to environmental innovation.

The company's diversified growth strategy is expected to deliver $2.1bn in incremental EBITDA potential, with $0.7bn targeted for 2025 alone. Key projects include the Liberia iron ore expansion to 20Mt capacity, which achieved record production and shipments in Q2 2025, and the development of AMNS India operations. The successful commissioning of Calvert's new EAF facility, combined with recent acquisitions of Tuper and AMTBA, strengthens ArcelorMittal's position in high-value tubular and automotive markets. These investments create a foundation for sustained margin expansion and cash flow generation.

ArcelorMittal has returned substantial capital to shareholders while maintaining growth investments, having reduced fully diluted shares outstanding by 38% since September 2020 through buyback programs. The company follows a disciplined capital allocation policy, returning a minimum 50% of post-dividend annual free cash flow to shareholders. With a proposed increase in the base dividend to $0.55/share for 2025 and a new multi-year buyback program through 2030, the company demonstrates commitment to consistent shareholder returns while funding strategic growth initiatives.

EU Trade Policy Implementation: Concrete announcements on CBAM enhancements and new safeguard measures replacing current protections could significantly benefit European operations by leveling the playing field against high-carbon imports.

• Liberia Full Capacity Achievement: Reaching the targeted 20Mt annual iron ore capacity by end-2025 should contribute an incremental $450m EBITDA annually, strengthening the mining segment's contribution to overall profitability.

• AMNS India Phase 1 Completion: The Hazira expansion to 15Mt capacity by end-2026, along with new downstream automotive-focused facilities (CGL3, PLTCM, CGAL), positions the company for India's projected 8% steel demand growth.

• Hydrogen Steel Commercialization: Full deployment of hydrogen-based DRI technology could establish premium positioning in the green steel market, with early mover advantages in capturing automotive and construction sector commitments to low-carbon materials.

• India Greenfield Development: The planned 7.3Mt integrated steel plant in Andhra Pradesh represents a transformational growth opportunity in the world's fastest-growing major steel market, potentially adding substantial long-term earnings capacity

ArcelorMittal faces significant exposure to trade policy uncertainties, particularly regarding steel tariffs and import restrictions. The company's global footprint, while providing diversification, also creates vulnerability to changing trade dynamics between major markets. Recent tariff announcements and ongoing geopolitical tensions could disrupt established supply chains and affect pricing dynamics across key markets, potentially impacting margins and operational efficiency.

The transition to low-carbon steel production requires massive capital investments with uncertain returns. The company's decarbonization pathway demands substantial spending on new technologies like hydrogen-based DRI and electric arc furnaces, while regulatory frameworks like the EU's CBAM add complexity. Energy costs could rise to over 40% of production costs for hydrogen-based processes, compared to 15-20% in traditional steelmaking, potentially pressuring profitability during the transition period.

Steel demand remains inherently cyclical, particularly vulnerable to economic downturns and construction sector weakness. China's steel production is expected to peak and decline, while global growth may slow despite emerging market expansion. The automotive sector, representing 20-25% of steel demand, faces its own transition challenges with the shift to electric vehicles and changing supply chain dynamics potentially affecting steel consumption patterns.