ArcelorMittal S.A. – Annual report – 31 December 2024
Industry: manufacturing
(millions of U.S. dollar, except share and per share data)
2.4 Investments in associates and joint arrangements
The carrying amounts of the Company’s investments accounted for under the equity method were as follows:
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, 2024 and 2023, and none of them have a carrying value exceeding 150 at December 31, 2024 and 2023.
2.4.1 Joint ventures
The following tables summarize the latest available financial information and reconcile it to the carrying value of each of the Company’s material joint ventures, as well as the income statement of the Company’s material joint ventures:
1. The country of incorporation corresponds to the country of operation.
2. Ownership interest in Borçelik was 45.33% and 50.00% based on issued shares and outstanding shares, respectively, at December 31, 2024; voting interest was 48.01% at December 31, 2024.
3. Adjustment in Borçelik relates primarily to differences in accounting policies regarding revaluation of fixed assets.
4. Adjustments in AMNS India correspond primarily to transaction costs incurred to set up the joint venture and the fair value of the guarantee of the joint venture’s debt (see note 9.4).
5. Includes AMNS Luxembourg, AMNS India (including infrastructure assets) and intermediate holding entities.
6. Adjustments in Calvert primarily relate to differences in accounting policies regarding inventory valuation.
7. The joint venture was incorporated and had no operations in 2024. The initial carrying amount of 566 corresponds to a paid cash contribution of 120 and 446 liability (including a non-current portion of 222 see note 9.2) corresponding to the net present value of future equity increases for which the Company has a present obligation.
1. The country of incorporation corresponds to the country of operation except for Tameh whose country of operation is also the Czech Republic.
2. Ownership interest in Borçelik was 45.33% and 50.00% based on issued shares and outstanding shares, respectively, at December 31, 2023; voting interest was 48.01% at December 31, 2023.
3. Adjustment in Borçelik relates primarily to differences in accounting policies regarding revaluation of fixed assets.
4. Adjustments in AMNS India correspond primarily to transaction costs incurred to set up the joint venture and the fair value of the guarantee of the joint venture’s debt (see note 9.4).
5. Includes AMNS Luxembourg, AMNS India and intermediate holding entities.
6. Adjustments in Calvert primarily relate to differences in accounting policies regarding inventory valuation.
1. The country of incorporation corresponds to the country of operation except for Tameh whose country of operation is also the Czech Republic.
2. Ownership interest in Borçelik was 45.33% and 50.00% based on issued shares and outstanding shares, respectively, at December 31, 2022; voting interest was 48.01% at December 31, 2022.
3. Adjustment in Borçelik relates primarily to differences in accounting policies regarding revaluation of fixed assets.
4. Adjustments in AMNS India correspond primarily to transaction costs incurred to set up the joint venture and the fair value of the guarantee of the joint venture’s debt (see note 9.4).
5. Includes AMNS Luxembourg, AMNS India and intermediate holding entities.
6. Includes Acciaierie d’Italia summarized statement of financial position as of December 31, 2022 adjusted for the fair value adjustments at divestment date.
7. Adjustments in Calvert primarily relate to differences in accounting policies regarding inventory valuation.
AMNS India
AMNS India is an integrated flat carbon steel manufacturer – from iron ore to ready-to-market products with an achievable crude steel capacity of 8.8 million tonnes per annum. Its manufacturing facilities comprise iron making, steelmaking and downstream facilities spread across India.
In 2019, ArcelorMittal and Nippon Steel Corporation (“NSC”), Japan’s largest steel producer and the third largest steel producer in the world, created a joint venture to own and operate AMNS India with ArcelorMittal holding a 60% interest and NSC holding 40%. Through the agreement, both ArcelorMittal and NSC are guaranteed equal board representation and participation in all significant financial and operating decisions. The Company has therefore determined that it does not control the entity, even though it holds 60% of the voting rights. AMNS Luxembourg Holding S.A. (“AMNS Luxembourg”) is the parent company of the joint venture. ArcelorMittal’s 60% interest is accounted for under the equity method.
AMNS India’s main steel manufacturing facility is located at Hazira, Gujarat in western India. It also has:
- two iron ore beneficiation plants close to the mines in Kirandul and Dabuna, with slurry pipelines that then transport the beneficiated iron ore slurry to the pellet plants in the Kirandul-Vizag and Dabuna-Paradeep systems;
- downstream facilities in Pune, Khopoli and Gandhidham; and
- six service centers in the industrial clusters of Hazira, Indore, Bahadurgarh, Chennai, Kolkata and Pune. It has a complete range of flat rolled steel products, including value added products, and significant iron ore pellet capacity with two main pellet plant systems in Kirandul-Vizag and Dabuna-Paradeep, which have the potential for expansion. Its facilities are located close to ports with deep draft for movement of raw materials and finished goods.
In terms of iron ore pellet capacity, the Kirandul-Vizag system has 8 million tonnes of annual pellet capacity; and the Dabuna-Paradeep system has 12 million tonnes of annual pellet capacity.
AMNS India completed the acquisition of the portfolio of strategic infrastructure assets from Essar Group. The remaining assets which were pending due to regulatory approvals have been acquired during 2024 and include a 16 million-tonne per annum all-weather, deep draft terminal at Visakhapatnam, Andhra Pradesh (along with an integrated conveyor connected to AMNS India’s iron ore pellet plant in the port city) and a 100- kilometer Gandhar – Hazira transmission line, connecting AMNS India’s steelmaking complex with the central electricity grid.
AMNS India intends to further debottleneck existing operations (steel shop and rolling parts) in the medium term. The first phase of expansion represents capital expenditures of approximately 7.7 billion (0.8 billion for debottlenecking, 1.0 billion for downstream projects, 5.7 billion for upstream projects and 0.2 billion for operational readiness) and started in October 2022. It aims to increase production at the Hazira facility to 15 million tonnes of rolled products by the second half of 2026 (Phase 1A). Plans are under development to further expand production. Phase 2A would see steelmaking capacity grow to 18 million tonnes per annum by 2028 with phase 2B taking capacity at the Hazira facility to 24 million tonnes by 2030. Further greenfield development options are under consideration to take steelmaking capacity to 40 million tonnes per annum in the long-term.
On March 16, 2020, AMNS Luxembourg entered into a 5.1 billion ten-year term loan agreement with various Japanese banks which is guaranteed by ArcelorMittal and NSC in proportion to their interests in the joint venture. On March 30, 2023, AMNS Luxembourg entered into an additional 5 billion ten-year term loan agreement at floating rate with various Japanese banks. The proceeds of the loan, which is guaranteed by ArcelorMittal and NSC in proportion to their respective interests in the joint venture, is used for the purposes of financing the expenditures necessary for the implementation of phase 1A of expansion to increase production at the Hazira facility to 15 million tonnes. The loan consists of Tranche A, Tranche B and Tranche C of 2 billion, 1 billion and 2 billion, respectively, and is arranged to be disbursed by April 30, 2026 at the request of AMNS Luxembourg.
In terms of iron ore mining assets, AMNS India operates the Thakurani mine in the Keonjhar district of Odisha and the Ghoraburhani-Sagasahi mine in the Sudargarh district of Odisha.
Acciaierie d’Italia
Acciaierie d’Italia is the leading steel producer in Italy and produces high-quality and sustainable steel to be used in a range of vital industry sectors across the domestic steel market such as construction, energy, automotive, home appliances, packaging and transport and for international export. Acciaierie d’Italia has operations across various structurally linked operating sites including Europe’s biggest single-site integrated steel facility in Taranto and rolling mills in Genova and Novi Ligure. Genova is also an important hub in terms of intermodal logistics.
On April 14, 2021, pursuant to the investment agreement signed on December 10, 2020 forming a public-private partnership between Invitalia and ArcelorMittal and providing Invitalia joint control rights, ArcelorMittal accounted for its investment in Acciaierie d’Italia under the equity method.
On February 20, 2024, the Italian Government issued a decree placing Acciaierie d’Italia in extraordinary administration subsequent to the request of Invitalia, thereby passing control of the company from its current shareholders, ArcelorMittal and Invitalia, to government appointed commissioners. As a result of loss of control, the Company reclassified 60 of foreign exchange translation gains from other comprehensive income to income from investments in associates, joint ventures and other investments in the consolidated statements of operations.
VAMA
Valin ArcelorMittal Automotive Steel (“VAMA”) is a joint venture between ArcelorMittal and Hunan Valin which produces steel for high-end applications in the automobile industry. VAMA supplies international automakers and first-tier suppliers as well as Chinese car manufacturers and their supplier networks. In April 2023 VAMA announced the start of production for its second continuous galvanization line with an annual capacity of 450,000 tonnes, bringing its total capacity to 2 millions tonnes per year.
Calvert
AM/NS Calvert (“Calvert”), a joint venture between the Company and NSC, is a steel processing plant in Calvert, Alabama, United States. The slabs for Calvert’s operations are sourced from ArcelorMittal plants in Brazil and Mexico and from Cleveland-Cliffs, which following its acquisition of ArcelorMittal USA entered on December 9, 2020 into a new five-year agreement with Calvert (with an automatic three-year extension unless either party provides notice of intent to terminate) for 1.5 million tonnes annually for the initial term and 0.55 million tonnes annually under the extension and which can be reduced with a six-month notice. In December 2024, Cleveland-Cliffs formally issued a notice to terminate the agreement at the end of the initial term on December 9, 2025. ArcelorMittal is principally responsible for marketing the product on behalf of the joint venture. Calvert serves the automotive, construction, pipe and tube, service center and appliance/ HVAC industries.
Calvert completed the investment in an on-site steelmaking facility through a 1.5 million tonnes capacity EAF (producing slabs for the existing operations and replacing part of the purchased slabs). Construction commenced in March 2021 after obtaining all environmental permits, and commissioning is underway.
On October 11, 2024, ArcelorMittal entered into an agreement with NSC pursuant to which ArcelorMittal would purchase NSC’s 50% equity interest in Calvert. The transaction has been entered into at the request of NSC to address regulatory concerns pursuant to its agreed acquisition of US Steel. On January 3, 2025, the U.S. President issued an order prohibiting NSC from acquiring US Steel but the parties were granted an extension to June 18, 2025 to permanently abandon the transaction. Accordingly, the agreement with NSC remains in place until such date.
NEMM
On October 16, 2024, ArcelorMittal and China Oriental formed two joint ventures with equal ownership to be engaged principally in the production and sale of electrical steel grade hot-rolled coil substrates and cold-rolled non-oriented or oriented electrical steel for the Chinese automotive market. The project envisages the construction of two plants with production commencing in 2027.
VdSA
On May 5, 2023, following approval by the Brazilian antitrust authority CADE on April 13, 2023, ArcelorMittal formed the joint venture Ventos de Santo Antônio Comercializadora de Energia S.A. (“VdSA”) with Casa dos Ventos, one of Brazil’s largest developers and producers of renewable energy projects, to develop a 554 MW wind power project, with ArcelorMittal holding a 55% stake and Casa dos Ventos holding the remaining 45%. The project Ventos de Santo Antonio aims to secure and decarbonize a considerable proportion of the Company’s wholly-owned subsidiary ArcelorMittal Brazil’s future electricity needs through a 20-year power purchasing power agreement starting on January 1, 2026. Through the agreement, both ArcelorMittal and Casa dos Ventos are guaranteed equal board representation and participation in all significant financial and operating decisions. The Company has therefore determined that VdSA is a joint venture subject to joint control as it does not control the entity, even though it holds a 55% interest. The Company accounted for its investment in VdSA under the equity method.
Tameh
Tameh is a joint venture between ArcelorMittal and Tauron Polska Energia S. A. (“Tauron”) including three energy production facilities located in Poland. Tameh’s objective is to ensure energy supply to the Company’s steel plants in Poland as well as the utilization of steel plant gases for energy production processes.
Following the occurrence of a deadlock situation, both Tauron and ArcelorMittal had the ability to exercise a put option right, allowing each partner to sell its shares to the other one. As per the shareholders’ agreement, the declaration of acceptance of an offer that is submitted first shall prevail. ArcelorMittal successfully served its declaration on Tauron on January 2, 2024. Tauron challenged this assertion and in October 2024, ArcelorMittal was served with a request for arbitration filed by Tauron (see note 9.3).
Borçelik
Borçelik Çelik Sanayii Ticaret Anonim Şirketi (“Borçelik”), incorporated and located in Turkey, is a joint venture between ArcelorMittal and Borusan Holding involved in the manufacturing and sale of cold-rolled and galvanized flat steel products.
Al Jubail
ArcelorMittal Tubular Products Al Jubail (“Al Jubail”) is a state of the art seamless tube mill in Saudi Arabia designed and built to serve the fast growing energy producing markets of Saudi Arabia, the Middle East, North Africa and beyond. Al Jubail is a joint venture in which the Company owns a 33.34% interest.
2.4.2 Associates
The following table summarizes the financial information and reconciles it to the carrying amount of each of the Company’s material associates, as well as the income statement of the Company’s material associates:
1. The country of incorporation corresponds to the country of operation except for China Oriental, whose country of operation is China, and Vallourec, whose operations are global.
2. Adjustments in Vallourec relate to provisional fair value adjustments of property, plant and equipment and goodwill.
3. 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. Other adjustment include the Company’s impairment loss with respect to its investment in DHS Group.
4. Adjustments in Gonvarri Steel Industries primarily relate to differences in accounting policies regarding revaluation of fixed assets.
5. Adjustments in Baffinland primarily relate to differences in accounting policies regarding recognized goodwill. In September 2020, following a legal reorganization that was not a business combination for the Company, its share of fair value remeasurement of 1.5 billion was not recognized in the carrying amount of Baffinland.
6. Following a legal reorganization in September 2020, the Company holds an indirect interest in Baffinland through Nunavut Iron Ore Inc.
1. The country of incorporation corresponds to the country of operation except for China Oriental whose country of operation is China.
2. Other adjustments correspond to the difference between the carrying amount at December 31, 2023 and the net assets situation corresponding to the latest financial statements ArcelorMittal is permitted to disclose translated with closing rates as of the reporting dates described in the table above.
3. 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.
4. Adjustments in Gonvarri Steel Industries primarily relate to differences in accounting policies regarding revaluation of fixed assets.
5. Adjustments in Baffinland primarily relate to differences in accounting policies regarding recognized goodwill. In September 2020, following a legal reorganization that was not a business combination for the Company, its share of fair value remeasurement of 1.5 billion was not recognized in the carrying amount of Baffinland.
6. Following a legal reorganization in September 2020, the Company holds an indirect interest in Baffinland through Nunavut Iron Ore Inc.
1. The country of incorporation corresponds to the country of operation except for China Oriental whose country of operation is China.
2. Other adjustments correspond to the difference between the carrying amount at December 31, 2022 and the net assets situation corresponding to the latest financial statements ArcelorMittal is permitted to disclose as of the reporting dates described in the table above.
3. 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.
4. Adjustments in Gonvarri Steel Industries primarily relate to differences in accounting policies regarding revaluation of fixed assets.
5. Adjustments in Baffinland primarily relate to differences in accounting policies regarding revaluation of fixed assets and locally recognized goodwill. In September 2020, following a legal reorganization that was not a business combination for the Company, its share of provisional fair value remeasurement of 1.5 billion was not recognized in the carrying amount of Baffinland.
6. Following a legal reorganization in September 2020, the Company holds an indirect interest in Baffinland through Nunavut Iron Ore Inc.
Vallourec
On August 6, 2024, ArcelorMittal completed the acquisition of 65,243,206 shares, representing 28.4% (27.89% at December 31, 2024) voting rights in Vallourec, for €14.64 per share from funds managed by Apollo Global Management, Inc. for total €960 million (1,048) cash consideration. Vallourec’s Board of Directors includes eleven members, out of which two are appointed by ArcelorMittal, whose Chief Executive Officer also acts as an observer of the Board. ArcelorMittal concluded that it exercises significant influence in Vallourec and accordingly it accounts for its investment under the equity method. In addition, as the share purchase agreement includes a forward component qualifying as a financial instrument as a result of the purchase price being fixed ahead of the closing date, ArcelorMittal recognized a 83 decrease in acquisition cost to reflect the fair value of the forward at acquisition date (see note 6.2). Having carried out a successful restructuring in recent years, Vallourec presents a compelling opportunity to increase ArcelorMittal’s exposure to the attractive, downstream, value-added tubular market. It is a global leader in premium tubular solutions for energy markets and demanding industrial applications, offering innovative, safe and competitive products for sectors including energy, automotive and construction. 85% of Vallourec’s 2.2 million tonnes of annual rolling capacity is focused around low-carbon, integrated productions hubs in US and Brazil, both of which are important strategic markets for ArcelorMittal. The fair value of ArcelorMittal’s investment was 1,113 at December 31, 2024 based on Vallourec’s quoted share price.
China Oriental
China Oriental Group Company Limited (“China Oriental”) is a Chinese integrated iron and steel company listed on the Hong Kong Stock Exchange (“HKEx”). The China Oriental Group has manufacturing plants in Hebei Province and Guangdong Province of the People’s Republic of China (the “PRC”) and sells mainly to customers located in the PRC. The China Oriental Group also carries out property development business which is mainly in the PRC.
DHS Group
DHS – Dillinger Hütte Saarstahl AG (“DHS Group”), incorporated and located in Germany, is a leading producer of heavy steel plates, cast slag pots and semi-finished products, such as pressings, pressure vessel heads and shell sections in Europe. The DHS Group also includes a further rolling mill operated by Dillinger France in Dunkirk (France).
Gonvarri Steel Industries
Holding Gonvarri SL (“Gonvarri Steel Industries”) is dedicated to the processing of steel. The entity is a European leader in steel service centers and renewable energy components, with strong presence in Europe and Latin America.
Baffinland
Baffinland Iron Mines Corporation (“Baffinland”) owns the Mary River project, which has direct shipping, high grade iron ore on Baffin Island in Nunavut (Canada).
2.4.3 Other associates and joint ventures that are not individually material
The Company has interests in a number of other joint ventures and associates, none of which are regarded as individually material. The following table summarizes the financial information of all individually immaterial joint ventures and associates that are accounted for using the equity method:
2.4.4 Impairment of associates and joint ventures
In the fourth quarter of 2023, Acciaierie d’Italia’s financial condition has deteriorated due in particular to the continued high cost of energy and the repeal of relief measures for energy-intensive companies. It has been experiencing liquidity issues, which have resulted in conflicts with suppliers. ArcelorMittal, the Italian Government and Invitalia discussed the terms and conditions of a possible support to Acciaierie d’Italia to address its short-term cash needs and the funding requirements to enable it to complete the acquisition of Ilva’s business units but the parties were not able to reach agreement on how to address Acciaierie d’Italia’s funding needs. As of December 31, 2023 the Company assessed the above facts as indicators of impairment with respect to its investment, further confirmed by the extraordinary administration of Acciaierie d’Italia effective February 20, 2024 (see note 2.4.1), and performed accordingly a value in use calculation resulting in a 1,405 impairment loss.
The Company is not aware of any material contingent liabilities related to associates and joint ventures for which it is severally liable for all or part of the liabilities of the associates, nor are there any contingent liabilities incurred jointly with other investors. See note 9.4 for disclosure of commitments related to associates and joint ventures.
2.4.5 Investments in joint operations
The Company had investments in the following joint operations as of December 31, 2024 and 2023:
Peña Colorada
Peña Colorada is an iron ore mine located in Mexico in which ArcelorMittal holds a 50.00% interest. Peña Colorada operates an open pit mine as well as concentrating facility and two-line pelletizing facility. Peña Colorada is part of the North America segment.
9.4 Commitments (extract)
Commitments related to purchases of raw materials and energy
Purchase commitments consist primarily of major agreements for procuring iron ore, coking coal, coke and hot metal. The Company also has a number of agreements for electricity, industrial and natural gas, scrap and freight. In addition to those purchase commitments disclosed above, the Company enters into purchasing contracts as part of its normal operations which have minimum volume requirements but for which there are no take-or-pay or penalty clauses included in the contract. The Company does not believe these contracts have an adverse effect on its liquidity position.
Commitments related to purchases of raw materials and energy included commitments given to associates for 1,704 and 1,487 as of December 31, 2024 and 2023, respectively. Purchase commitments given to associates included 798 and 704 as of December 31, 2024 and 2023, respectively, related to the gas supply agreement with Kryvyi Rih Industrial Gas. Purchase commitments included commitments given to joint ventures for 719 and 838 as of December 31, 2024 and 2023, respectively.
Purchase commitments given to joint ventures included 287 and 334 related to Tameh and 380 and 413 related to Enerfos as of December 31, 2024 and 2023, respectively.
Guarantees, pledges and other collateral
Guarantees related to financial debt and credit lines given on behalf of third parties were 256 and 155 as of December 31, 2024 and 2023, respectively. Additionally, guarantees of 11 and 12 were given on behalf of associates and guarantees of 6,259 and 4,992 were given on behalf of joint ventures as of December 31, 2024 and 2023, respectively.
Guarantees given on behalf of joint ventures included 1,183 and 421 on behalf of Calvert, 186 and 208 on behalf of Al Jubail, 183 and nil on behalf of VdSA and 303 and 480 in relation to outstanding lease liabilities for vessels operated by Global Chartering as of December 31, 2024 and 2023, respectively.
Guarantees given on behalf of Calvert increased by 846 in 2024 in relation to a loan from the Industrial Development Authority of Mobile County in Alabama (USA) following the issuance of bonds. Guarantees given on behalf of joint ventures also included 4,038 and 3,490 as of December 31, 2024 and 2023 corresponding to ArcelorMittal’s 60% guarantee of the debt under the term loan agreements entered into by the AMNS India joint venture with various Japanese banks.
As of December 31, 2024, pledges and other collateral mainly related to (i) mortgages entered into by the Company’s operating subsidiaries and (ii) inventories and receivables pledged to secure the South African Rand revolving borrowing base finance facility for the amount drawn of 144 and ceded bank accounts to secure environmental obligations, true sale of receivables programs and the revolving borrowing base finance facility in South Africa of 95. Pledges of property, plant and equipment were 33 and 59 as of December 31, 2024 and 2023, respectively. Other sureties, first demand guarantees, letters of credit, pledges and other collateral included 291 and 319 of commitments given on behalf of associates as of December 31, 2024 and 2023, respectively, and 404 and 313 of commitments given on behalf of joint ventures as of December 31, 2024 and 2023, respectively.
Accounts examples 