1. automotive and vehicles

2015 Automotive R&D Event
Brian Aranha, VP Automotive Worldwide, London June 2015
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Forward-Looking Statements
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the Luxembourg Stock Market Authority for the Financial Markets (Commission de Surveillance
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made or to be made by ArcelorMittal, including ArcelorMittal’s Annual Report on Form 20-F for the
year ended December 31, 2014 filed with the SEC. ArcelorMittal undertakes no obligation to
publicly update its forward-looking statements, whether as a result of new information, future
events, or otherwise.
1
Agenda
• The market opportunity
• Challenges
• Solutions
• Industry leadership
2
Key automotive industry requirements
• Global platforms: Carmakers
demand that the same products be
delivered to their production
facilities worldwide, to support
global platforms that are designed
centrally. The percentage of
vehicles built on global platforms
will increase from 46% in 2014 to
63% in 2020
• Regulation: Shift in product needs
to meet regulatory targets for fuel
economy as well as passenger
safety during crash events
• ArcelorMittal offers
the specific solutions
to address these
challenges
• ArcelorMittal
maintains both its
geographical and its
technological
leadership in the
automotive market
ArcelorMittal well positioned to meet automotive industry requirements
3
Automotive growth in developed world
USA / Canada and EU28 + Turkey vehicles production units
• USA and Canadian automotive
21,000
20,000
19,000
18,000
17,000
16,000
15,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
production forecast to stabilize at
18,056
~14m units level
13,818
• EU28 and Turkey recovery
ongoing. Expected to return to
2007 level in 2017 with further
EU28 & Turkey
USA & Canada
growth potential beyond
0
2006 2008 2010 2012 2014 2016 2018 2020 2022
Developed market vehicle production rates increasing; recovery ongoing
4
Automotive emerging market growth
China vehicle production (‘000s)
40,000
• China production to grow steadily by
+42%
30,000
• India production to almost double by
20,000
22,610
2022 (from 3.6mvh in 2014 to 6.9mvh in
10,000
0
2022)
2006 2008 2010 2012 2014 2016 2018 2020 2022
Brazil, India, Russia & Mexico vehicle production (‘000’s)
8,000
6,000
+10m units to ~32mvh in 2022
Russia
Brazil
India
Mexico
+93%
4,000
• Mexico production is expected to
increase by >50% between 2014-2022
will supply new demand to USA and
Canada
• Brazil and Russia expected to need
2,000
time to recover and reach 2013 level
0
(>2020)
2006 2008 2010 2012 2014 2016 2018 2020 2022
Strong growth expected in China, Mexico and India
Source: IHS
5
Rigorous fuel economy standards
2012-2025 US CAFE* rules (MPG)
Global CO2 (or equivalent) regulation trends
70
60
50
Cars
Truck
Average
40
62.1
54.5
41.5
30
20
10
0
1970 1980 1990 2000 2010 2020 2030
• 2012-2025 rules are footprint driven – each vehicle has a mandated fuel economy standard based on
track x wheelbase
• 2025 CAFE for Light Vehicle USA: 54.5 MPG based on projected 2025 fleet by EPA/NHTSA
• Similar trend for passenger safety in a crash event
Fuel economy targets to be achieved whilst improving crash performance standards
* CAFE refers to Corporate Average Fuel Economy
6
EU and US CO2 emission targets
Europe: On track to achieve the regulatory
CO2 emissions targets
EU and US emissions performance 2007-2025
C02 (g/km)
250
200
150
Historical performance
2007
(210)
2007
(159)
• EU regulation of new car fleet average
CO2 emissions of 130 g/km by 2015 has
been met in 2014 with an average of 123
g/km thanks to rapid progress in recent
years
Targets
2015
(165)
2014
(165)
2014
(123)
100
• Target of 95 g/km confirmed for 2021.
The next targets are still under discussion
2021
(124)
2015
(130)
US: 2025 target is more challenging
2021
(95)
2025
(97*)
* 97 g/km of CO2 = 54.5 mpg
50
Europe
USA
Regulatory targets
10 kg of weight saved reduces ~1g of CO2 per km**
• The 2014 US new car fleet met the 2015
target (165 g/km) but require further
improvements to meet the 2025 target of
97 g/km
• The US fleet is composed of larger cars
making the CO2 target much harder to
meet
By 2015 fuel economy rates have met  but there is a greater challenge ahead
* Average emissions of new passenger cars sold in these years; ** Market consensus ( eg PSA, Renault, McKinsey) ; Source: European Federation for Transport
and Environment (T&E), EPA, ArcelorMittal Corporate Strategy analysis, Automotive Worldwide update
7
Technologies to meet US 2025 fuel
economy mandate
US fuel economy breakdown (MPG)
Fuel Economy (MPG)
60
54.5 MPG
50
40
30 25 MPG
20
10
8%
15%
7%
58%
12%
0
• A range of technologies are
being implemented by
automakers to reach the 54.5
MPG target
• Power train, electrification,
aerodynamics and rolling
resistance are the largest
contributors
• Weight reduction is necessary
to close the gap and
compensate for under
achievement by other
technologies
20% BIW weight reduction ie required to meet the 54.5 MPG target
Source: NHTSA Volpe Transportation Research Center CAFE Compliance and Effects Model
8
ArcelorMittal automotive strategy
Four key pillars of ArcelorMittal automotive strategy:
 New products and solutions
• Develop new products and solutions to meet OEM targets for
weight reduction and crash performance
 Downstream network
• Pursue downstream technology solutions through partnerships and
wholly owned subsidiaries.
 Quality and service leadership
• Make existing products and solutions available wherever we have
automotive production facilities
 Geographical expansion
• Expand our geographic footprint into emerging markets
Four pillars to answer the key challenges and capture opportunities
9
Steel meets weight reduction needs
• ArcelorMittal has demonstrated that 20% BIW weight reduction needed to
achieve 54.5 MPG can be achieved with existing steel grades with further
potential from new grades
S-in motion® CSegment Vehicle
S-in motion®
Pickup Truck
S-in motion® NA DSegment Vehicle
Achieved 20% BIW
weight reduction from
2009 baseline with
emerging grades
Achieved 23% BIW
weight reduction
from 2013 baseline
with commercialavailable grades
Targets 24% BIW
weight reduction from
2015 baseline with
commerciallyavailable grades
Results in July, 2015
Steel can provide the required 20% BIW weight reduction needed to achieve 54.5 MPG
10
Further weight reduction potential
• Due to very aggressive and weight reduction driven product development,
ArcelorMittal keeps enhancing:
• Our portfolio of products for cold stamping with developments like
Fortiform®, our family of 3rd Generation AHSS
• Our portfolio of products for hot stamping with Usibor® 2000 and Ductibor®
1000
Further potential weight savings with new products (%)
Potential
Current
20
C Segment
(2009 base)
23
24
Potential weight savings of
additional 3% over the next 2
years across our solutions
Pick up truck North America
(2013 base)
D segment
(2015 base)
New product developments to offer an additional 3% weight reduction in next 2 Years
11
What are laser welded blanks?
• Laser welded blanks are two or more flat steel sheets welded together
by a laser. These sheets can:
• Have different thicknesses
• Be made of different alloys
• Have different coatings
• Using laser welded blanks, automotive engineers can design parts with
the necessary properties where they are needed, optimizing weight and
safety
Laser
Pressure
1 part:
- 2 different thicknesses
- 2 different alloys
Laser welding
Stamping
Video
Applying the necessary properties where they are needed
12
Combining LWB and hot stamping
for maximum weight saving
B-pillar inner
Seat cross member
B-pillar
Rear side member
A-pillar
Shotgun
Front side member
Door ring
Front bumper beam
Tunnel
Front rail extension
Ductibor Usibor
®
®
Optimum balance between lightweight and strength thanks to Laser Welded Blanks
13
ArcelorMittal Tailored Blanks footprint
Existing Plants
In project
India
North America
 Concord, Ontario
 Pioneer, Ohio
 Murfeesboro, Tennessee
 Delaco Tonawanda, NY (JV)
 Delaco Dearborn, Michigan (JV)
 Silao, Mexico
 San Luis Potosi, Mexico
Europe
 Birmingham UK
 Gent Belgium
 Bremen Germany  Lorraine France
 Neuwied Germany  Senica Slovakia
 Liege Belgium
 Zaragoza Spain
 Genk Belgium
 Orhangazi Tk (JV)
 Arcelor Neel Tailored
Blank Chennai (JV)
 Arcelor Neel Tailored
Blank Pune (JV)
China
Shanghai Baosteel &
Arcelor Tailor Metal (JV)
Australia
ArcelorMittal Tailored
Blanks Adelaide
Global footprint and expanding
14
Technology leadership ranking by
customers
Technology
• In NAFTA, 11 out of 12 customers ranked ArcelorMittal the #1 supplier on
Technology Leadership
• In Europe, 11 out of 14 customers considers ArcelorMittal the technology leader
of the steel industry
Industry awards
ArcelorMittal proudly accepted General Motors’
Supplier of the Year award for the second
consecutive year at the automaker’s 23th annual
ceremony held in Detroit on March 5, 2015.
The Supplier of the Year award was given to just
78, or less than one percent, of GM’s global
suppliers.
Majority of OEMs in Europe and NAFTA rank ArcelorMittal #1 in Technology
15
ArcelorMittal preferred AHSS supplier
AHSS share of total steel demand
AHSS evolution
ArcelorMittal market shares
40%
35%
30%
25%
20%
NAFTA
15%
10%
5%
0%
2005
2010
2015
2020
2025
Source: Ducker
• ArcelorMittal is maintaining or even increasing
our overall market share in Europe and NAFTA
• AHSS share of the total steel market is
increasing, exactly where our share is higher
• As the technology requirements to develop
and produce new AHSS like Fortiform® are
higher, our share on these products can further
grow
Europe
Source: Regional ArcelorMittal Marketing intelligence
ArcelorMittal increased AHSS capturing market share
16
Global presence and reach
Automotive production facilities
Alliances & JV
Commercial Teams
Vehicle production 2014
> 20 M veh
> 15 M veh & < 20 M veh
> 10 M veh & < 15 M veh
> 5 M veh & < 10 M veh
> 2.5 M veh & < 5 M veh
> 1 M veh & < 2.5 M veh
< 1 M veh
ArcelorMittal supplying globally and increasing emerging region exposure
Source: LMC figures for Western & Eastern Europe & Russia; IHS figures for all other regions. Personal cars and light commercial vehicles < 6 t
17
Right products to right markets
HDG capacity
increase to produce
Usibor®
Usibor® production facilities (2012 and 2016)
+136%
Dudelange
Mouzon
Florange
Indiana Harbor Sagunto
2012
AM/NS Calvert
2016
VAMA
Vehicle production 2014
> 20 M veh
> 15 M veh & < 20 M veh
> 10 M veh & < 15 M veh
> 5 M veh & < 10 M veh
> 2.5 M veh & < 5 M veh
> 1 M veh & < 2.5 M veh
Vega
< 1 M veh
Existing facility in 2012
Newly added facility
ArcelorMittal supplying to meet local customer needs
Source: LMC forecasts (01-2013) for Western & E. Europe & Russia; IHS forecasts (01-2013) for all other regions. Personal cars and light commercial vehicles < 6 t
18
NAFTA automotive landscape
•
•
•
•
For the first time since the great recession of 2008, the US Midwest production is not growing
Decline in Canada is much higher than the past several years
Southern US continues to grow
Mexico’s growth rate is more than double the rate of the past 5 years
Forecast Canadian, US, and Mexican automotive production change 2014 to 2019F
2019
2014
Canada
-485,000 units
19%
10%
14%
26%
US Midwest
-7,800 units
Southern US
+454,000 units
Mexico
+1,343,000 units
AM/NS
Calvert
21%
43%
22%
46%
Canada
US Midwest
US South
Mexico
AM/NS Calvert ideally located to serve the growing markets
19
AM/NS Calvert
• World’s most advanced steel finishing facility. The largest newly constructed facility
in the U.S. in 40 years
• Well positioned to supply growing demand in the SE US and Mexico with steels
grades that meet 2025 safety and fuel economy targets
• Powerful, state-of-the-art hot-strip mill, well suited to supply fast-growing demand
for advanced high-strength steels (AHSS)
• 5.3 million metric ton capacity with 1,650 team members
Strengthens existing auto steel franchise and ability to supply energy market
20
AM/NS Calvert
• AM/NS Calvert is now integrated with ramp
up to full production and target market
position on track
• Organization readiness
• Prepared for ramp up to full capacity
• ISO9001, ISO14001, ISO17025,
TS16949 certification in process
• Technology partnership with NSSMC
• Sales team integrated  ArcelorMittal
as managing partner 100% responsible
for marketing
• Market penetration
• Approved on 157 of 182 automotive
qualification packages.
• Further 20 estimated in 2015
• Pipe & Tube customers
qualified/business established
• Two steel service centres on-site
Production capacity
Hot strip mill: 5.3Mt
Cold rolling mill
CPL: 1.1Mt
PLTCM: 2.5Mt
Hot dip galvanizing
Line #1: 0.5Mt
Line #2: 0.6Mt (CAL)
Line #3: 0.5Mt
Line #4: 0.5Mt
Continuous hot-dip galvanising line
On track for ramp up with full benefits to accrue in 2016/2017
CPL – Continuous Pickling Line; PLTCM - pickling line-tandem cold mill
21
VAMA greenfield JV facility in China
• 1.5 MT state-of-the-art production facilities
• Well-positioned to serve growing automotive market
• Central office in Changsha with satellite offices in
proximity to decision making centers of VAMA’s
customers
• VAMA will represent 10% of Chinese automotive
steel market
VAMA: Valin ArcelorMittal Automotive
target areas and markets
FAW-VW
& BMW
Daimler
& Nissan
Beijing
Auto steel consumption accessible to VAMA target products
(market size in MT)
+29%
17
20
Geely, VW, GM,
KIA, SAIC & Chery
BYD, Changan,
Suzuki, CFMA &
FAW-VW
Shanghai
22
Loudi
Changfeng, Fiat,
DPCA, Dongfeng,
VAMA Honda, JMC &
Suzuki
SAIC, Toyota, GM,
Honda, Nissan & BYD
2014
2016F
Guangzhou
2018F
•VAMA well positioned to supply growing Chinese auto market (+35% 2014-2020)
BYD: Build Your Dreams; CFMA: Changan Ford Mazda Automobile; SAIC: Shanghai Automotive Industry Corporation; JMC: Jiangling Motors Corporation
22
VAMA: Leveraging ArcelorMittal
Technology
Auto finishing facility fully supported with ArcelorMittal technology
VAMA PLTCM
Valin – Liangang
Hot Strip Mill
Hot rolled coil
1.0M tonnes
•
•
ArcelorMittal technology transfer team
permanently detached to Lianyuan Steel:
Process: Development of automotive grades
to supply substrate to VAMA and coils to
wheels market
JV Shareholder structure:
ArcelorMittal owns 49% direct
51% Valin Steel
0.5M tonnes
0.5M tonnes
ArcelorMittal Chief Technology Officer team dedicated to
Mixed
CAL
CGL
• DesignVAMA
production
assets
& select VAMA
equipment
suppliers
• Develop metallurgical routes for VAMA scope
• Deploy automotive specific process know how
ArcelorMittal production technology to be deployed through VAMA
23
India - potential JV with SAIL
India auto production 2007-2022 (kveh)
+93%
8,000
6,000
4,000
2,000
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
• MoU signed with SAIL on 22nd May to
study feasibility of creating JV for
constructing CR and HDG automotive
steel production facility in one of the
major auto clusters in India
• India forecast to become the 4th
largest automobile manufacturing
nation by 2020, growing from ~3.5m
units to over 7m units
• India is expected to grow as a hub for
automobile export manufacturing
facilities to cater to the international
market
• Establishing an automotive focussed
production presence in India is a
natural progression in executing our
global automotive strategy
India auto steel consumption ktpa 2014-2021
+2,200
Organic growth
Domestic
Imports
4,900
2,700
1,900
800
2,200
2014
2021
1,900
800
2014: 3.7m passenger cars; 2.6Mtpa
2021F: 6.6m passenger cars; 4.8Mtpa
ArcelorMittal technology to be delivered through local JV partner
24
Capital investments to support
existing and new products
Selection of further investments:
• $15 million at ArcelorMittal Vega to locally produce Usibor®
• Additional upgrades at AM/NS Calvert to supply the latest AHSS
• €140 million investment at ArcelorMittal Gent to enable production
of Fortiform®, our family of 3rd Generation AHSS
• €9 million investment at ArcelorMittal Sagunto to enable
production of Usibor® Alusi and increase the group capacity by
adapting the hot dip galvanizing line in order to better serve the
Southern European automotive market.
• Several investments at AMTB to support the development of Laser
Welded Blanks as a mainstream light-weighting solution
Capital investments to fund franchise business
25
Current and future material mix
• This trend should remain progressive and light:
– Carbon fibre not expected to be high relevance before 2030
– Aluminium still too expensive to play a major role
– Steel remains the most recyclable metal (100% recyclable /
environmentally friendly)
– High strength steel to replace mild steel
– New steel material (ultra high strength) has potential to substitute
aluminium parts
Steel to remain material of choice with greater share of AHSS
26
Summary
Regulatory targets and trend towards global platforms created needs for
the automotive industry
• Continuous improvements to simultaneously meet fuel efficiency and safety
targets
• Procure same materials across different regions
ArcelorMittal is investing to deliver responses to these needs
• S-in motion® Pickup Truck demonstrated that a body-in-white reduction of
23% can be achieved via our current portfolio of steel products and solutions
• Further weight reduction will be achieved with our upcoming steel grades
• Enlarging industrial presence with VAMA, AM/NS Calvert and the potential
JV with SAIL in India
ArcelorMittal has products and market position to capture industry
growth
Due to an unmatched strength, lightweight potential and global footprint,
ArcelorMittal and steel will remain the choice of the automotive industry
27
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