Steel Mills
ArcelorMittal Repositions NAFTA Assets
Written by Sandy Williams
September 29, 2020
ArcelorMittal’s divestment of U.S. assets to Cleveland-Cliffs completes the company’s $2 billion asset portfolio optimization and strategically repositions its North American platform.
“This transaction is a unique opportunity for ArcelorMittal to unlock significant value for shareholders while retaining exposure to the North American economy through our high-quality NAFTA assets alongside a participation in what will be a stronger, better integrated, U.S. business,” said Chairman and CEO Lakshmi Mittal.
ArcelorMittal sees the divestment as a strategic move for its North American assets, a positive financial impact on the balance sheet that will reduce net debt and strengthen capital and credit metrics, and an opportunity for returning cash to shareholders. The acquisition announcement coincides with a $500 million share buyback program that will allow ArcelorMittal to redistribute proceeds from the sale of the U.S. assets to shareholders.
Although ArcelorMittal becomes a 16 percent shareholder of Cleveland-Cliffs by the sale, it will not be represented on the board or make decisions for the company.
ArcelorMittal’s remaining footprint in North America will include its joint venture finishing facility AM/NS Calvert, ArcelorMittal Mexico and Dofasco in Canada. Upgrades at the three facilities, including an EAF designated for Calvert, will focus on capturing automotive market share. Pre-COVID, ArcelorMittal’s automotive contract business was in the range of 5-6 million tons annually. AM/NS Calvert represents about 40 percent of that number, said President and CFO Aditya Mittal in a conference call on the acquisition.
The company will retain its R&D centers, ArcelorMittal Tubular Products, ArcelorMittal Long Products Canada and its mining and pelletizing facilities in Canada. The Canadian mining operations have 26 million tons of concentrate capacity and 10 million tons of pelletizing capacity. Iron ore from the divested U.S. mining assets was consumed internally by the U.S. operations.
The AM/NS Calvert facility will be strengthened by the addition of an electric arc furnace, which will eventually provide slabs for the operation. For the present, Indiana Harbor, now part of Cleveland-Cliffs, will continue to supply slabs to Calvert under the current five-year contract.
Investments in Canada and Mexico include a new hot strip mill and galvanizing line at Dofasco and a new rolling mill at ArcelorMittal Mexico.
Aditya Mittal said that the NAFTA market remains very important. “We have exited a big chunk of that, but still have a substantial presence.” He called the divestment “not a change in philosophy, vision or direction, but a strategic repositioning of our assets.”
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
Hybar lowers output forecast, owning up to EAF startup delay
Hybar LLC’s rebar mill in Osceola, Ark., is now melting scrap and will soon be fulfilling orders, according to CEO David Stickler, despite a six-to-eight-week delay caused by commissioning the world’s first Aura electrical system.
Steel Dynamics guides to more metal, more money in Q3
Steel Dynamics Inc. is bullish heading into the close of the third quarter, with all three of its operating segments tracking higher.
AHMSA opens doors to potential buyers as $1.3B asset auction nears
AHMSA is opening its doors to potential buyers to tour its steel plant and mining operations in northern Mexico in preparation for the next stage of its bankruptcy process: the auction of its assets.
USW seeks clarity on USS plans for Granite City Works
The United Steelworkers union has asked U.S. Steel to elaborate on its Granite City Works plans following reports that the steelmaker is ending processing at the facility.
Nucor maintains plate prices, opens October order book
Nucor aims to keep plate prices flat for a seventh straight month with the opening of its October order book.