ITEM 4.         INFORMATION ON THE COMPANY

A.    History and Development of the Company

ArcelorMittal is the world’s leading integrated steel and mining company. It results from the combination in 2006 of Mittal Steel and Arcelor, which were at the time the world’s largest and second largest steel companies by production volume respectively.

ArcelorMittal had sales of $79.3 billion, steel shipments of 85.1 million tonnes, crude steel production of 93.1 million tonnes, iron ore production from own mines and strategic contracts of 77.0 million tonnes and coal production from own mines and strategic contracts of 7.7 million tonnes for the year ended December 31, 2014, as compared to sales of $79.4 billion, steel shipments of 82.6 million tonnes, crude steel production of 91.2 million tonnes, iron ore production from own mines and strategic contracts of 70.1 million tonnes and coal production from own mines and strategic contracts of 8.8 million tonnes for the year ended December 31, 2013.

ArcelorMittal’s net loss attributable to equity holders of the parent for the year ended December 31, 2014, was $1.1 billion, or $0.61 per share, as compared with net loss attributable to equity holders of the parent of $2.5 billion, or $1.46 per share, for the year ended December 31, 2013.

As of December 31, 2014, ArcelorMittal had equity attributable to the equity holders of the parent of $42.1 billion, total debt of $19.9 billion (including $0.1 billion related to debt classified as held for sale) and cash and cash equivalents, including restricted cash, of $4.0 billion as compared to equity attributable to the equity holders of the parent of $49.8 billion, total debt of $22.3 billion and cash and cash equivalents, including restricted cash, of $6.2 billion as of December 31, 2013.

ArcelorMittal's success is built on its core values of sustainability, quality and leadership and the entrepreneurial boldness that has empowered its emergence as the first truly global steel and mining company. Acknowledging that a combination of structural issues and macroeconomic conditions will continue to challenge returns in its sector, the Company has adapted its footprint to the new demand realities, redoubled its efforts to control costs and repositioned its operations to outperform its competitors. ArcelorMittal’s research and development capability is strong and includes several major research centers as well as strong academic partnerships with universities and other scientific bodies.

Against this backdrop, ArcelorMittal's strategy is to leverage four distinctive attributes that will enable it to capture leading positions in the most attractive areas of the steel industry value chain, from mining at one end to distribution and first-stage processing at the other: global scale and scope; unmatched technical capabilities; a diverse portfolio of steel and related businesses, one of which is mining; and financial capabilities. The Company’s strategy is further detailed under “Item 4.B—Information on the Company—Business Overview—Business Strategy”.

 Geography:  ArcelorMittal is the largest steel producer in the Americas, Africa and Europe and is the sixth largest steel producer in the CIS region. ArcelorMittal has steel-making operations in 19 countries on four continents, including 56 integrated and mini-mill steel-making facilities. As of December 31, 2014, ArcelorMittal had approximately 222,000 employees.

On January 1, 2014, ArcelorMittal modified the composition of its reportable segments in order to reflect changes in the Company’s approach to managing its operations. As a result of the change, ArcelorMittal reports its operations in five reportable segments corresponding to continuing operations: NAFTA; Europe; Brazil; ACIS; and Mining. Previously, ArcelorMittal reported its operations in six reportable segments corresponding to its then continuing operations: Flat Carbon Americas, Flat Carbon Europe, Long Carbon Americas and Europe, AACIS, Distribution Solutions, and Mining. In January 2011, ArcelorMittal completed the spin-off of its stainless steel division to a separately-focused company, Aperam, and these operations were therefore reported as discontinued operations. Beginning in the first quarter of 2011, ArcelorMittal began reporting Mining as a separate reportable segment in order to reflect changes in the Company’s approach to managing its mining operations.

ArcelorMittal’s steel-making operations have a high degree of geographic diversification. Approximately 38% of its crude steel is produced in the Americas, approximately 47% is produced in Europe and approximately 15% is produced in other countries, such as Kazakhstan, South Africa and Ukraine. In addition, ArcelorMittal’s sales of steel products are spread over both developed and developing markets, which have different consumption characteristics. ArcelorMittal’s mining operations, present in North and South America, Africa, Europe and the CIS region, are integrated with its global steel-making facilities and are important producers of iron ore and coal in their own right.

Products: ArcelorMittal produces a broad range of high-quality finished and semi-finished steel products. Specifically, ArcelorMittal produces flat steel products, including sheet and plate, and long steel products, including bars, rods and structural shapes. In addition, ArcelorMittal produces pipes and tubes for various applications. ArcelorMittal sells its steel products primarily in local markets and through its centralized marketing organization to a diverse range of customers in approximately 170 countries including the automotive, appliance, engineering, construction and machinery industries. The Company also produces various types of mining products including iron ore lump, fines, concentrate and sinter feed, as well as coking, PCI and thermal coal.

As a global steel producer, the Company is able to meet the needs of different markets. Steel consumption and product requirements clearly differ between developed markets and developing markets. Steel consumption in developed economies is weighted towards flat products and a higher value-added mix, while developing markets utilize a higher proportion of long products and commodity grades. To meet these diverse needs, the Company maintains a high degree of product diversification and seeks opportunities to increase the proportion of higher value-added products in its product mix.

Automotive focus: ArcelorMittal has a leading market share in its core markets in the automotive steel business and is a leader in the fast-growing advanced high strength steels segment. ArcelorMittal is the first steel company in the world to embed its own engineers within an automotive customer to provide engineering support. The Company begins working with original equipment manufacturers (“OEMs”) as early as five years before a vehicle reaches the showroom, to provide generic steel solutions, co-engineering, and help with the industrialization of the project. In June 2013, ArcelorMittal launched an innovative ultra-lightweight steel car door, which is less expensive than an aluminum door. In addition, further solutions developed for the pick-up trucks market offer weight savings benefits.

Mining Value Chain: ArcelorMittal has a significant and growing portfolio of raw material and mining assets, as well as certain strategic long-term contracts with external suppliers. In 2014 (assuming full shipments of iron ore at ArcelorMittal Mines Canada,  Serra Azul, Andrade, Liberia and full shipments at Peña Colorada for own use), approximately 65% of ArcelorMittal’s iron-ore requirements and approximately 17% of its PCI and coal requirements were supplied from its own mines or pursuant to strategic contracts at many of its operating units. The Company currently has iron ore mining activities in Algeria, Brazil, Bosnia, Canada, Kazakhstan, Liberia, Mexico, Ukraine and the United States and has prospective mining developments in Canada and India. The Company currently has coal mining activities in Kazakhstan and the United States. ArcelorMittal also has made strategic investments in order to secure access to other raw materials including manganese and ferro alloys.

In addition, ArcelorMittal produces substantial amounts of direct reduced iron, or DRI, which is a scrap substitute used in its mini-mill facilities to supplement external metallics purchases. ArcelorMittal is also a significant producer of coke, which is produced from metallurgical coal and is a critical raw material for steel-making, and it satisfies over 87% of its coke needs through its own production facilities. ArcelorMittal’s facilities have good access to shipping facilities, including through ArcelorMittal’s own 18 deep-water port facilities and linked railway sidings.

ArcelorMittal has its own downstream steel distribution business, primarily run through its Europe segment. It also provides value-added and customized steel solutions through additional processing activities to meet specific customer requirements.

History

ArcelorMittal is the successor to Mittal Steel, a business founded in 1989 by Mr. Lakshmi N. Mittal, the Chairman of the Board of Directors and Chief Executive Officer of ArcelorMittal, and Arcelor after Mittal Steel acquired Arcelor in 2006.

Since the creation of ArcelorMittal in 2006 and continuing through 2008, ArcelorMittal pursued a disciplined growth strategy, with transactions in Argentina, Australia, Austria, Brazil, Canada, Costa Rica, China, Estonia, France, Germany, Italy, Mexico, Poland, Russia, Slovakia, South Africa, Sweden, Turkey, the United Kingdom, Uruguay, United Arab Emirates, the United States and Venezuela. Beginning in the latter part of 2008, ArcelorMittal largely suspended mergers and acquisitions activity in light of the deteriorating economic and market environment, and sharply curtailed its investment activities, with the exception of the acquisition (along with a partner) of Baffinland in 2011. Since September 2011, ArcelorMittal has been undergoing a deleveraging process to reduce its indebtedness including numerous divestments of non-core assets (sale of stakes in Macarthur Coal, Enovos, Paul Wurth, Erdemir, ATIC, the steel cord business, Circuit Foil and Gallatin Steel Company; and the sale of Skyline Steel). In late 2013 and in 2014, ArcelorMittal began to make strategic investments and acquisitions with the acquisition of TK Steel USA through a 50/50 joint venture partnership entered into with NSSMC .

Updates on Previously Announced Investment Projects

In the strong market environment that prevailed from 2005 through 2008, the Company announced a series of proposed greenfield and brownfield investment projects. As a result of the severe market downturn in 2008-2009, the Company re-examined its investment projects involving significant capital expenditure and subsequently has continued to reassess the cost-benefit and feasibility calculations of these projects. It has also in more recent years readjusted its investment priorities, with increased focus on mining projects and less focus on steelmaking projects (above and beyond maintenance capital expenditures). These trends and changes in focus are apparent from the capital expenditure numbers. In 2012, capital expenditure decreased slightly to $4.7 billion, $3.2 billion of which was related to maintenance (including health and safety investments) and $1.5 billion of which was dedicated to growth projects mainly in mining. In 2013, capital expenditure decreased to $3.5 billion, $2.4 billion of which was related to maintenance (including health and safety investments) and $1.1 billion of which was dedicated to growth projects mainly in mining. In 2014, capital expenditure increased to $3.7 billion, $2.8 billion of which was related to maintenance (including health and safety investments). In 2015, capital expenditure is expected to be approximately $3.4 billion. Accordingly, while the Company continues to study certain of the previously announced investment projects summarized below, no assurance can be given that they will proceed.

India Greenfield Projects. In 2005 and 2006, ArcelorMittal announced plans to build large-scale integrated steel plants in the Indian States of Jharkhand and Odisha at a cost estimated at the time as in excess of $10 billion. Implementation of these projects was delayed for various reasons, including because of challenges relating to securing necessary mining rights, land and construction permits and regulatory approvals, and due to the fact that, in the meantime, the Company had explored alternative investment opportunities. Concerning the proposed steel plant in Jharkhand, ArcelorMittal is currently working to set up a three-million tonne per annum module in the first stage for which adequate land is sought under the State Government Consent Award Scheme. Under this scheme, the State Government would facilitate the legal transfer of land for a project after an investor has secured the landowner’s consent to the sale of the land. A recent Supreme Court judgment cancelling allocation of coal blocks to most private parties has resulted in the cancellation of the allocation made to a subsidiary of ArcelorMittal India Limited. Concerning the Odisha project, the Company decided in July 2013 not to progress with its planned construction of an integrated steel plant and a captive power plant in the district of Keonjhar and accordingly informed the Odisha Government that it would not seek to extend the memorandum of understanding with the Odisha Government, which became eligible for renewal on December 31, 2011.

The Company also explored other investment opportunities in India and in June 2010, entered into a memorandum of understanding with authorities in the state of Karnataka in South India that envisages the construction of a six-million tonne steel plant with a captive 750 megawatt power plant, representing a potential aggregate investment of $6.5 billion. The Company has completed all of the necessary steps to acquire the land. ArcelorMittal India Limited received possession certificates for 2,659 acres of private land following the acquisition of 1,827 acres and 832 acres in December 2011 and October 2012, respectively. This leaves a balance of 136.33 acres of land owned by the Karnataka Government, which is being processed for allocation and expected to be completed during the first quarter of 2015. The Company has completed, in accordance with the plan, fencing all of the land allotted for the project. The Karnataka Government has also approved the project’s use of water from the Tungabhadra River. The Company has applied for mining leases, although following a recent Supreme Court order relating to illegal mining activities in the State of Karnataka, and new mining legislation proposed by the

Government of India, the allocation of new mining leases in Karnataka has been put on hold and a plan for e-auction of mining leases is under discussion. A draft feasibility report for the contemplated steel plant has been completed and hydrological and environmental impact assessment studies have been initiated.

Kazakhstan. On June 10, 2008, ArcelorMittal announced plans to invest approximately $1.2 billion in improvements in health and safety and technological upgrades at its integrated steel plant and coal mines in Kazakhstan. This investment program is proceeding as announced. ArcelorMittal also announced possible investments to expand steelmaking capacity in Kazakhstan from five to ten million tonnes over a five to nine year period. The implementation of this expansion project has been postponed due to, among other things, the subsequent change in market conditions. As in other markets, any decision to increase investment in steelmaking capacity, while not currently envisaged, will depend on local market conditions and overall competitiveness considerations.

Brazil . On November 30, 2007, ArcelorMittal announced plans to expand capacity at its Monlevade integrated long products plant in the state of Minas Gerais with the construction of a second line of sinter plant, blast furnace, melting shop and rolling mill that would add approximately 1.2 million tonnes per annum of additional wire rod capacity. After having been delayed in late 2008-early 2009 due to market conditions, implementation of the project, estimated to entail an investment of $1.4 billion, was restarted in April 2010 with an initial targeted date of completion of late 2012. In light of market uncertainty, however, the Monlevade project has been temporarily halted in the third quarter of 2011.  During the second quarter of 2013, ArcelorMittal restarted its Monlevade expansion project, which is expected to be completed in two phases with the first phase expected to be finished in 2015 and focused mainly on downstream facilities consisting of a new wire rod mill in Monlevade with additional capacity of 1.05 million tonnes of coils per year with an estimated investment of $280 million and an increase in Juiz de Fora rebar production from 50,000 to 400,000 tonnes per year and an increase in meltshop capacity by 200,000 tonnes. A decision regarding the execution of the second phase of the project will be taken at a later date.

China . In 2008, ArcelorMittal announced the establishment of a joint venture project in China with Hunan Valin Iron & Steel Group Co., Ltd. (“Valin Group”) related to automotive steel, in which each party holds a 33% stake and Hunan Valin Steel Co., Ltd. holds 34% stake. The joint venture, Valin ArcelorMittal Automotive Steel (“VAMA”), is building facilities with an annual production capacity of 1.5 million tonnes of products including cold rolled steel, galvanized steel and galvannealed steel, with an estimated investment amount of CNY 4.5 billion ($725 million). VAMA will produce steel for high-end applications in the automobile industry and supply international automakers and first-tier Chinese car manufacturers as well as their supplier networks for the rapidly growing Chinese market. Approval from China’s National Development and Reform Commission and the Ministry of Commerce was received in 2010. In June 2012, ArcelorMittal and Valin Group announced that ArcelorMittal would increase its shareholding in VAMA from 33% to 49%.  Pursuant to a new shareholding agreement, the Valin Group and ArcelorMittal increased VAMA's planned capacity by 25% from 1.2 million tonnes to 1.5 million tonnes, with capital investment to increase by 15% to CNY 5.2 billion (approximately $838 million). On June 15, 2014, VAMA officially opened the steel plant. As of January 31, 2015, it is scheduled to complete Provisional Acceptance Test of the pickling and tandem cold mill, the continuous annealing line and the continuous galvanizing line before April 2015. In the last quarter of 2014, VAMA commenced trial production focusing on the development of prioritized automotive steel grade of mild steel, DP600 and USIBOR 1500P to be completed in the first quarter of 2015.

Saudi Arabia . In 2007, Mittal Steel signed a joint venture agreement with the Bin Jarallah Group of companies (“BJG”) for the design and construction of a seamless tube mill in Saudi Arabia to be located in Jubail Industrial City, north of Al Jubail on the Persian Gulf. The mill is designed and built to serve the fast growing energy producing markets of Saudi Arabia, the Middle East, North Africa and beyond. ArcelorMittal, through its subsidiary ArcelorMittal Tubular Products International B.V. (“AMTPI”), currently holds 51% and BJG’s transferee, Al-Tanmiah for Industrial & Commercial Investment Company, holds 49% of the joint venture company, which is managed under the joint control of both investors.  The Jubail facility has a design capacity above 0.6 million tonnes per year and will produce a full range of products from 2.375 to 16 inches, suited for the energy markets as well as industrial and process applications.

Production ramp-up began in 2014 and will continue in 2015. Certification by the American Petroleum Institute (“API”) was obtained in 2014, allowing commercial production of API products. Further certification from key regional customers is ongoing and will continue in 2015. The majority of the project was completed in 2014, however, full performance test acceptance is expected to be completed in 2015, depending on the different production and finishing lines available.

Liberia . In December 2006, the Government of Liberia and ArcelorMittal announced the finalization of a first amendment to agreements relating to an iron ore mining and infrastructure development project entered into in 2005. A further amendment to the 2006 Mineral Development Agreement was negotiated and ratified in September 2013. The project consists of reopening mines in Nimba County, rehabilitating 260 kilometers of abandoned railway and developing the Buchanan port for shipping traffic, and includes a number of important social initiatives, including providing training and health facilities for employees. Production of direct shipping ore (“DSO”) commenced in the second half of 2011 which increased to a capacity of five million tonnes in 2013. An expansion of production to reach capacity of 15 million tonnes per annum of concentrate that requires investments in a concentrator, stacker-reclaimers, a shiploader and power plants has commenced. However, most contractors working on the expansion declared force majeure and evacuated expatriate staff from Liberia following the outbreak of the Ebola virus and the declaration of a State of Emergency by the Liberian President in August 2014. Prior to the force majeure event, the plant was expected to begin production of sinter feed at the end of 2015. The Company will issue a new timing forecast as soon as available.

Kalagadi Manganese (South Africa ). In 2007, ArcelorMittal entered into a joint venture agreement with Kalahari Resources and the Industrial Development Corporation Limited to develop the Kalagadi manganese ore deposits in South Africa. The Kalagadi Manganese’s project is situated in the Kuruman / Hotazel district of the Northern Cape Province. The project envisages the establishment of a manganese ore mine and sinter plant at Hotazel that would ultimately produce 2.4 million tonnes of sinter product per annum and the establishment of a 320,000 tonne per annum ferromanganese alloy production facility in the Coega Industrial Development Zone in Port Elizabeth. In November 2012, ArcelorMittal signed a share purchase agreement with Mrs. Mashile-Nkosi providing for, subject to various conditions including financing by the buyer, the acquisition by her or her nominee of ArcelorMittal’s 50% interest in Kalagadi Manganese. After several extensions, the agreement expired without satisfaction of the finance condition in April 2014.

Baffinland (Canada ). In March 2011, ArcelorMittal acquired 70% of Baffinland Iron Mines Corp. (“Baffinland”), with Nunavut Iron Ore Inc. (“Nunavut Iron Ore”)  owning the remaining 30%. In February 2013, ArcelorMittal and Nunavut Iron Ore entered into a joint arrangement and equalized their shareholdings at 50/50. ArcelorMittal retained operator and marketing rights and, in consideration for its increased shareholding, Nunavut Iron Ore assumed certain project funding obligations . 

Baffinland owns the Mary River project, which has direct shipping, high grade iron ore on Baffin Island in Nunavut. The Mary River property is located within the Arctic Circle and consists of nine high grade deposits. The current project envisages a multi-phased development approach. In July 2013, Baffinland received its required permit for the overall project, allowing for the commencement of phase 1 activities. The Company received an amended permit for operating phase 1 in May 2014. Phase 1 comprises a low capital cost investment in a road haulage option, expected to result in annual production of 3.5 million tonnes, with the first shipments expected in the second half of 2015. Due to the presence of ocean ice for much of the year, conventional vessels can only reach the port site during the summer open-water season, and special ice breaking polar class cargo carrying vessels would be required to extend the shipping season. Extensive studies for an expansion of Phase 1 have also commenced with the aim of increasing production to at least 6.2 million tonnes. Subsequent phases could involve the expansion of mining facilities and construction of additional infrastructure so as to produce approximately 18 million tonnes per annum of high grade, direct shipping lump and sinter fines ore. The Company has currently initiated a request for an amendment to its permit to allow for expanded shipments of ore through the northern route.

Key Transactions and Events in 2014

ArcelorMittal’s principal investments, acquisitions and disposals, and other key events that occurred during the year ended December 31, 2014 are summarized below.

·          On December 31, 2014, ArcelorMittal signed an agreement to sell its interest in the Kuzbass coal mines in the Kemerovo region of Siberia, Russia, to Russia’s National Fuel Company. The existing intra-group debt was assumed by the buyer for RUB 1.5 billion ($25 million) to be settled in monthly installments until June 30, 2017.

·          On December 11, 2014, ArcelorMittal and Tauron Polska Energia S.A. (“Tauron Group”) contributed four existing energy production facilities located in Poland and in the Czech Republic into a new 50/50 joint venture named Tameh Holding Sp. z o.o., whose objective is to provide blow air, electricity and heat to the Company’s facilities in Poland and in the Czech Republic and electricity to the local communities.

·          On November 25, 2014, ArcelorMittal and the Algerian state-owned companies Sider and Ferphos Group signed an agreement whereby the Company’s interest in the Tebessa mines in Ouenza and Boukhadra will be diluted from 70% to 49%. The transaction was completed on January 10, 2015.

·          On November 14, 2014, ArcelorMittal signed a memorandum of understanding with the Banque et Caisse d’Epargne de l’Etat (“BCEE”) whereby the Company and BCEE irrevocably agreed to sell and buy, respectively, the Liberté property (the former headquarters of the Company) in Luxembourg city. The disposal was completed on January 23, 2015.

·          On October 30, 2014, ArcelorMittal redeemed its 9.00% Notes due February 15, 2015 and its 3.75% Notes due February 25, 2015 prior to their scheduled maturity for a total nominal amount of $750 million and $500 million respectively.

·          On October 28, 2014, ArcelorMittal announced that Sudhir Maheshwari, member of the Group Management Board (“GMB”), with responsibility for corporate finance; mergers, acquisitions and divestments; risk management; and India and China is leaving the Company to pursue other opportunities effective March 31, 2015. See “Item 6.A – Directors, Senior Management and Employees – Directors and Senior Management – Senior Management”.

·          On October 21, 2014, the Company entered into an agreement with Coils Lamiere Nastri S.P.A. (“CLN”) to establish the joint venture ArcelorMittal CLN Distribuzione Italia S.r.l. (“AMCDI”). In order to create this joint venture, ArcelorMittal will contribute assets and liabilities of its wholly owned subsidiary ArcelorMittal Distribution Solutions Italia S.R.L (“AMDSI”) to AMCDI in which ArcelorMittal expects to hold a 50% interest. The transaction is expected to be completed during the first half of 2015.

·          On October 8, 2014, ArcelorMittal and Gerdau completed the sale of their respective 50% interests in Gallatin Steel Company (“Gallatin”), a flat rolled mini-mill located in Gallatin County, Kentucky, USA, to Nucor Corporation for total consideration of $770 million.

·          On September 18, 2014, ArcelorMittal entered into an agreement to establish the joint venture in Turkey, ArcelorMittal RZK Celik Servis Merkezi Sanayi ve Ticaret Anonim Sirketi (“AM RZK”). This joint venture will include assets and liabilities of the Company’s wholly owned subsidiary, Rozak Demir Profil Ticaret ve Sanayi Anonim Sirketi (“Rozak”). ArcelorMittal will hold 50% in the joint venture AM RZK. The transaction is expected to be completed during the first half of 2015.

·          On July 29, 2014, ArcelorMittal and Billiton Guinea B.V. (“BHP Billiton”) signed a sale and purchase agreement for the acquisition by ArcelorMittal of a 43.5% stake in Euronimba Limited (“Euronimba”), which holds a 95% indirect interest in the Mount Nimba iron ore project in Guinea (the “Project”). The Project is comprised of a 935 million tonne direct shipping ore resource with an average grade of 63.1% Fe. The Project is located approximately 40 kilometers from ArcelorMittal Liberia’s mine and infrastructure operations. ArcelorMittal simultaneously entered into a sale and purchase agreement with Compagnie Française de Mines et Métaux (a member of the Areva group) for the acquisition of its 13% stake in Euronimba. The closing of these two transactions would give ArcelorMittal 56.5% ownership of Euronimba. The remaining 43.5% stake in Euronimba is owned by Newmont LaSource S.A.S. (“Newmont”).  As part of the transaction, ArcelorMittal has granted Newmont a limited duration option which, if exercised, would result in Newmont and ArcelorMittal owning equal stakes in Euronimba. The transaction is subject to certain closing conditions, including certain approvals from the Government of Guinea, which were still outstanding as of the date this annual report.

·          On July 31, 2014, ArcelorMittal completed the sale of all of the shares of Circuit Foil Luxembourg, a manufacturer of electrodeposited copper foils for the electronics industry, and certain of its subsidiaries to

Doosan Corporation, a South Korean conglomerate for cash consideration of $49 million (net of cash received).

·          On July 4, 2014, ArcelorMittal issued €600 million 2.875% Notes due July 6, 2020 under its €3 billion wholesale Euro Medium Term Notes Programme. The proceeds from the issuance were used for general corporate purposes.

·          On June 30, 2014, ArcelorMittal completed the sale of its 78% stake in the European port handling and logistics company Atic Services S.A. (“ATIC”) for €155 million ($144 million net of the disposal of $68 million cash) to H.E.S. Beheer N.V., who held the remaining 22% non-controlling interest.

·          On June 10, 2014, ArcelorMittal entered into an agreement for financing with a financial institution for $1.0 billion. The financial institution had the right to request early repayment once per year beginning in February 2015 until the final maturity on April 20, 2017. On February 13, 2015, the Company elected to make an early repayment of such financing.

·          On May 30, 2014, ArcelorMittal completed the sale of its 50% stake in the joint venture Kiswire ArcelorMittal Ltd. in South Korea and certain other entities of its steel cord business in the United States, Europe and Asia to Kiswire Ltd. The Company received preliminary cash consideration of $55 million ($39 million net of the disposal of $16 million cash) which was subsequently adjusted to $57 million upon final determination of the net debt and working capital balances at the closing date. The existing intra-group debt of $102 million and external debt was assumed by Kiswire Ltd. The intra-group debt is expected to be repaid during the first half of 2015.

·          On April 30, 2014, ArcelorMittal completed the extension of its partnership in Latin America with the Bekaert Group (“Bekaert”), a worldwide technology and market leader in steel wire transformation and coatings, to include operations in Costa Rica and Ecuador. Through the extension, ArcelorMittal acquired a 27% non-controlling interest in the Ideal Alambrec Ecuador wire plant, which is controlled by Bekaert, and transferred to Bekaert both a 73% interest in the wire drawing business of ArcelorMittal Costa Rica and its 55% interest in Cimaf Cabos, a cable business in Osasco (São Paulo) Brazil which is a branch of Belgo Bekaert Arames (“BBA”). In addition, as part of the transaction, ArcelorMittal executed wire rod supply agreements with Bekaert and BBA executed a cable wire supply agreement with Bekaert.

·          On March 25, 2014, ArcelorMittal issued €750 million 3.00% Notes due March 25, 2019 under its €3 billion wholesale Euro Medium Term Notes Programme. The proceeds from the issuance were used for general corporate purposes.

·          On February 26, 2014, ArcelorMittal, together with NSSMC, completed the acquisition of ThyssenKrupp Steel USA (“TK Steel USA”), a steel processing plant in Calvert, Alabama. The transaction is a 50/50 joint venture, Calvert, with NSSMC, and was completed for an agreed price of $1,550 million plus working capital and net debt adjustments. The Calvert plant has a total capacity of 5.3 million tonnes including hot rolling, cold rolling, coating and finishing lines. The transaction was financed through a combination of debt, at the joint venture level, and equity, of which $258 million was contributed by the Company. The transaction includes a six-year agreement to purchase two million tonnes of slab annually from TK CSA, an integrated steel mill complex located in Rio de Janeiro, Brazil, using a market-based price formula. TK CSA has an option to extend the agreement for an additional three years on terms that are more favorable to the joint venture than the terms under the original six year agreement. The remaining slab balance will be sourced from ArcelorMittal plants in the United States, Brazil and Mexico. ArcelorMittal will be principally responsible for marketing the product on behalf of the joint venture. The consideration ArcelorMittal will receive for its slabs will be determined by the volume, price and cost performance of the joint venture.

·          On February 20, 2014, ArcelorMittal redeemed all of its outstanding $650 million subordinated perpetual capital securities following the occurrence of a “Ratings Agency Event”, as defined in the terms of the securities. The notes were redeemed at a price of 101% of the principal amount thereof, plus any interest accrued to, but excluding the redemption date.

·          On January 17, 2014, ArcelorMittal extended the conversion date for its $1 billion privately placed mandatory convertible bond (the “MCB”) issued on December 28, 2009 by one of its wholly-owned Luxembourg subsidiaries. The mandatory conversion date of the MCB was extended to January 29, 2016, while the other main features of the MCB remain unchanged. The MCB was placed privately with a Luxembourg affiliate of Crédit Agricole Corporate and Investment Bank and is not listed. The issuing subsidiary simultaneously executed amendments providing for the extension of the outstanding notes, in which the Company invested the proceeds from the MCB issuance. The notes are linked to shares of the listed companies Eregli Demir Va Celik Fab. T. AS of Turkey and China Oriental, both of which are held by ArcelorMittal subsidiaries.

Recent Developments

·          On January 14, 2015, ArcelorMittal announced the issuance of €750 million 3.125 percent Notes due on January 14, 2022 under its €3 billion wholesale Euro Medium Term Notes Programme. The proceeds of the issuance will be used for general corporate purposes.

Other Information

ArcelorMittal is a public limited liability company ( société anonyme ) that was incorporated for an unlimited period under the laws of the Grand Duchy of Luxembourg on June 8, 2001. ArcelorMittal is registered at the R.C.S. Luxembourg under number B 82.454.

The mailing address and telephone number of ArcelorMittal’s registered office are:

ArcelorMittal
24-26, Boulevard d’Avranches
L-1160 Luxembourg
Grand Duchy of Luxembourg
Telephone: +352 4792-3746

ArcelorMittal’s agent for U.S. federal securities law purposes is:

ArcelorMittal USA LLC
1 South Dearborn Street, 19 ^th floor
Chicago, Illinois 60603
United States of America
Telephone: + 1 312 899-3985

ArcelorMittal shares are listed and traded (through a single order book as from January 14, 2009) on the NYSE Euronext European markets (Paris and Amsterdam) (symbol “MT”), are admitted to trading on the Luxembourg Stock Exchange’s regulated market and listed on the Official List of the Luxembourg Stock Exchange (symbol “MT”) and are listed and traded and the stock exchanges of Madrid, Barcelona, Bilbao and Valencia (the “Spanish Stock Exchanges”) (symbol “MTS”). ArcelorMittal shares are also listed and traded on the NYSE (symbol “MT”).

Internet Site

ArcelorMittal maintains an Internet site at www.arcelormittal.com. Information contained in or otherwise accessible through this Internet site is not a part of this annual report. All references in this annual report to this Internet site are inactive textual references to this URL and are for information only.

B.    Business Overview

Competitive Strengths

The Company believes that the following factors contribute to ArcelorMittal’s success in the global steel and mining industry:

Market leader in steel.   ArcelorMittal is the world’s largest steel producer, with annual achievable production capacity of approximately 114 million tonnes of crude steel for the year ended December 31, 2014. Steel shipments for the year ended December 31, 2014 totaled 85.1 million tonnes.

ArcelorMittal is the largest producer of steel in North and South America and Africa, a significant steel producer in the CIS region, and has a growing presence in Asia, including investments in China and India. It is also the largest steel producer in the EU, with significant operations in France, Germany, Belgium, Spain, Luxembourg, Poland, the Czech Republic and Romania. In addition, many of ArcelorMittal’s operating units have access to developing markets that are expected to experience, over time, above-average growth in steel consumption (such as Central and Eastern Europe, South America, India, Africa, CIS and Southeast Asia).

ArcelorMittal has a diversified portfolio of steel products to meet a wide range of customer needs across all steel-consuming industries, including automotive, appliance, engineering, construction, energy and machinery. The Company sells its products in local markets and through a centralized marketing organization to customers in approximately 170 countries. ArcelorMittal’s diversified product offering, together with its distribution network and research and development (“R&D”) programs, enable it to build strong relationships with customers, which include many of the world’s major automobile and appliance manufacturers. The Company estimates that it has approximately 16.7% of the worldwide market share of flat steel sheets for the automotive industry. The Company is a strategic partner for the major original equipment manufacturers (“OEMs”), and has the capability to build long-term contractual relationships with them based on early vendor involvement, contributions to global OEM platforms and common value-creation programs.

A world-class mining business .   ArcelorMittal has a global portfolio of 15 operating units with mines in operation and development and is among the largest iron ore producers in the world. In the year ended December 31, 2014, ArcelorMittal mines and strategic contracts produced 77.0 million tonnes of iron ore and met 65% of the Company’s iron ore requirements, and produced 7.7 million tonnes of coking coal and PCI and met 17% of the Company’s PCI and coal requirements. The Company currently has iron ore mining activities in Algeria, Brazil, Bosnia, Canada, Kazakhstan, Liberia, Mexico, Ukraine and the United States and has projects under development or prospective development in Canada and India. The Company currently has coal mining activities in Kazakhstan and the United States. ArcelorMittal’s main mining products include iron ore lump, fines, concentrate, pellets, sinter feed, coking coal, PCI and thermal coal. As of December 31, 2014, ArcelorMittal’s iron ore reserves are estimated at 4.5 billion tonnes run of mine and its total coking coal reserves are estimated at 277 million tonnes run of mine or 139 million wet recoverable tonnes.

The Company’s long-life iron ore and coal reserves provide a measure of security of supply and an important natural hedge against raw material volatility and global supply constraints. The mining business is managed as a separate segment which enhances ArcelorMittal’s ability to optimize capital allocation and pursue growth plans, which include a material increase in production and sales to third parties at market prices.

Market-leading automotive steel business. The Company estimates its flat products share of the global automotive steel market at approximately 16.7% in 2014. In total, the automotive industry consumed approximately 13.3 million tonnes of steel in 2014, which represents 15.6% of the Company’s total steel shipments for the year.

Long-term contracts add to the stability of the business. ArcelorMittal has built close relationships with its customers, often working with them at the vehicle design stage. These relationships are founded on the Company’s continuing investment in R&D and its ability to provide highly engineered solutions that help make vehicles lighter, safer and more fuel-efficient.

ArcelorMittal has a leading market share in its core markets and is a leader in the fast-growing advanced high strength steels segment. Its S-in motion® line of solutions is a unique offering to the automotive market that is responsive to OEMs’ requirements for safety, fuel economy and reduced CO2 emissions. By utilizing advanced high strength steels promoted in the S-in motion® projects, OEMs can achieve weight reduction with the solutions offered. Building on this, in June 2013, ArcelorMittal launched an innovative ultra-lightweight steel car door, which is less expensive than an aluminum door. Further solutions developed for the pick-up trucks market offer weight savings. A third generation of cold stamping advanced high-strength steel (“AHSS”) is being launched and a new grade of AHSS with a tensile strength one third higher than the Company’s current offering is under development. These will offer further substantial weight savings.

ArcelorMittal’s deliveries to the automotive industry are mainly in the natural geographic markets of its production facilities in Europe, North and South America and South Africa. The Company also exports certain specialty products to China, where it is developing its position in advance of production through VAMA, its joint venture with Hunan Valin which is expected to produce the first automotive coil in the first quarter of 2015.  Its product mix is oriented toward higher value products and mainly to OEMs directly where the Company sells tailored solutions based on its products. With sales and service offices worldwide, production facilities in North and South America, South Africa and Europe and eventually, in China, ArcelorMittal believes it is uniquely positioned to supply global automotive customers with the same products worldwide. The Company has joint ventures and has also developed a global downstream network with partners through its distribution solutions activities. This provides the Company with a proximity advantage in virtually all regions where its global customers are present.

Research and Development . Research and Development (“R&D”) provides the technical foundation for the sustainability and commercial success of the Company by stimulating continuous product and process improvement. ArcelorMittal believes it possesses leading R&D capabilities among steel producers. It operates 11 major research centers. The Company also maintains strong academic partnerships with universities and other scientific bodies, while its close customer relationships and well-established design and engineering skills enable it to foster the development of new steel products and solutions that meet its customers' evolving needs.

In 2014, ArcelorMittal's R&D expense was $259 million.

The main focuses of ArcelorMittal's R&D are:

·        Maintaining the competitiveness of steel versus alternative materials, particularly in the Company's unique automotive franchise. R&D has been at the forefront of industry developments to pioneer Advanced High Strength Steel (AHSS) grades and manufacturing processes that help automotive customers create lighter yet stronger vehicles and meet demanding new targets for fuel economy. These developments are designed to ensure that steel remains the material of choice for the automotive industry, while protecting and expanding the Company's market share in this segment.

Around 80 new automotive products are currently under development. With each new product, the Company develops all the accompanying technology and know-how that customers will need to use the product efficiently, thereby delivering a complete engineering solution. It further supports them with a holistic lifecycle analysis that details the environmental footprint of the product from manufacture through use to final disposal and recycling, including CO ₂ . ArcelorMittal's work in this area was shortlisted for an award from the World Steel Association in both 2013 and 2014.

In the past year, the Company achieved significant breakthroughs with a new generation of AHSS press-hardenable steels. The Usibor® range, which possesses a very high mechanical strength after hot stamping and has been developed to meet vehicle weight reduction requirements , was extended with the development of a 2000 MPa grade. Usibor® 2000 is now in industrial trials. The Ductibor® range was similarly extended with Ductibor® 1000, designed as a complementary product for Usibor® to meet new crashworthiness requirements . In addition, the first Fortiform® product was launched and trialed by major automotive customers. Fortiform® is a new range of cold-stamping AHSS steels and can absorb more energy in a crash even though less steel is used. The Company plans to release two further grades of Fortiform® over the next

three years. Taken together, these new steel grades have the potential to achieve a further 10% reduction in weight for all the parts currently made of Dual Phase steels. This is in addition to the weight savings of around 20% already achieved since the Company's S-in motion® project first began in 2010.

ArcelorMittal's innovative work with Honda and Magna International in developing the first integrated door ring using laser ablation technology was recognized in a number of industry awards in 2014. The Honda Acura MDX, the first vehicle to incorporate the door ring, gained a best-in-class safety rating Top Safety Pick+ from the Insurance Institute for Highway Safety while achieving significant weight reduction and other performance targets.

The R&D department continues to expand significantly its engineering and design activities in the pickup truck market. It is currently engaged in co-engineering projects with the majority of the world's automotive manufacturers, helping them reach their weight reduction targets not only with unique materials but also with unique design concepts. Solutions drawing on the S-in motion® catalogue can reduce the combined weight of a pickup's cab, box, frame and closures by 23% compared with a baseline 2014 vehicle. A second set of solutions will use the new AHSS grades and take the lightweighting process still further.

·          Creating niche products to grow ArcelorMittal's non-auto segments . In the construction sector, the focus in 2014 was on the development and commercialization of new coatings and coating techniques to improve corrosion resistance or formability, simplify production, reduce weight and cut pollution. The Company launched Optigal®, a zinc-aluminum-magnesium alloy for organic coated steels, and ramped up production of Magnelis®, a metallic coated steel with the ability to self-heal on cut edges. A new range of organically coated materials is in the process of being launched.

In the packaging sector, the R&D department responded to pending or anticipated new legislation requiring ecologically friendly coatings with the development of bisphenol A-free lacquer coating for the lining of cans and chrome-free passivation techniques. Industrial deliveries of tinplate chrome free passivation coils will commence in the fourth quarter of 2015.

New grades of non-oriented electrical steels are being introduced that will enable automotive manufacturers to produce motors with higher torque. These are currently being tested by a number of the leading automotive manufacturers. In grain-oriented electrical steels for transformers, the Company released a new product line of improved grain-oriented electrical steels in 2014 that allows it to achieve the Eco-design Regulation’s efficiency targets for transformers. In the appliance segment, the Company launched Solfer®CA, a new steel grade designed specifically for enameling (home appliance equipment). A major ramp-up in production is planned for 2015 and 2016.   

In a development of major importance for all pipe and tube markets, the R&D department developed a new cooling technology for plates that provides enhanced shape control and a superior micro-structure, named NUBOC. This technology is being converted into an industrial process at the Company's Burns Harbor plant with testing due to start in early 2015. When successfully proven, it will be introduced to all of the Company's other plate-manufacturing sites around the world.

·          Ensuring a continuing and growing contribution to ArcelorMittal's management gains program through research dedicated to improving the Company's steelmaking processes . Deployment of approximately 180 innovative research-developed technical solutions was carried out in 2014.  Among the key advances, the R&D department developed a control model for optimizing temperatures on hot strip mill run-out tables resulting in major cost-savings. In addition, a new cost-based scheduling technique for improving productivity and quality in the Company's coating lines has been deployed. R&D is also testing a dust filtration technology in one of the Company’s sinter plants to minimize particulate emissions from the sintering process in view of meeting demanding new emission standards due to be implemented across Europe in 2017. The new technology represents major savings compared with alternative technology available today and has been shown to reduce dust loading in exhaust gas from 40 - 50mg/Nm ₃  using conventional electrostatic precipitators to 10mg/Nm ₃ . 

The R&D department also supports ArcelorMittal's involvement in the Low-Impact Steelmaking (“LIS”) program being led in collaboration with the French government authorities. The LIS program aims to reduce the

level of CO ₂  in the steelmaking process through the recycling of blast furnace top gas and the use of captured CO ₂ .  

Diversified and efficient producer . As a global steel manufacturer with a leading position in many markets, ArcelorMittal benefits from scale and production cost efficiencies in various markets and a measure of protection against the cyclicality of the steel industry and raw materials prices.

·          Diversified production process. In 2014, approximately 69.0 million tonnes of crude steel were produced through the basic oxygen furnace route, approximately 21.0 million tonnes through the electric arc furnace route and approximately 3.1 million tonnes of crude steel through the open hearth furnace route. This provides ArcelorMittal with greater flexibility in raw material and energy use, and increased ability to meet varying customer requirements in the markets it serves.

·          Product and geographic diversification. By operating a portfolio of assets that is diversified across product segments and geographic areas, ArcelorMittal benefits from a number of natural hedges. As a global steel producer with a broad range of high-quality finished and semi-finished steel products, ArcelorMittal is able to meet the needs of diverse markets. Steel consumption and product requirements are different in mature economy markets and developing economy markets. Steel consumption in mature economies is weighted towards flat products and a higher value-added mix, while developing markets utilize a higher proportion of long products and commodity grades. As these economies develop and as market needs evolve, local customers will require increasingly advanced steel products. To meet these diverse needs, ArcelorMittal maintains a high degree of product diversification and seeks opportunities to increase the proportion of its product mix consisting of higher value-added products.

·          Upstream integration . ArcelorMittal believes that its own raw material production provides a competitive advantage over time. Additionally, ArcelorMittal benefits from the ability to optimize the efficient use of raw materials in its steel-making facilities, a global procurement strategy and the implementation of overall company-wide knowledge management practices with respect to raw materials. Certain of the Company’s operating units also have access to infrastructure, such as deep-water port facilities, railway sidings and engineering workshops that lower transportation and logistics costs.

·          Downstream integration . ArcelorMittal’s downstream integration primarily through its Europe segment for distribution solutions enables it to provide customized steel solutions to its customers more directly. The Company’s downstream assets have cut-to-length, slitting and other processing facilities, which provide value additions and help it to maximize operational efficiencies.

Business improvement through company-wide Knowledge Management Program .   Knowledge sharing and implementation of best practices are an integral part of ArcelorMittal’s management philosophy. Through its global Knowledge Management Program (“KMP”), ArcelorMittal shares, develops and utilizes its knowledge and experience across its facilities to accelerate improvement in business performance. The KMP covers all key functional areas, such as procurement, finance, marketing, logistics and health and safety, as well as the main steps in steel production and processing. The KMP includes ongoing detailed benchmarking, regular technical meetings and information-sharing at the corporate, regional and operating levels and inter-plant expert and operational support to drive performance improvement. The KMP enables each business unit to benefit from the scale and reach of ArcelorMittal’s global presence and access the best practices and experience within the Company. ArcelorMittal believes that the KMP provides a differentiating advantage to ArcelorMittal’s business performance by continuously contributing to reduced procurement and conversion costs and enhancing safety, quality, productivity and profitability.

Dynamic responses to market challenges and opportunities.   ArcelorMittal’s management team has a strong track record and extensive experience in the steel and mining industries. Management had the vision to recognize and take full advantage of the strong steel market trend from 2004 to mid-2008 and by responding quickly and

decisively to opportunities, succeeded in building the world’s largest steel company. Even as ArcelorMittal grew during the period from 2004 to mid-2008 (in large part due to its expertise in acquisitions and turnarounds as described below), it put itself on stronger footing to weather the market downturn that commenced in late 2008. Management’s flexibility and agility allowed ArcelorMittal to shift quickly from the growth-oriented approach that prevailed in early 2008 to a crisis response that focused on prudent deployment of cash and reduction of costs, while continuing to provide customers with superior value-added steel products and solutions. In 2010, management continued to carefully adjust its production to changing market conditions and the slow and uncertain economic recovery, while also broadening the Company’s strategic focus on developing its mining activities and securing long-term stable supplies of raw materials.  In response to the worsening eurozone sovereign debt crisis starting in the summer of 2011 and subsequent recession in certain of its key markets, ArcelorMittal accelerated its operating results improvement plans in order to maintain its leadership position in the steel industry and to continue to be competitive on costs.

In this respect, during the third quarter of 2012, the Company achieved its target to reach management gains of $4.8 billion from sustainable selling, general and administrative expenses (“ SG&A”), fixed and variable cost reductions, ahead of its initial schedule. During the investor day held on March 15, 2013, the Company announced a new management gains improvement target of $3 billion by the end of 2015. Action plans and detailed targets were set and rolled out to the various business units, and progress was monitored and reported upon. The Company generated annualized savings of $2.1 billion for the year ended December 31, 2014, with a further $1 billion savings from the program expected in 2015. The Company is targeting cost savings related to reliability, fuel rate, yield and productivity with two thirds of costs targeted being variable costs.

In September 2011, the Company launched an asset optimization initiative aimed at maximizing steel production at its lowest cost facilities. This process is advancing as planned and the essential components of asset optimization have been implemented.   As of December 31, 2014, the total costs of implementing the announced program (restructuring costs and fixed asset impairments) totaled $2.1 billion (of which $0.8 billion was non-cash) and no further significant charges are anticipated. The Company mothballed the liquid phase at the Florange site of ArcelorMittal Atlantique et Lorraine, France in 2012 and, pursuant to the industrial plan agreed on September 30, 2013 for ArcelorMittal Liège, the Company agreed that six lines would be maintained. As of December 31, 2014, including residual cost effects, the targeted $1 billion annual savings rate had been exceeded on a run-rate basis.

The Company had temporarily suspended steel growth capital expenditure, but, beginning in the second half of 2013 and continuing through 2014, select steel capital expenditure projects were restarted to support the development of key activities, including more focus on automotive.

Despite the uncertain business environment since the market downturn in 2008, ArcelorMittal management has successfully continued to access the equity and bond markets to adapt its balance sheet structure and extend debt maturity dates.

Proven expertise in acquisitions and turnarounds .   ArcelorMittal’s management team has proven expertise in successfully acquiring and subsequently integrating operations, as well as turning around underperforming assets within tight timeframes. The Company takes a disciplined approach to investing and uses teams with diverse expertise from different business units across the Company to evaluate new assets, conduct due diligence and monitor integration and post-acquisition performance. Since the inception of ArcelorMittal’s predecessor company Mittal Steel in 1989, the Company has grown through a series of acquisitions and by improving the operating performance and financial management at the facilities that it has acquired. In particular, ArcelorMittal seeks to improve acquired businesses by eliminating operational bottlenecks, addressing any historical under-investments and increasing acquired facilities’ capability to produce higher quality steel. The Company introduces focused capital expenditure programs, implements company-wide best practices, balances working capital, ensures adequate management resources and introduces safety and environmental improvements at acquired facilities. ArcelorMittal believes that these operating and financial measures have improved the operating performance and quality of steel produced at these facilities.

Due to difficult economic and market conditions prevailing in late 2008 and early 2009, ArcelorMittal sharply curtailed M&A and greenfield investment activity. Due to continuing weaker demand, as well as uncertainties

arising from the eurozone sovereign debt crisis, M&A activity remained subdued for most of 2010, 2011 (with the exception of the Baffinland transaction) and 2012, as the Company focused on targeted cost improvement through its management gains program, non-core asset disposals and resizing its operational footprint through asset optimization. The Company has continued its strategy to dispose of non-core assets with the disposal of Gallatin, Circuit Foil Luxembourg, the steel cord business and ATIC in 2014. In addition, as global market conditions gradually improve and signs of stability emerge in Europe, the Company has begun to take advantage of select growth opportunities. On February 26, 2014, for example, ArcelorMittal completed a 50/50 joint venture partnership with NSSMC to acquire TK Steel USA, a steel processing plant situated in Calvert, Alabama, with a total capacity of 5.3 million tons including hot rolling, cold rolling, coating and finishing lines (out of which 1.0 million tons is reserved for stainless steel on a tolling basis).

Sustainable Development. ArcelorMittal sees sustainable development (“SD”) as an important driver of shareholder value. During 2014, the Company developed a new approach to SD. The Company’s ambition is to position steel and ArcelorMittal in particular, as an essential and trusted contributor in the creation of high quality and sustainable lives in the coming decades. In order to achieve this, the Company will develop SD plans at the local level based on a local understanding of three inputs: the social and environmental challenges and opportunities that arise for its business, the expectations of its customers, regulators and local communities and global sustainability trends. These plans will enable the Company to better manage social and environmental risk and ensure it creates the conditions needed to succeed by focusing on ten SD outcomes, identified through internal consultation.

Safe healthy quality working lives for ArcelorMittal’s people

The Company regards its employees as an important and highly valued resource and aims to ensure they lead safe, healthy and high-quality lives. Safety is of paramount importance, and a culture of diversity, integrity and innovation is encouraged. A number of programs ensure the talent within ArcelorMittal’s workforce is harnessed through the development, engagement, inclusion and leadership of all employees, and by building strong leadership for the future.

·          Safety.  It is ArcelorMittal's stated aim to have the best safety record in its sector, producing steel and extracting minerals with no fatalities or lost-time injuries. The company-wide safety program, “Journey to Zero”, is designed to achieve this goal by creating a culture of shared vigilance in which the risks and hazards are understood and monitored, best practices are shared and appropriate action is taken at every level. ArcelorMittal's advanced safety monitoring systems take into account both the physical and human aspects of workplace safety. The system includes safety leadership and awareness programs, which are backed up by workshops, training sessions and ongoing communication programs. An annual Health and Safety Day provides a focus for best-practice sharing across the Group. Safety performance is measured by tracking the number of injuries per million hours worked that result in employees or contractors taking time off work (the “lost-time injury frequency rate” or “LTIFR”) as well as the number of restricted work injuries per million hours worked that result in employees or contractors not being able to perform their normal tasks. The Company compiles an index that combines the two measures. All accidents are investigated whilst designated Group Management Board members review all fatalities to ensure lessons are learned throughout the Company. Management accountability for safety is reinforced through a remuneration policy that links an element of executive bonuses to the LTIFR and to the number of fatalities in the relevant area.

In mining, the Journey to Zero program is supported by a “Courageous Leadership” campaign. This aims to ensure that everyone takes responsibility for safety — both their own and that of others.

ArcelorMittal works closely with its trade unions to drive safety improvements through a global partnership comprising a Joint Global Health and Safety Committee at the corporate level and similar committees at every production unit. ArcelorMittal is the only company in its sector to have established such a global partnership.

Journey to Zero has achieved significant improvements in safety performance. The LTIFR has fallen from 3.1 incidents per million hours worked in 2007 to 0.85 in 2014. This compares with an average of 1.61 for the steel industry in 2013, up from 1.45 in 2012 (source: World Steel Association, “Worldsteel”), the latest available data. ArcelorMittal's LTIFR target for 2014 was reduced to 0.75 from 0.85 in 2013.

The index for restricted work plus lost time injuries improved by about 10 % from 2.59 in 2013 to 2.34 in 2014. This demonstrates good progress in reducing the frequency of significant safety events. That progress is confirmed by the reduction in the severity rate (related to the number of days' absence from work) relating to LTIs from 0.09 in 2013 to 0.08 in 2014 and by the severity rate for LTIs plus restricted work cases from 0.16 in 2013 to 0.14 in 2014.

Nevertheless, the Company's performance in 2014 was marred by 23 fatalities, an unacceptable and deeply distressing outcome. Reinforcing the implementation of the Company's fatality prevention standards through continued auditing of its sites, conducting more pro-active assessments of risks and hazards through awareness campaigns, and intensifying efforts to instill a safety culture among contractors remain priorities for 2015. A specific communication and information campaign relating to all major categories of past fatal accidents has been launched. Business Units and sites can draw on this to train and inform both their own personnel and third-party contractors before undertaking any task entailing one or more of these categories of work. 

·          Health.  As with safety, ArcelorMittal takes a proactive approach on health. The Company is a member of the International Occupational Hygiene Association and is building a network of occupational health and hygiene professionals across the group. In 2014, more than 400 sites ran their own health awareness program, with approximately 135,000 employees participating in the various activities. One ArcelorMittal site received a Worldsteel Excellence Award in 2014 (the 2014 rules restrict the number of awards to one per company) for projects that have resulted in major improvements in a site’s safety or health record: the winning project was the ‘Quality of Life Program’ at the Tubarão site in Brazil.

·          Employee relations. The Company conducts open and continuous dialogue to create a working environment based on mutual trust, understanding and respect. See “Item 6.D––Directors, Senior Management and Employees––Employees”.

·          Diversity and Inclusion. With a presence in 60 countries and employees from many more, the diversity of ArcelorMittal's workforce is important in bringing fresh perspectives and experiences to the business. The Company's diversity and inclusion policy reflects an effort to encompass different cultures, generations, genders, ethnic groups, nationalities, abilities and social backgrounds. There is a particular focus on improving the gender balance within the business and to supporting women leaders. ArcelorMittal’s Group Management Board is committed to creating and maintaining a more inclusive culture and ensuring that the Company becomes an “employer of choice” for women. The Company has set a goal of increasing the number of women directors from two to three by the end of 2015, based upon a board size of 11 members. In 2011, a Global Diversity and Inclusion Council was created to define the gender diversity and inclusion strategy, identify the barriers that women face in the business and establish key performance indicators. With membership including one Group Management Board member and three members of the Management Committee, the Council comprises both men and women. In 2014, the ArcelorMittal University delivered sessions of its “Women in Leadership” course developed with the Instituto de Empresa business school in Madrid, Spain, and “Women Emerging in Leadership” course aimed at talented women in non-managerial levels for over 153 women worldwide.  The Company is carefully considering the impact of these programs on the business and looking at ways in which the women participants can become change agents and program ambassadors in their home organizations or departments. The Company is preparing to take an additional step with the launch of a new initiative to raise awareness of “unconscious bias” and its impact on decision-making.

·          Employee development. ArcelorMittal’s training and development activities are centered on the ArcelorMittal University (the “University”), which provides online and classroom training courses and offers a diverse choice of leadership, management, functional, technical and bespoke programs, encouraging lifelong learning and enabling professional progression. The University is fully accredited

through the Corporate Learning Improvement Process (“CLIP”) accreditation from the European Foundation for Management Development (“EFMD”). EFMD is recognized as a high-quality accreditation body in the management field and CLIP is a benchmark for quality in the design and functioning of corporate training and educational organizations. A Governing Board has been set up to ensure better alignment between the University and the needs of the business. It is a forum for high-level, strategic university planning and discussions regarding learning. The board meets twice a year and is composed of members representing segments and main corporate functions. The University comprises a network of local campuses strategically located across the world – Hamilton (Canada), Avilès (Spain), Ostrava (Czech Republic) and Vanderbijlpark (South Africa). In 2014, a new campus opened its doors in Kryvyi Rih (Ukraine) to reinforce the exchange of best practices and knowledge sharing with Eastern Europe. The campus has the capacity to train simultaneously around 830 employees.

Learning Week is an annual event and in 2014 more than 48,000 employees participated in nearly 130 locations across the group, four times the number participating in 2013. The theme in 2014 - "we share, we learn, we grow" - was designed to reinforce knowledge sharing as a key component of organizational learning and growth.

ArcelorMittal constantly seeks to improve in all of its people practices. Regular benchmarking visits to other organizations are made to understand and share human resource and learning best practices, which will further support and enhance ArcelorMittal's capabilities to respond to the needs of the business. The Company's partnerships with well-recognized business schools and a pool of expert training providers offer it a wider perspective on the “world” of human resources. The University supports this learning culture within the organization. In 2014, the University also redefined and adapted its business model to position itself as a center of expertise through the involvement of local resources to respond to the growing training demand.

ArcelorMittal's management is focused on the development of a strong leadership pipeline, with a clear emphasis on internal mobility . Its commitment in this area was recognized in 2014 when ArcelorMittal was ranked 14th on the global Aon Hewitt Top Companies for Leaders list, which explores how organizations assess, select, develop and reward leaders. The Company maintains a number of processes that ensure the right skill sets are in place when and where they are needed.

Through a series of ‘career committees’, the Company facilitates the management and development of individuals, increases competency levels across the organization and ensures the availability of a pipeline of talent for key positions. This process is conducted through periodic meetings at different levels within the Company using information collected through the Global Employee Development Program.

Leadership assessments provide an objective insight into an individual's potential, providing them with an opportunity to accelerate their personal development and effectiveness. The assessment process is fully integrated with development programs such as selection, nomination, promotion and development.

Succession management is a key means of ensuring the sustainability of the business and continuity in leadership positions. Every year, senior management dedicates time to reviewing succession plans for around 400 key positions, from General Manager to Senior Executive Vice President. In addition, ArcelorMittal identifies, interviews and vets high-caliber individuals from within the global steel and mining industries and establishes an ongoing relationship with industry leaders. By combining these two approaches, ArcelorMittal strengthens its succession process by maintaining pre-identified and readily equipped internal and external talent pipelines.

Strategic workforce planning enables ArcelorMittal to proactively plan for its long-term workforce requirements with an aim to ensure that critical jobs are secured, the organization is appropriately staffed and skill shortages in the market are identified and addressed before the organization is negatively impacted.  The process is part of the “ArcelorMittal way”, and each business lead has its own workforce plan, consistent with its targets.

The desired qualities and outcomes of incumbents in key positions are outlined in highly detailed job profiles, which are developed in conjunction with a GMB member, the Head of Strategy and the Head of Human Resources. These are comprehensive profiles, including details from the duties of the job holder and the experience and competencies required to the major business challenges that will be faced. Individuals on succession plans are assessed against these profiles using psychometrics, simulations and detailed competency-based interviews. Development plans are then created to align with career aspirations of individuals, demands of job profiles and competency gaps.

·          Employee engagement . ArcelorMittal views employee engagement as a combination of alignment  (knowing what to do) and motivation (wanting to do it). In all engagement practices, the Company seeks to integrate feedback into action plans to address employees’ concerns. The principal vehicle to help the Company’s management understand and measure employees’ opinions, attitudes and satisfaction is the ArcelorMittal Climate Survey. The survey looks at a variety of key dimensions including organizational direction, leadership and professional deployment and development. It allows employees to relay feedback anonymously to the executive leadership. In 2013, the survey registered the highest ever rate of response, at 75% of the targeted population. The next run of the survey is anticipated in 2015 and will measure the impact of the action plans developed following the previous results.

       Products that accelerate more sustainable lifestyles

         Increasingly, the sustainability of the Company’s steel solutions, as well as the sustainability of its production credentials, will affect consumer preferences. The Company’s ability to measure the sustainability value of its products over their lifecycle helps to prepare the Company to respond to these developments.

Accounting for the sustainability of a product over its life, or “lifecycle thinking”, has been developed in order to analyze and reduce the resource and emissions impact of products during their production, use and disposal.  Lifecycle analysis (“LCA”) is integral to ISO14040-44 and is a requirement of Environmental Product Declarations for construction products in Europe, although it has yet to be incorporated into the relevant standards for automotive products. A dedicated R&D team at ArcelorMittal has, since 2005, undertaken over 40 LCA studies in relation to construction, automotive, packaging and general industry products. Currently, ArcelorMittal chairs the Worldsteel LCA expert group and the SOVAMAT initiative (SOcial VAlue of MATerials), a strong international network of experts which aims to share knowledge on the measurement of the social and environmental impacts of materials.

The Company’s further breakthroughs in third generation advanced high-strength steels exemplify how its products are reducing the weight of automotive components whilst retaining their strength, thereby contributing to safer and lower carbon lifestyles. It has also commercialized new coatings for the construction and packaging industries that reduce weight and thereby the use of raw materials, cut pollution or respond to demand for ecologically friendly solutions. See “Item 4.B - Business Overview – Research and Development - Maintaining the competitiveness of steel versus alternative materials, particularly in the Company’s unique automotive franchise.”

       Products that create sustainable infrastructure

         A prosperous future society with a growing population will require innovative, smart and high-quality infrastructure.  The Company is working to ensure that customers understand the importance of steel’s potential social contribution, so that steel is the material of choice for those who design and deliver infrastructure. This is particularly important for customers in the construction, energy, public transport and general industrial markets.

In partnership with leading research institutions, ArcelorMittal has developed software packages, AMEco and LicaBuilt, that enable designers of bridges and buildings to assess the relative lifecycle impacts of their choice of materials on the environment, in terms of CO ₂ emissions, energy and water consumption and waste generation. 

The Company has developed solutions to improve the sustainability of steel in the construction sector through new coating techniques to improve durability, reduce weight or cut pollution.  It has also enhanced the performance of electrical steels used in transformers. More details can be found in “Item 4.B–Business Overview–Research and Development.”

       Efficient use of resources and high recycling rates

ArcelorMittal is well positioned to respond to the long-term trends of continued population growth and natural resource pressures. This involves not only recycling scrap steel and promoting the re-use of production byproducts, but also appreciating the long-term value that can be created through the inherently circular nature of steel, and building this into commercial models. The Company will therefore work to evaluate how to capture the maximum value from a resource-efficient, closed-loop economy. It is currently engaged in several studies aimed at improving its understanding of the potential to improve steel recovery and recycling efficiencies.    

      Approximately one quarter of the Company’s crude steel is produced in electric arc furnaces, which use steel scrap as feedstock. This capacity, together with the scrap used in the Company’s integrated plants, makes ArcelorMittal one of the world’s biggest recyclers. To work towards improved recovery and the optimal use of scrap, the Company is participating in a number of research programs on end-of-life steel recovery and recycling practices.  

      The Company continues to research ways of reducing or reusing the byproducts from its operations, such as BOF slag or oily mill sludge. A dedicated R&D team evaluates the most valuable ways to do this using a proprietary tool, ROMEO. Wherever possible, these byproducts are re-used internally, and where not possible, they are sold for further use in the wider economy. For example, the Company is presently developing a process to retrieve and re-use the steel in grinding sludge produced from rolling mill rollers.

       Trusted user of air, land and water

         As a user of large volumes of water in its steel and mining operations, the Company contributes to local air and water quality. ArcelorMittal recognizes the importance of the trust of its stakeholders in order to share these vital resources with local communities as part of the Company’s license to operate. The Company therefore aims to enhance its relationship with local communities and other stakeholders, endeavoring to listen to concerns about air and water quality where they are raised. The Company monitors air, water, energy and residue data at all production sites and publishes regularly on its performance in its corporate responsibility report at a global level. In 2014, 19 corporate responsibility reports were also published at a country or local level, and a large proportion of these disclosures concerned air emissions and water use.

In 2014, $375 million was allocated to investment in environmental improvement projects. Significant projects are detailed in “Item 4.B––Information on the Company––Business Overview – Government Regulations–Environmental Laws and Regulations”. 

The Company aims to practice good land use management, and protects biodiversity in the environments where it operates.  Wherever ArcelorMittal develops a new mine or steel project, it carries out detailed environmental impact assessments so as to establish an environmental management plan covering both the life of the mine and what happens to the land afterwards. At the Company's Liberian iron ore mines, situated close to both mountain and lowland rainforests, ArcelorMittal is engaged in major environmental investments to offset the impact of the project. In Baffinland, where through its joint venture ArcelorMittal plans to develop a greenfield iron ore project, the Company has been carefully documenting the biotic and abiotic environment at the Mary River.

          Responsible energy user that helps create a lower carbon future

Given the importance of energy to the ArcelorMittal business, it is vital that the Company be able to respond to the geo-political realities driving energy policy and supplies, including regulations relating to carbon emissions.  Through its energy choices, the Company’s ambition is to be a responsible energy user that helps create a lower carbon future.  

ArcelorMittal therefore continuously seeks process improvements that will lessen its energy usage, thereby reducing both CO ₂  emissions and costs. An energy manager is in place at every plant, supported by a network of technical energy professionals, energy procurement experts and R&D specialists. In 2014, about 47% of the Company’s approved environmental capital investments were dedicated to energy projects.

In the United States, the Company has an initiative in place to reduce energy consumption of 17 plants by 10% and has been honored with the “Energy Star” award from the U.S. Environmental Protection Agency for six years in a row. In the Europe segment, the Energize program targets a 10% saving in energy costs by 2016, covering the period from 2011 through 2016. Performance against these targets is reported in the Company’s annual sustainable development report.

Supply chains that ArcelorMittal’s customers trust

ArcelorMittal engages with its suppliers on social and environmental issues in order to reduce its own risks, meet the expectations of its customers, regulators and wider society, and create more sustainable value for the Company, its shareholders and other stakeholders. The Company’s Code for Responsible Sourcing sets out minimum standards for its suppliers and describes how the Company will work with them to achieve these standards. Progress on responsible sourcing is reported in the Company’s annual corporate responsibility report.

       Active and welcomed member of the community

The Company understands the importance of active  engagement in the community, a commitment to two-way dialogue, respect for the rights of the community, and honest, transparent communications.  

The Company’s Community Investment Strategy aims to focus on the company’s core competencies and resources to support communities in ways that align with both their needs and those of their businesses. In this way it responds to the needs of local stakeholders. I n response to the heavy flooding in Bosnia Herzegovina in May, ArcelorMittal teams in both Zenica and Prijedor made efforts to deliver all possible aid to their respective local communities and made an assessment for longer-term support.  In August, with the Company’s operations and communities in Liberia severely challenged by the Ebola outbreak, ArcelorMittal co-founded and has to date chaired the Ebola Private Sector Mobilization Group (“EPSMG”). EPSMG became a growing coalition of over 100 companies and 40 civil society/government bodies aiming to align private sector capability with the international Ebola response.

Employee volunteering is part of the community investment strategy that also creates motivation in the Company’s workforce. In 2014, 90 employees took part in solidarity holidays in nine countries, providing a link with local communities and support for local projects.

Pipeline of talented scientists and engineers for tomorrow    

         The continued input of talented scientists and engineers will be vital to sustainable development, and the contribution of the steel industry to such initiatives. Skills in STEM (science, technology, engineering and mathematics) are therefore important to the Company’s future and to the jobs of the future. Between 2015 and 2025, jobs requiring STEM skills are projected to grow to more than 9 million worldwide, which is an increase of about 1 million. The Company is investing in STEM to motivate potentially compelling applicants to move in this promising direction. STEM is now the global theme for the Company’s community investment strategy.

         In the U.S., the Company’s Campus Partnership Program invests $1 million each year in ten schools to sponsor mechanical and electrical engineering majors and to build the Company’s relationships with schools. A Great Science Academy program launched with ArcelorMittal investment enables students from sixth to twelfth grade to focus on the Great Lakes, space and aeronautics, biomedical technology, design and innovation. The retention rate of students beginning in sixth grade continuing on in the program is 90%, and students who have participated in the program report being more interested in a STEM major in college.  

         In South Africa, the Company is contributing to the alleviation of the crisis-level dearth of national skills in the sciences, and especially in the field of engineering, through the Company’s ZAR 12 million investment in Science Centres in Sebokeng, Saldanha and Newcastle. These ArcelorMittal Science Centres are non-profit centers of excellence that seek to improve mathematics and science performance at schools, and stimulate interest and curiosity in these fields. Furthermore, these Science Centres provide information, knowledge and skills training to teachers, learners, school leavers and the general public in the communities surrounding the company’s operations.

ArcelorMittal’s contribution to society measured, shared and valued

         ArcelorMittal recognizes it can benefit from understanding the broader social and economic value it creates, both directly and indirectly, and from sharing this information with its stakeholders. The Company is therefore developing metrics to measure its social impact . In 2014, ArcelorMittal South Africa published a study that examines the actual impact the Company has in South Africa in terms of economic growth, jobs, local communities, the environment, the country’s development through steel, and as a catalyst for change. The Company will review this approach and apply it in other areas where it has a significant economic impact to ensure it is able to provide evidence of this. It will also report on its economic impact at a global level in the Company’s sustainable development report published in April.

These outcomes are underpinned by transparent and good governance  

Listening, learning and transparency are key to the integrity of the Company’s leadership and governance, ensuring the Company operates effectively and ethically in all parts of the world.  The Company understands the importance of managing and monitoring the non-financial aspects of its business at the local level. This involves tracking stakeholder expectations and long-term global sustainability trends and preparing to respond effectively and transparently. 

The Board of Directors reviews issues of sustainability and corporate responsibility for the business on a quarterly basis. Analysis is provided via three committees which report to the Board: the Audit Committee reviews the Compliance Reports, which also cover compliance with the Code of Business Conduct; the Appointments, Remuneration and Corporate Governance Committee develops, monitors and reviews corporate responsibility policies; and the Risk Management Committee addresses specific social, environmental or ethical aspects that present a potential or actual risk to the business.

The Sustainable Development Council (“SDC”) is mandated to coordinate and optimize sustainability throughout ArcelorMittal, and reports to the GMB. It is comprised of senior managers representing each segment as well as corporate functions including risk management, human resources, environment, health and safety and communications.

The day-to-day implementation of the corporate responsibility policy is managed by the corporate responsibility team. They have expertise in specific areas such as global sustainability trends and policies, stakeholder relations, responsible sourcing, human rights, community investment, environmental and social impact and reporting. They also engage with global stakeholders such as international non-governmental organizations and socially responsible investors. This team works with segment representatives and business units to ensure that short- and long-term sustainability issues are being effectively addressed. Every plant manager and local CEO is responsible for managing sustainability issues in their own operations, as supported by local coordinators.

·          Stakeholder expectations. ArcelorMittal considers its relationships with its various stakeholders to be vital across its operations. Conducted in the right way, these relationships help the Company to know its priorities, understand how it can best respond, anticipate future problems, and earn the trust of its stakeholders. ArcelorMittal operations in each of the countries in which it operates are required to undertake an assessment of their stakeholders and their expectations, and to incorporate suitable responses by local businesses as part of their sustainable development plan.

·          Transparency.  The Company believes that stakeholder trust will be enhanced through transparency about the social and environmental impacts of its operations. The Company is continuously enhancing its disclosures through its annual corporate responsibility reports issued at both the corporate and local level. In 2014, such local reports were published in 19 countries. The Company also discloses to the Carbon Disclosure Project for carbon, water and its supply chain. 

In Transparency International’s Transparency in Corporate Reporting index , published in November 2014, ArcelorMittal was ranked 6th out of 124 companies. ArcelorMittal’s 2013 corporate responsibility report was highlighted by the World Business Council for Sustainable Development in its annual review of 162 sustainability reports released in November 2014; the Company’s corporate responsibility governance

and accountability performance is exemplified as a best practice, and its report was among the ten highest-scoring reports under review. The Company did not appear in the Dow Jones Sustainability Index in 2014, but is working on how to improve its sustainability management and disclosures in order to re-enter.

·          Ethics and integrity. The Company's way of doing business is governed by its Code of Business Conduct and the associated set of policies and procedures. This covers not only employees’ legal responsibilities, but also areas such as potential conflicts of interest, fair dealing with customers and suppliers, data protection and the proper use of Company assets.

In 2014, an integrity campaign was launched to assess the impact of the Company’s policies and procedures on the behavior of the business, through engaging employees around three pillars of integrity: honesty and transparency; dignity and respect; and exemplarity.  See also “Item 16.B–Code of Ethics” and “Item 6.C‒Directors, Senior Management and Employees‒Board Practices/Corporate Governance”.

·          Human rights. ArcelorMittal’s human rights policy draws on the UN Universal Declaration of Human Rights, the International Bill of Human Rights, the core conventions of the International Labor Organization, and the UN Global Compact. It includes commitments to the Company’s workforce, local communities and business partners, and covers health and safety, labor rights and the rights of indigenous people. Every employee is required to undertake training in the Company’s policy every three years, and in 2014, 76% of the Company’s workforce had completed up-to-date training.

See also “Item 6.C – Directors, Senior Management and Employees‒ Board Practices/Corporate Governance”.

Business strategy

ArcelorMittal’s success is built on its core values of sustainability, quality and leadership and the entrepreneurial boldness that has empowered its emergence as the first truly global steel and mining company. Acknowledging that a combination of structural issues and macroeconomic conditions will continue to challenge returns in its sector, the Company has adapted its footprint to the new demand realities, intensified its efforts to control costs and repositioned its operations to outperform its competitors.

Against this backdrop, ArcelorMittal's strategy is to leverage four distinctive attributes that will enable it to capture leading positions in the most attractive areas of the steel industry value chain, from mining at one end to distribution and first-stage processing at the other:

Three themes

Steel . ArcelorMittal looks to expand its leadership role in attractive markets and segments by leveraging the Company’s technical capabilities and its global scale and scope. These are critical differentiators for sophisticated customers that value the distinctive technical and service capabilities the Company offers. Such customers are typically found in the automotive, energy, infrastructure and a number of smaller markets where ArcelorMittal is a market leader. In addition, the Company is present in, and will further develop, attractive steel businesses that benefit from favorable market structures or geographies. In developing attractive steel businesses, ArcelorMittal’s goal is to be the supplier of choice by anticipating customers’ requirements and exceeding their expectations. It will invest to develop and grow these businesses and enhance its ability to serve its customers. Given the current environment, that investment will be highly disciplined. Commodity steel markets will inevitably remain an

important part of our steel portfolio. Here, a lean cost structure should limit the downside in weak markets while allowing the Company to capture the upside in strong markets.

Mining. ArcelorMittal is working to grow its already world-class business. Mining forms part of the steel value chain but typically enjoys a number of structural advantages, such as a steeper cost curve. The Company's strategy is to create value by expanding its Tier I and Tier II assets, such as its mines in Canada and Liberia; by controlling cost and capital expenditure, and by supplying products that are highly valued by steel producers.

ArcelorMittal's financial capability has allowed it to continue to invest in key mining assets throughout the crisis, while the diversity of its steel and mining portfolio facilitates the ability of the mining business to optimize the value of its products in the steelmaking process. The Company's mining business aspires to be the supplier of choice for a balanced mix of both internal and external customers, while at the same time providing a natural hedge against market volatility for our steel operations.

All operations. ArcelorMittal strives to achieve best-in-class competitiveness. Operational excellence, including health and safety, the number one priority, is at the core of the Company's strategy in both steel and mining. The Company steadily optimizes its asset base to ensure it is achieving high operating rates at its best assets. Its technical capabilities and the diversity of its portfolio of businesses underpin a strong commitment to institutional learning and continuous improvement through measures such as benchmarking and best-practice sharing. Innovation in products and processes also plays an important role while supporting overall competitiveness.

Five key strategic enablers. Critical to implementing this strategy are five key enablers:

A clear license to operate. Many of ArcelorMittal's businesses are located in regions that are in the early stages of economic development. Practically all are resource-intensive. The Company recognizes that it has an obligation to act responsibly towards all stakeholders . ArcelorMittal's commitment to sustainability is outlined in the Sustainable Development section above. Sustainability is a core value that underlies ArcelorMittal's efforts to be both the world’s safest steel and mining company and a responsible environmental steward.

A strong balance sheet. The Company's balance sheet currently constrains its flexibility for funding organic growth or transformative acquisitions. While good progress has been made in recent years to reduce debt, achieving the medium-term targeted net debt level of US$15 billion remains a critical objective.

A decentralized organizational structure. ArcelorMittal's scale and scope are defining characteristics that give it a competitive advantage. They also introduce complexity and the risks of inefficiency, bureaucracy and diffuse accountability. To manage these risks, the Company favors a structure in which the responsibility for profit and loss is focused on business units aligned with markets.

Active portfolio management. Throughout the Company's history, it has sought to grow and strengthen the business through acquisition. That remains the case. The acquisition of existing assets and businesses is typically seen as a more attractive growth path than greenfield investment. But the Company is also willing to dispose of businesses that cannot meet its performance standards or that have more value to others.

The best talent. ArcelorMittal's success will depend on the quality of its people, and its ability to engage, motivate and reward them . As detailed in the Employee Development sections above, the Company is committed to investing in its people and ensuring a strong leadership pipeline. It will continue to improve its proc esses to attract, develop and retain the best talent.

Business Overview

ArcelorMittal reports its operations in five reportable segments representing continuing operations: NAFTA, Brazil, Europe, ACIS and Mining. The following table sets forth selected financial data by segment.

Information regarding sales by geographic area can be found in Note 27 to ArcelorMittal’s consolidated financial statements.

Products

ArcelorMittal has a high degree of product diversification relative to other steel companies. Its plants manufacture a broad range of finished and semi-finished steel products of different specifications, including many difficult and technically sophisticated products that it sells to demanding customers for use in high-end applications.

ArcelorMittal’s principal steel products include:

·          semi-finished flat products such as slabs;

·          finished flat products such as plates, hot- and cold-rolled coils and sheets, hot-dipped and electro-galvanized coils and sheets, tinplate and color coated coils and sheets;

·          semi-finished long products such as blooms and billets;

·          finished long products such as bars, wire-rods, structural sections, rails, sheet piles and wire-products; and

·          seamless and welded pipes and tubes.

ArcelorMittal’s main mining products include:

·          iron ore lump, fines, concentrate, pellets and sinter feed; and

·          coking, PCI and thermal coal.

Steel-Making Process

Historically, primary steel producers have been divided into “integrated” and “mini-mill” producers. Over the past few decades, a third type of steel producer has emerged that combines the strengths of both the integrated and the mini-mill processes. These producers are referred to as “integrated mini-mill producers”.

Integrated Steel-Making

In integrated steel production, coal is converted to coke in a coke oven, and then combined in a blast furnace with iron ore and limestone to produce pig iron, which is subsequently combined with scrap in a converter, which is generally a basic oxygen or tandem furnace, to produce raw or liquid steel. Once produced, the liquid steel is metallurgically refined and then transported to a continuous caster for casting into a slab, bloom or billet, which is then further shaped or rolled into its final form. Various finishing or coating processes may follow this casting and rolling. Recent modernization efforts by integrated steel producers have focused on cutting costs through eliminating unnecessary production steps, reducing manning levels through automation, and decreasing waste generated by the process. Integrated mills are substantially dependent upon iron ore and coking coal which, due to supply and demand imbalances, shortening of contract durations and linkage of contract prices to spot prices, have been characterized by price volatility in recent years.

Mini-Mills

A mini-mill employs an electric arc furnace to directly melt scrap and/or scrap substitutes such as direct reduced iron, thus entirely replacing all of the steps up to and including the energy-intensive blast furnace. A mini-mill incorporates the melt shop, ladle metallurgical station, casting, and rolling into a unified continuous flow. Mini-mills are generally characterized by lower costs of production and higher productivity than integrated steel-makers. These attributes are due in part to the lower capital costs and lower operating costs resulting from the streamlined melting process and more efficient plant layouts of mini-mills. The quality of steel produced by mini-mills is primarily limited by the quality of the metallic raw materials used in liquid steel-making, which in turn is affected by the

limited availability of high-quality scrap or virgin ore-based metallics for use in the electric arc furnaces. Mini-mills are substantially dependent on scrap, which has been characterized by price volatility in recent years, and the cost of electricity.

Integrated Mini-Mills

Integrated mini-mills are mini-mills that produce their own metallic raw materials consisting of high-quality scrap substitutes, such as direct reduced iron. Unlike most mini-mills, integrated mini-mills are able to produce steel with the quality of an integrated producer, since scrap substitutes, such as direct reduced iron, are derived from virgin iron ore, which has fewer impurities. The internal production of scrap substitutes as the primary metallic feedstock provides integrated mini-mills with a competitive advantage over traditional scrap-based mini-mills by insulating the integrated mini-mills from their dependence on scrap, which continues to be subject to price volatility. The internal production of metallic feedstock also enables integrated mini-mills to reduce handling and transportation costs. The high percentage use of scrap substitutes such as direct reduced iron also allows the integrated mini-mills to take advantage of periods of low scrap prices by procuring a wide variety of lower-cost scrap grades, which can be blended with the higher-purity direct reduced iron charge. Because the production of direct reduced iron involves the use of significant amounts of natural gas, integrated mini-mills are more sensitive to the price of natural gas than are mini-mills using scrap.

Key Steel Products

Steel-makers primarily produce three types of steel products; flat products, long products and stainless steel. Flat products, such as sheet or plate, are produced from slabs. Long products, such as bars, rods and structural shapes, are rolled from blooms and/or billets. Stainless steel products include austenitic stainless, ferritic stainless and martensitic stainless.

Flat Products

Slab. A slab is a semi-finished steel product obtained by the continuous casting of steel or rolling ingots on a rolling mill and cutting them into various lengths. A slab has a rectangular cross-section and is used as a starting material in the production process of other flat products (e.g., hot-rolled sheet, plates).

Hot-Rolled Sheet. Hot-rolled sheet is minimally processed steel that is used in the manufacture of various non-surface critical applications, such as automobile suspension arms, frames, wheels, and other unexposed parts in auto and truck bodies, agricultural equipment, construction products, machinery, tubing, pipe and guard rails. All flat-rolled steel sheet is initially hot-rolled, a process that consists of passing a cast slab through a multi-stand rolling mill to reduce its thickness to less than 12 millimeters. Flat-rolled steel sheet that has been wound is referred to as “coiled”.

Cold-Rolled Sheet. Cold-rolled sheet is hot-rolled sheet that has been further processed through a pickle line, which is an acid bath that removes scaling from steel’s surface, and then successively passed through a rolling mill without reheating until the desired gauge, or thickness, and other physical properties have been achieved. Cold-rolling reduces gauge and hardens the steel and, when further processed through an annealing furnace and a temper mill, improves uniformity, ductility and formability. Cold-rolling can also impart various surface finishes and textures. Cold-rolled steel is used in applications that demand higher surface quality or finish, such as exposed automobile and appliance panels. As a result, the prices of cold-rolled sheet are higher than the prices of hot-rolled sheet. Typically, cold-rolled sheet is coated or painted prior to sale to an end-user.

Coated Sheet. Coated sheet is generally cold-rolled steel that has been coated with zinc, aluminum or a combination thereof to render it corrosion-resistant and to improve its paintability. Hot-dipped galvanized, electro-galvanized and aluminized products are types of coated sheet. These are also the highest value-added sheet products because they require the greatest degree of processing and tend to have the strictest quality requirements. Coated sheet is used for many applications, often where exposed to the elements, such as automobile exteriors, major household appliances, roofing and siding, heating and air conditioning equipment, air ducts and switch boxes, as well as in certain packaging applications, such as food containers.

Plates. Plates are produced by hot-rolling either reheated slabs or ingots. The principal end uses for plates include various structural products such as for bridge construction, storage vessels, tanks, shipbuilding, line pipe, industrial machinery and equipment.

Tinplate. Tinplate is a light-gauge, cold-rolled, low-carbon steel usually coated with a micro-thin layer of tin. Tinplate is usually between 0.14 millimeters and 0.84 millimeters thick and offers particular advantages for packaging, such as strength, workability, corrosion resistance, weldability and ease in decoration. Food and general line steel containers are made from tinplate.

Long Products

Billets/Blooms. Billets and blooms are semi-finished steel products. Billets generally have square cross-sections up to 180 millimeters by 180 millimeters, and blooms generally have square or rectangular cross-sections greater than 180 millimeters by 180 millimeters. These products are either continuously cast or rolled from ingots and are used for further processing by rolling to produce finished products like bars, wire rod and sections.

Bars. Bars are long steel products that are rolled from billets. Merchant bar and reinforcing bar (rebar) are two common categories of bars. Merchant bars include rounds, flats, angles, squares, and channels that are used by fabricators to manufacture a wide variety of products such as furniture, stair railings, and farm equipment. Rebar is used to strengthen concrete in highways, bridges and buildings.

Special Bar Quality (SBQ) Steel. SBQ steel is the highest quality steel long product and is typically used in safety-critical applications by manufacturers of engineered products. SBQ steel must meet specific applications’ needs for strength, toughness, fatigue life and other engineering parameters. SBQ steel is the only bar product that typically requires customer qualification and is generally sold under contract to long-term customers. End-markets are principally the automotive, heavy truck and agricultural sectors, and products made with SBQ steel include axles, crankshafts, transmission gears, bearings and seamless tubes.

Wire Rods. Wire rod is ring-shaped coiled steel with diameters ranging from 5.5 to 42 millimeters. Wire rod is used in the automotive, construction, welding and engineering sectors.

Wire Products. Wire products include a broad range of products produced by cold reducing wire rod through a series of dies to improve surface finish, dimensional accuracy and physical properties. Wire products are used in a variety of applications such as fasteners, springs, concrete wire, electrical conductors and structural cables.

Structural Sections. Structural sections or shapes is the general term for rolled flanged shapes with at least one dimension of their cross-section of 80 millimeters or greater. They are produced in a rolling mill from reheated blooms or billets. Structural sections include wide-flange beams, bearing piles, channels, angles and tees. They are used mainly in the construction industry and in many other structural applications.

Rails. Rails are hot-rolled from a reheated bloom. They are used mainly for railway rails but they also have many industrial applications, including rails for construction cranes.

Seamless Tubes. Seamless tubes have outer dimensions of approximately 25 millimeters to 508 millimeters. They are produced by piercing solid steel cylinders in a forging operation in which the metal is worked from both the inside and outside. The final product is a tube with uniform properties from the surface through the wall and from one end to the other.

Steel Sheet Piles. Steel sheet piles are hot rolled products used in civil engineering for permanent and temporary retaining structures. Main applications are the construction of quay walls, jetties, breakwaters, locks and dams, river reinforcement and channel embankments, as well as bridge abutments and underpasses. Temporary structures like cofferdams in the river are made with steel sheet piles. A special combination of H beams and steel sheet piles are sometimes used for the construction of large container terminals and similar port structures.  

Welded Pipes and Tubes. Welded pipes and tubes are manufactured from steel sheet that is bent into a cylinder and welded either longitudinally or helically.

Stainless Steel

In January 2011, ArcelorMittal completed the spin-off of its stainless steel operations to a separately-focused company, Aperam. A small amount of stainless processing and products are produced at Calvert and Industeel.

Electrical Steels

There are three principal types of electrical steel: grain-oriented steels, non-grain oriented fully processed steels and non-grain oriented semi-processed steels:

·          Grain-oriented steels are 3% silicon-iron alloys developed with a grain orientation to provide very low power loss and high permeability in the rolling direction, for high efficiency transformers. These materials are sold under the Unisil trademark. Unisil H ^® is a high permeability grade that offers extremely low power loss.

·          Non-grain oriented fully processed steels are iron-silicon alloys with varying silicon contents and have similar magnetic properties in all directions in the plane of the sheet. They are principally used for motors, generators, alternators, ballasts, small transformers and a variety of other electromagnetic applications. A wide range of products, including a newly developed thin gauge material for high frequency applications, are available.

·          Non-grain oriented semi-processed steels are largely non-silicon alloys sold in the not finally annealed condition to enhance punchability. Low power loss and good permeability properties are developed after final annealing of the laminations. These materials are sold under the Newcor and Polycor trademarks.

Direct Reduced Iron

Direct reduced iron, also known as DRI, is produced by removing the oxygen from iron ore without melting it. DRI is used as feedstock for electric arc furnaces and is a high-quality substitute for scrap. In 2014, ArcelorMittal produced 9.3 million tonnes of DRI, up from 8.9 million in 2013. Direct reduced iron enables ArcelorMittal to control the quality and consistency of its metallic input, which is essential to ensure uniform high quality of the finished products.

Mining Products

ArcelorMittal’s principal mining products and raw material input items for steel operations include iron ore, solid fuels (coking coal, PCI coal and coke), metallics, alloys, base metals, energy and industrial gases.

ArcelorMittal’s mining and raw materials supply strategy consists of:

·          Acquiring and expanding production of certain raw materials, in particular iron ore, coal and manufacturing refractory products and developing diverse third-party customer relationships;

·          With respect to purchasing, pursuing the lowest unit price available based on the principles of total cost of ownership and value-in-use through aggregated purchasing, supply chain and consumption optimization;

·          Exploiting its global purchasing reach; and

·          Leveraging local and low cost advantages on a global scale.

Faced with rising and more volatile raw materials prices in recent years and in light of the concentrated nature of the mining industry (in particular iron ore), ArcelorMittal has pursued a strategy of selectively acquiring mining assets that are complementary to its steel producing activities and making substantial investments in the development of its own production base. These acquisitions and investments have focused mainly on iron ore and

coking coal, which are the two most important inputs in the steel-making process. ArcelorMittal has exploration and evaluation mining projects in India and Africa that have not yet reached the development and production stages, and whose advancement was delayed in late 2008 and 2009 due to the global economic crisis. ArcelorMittal also holds stakes in a few joint ventures and other entities with substantial mining assets. As the global economic crisis continued in 2010, ArcelorMittal focused on optimizing output and production from its existing sources rather than on further expanding its portfolio of mining assets. In early 2011, the Company’s expansion of its own raw materials base resumed with its acquisition of Baffinland, owner of an undeveloped iron ore deposit in the Canadian territory of Nunavut. In late 2012, the Company secured additional shareholder support for Baffinland with ArcelorMittal and Nunavut Iron Ore becoming equal partners in the joint venture. Also, in order for the Company to forge strategic relationships with key customers, in 2013, the Company’s wholly owned subsidiary ArcelorMittal Mines Canada entered into a joint venture partnership with a consortium led by POSCO and China Steel Corporation (“CSC”) to hold ArcelorMittal’s Labrador Trough iron ore mining and infrastructure assets. The consortium holds a 15% interest in the joint venture, with ArcelorMittal Mines Canada retaining the remaining 85% interest. POSCO and CSC have entered into long-term iron ore off-take agreements with ArcelorMittal Mines Canada. See “Item 4.A—Information on the Company—History and Development of the Company—Updates on Previously Announced Investment Projects”.

ArcelorMittal is a party to contracts with other mining companies that provide long-term, stable sources of raw materials. The Company’s largest iron ore supply contracts are agreements with Vale that were entered into in 2008 and amended in 2009 in response to changed market conditions and to introduce a greater level of flexibility with respect to ArcelorMittal’s purchasing requirements and Vale’s supply requirements. ArcelorMittal’s other principal international iron ore suppliers include Cliffs Natural Resources Inc. and US Steel in the United States, Metalloinvest in Russia, Metinvest in Ukraine, Luossavaara-Kiirunavaara AB in Sweden, Samarco in Brazil, IOC (Rio Tinto Ltd.) in Canada and Sishen in South Africa. ArcelorMittal’s principal coal suppliers include the BHP Billiton Mitsubishi Alliance (“BMA”), Rio Tinto, Anglo Coal, Glencore and Peabody in Australia, Alpha Natural Resources and Walter Energy Inc. in the United States, Teck Coal in Canada, Vale and Rio Tinto in Mozambique. ArcelorMittal classifies certain of these long-term contracts as “strategic”, such as one of the contracts with Cliffs Natural Resources Inc. and the contract with Sishen, due to their pricing arrangements and includes them in its assessment of its raw material self-sufficiency.  

ArcelorMittal believes that its portfolio of long-term supply contracts can play an important role in preventing disruptions in the production process. In 2014, ArcelorMittal sourced nearly all of its iron ore requirements and the majority of its coking coal requirements, beyond those provided by its own mines and strategic long-term contracts, under other long-term contracts, the majority of which are now on a quarterly pricing arrangement (see “Item 5—Operating and Financial Review and Prospects—Raw Materials”). 

The table below sets forth information regarding ArcelorMittal’s raw material production and consumption in 2014.