ArcelorMittal Italia Italian steel: building a sustainable...

ArcelorMittal Italia

Italian steel: building a

sustainable tomorrow

ArcelorMittal EuropeMedia Day 2018


• Key deal milestones

• The priorities of our plan

• Our plan, our first results, our new targets

Why ILVA is strategical for ArcelorMittal

Concentration of production in

larger and more efficient sites1

2Increased geographical balance and better presence in

South Europe and in Italy, the second largest European

steel consuming market

3Solid asset base

Taranto is the largest integrated steel plant in Europe

Key deal milestones 2014 - 2017

2014 Beginning 2015 June 2017 Sept 2017

First

publication of

ILVA contract

notice

First

ArcelorMittal

offer

ILVA is

assigned to

AM InvestCo,

contract

signed with

Italian

government

Environmental

law approved

Jan 2016

Second

publication of

ILVA contract

notice

Key deal milestones 2018

May 2018 July 2018 1 Nov 20186 Sept 2018

Antitrust approval

from European

Commission

Enhanced

environmental

and social

commitments

Agreement

with unionsArcelorMittal

Italia takes over

ILVA operations

A solution for everyone

10,700 people hired by ArcelorMittal.

For the employee remaining in ILVA AS:

• Access to voluntary separation programme

• No forced lay-off

• Hiring guarantee by ArcelorMittal at the end of the plan

Environment

• Most ambitious environmental plan ever

• Enhanced deadlines and performance commitments


• Key deal milestones

• The priorities of our plan

• Our plan, our first results, our new targets

The three priorities

Sustainability and reputation• Health & safety and environment

• Compliance

Performance and profitability

Integration

The approach

Sustainability

and reputation

Performance

and profitability

Integration

Beg. Nov

Target setting and

planning.

Quick win launch

End 2018

Prioritisation and

implementation

launch (short cycles)

• Priorities set and

agreed

• Tracking and

steering

2019

Turnaround

implementation

• Projects

realisation (inc.

environment)

• Stop losses

Beyond

Structural

continuous

improvement

towards excellence


• Sustainability & reputation:our plan, our first results, our next targets

10

Sustainability and reputation: health and safetyThe plan

* Lost Time Injury Frequency is defined as the lost time for an injury for 1,000,000 hours worked; based on workers and internal contractors

3.12.5

1.9 1.81.4

1.0 0.9 0.9 0.8 0.8 0.8 0.6 0.7 0.6

ArcelorMittal Health & Safety Lost Time Injury

Frequency (LTIF) rate*

Extraction & steel, workers and contractors

3Q182007 20112008 2009 201420132010 2012 2015 2016 2017 1Q18 2Q18

ArcelorMittal promotes improvements

to reach “world-class” levels through

• Training > e.g. "Take Care” training

for all workers (47,000 people): 20

day-programme to improve health and

safety culture on top of all legal

requirements

• Monitoring > Our attention is directed

towards all of the touch points found in

the safety pyramid

• Certification > All of the ArcelorMittal

Europe sites have the OHSAS 18001

certification. Our objective is to be the

safest metals & mining company.

Align the health and safety performances to ArcelorMittal standards

Sustainability and reputation: health and safetyWork in progress and next targets

• Risk assessment of all sites updated against the new

organisation and the knowledge and experience gained by

ArcelorMittal

• Safety leadership training and coaching and H&S training

activities organised in November and December for more

than 7,500 people

• Introduction of new operational tools (ex. Hira Lite)

• Internal awareness campaigns on targeted topics (use of

handrails, safety glasses, etc.)

H&S initial action ongoing

Principles of compliance of ArcelorMittal

• ArcelorMittal business conduct

• Continuous training

Protection and

appropriate use

of company

goods

Equity

of the

agreements

Avoid any

conflicts of

interests

Compliance

with law

Respect

for the

community

5. 2.

1.

4. 3.

Sustainability and reputation: environmentThe plan

Our most ambitious environmental plan ever

Raw material yards

Zero dust emissions in

Tamburi from the raw

materials yards and

conveyor belt before the

first half of 2020

€300m

Water treatment

Elimination of

run off polluted water

€167m

Coke plant revamping

Technology best-in-class

€200m

Investments of €2.4 billion of which €1.15 billion is dedicated to the environment

Filter in the sinter plants

Dust, metals and dioxin

reduction to lower levels

than EU BAT

€35m

Main areas of

intervention


€2.4 billion of investments: €1.15 billion for the environment

1.15

2.40

1.25

428

290

172

167

40

CAPEX commitment till 2024 (€ billions)… … which €1.15 billion are for the environment

Environmental 2018-2023

Industrial2018 - 2024

Total CAPEX2018 - 2024

Reduction of canalized emissions(e.g. coke plants)

Reduction of diffuseemissions(e.g. raw material

yards coverage)

Water treatment (rain and processed)

Fixing solutions

Upgrade fire prevention plan

Equivalent to €500k per day

After the investment,

ArcelorMittal Italia will

be a global benchmark

in the steel sector


Improved environmental commitments

Intervention Requirements under DPCM 2017 ArcelorMittal’s commitments Improvements

Iron ore yard coverage • Start of the works required by 30.09.2018

• Completion within 36 months from

ArcelorMittal taking the business

(31.10.2018)

• Works started on 01.02.2018

• Planning to complete in 24 months,

within end of December 2019

• Work started 8 months earlier than required.

• Expected to complete at least 22 months

ahead of deadline.

Coal and coke yard

coverage

• Completion within 36 months from

ArcelorMittal taking the business

Planning to complete within end of

May 2020

Completion at least 17 months earlier than

required.

Sinter plant dedusting • First strand to be equipped with bag

filtration technology by 31.12.2021

• Second strand by 23.08.2023

• First strand to be upgraded by

31.03.2021

• Second strand to be upgraded by

30.09.2022

• 9 months ahead of the deadline

• 11 months ahead of the deadline

Treatment of the coke

oven gas

Level of H2S content in the coke oven gas

below 500 mg/Nm3, with the exception of

during the annual plant maintenance (20 days)

Implementation of the improvement of

the coke oven gas desulphurization

plant within 36 months from

ArcelorMittal taking the business.

• Reduction of SO2 emissions associated to the

use of coke oven gas at Taranto plant.

• Maintenance of the H2S level in coke oven

gas below 500mg / Nm3 even during the 20

days of annual maintenance.

Waste water treatment for

the Blast Furnaces

scrubbing water

Compliance with new limits by 1st July 2020 Built new waste water treatment,

applying in house technology for which

a patent has been filed in December

2017

• Anticipate to future regulation by avoiding the

use of highly hazardous chemical,

formaldehyde.

• Tailor made solution: onsite testing with

ArcelorMittal pilot plant ongoing since

November 2017

Sustainability and reputation: environmentWork in progress and next targets

Environmental plan: quick update

• Implementation of the

pump and treat system at

the raw materials yard

area in order to create a

hydraulic barrier

• Removal of the historical

storage of rail traverse and

old tires and

characterisation of the

area

Done To be completed by end 2018 What’s next?

• Dredging of the channels

(1st part – end by 31.05.19)

• Coverage of the landfill G2

(1st part – end by 31.05.19)

• Implementation of the mobile hoods for the

aspiration of the fumes during BOF slag

pouring at the “GRF area” as well as the

impermeabilisation of the pouring area

• Enclosure of buildings where dusty

material is handled

• Dismantling of the old tank S3

• Adaptation of temporary waste dumps

• Primary raw materials yard

coverage – ongoing

• Pavement of the BF slag yard –

ongoing

• Investments at the coke batteries

– ongoing

• Conveyor belts enclosure –

ongoing

• Sinter yard coverage ordering for

South and North

• Intervention for collection and

treatment of rain water

• Start of dismantling BF3

Sustainability and reputation: environmentWork in progress and next targets

Raw materials yard coverage: a unique project in Europe

Yesterday Today Tomorrow

Starting of excavation

activities on iron ore

yard

Installation of

foundation poles on

the iron one yard and

assembling of the

erection piers

Completion of the

first arch of the shed

1st Feb 2018 May 2018 Q4 2019 May 2020Dec 2018

Completion of the

mineral park

Finalisation of the

fossils and coke

area


• Performance and profitability:our plan, our first results, our next targets

Performance and profitability: industrial planThe plan

We have to bring profitability back to a

sustainable level and in line with our potential

Today's performances show a considerable gap compared

to ArcelorMittal

ArcelorMittal Italia has the potential to improve its results

quickly

Only a sustainably profitable company can invest and

create value for all stakeholders

Performance and profitability: industrial planThe plan

€1.25 billion for the industrial plan

To support the

important plan of

technical investments,

ArcelorMittal will have

to ensure an

appropriate cash flow

Performance and profitability: industrial planWork in progress and next targets

• Continuity ensured on transferred contracts & orders (inc. payments)

• Event with 130 suppliers in Taranto and individual meetings with current and

potential suppliers as per business needs

• Enter into new partnership with suppliers in full transparency Next goal

Buy

• Ensure business continuity: raw materials, maintenance and repair

• November 2018: Restart production of plate mill and hot rolling mill #1

• Main operational priorities are being set up per area for proper industrial

turnaround

• 6mt crude steel production from 2019 onwards Next goal

Make

• Implementation of the ArcelorMittal commercial approach and internal policies

• Become a reliable supplier able to offer a superior service level through an enlarged

and improved range of products Next goalSell

Performance and profitability: industrial planWork in progress and next targets

Research & Development Centre in Taranto:

in development

Staffing & building• Staffing plan is done, two-waves strategy: 15 people by March

2019 / at least 12 people after the summer holiday

• Final building: many solutions have been reviewed

• Performance improvement action plans started on:

environment, blast furnaces, BOF converter, secondary

metallurgy, continuous casting, hot strip millR&D process

• Launch action plans on production processes such as pipe & tube forming,

pickling, cold rolling, galvanizing, tinning

• Completion of buying, billing, IP, IT procedures

• Start developing the network with Italian engineering schools and universities


• Integration:our plan, our first results, our next targets

IntegrationThe plan

Deployment of operating practices and processes in ArcelorMittal Italia to

support turnaround activities

• Use of internal benchmarks in the Group to guide actions to

improve industrial KPIs

• ArcelorMittal experts with extensive experience in different

sites, stationed on ground in Italy to support and guide Italian

colleagues in their improvement actions

• “Twins” from rest of ArcelorMittal Europe to provide more

dedicated support for improvement and product development

Integration: communication and

corporate responsibility The plan and next targets

Our approach: transparency and continuous dialogue with all our

targets/stakeholders

Done

• Town hall meeting in Genova and in Taranto with more

than 2,200 attendees from all the departments

• Press conference and several interviews with national

and local media to present the plan

• Meeting with 130 suppliers

Next steps

• January 2019: formalise a partnership with the Soprintendenza ai beni

culturali di Taranto (local Fine Arts Service) and universities to use a location

inside the plant in Taranto to examine and stock - for research objectives -

the ruins of a Roman aqueduct near the plant which collapsed in November

• Several other CR initiatives under review and preparation

Integration: HRThe plan and next targets

Our people: our primary asset

Done

• September – November: selection of 10,700 out of 13,800 following the criteria of the agreement

• 1st November onwards: secondment of 10,700 employees from ILVA S.p.A. in AS

• Continuous monitoring of process and transparency toward unions

• November 12th: (re)hiring process launched. About 260 recruitments per day

Next steps

• January: workforce complete with headcount of 10,700

• Integration of ArcelorMittal Group HR processes (evaluation, KPIs, …)

• Definition of a training plan by role/function

• Group mobility

• Industrial relations: build new social dialogue forums, EWC

Conclusion

Sustainability and reputation• Health & safety and environment

• Compliance

Performance and profitability

Integration

Questions & Answers

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