ArcelorMittal Annual Report 2008

ArcelorMittal Annual Report 2008

Steel, as the most recyclable material 

in the world, is naturally sustainable. 

But we want to go beyond this. 

We want to ensure that our business position 

in the world creates sustainable benefits 

for all our stakeholders. 

Lakshmi N Mittal

Contents 

Management Report 

01 Our Philosophy 

02 Message from the Chairman and CEO 

06 Questions for the Group Management Board 

10 

Safe 

Monthly Highlights 2008 

14 Health and Safety: The Number 1 Priority 

20 Board of Directors 

24 Senior Management 

Sustainable 

28 Business Strategy 

30 Corporate Responsibility 

40 Global Presence 

46 Operational Review 

53 Customers and Innovation 

56 

Steel 

Market Information 

60 Corporate Governance 

67 Share Ownership 

68 Share Capital and Voting Rights 

69 Additional Information about ArcelorMittal 

Legal and Financial Information 

73 Directors’ Responsibility Statement 

2008 Consolidated Financial Statements 

74 Consolidated Balance Sheets 

75 Consolidated Statements of Income 

76 Consolidated Statements of Changes in Equity 

77 Consolidated Statements of Cash Flows 

78 Notes to the Consolidated Financial Statements 

146 Auditors’ Report on the Consolidated Financial Statements 

2008 Annual Accounts 

147 Balance Sheet 

148 Profit and Loss Account 

149 Notes to the Annual Accounts 

158 Auditors’ Report on the Annual Accounts 

159 Proposed Allocation of Results for 2008 

Disclaimer 

ArcelorMittal has made, and will continue to make, forward-looking statements 

with respect to, among other things, its financial position, business strategy, 

projected costs, projected savings, and the plans and objectives of our 

management. Such statements are identified by the use of forward-looking 

words or phrases such as ‘anticipates’, ‘intends’, ‘expects’, ‘plans’, ‘believes’, 

or ‘estimates’, or words or phrases with similar meaning. Our actual results 

may differ materially from those implied by such forward-looking statements 

on account of known and unknown risks and uncertainties, including, 

without limitation, the risks described in this Annual Report. 

ArcelorMittal does not make any representation, warranty or prediction 

that the results anticipated by such forward-looking statements will be achieved. 

Such forward-looking statements represent, in each case, only one of many 

possible scenarios and should not be viewed as the most likely or standard 

scenario. ArcelorMittal undertakes no obligation to publicly update its 

forward-looking statements, whether as a result of new information, 

future events or otherwise.

6 

5 

Key Figures 

Financial Highlights 

Sales (million US$) 

2008 124,936 

2007 105,216 

Shipments (million tonnes) 

2008 101.7 

2007 109.7 

Operating Income ($ million) 


2007 14,830 

Net Income ($ million) 


2007 10,368 

Basic Earnings per Share ($) 

2008 6.80 

2007 7.41 

Number of employees 1 at December 31, 2008 according to segments 

5 

6 

4 

7 1 

2 

3 

+18.7% 

-7.3% 

-17.5% 

-9.3% 

-8.2% 

Segment Total % 

1 Flat Carbon Americas 30,848 10 

2 Flat Carbon Europe 71,192 22 

3 Long Carbon Americas and Europe 72,969 23 

4 Asia, Africa and CIS (AACIS) 100,325 32 

5 Stainless Steel 12,415 4 

6 Steel Solutions and Services 18,871 6 

7 Others 9,247 3 

Total 315,867 100 

Allocation of employees 1 at December 31, 2008 according to geographic location 

4 

7 

1 

3 

2 

1 Full Time Equivalent. 

2 EU15 includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, 

Luxembourg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom. 

3 EU27 includes the EU15 countries plus Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, 

Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia. 

1 EU15 2 24 

2 Rest EU (EU27) 3 17 

3 Other European Countries 16 

4 North America 12 

5 South America 9 

6 Asia 16 

7 Africa 6 

Total 100 

%

Our Philosophy 

ArcelorMittal1 is the world’s leading steel 

company, with approximately 316,000 

employees in more than 60 countries. 

ArcelorMittal has been built on a consistent 

management strategy that values scale, 

vertical integration, product diversity 

and quality, continuous growth in higher 

value products, strong employee well-being 

and customer focus. The Company’s 

three dimensional growth strategy 

of product diversity, geographical reach 

and vertical integration is its key to 

sustainability and growth. 

As a result of this strategy, the Company 

today is the leader in all major global 

steel markets, including automotive, 

construction, household appliances 

and packaging, with leading Research 

and Development (R&D) and technology, 

as well as sizeable captive supplies 

of raw materials and outstanding 

distribution networks. With an industrial 

presence in over 20 countries spanning 

four continents, the Company covers 

all of the key steel markets, from emerging 

to mature. It is the largest steel producer 

in the Americas, Africa and Europe, 

and the second largest producer in the 

CIS2 region, with a growing presence in 

Asia, particularly China. 

With crude steel production of 

103.3 million tonnes, representing around 

10% of world steel output, ArcelorMittal 

generated revenues of $124.9 billion 

and an operating income of $12.2 billion 

in 2008. Approximately 36% of its steel 

is produced in the Americas; 49% is 

produced in Europe; and 15% is produced 

in other countries, such as Kazakhstan, 

South Africa and Ukraine. 

Underpinning all our operations 

is a philosophy to produce Safe 

Sustainable Steel. 

Safety is the top priority for 

ArcelorMittal. The Group is building 

on good practices to improve safety 

performance. The ‘Journey to Zero’ 3 

program will promote the achievement 

of world class standards by integrating 

Health and Safety into the Group’s 

performance management. 

ArcelorMittal’s leadership position is not 

only about ‘what we do’ but also about 

‘how we do it’. Through its core values 

of Sustainability, Quality and Leadership, 

ArcelorMittal commits to operating 

in a responsible way with respect 

to the health, safety and well-being 

of its employees, contractors and the 

communities in which it operates. 

It is also committed to the sustainable 

management of the environment 

and of finite resources. ArcelorMittal 

recognizes that it has a significant 

responsibility to tackle the global climate 

change challenge; it takes a leading 

role in the industry’s efforts to develop 

breakthrough steelmaking technologies 

and is actively researching and developing 

steel-based technologies and solutions 

that contribute to combating 

climate change. 

The Company’s Research and 

Development team supports the business 

units in process and product improvement 

to produce the best quality steel at 

low-cost and low environmental impact. 

With 14 major research centers, 

ArcelorMittal possesses an R&D capability 

unique in the steel industry. To improve 

its research efficiency and to achieve 

a high level of scientific knowledge, 

ArcelorMittal maintains strong academic 

partnerships with world-class scientific 

and technical universities. 

1 Unless indicated otherwise, or the context 

otherwise requires, references herein to ‘ArcelorMittal’, 

the ‘Group’ and the ‘Company’ or similar terms 

are to ArcelorMittal, having its registered office 

at 19, avenue de la Liberté, L-2930 Luxembourg, 

Grand Duchy of Luxembourg, and, where the 

context requires, its consolidated subsidiaries. 

2 Commonwealth of Independent States. 

3 ‘Journey to Zero’ is ArcelorMittal’s Health 

and Safety improvement process, based on 

the best practice principles contained 

within the Group-wide Health and Safety policy. 

1 

Our Philosophy 


Message from the Chairman and CEO 

2 

Dear Shareholders, 

A year ago I was able to report to you 

on the considerable success of the 

integration of ArcelorMittal and the 

related achievements of our Company. 

I said that despite an uncertain outlook 

for the global economy I expected 2008 

to be a good year for ArcelorMittal. 

Clearly the global context has changed 

dramatically since then, entering a period 

of instability the extent of which few had 

predicted or have experienced in their 

working lives. Nevertheless, 2008 was 

in general a strong year for our Company. 

Benefiting from a strong demand for 

steel in the first three quarters in all main 

geographies, we reported an operating 

income of $12.2 billion and net income 

of $9.4 billion. This performance underlines 

the benefits of a global and diversified 

business model and reflects the success 

of our three dimensional growth strategy. 

This generally excellent performance 

was however overshadowed by the 

dramatic slowdown in the world economy 

in the fourth quarter. Since September 

2008 we have been facing a very different 

outlook. By the end of 2008, it was 

widely accepted that, as a fall-out of the 

financial crisis, advanced economies 

were on the edge of the worst recession 

for decades. The global economy is barely 

expected to exhibit positive growth 

in 2009, as declines in the developed 

economies are accompanied by slower, 

though still positive, growth in the 

developing world. 

In response, we have seen some quite 

unprecedented moves from governments 

across the world in an effort to support 

and stimulate their economies. The extent 

of the success these bail-out packages 

can achieve will not be known for some 

time. In the meantime, we must all adapt 

our business to the current climate. 

Structurally, the Company benefits today 

from the size and scale it has built through 

leading the process of consolidation. 

This does not mean that we will be 

unaffected. Rather, it means that today 

our Company has a business model which 

I believe will prove more resilient than 

other business models have proved to be 

in previous downturns. Nevertheless, 

we have no choice but to respond to this 

changed environment. 

One of ArcelorMittal’s key competitive 

advantages is our ability to remain flexible 

and take fast decisions. We have made 

it a priority to retain this ability even 

as we have grown. Therefore, as soon as 

the severity of the new economic reality 

became apparent, we moved quickly 

to take the appropriate steps to position 

ourselves for the new environment. 

Most specifically, we made temporary 

production cuts totaling up to 45% 

of global production capacity to accelerate 

inventory reduction. These cuts were 

introduced across the Group at all our 

main production facilities. These are the 

deepest cuts the Group has implemented 

to date, but they were necessary 

in response to the speed with which 

the market has turned, as many of our 

customers started using up existing 

inventories rather than buying new stock.

Whilst we must accept that real demand 

in 2009 will be significantly lower than 

in 2008, we are confident that these 

production cuts will begin to yield 

results as real demand is not expected 

to fall anywhere near as much as 45%. 

It is too early yet to say exactly when 

this technical recovery will begin 

and therefore production cuts are being 

maintained at present, but we are 

cautiously optimistic that the second 

half of the year should be stronger than 

the first. 

The current climate has also caused 

us to pause our growth plans for the 

immediate future. As a result, capital 

expenditure in 2009 will be kept 

at a minimum, focusing on health, 

safety, environment and maintenance. 

Over the medium to long-term, 

we believe that developing countries 

will continue with their industrialization 

plans and therefore will have a demand 

for steel to support infrastructure projects. 

Our growth projects will continue 

at the appropriate time to ensure 

we are able to meet this demand when 

it occurs. 

ArcelorMittal is a cost-conscious 

organization and we have put a renewed 

emphasis on this aspect of the 

management of our business in recent 

months. In the autumn of 2008 

we announced a target of achieving 

$4 billion in management gains over 

four years through additional selling, 

general and administrative savings. 

We later increased this target to $5 billion 

over the same period. We expect to 

achieve $2 billion of this amount by 

the end of 2009. 

Regrettably this has included the 

commencement of implementation 

of a Voluntary Separation Scheme across 

the Group. This is never an easy decision 

for management to take but it was 

a necessary response to today’s 

deteriorated operating environment. 

As part of this emphasis on cost controls 

and cash conservation, we have also 

announced an intention to reduce our 

net debt1 by $10 billion by the end 

of 2009, from levels during the third 

quarter of 2008. Whilst we were 

comfortable with our net debt/EBITDA2 ratio for 2008, it is only prudent in the 

current instability in the credit markets 

for our Company to make net debt 

reduction a priority. I am pleased to be 

able to report that we have already been 

making significant progress towards 

this target. By the end of 2008, net debt 

has already been reduced by $6 billion. 

Although this important net debt 

reduction in the last quarter of 2008 

was due in part to non-recurring factors, 

we believe that the measures we have 

implemented across the Group will allow 

us to reach the targeted net debt reduction 

by the end of 2009. Slightly improved 

conditions in the worldwide steel 

markets which we expect to occur before 

year-end should also help in achieving 

this target. Along with debt reduction, 

the Board of Directors has recommended 

reducing the base dividend for 2009 

to $0.75 per share. 

All of these measures have been 

implemented in close collaboration with 

our key stakeholders, including unions 

and governments and, of course, 

our employees. We are very grateful 

for their support. They have recognized 

the difficulties that our Company 

experiences at present and have been 

largely working with us to ensure the 

sustainability of ArcelorMittal. 

It is important to emphasize also that 

these measures do not represent any 

fundamental change in long-term 

strategy for the Company. We still 

believe in the benefits of an integrated, 

diversified and global business model. 

The systemic failure in the banking 

system has caused deep and severe 

repercussions worldwide and across 

industries, the extent of which are 

still being worked out and which will 

probably continue through 2010-2011. 

But over the long-term, we believe 

that steel will continue to be in demand 

as a fundamental material for building 

the infrastructure of our world. 

And investment in infrastructure will 

continue – both in developed and 

developing economies. It is highly unlikely, 

for example, that the industrialization 

of more than 1.5 billion people in the 

developing markets will simply come 

to a halt. This is a huge macro-trend, 

one that will remain relevant despite 

the current slowing growth rates 

in developing countries. And of course 

ArcelorMittal has great experience in 

and understanding of these developing 

markets. Few companies are better placed 

than us to capture stronger growth 

when levels resume. 

1 Net debt stands for long-term debt net of current portion plus payables to banks and current portion 

of long-term debt, less cash and cash equivalents, restricted cash and short-term investments. 

2 EBITDA is defined as operating income plus depreciation, impairment expenses and exceptional items. 

Looking ahead. 

There can be no doubt that 

2009 will be very challenging 

for our Company. Whilst I hope 

that the various government stimulus 

packages will start to bring some relief, 

we must recognize that we are 

in the midst of an exceptionally 

difficult period for the global economy 

to which there is no easy or swift 

solution. Nevertheless, I am pleased 

with the way the Company has 

adapted so far. 

3 

Message from the Chairman and CEO ArcelorMittal Annual Report 2008

Message from the Chairman and CEO continued 

The current climate will also not 

compromise the way we do business 

or our core values of Sustainability, Quality 

and Leadership. At our senior management 

convention last September in Delhi, 

I said that the priority of this Company 

is to produce Safe Sustainable Steel. 

This is not dependent on the quantity 

of steel we produce, but is the basic 

operating philosophy that we seek to apply 

to every tonne produced and it will not 

be compromised by economic fluctuations. 

We have introduced several important 

initiatives that support this philosophy 

during 2008. 

First of all safety. 2008 saw not only 

a repeat of our successful annual Health 

and Safety Day, but also the launch of our 

new Health and Safety drive, ‘Journey 

to Zero’. ‘Journey to Zero’ is all about 

reaching world class standards by 

integrating Health and Safety into the 

performance management system of the 

Group. The driving philosophy is that, 

if some parts of the ArcelorMittal Group 

can deliver best practices, then all parts 

can do so. By learning together and 

sharing best practices across the entire 

organization, we can achieve high impact 

Health and Safety improvements that 

protect the Company’s greatest asset 

– our people. In order to leverage this 

potential, we have identified 15 high 

priority plants where the improvement 

plans will be monitored on a weekly 

basis with the direct involvement of the 

corporate Health and Safety team. 

We are making progress. The Lost Time 

Injury Frequency Rate improved in 2008 

to 2.3, compared with 3.3 in 2007. 

But our ‘Journey to Zero’ continues. 

4 

If we aspire to our steel being 

accident-free, we also aspire to it being 

sustainable. Of course steel, as the 

most recyclable material in the world, 

is naturally sustainable. But we want to 

go beyond this. We want to ensure that 

our business position in the world 

creates sustainable benefits for all our 

stakeholders. This desire has translated 

into a new Corporate Responsibility 

(‘CR’) strategy focused on three key 

areas: Investing in our People through 

innovative HR policies; Making Steel 

More Sustainable through focusing 

on continuous improvement in 

environmental performance; and Enriching 

our Communities through engaging 

more transparently with communities 

and working in active partnership with 

local organizations. We see tremendous 

scope for results in these areas. As one 

of the largest businesses in the world, 

we have the ability to have a far-reaching 

and positive influence in many different 

areas. We hope our new CR strategy 

will help us deliver on this ability. 

And finally there is steel itself. 

We continue to produce on a daily basis 

one of the most useful, durable and 

necessary materials in terms of building 

the infrastructure of the modern world. 

The Shanghai World Financial Center, 

the Freedom Tower in New York and 

the Federation Tower in Moscow 

– these are just some of the renowned 

global structures made from ArcelorMittal 

steel. This is a big responsibility. 

Therefore, whatever the economic climate, 

we must ensure that the quality of our 

steel is never compromised – that in 

every country where customers buy 

our steel they will be guaranteed the 

highest quality product. We are continually 

evaluating opportunities to improve 

our service to customers. 

This is why we invest in Research 

and Development (R&D) and are expanding 

our network of R&D centers around 

the Group. Our team of 1,500 researchers 

is working daily on new ways to make 

lighter, stronger, more environmentally 

friendly steel. 

Looking ahead, there can be no doubt 

that 2009 will be very challenging 

for our Company. Whilst I hope that 

the various government stimulus packages 

will start to bring some relief, we must 

recognize that we are in the midst of 

an exceptionally difficult period for the 

global economy to which there is no 

easy or swift solution. Nevertheless, 

I am pleased with the way the Company 

has adapted so far. Our strategy has been 

built around designing a company of such 

a scale and diversity that it has the 

strength, flexibility and presence to adapt 

itself to fluctuations in the economic cycle. 

This current cycle is more extreme than 

most, but the fact that we have been 

able to adapt swiftly and take decisive 

and substantial measures will, I believe, 

assist in bringing a faster recovery 

for our Company than might have been 

the case otherwise.

To this end, I must thank all 

our employees who have 

adapted to the required 

changes with understanding 

and support. I would also 

like to thank my colleagues 

on the Board of Directors, 

the Group Management 

Board and the Management 

Committee who continue 

to show strong leadership. 

And finally I would like to 

extend my thanks to all our 

stakeholders for their continued 

commitment to this Company. 

Lakshmi N Mittal 

Chairman and CEO 

5 

Message from the Chairman and CEO continued 


Questions for the Group Management Board 

Since April 21, 2008, 

the Group Management Board 

(‘GMB’) has had seven 

members: Lakshmi N Mittal, 

Aditya Mittal, Michel Wurth, 

Gonzalo Urquijo, Christophe 

Cornier, Sudhir Maheshwari 

and Davinder Chugh. 

6 

Mine modernization program 

$1.2 bn 

We are engaged 

in a $1.2 billion mine 

modernization program 

spanning over five 

years to complete. 

Christophe Cornier, 

GMB.

Given the prime importance 

of Health and Safety, what progress 

was made in this area in 2008? 

Aditya Mittal: Since our merger in 2006 

we have worked to ensure that Health 

and Safety is our priority number one 

and our frequency rate has gone down 

significantly. Building on ArcelorMittal 

Dofasco’s initiative, in 2008 we launched 

our new global Health and Safety 

improvement process: ‘Journey to Zero’. 

ArcelorMittal Dofasco was recognized 

by the World Steel Association with 

the 2008 Safety and Health Excellence 

Recognition Award, for its efforts 

to eliminate accidents and injuries. 

They also met the requirements of the 

OHSAS 18001:2007 Occupational Health 

and Safety Assessment Series Standard, 

being the first of our North American 

sites to do so. We must always remember 

that, even if this performance 

is encouraging, we need to continue 

building a culture where everyone 

realizes that safety must come first. 

Michel Wurth: Overall, we have made 

progress, as our accident frequency 

and severity figures attest. But we still 

experienced fatalities, and it is here 

that we will focus major efforts in the 

year ahead – particularly in the area 

of responsible behavior – as we work 

to implement the ‘Journey to Zero’ program. 

One other pressing issue is a relatively 

poor safety performance among 

contractors. Clearly, there is greater 

rotation of outside personnel but that 

should be no excuse. We are not where 

we want to be on this issue – and 

there is much more work to be done. 

This is the absolute priority. 

Gonzalo Urquijo: There are two 

aspects to consider. On the one hand, 

we suffered a number of fatalities, 

which is unacceptable. On the other, 

we reduced overall accident frequency 

and severity rates. We are now 

concentrating on the areas of maximum 

vulnerability, such as falls from height, 

road and rail traffic, loading of materials 

and unauthorized access to particular areas. 

We are involving everyone, from top 

to bottom, and we are working hard 

to share the lessons of every incident 

in all our plants worldwide. Nothing is 

more important than safety and we are 

determined to achieve the highest 

possible standards. 

Christophe Cornier: In the steelmaking 

and iron ore operations, we are making 

continuous, step-by-step progress. 

Safety ratios improved over the year 

and the extension of our ‘world-class 

manufacturing’ initiative in 2009 will keep 

the pressure up in areas such as good 

housekeeping. The coal mining operations 

are another matter. We are engaged in 

a $1.2 billion mine modernization program 

spanning over five years to complete. 

While other areas of capital expenditure will 

be trimmed in 2009, safety will be one of our 

focus areas – testimony to the overriding 

importance we give to lifting safety standards. 

Sudhir Maheshwari: For me, the key event 

was the launch of the ‘Journey to Zero’ 

initiative, aimed at making accidents a thing 

of the past. I am confident this program 

will yield positive results in 2009 and beyond. 

Davinder Chugh: Health and Safety 

of our colleagues and contractors working 

in our plants is of utmost importance 

to the management. Our supplier selection 

criteria now include a good safety track 

record. Contractor training is enforced and 

we have introduced stricter norms in our 

contracts for adherence to safety standards. 

There are consequences for safety lapses 

and there is motivation for good safety 

performance by contractors. 

We face a big challenge. 

As part of a value 

chain that extends from 

our suppliers at one 

end to our customers 

at the other, steel 

consumption is bound 

to be hit if, for instance, 

people are not buying 

cars or ordering new 

buildings. The answer is 

that we must focus 

on the three ‘Cs’ – Cash, 

Customers, and Cost. 

Michel Wurth, GMB. 

GMB members, 

from left to right: 


Sudhir Maheshwari 

Michel Wurth 

Aditya Mittal 

Christophe Cornier 

Gonzalo Urquijo 

Davinder Chugh 

7 

Questions for the Group Management Board 


Questions for the Group Management Board continued 

How would you sum up performance 

in your area in 2008? 

Aditya Mittal: From the financial 

perspective, in general 2008 was 

a very strong year for the Company. 

Unfortunately, however, the achievements 

of the first nine months have been 

overshadowed by the sudden turn 

in market conditions in the last quarter. 

In the last quarter, our focus was 

on reducing costs, reducing net debt and 

generally adapting to the new environment. 

While the current economic situation 

is very challenging, I am pleased 

with the way the Company has adapted. 

In particular we have made pleasing 

progress with debt reduction, 

reducing net debt by $6 billion in the 

fourth quarter. In Flat Carbon Americas, 

we recorded good results in 2008 

despite the slowdown in demand 

experienced in the final quarter. 

Michel Wurth: Despite a fourth quarter 

impacted by the economic crisis, 

the overall performance was excellent. 

For much of the year, the major challenge 

was the unprecedented explosion in 

the cost of raw materials, followed by the 

rapid downturn. We responded quickly 

by implementing Total Cost of Ownership 

(‘TCO’) and by deciding actions in the 

fourth quarter, with the aim to decrease 

fixed cost parallel to the strong decline 

in demand, and by increasing our level 

of contact with customers in order to find 

appropriate solutions. A re-engineered, 

more customer-focused R&D department 

also contributed by delivering new steel 

solutions and better value to customers. 

The reorganization of Flat Carbon Europe 

delivered major integration benefits. 

8 

Gonzalo Urquijo: The first eight months 

of the year saw strong demand, with rising 

raw material costs matched by higher 

prices. There was then a downturn, 

with falling demand exacerbated by 

de-stocking as customers sought to 

increase their liquidity. We responded by 

a reduction in production by approximately 

40% in the fourth quarter. Nonetheless, 

there were important landmarks during 

the year, such as the blast furnace start-up 

in Zenica, Bosnia, the opening of the new 

bar mill in Warsaw, Poland, and a number 

of acquisitions. On the industrial front, 

our drive to lift the performance of 

the weaker plants to benchmark levels 

is bearing fruit. 

Christophe Cornier: The businesses 

in Ukraine, Kazakhstan and South Africa 

all experienced a profitable year, 

especially during the first three quarters, 

while activities deteriorated during the 

fourth quarter. In our mining activities, 

we are on track to achieve our stated 

aim of becoming two-thirds self-sufficient 

in iron ore after 2012 and we have 

made some progress with our program 

to modernize our Kazakh coal mines 

– a vital plan in our drive to raise safety 

standards. We have also taken a major 

step forward in the transfer of expertise 

around the Group with the creation 

of a new organization that will hold 

a central technical database and help 

standardize procedures. This is an 

important tool for capitalizing on the 

Group’s knowledge base. 

Sudhir Maheshwari: In the first nine 

months of 2008, we were very successful 

in pursuing our three dimensional 

growth strategy of extending geographic 

reach, enhancing product diversity and 

increasing vertical integration. We achieved 

a major expansion in our coal mining 

operations, with transactions in Siberia, 

India, Australia, the USA and Mozambique. 

We completed four transactions in iron 

ore mining and commenced work on 

a Saudi pipe mill project. We also received 

a positive response to our $3 billion bond 

issue in the USA, the largest of its kind 

by a steel producer. 

Davinder Chugh: Shared Services has 

consolidated the transversal functions 

of the Group into a strategic advantage 

by leveraging the scale of operations 

and at the same time providing agility 

of response to market changes. We have 

one face to all our suppliers whether 

big or small and have consolidated 

relationships and strategic partnerships 

with our suppliers in 2008. Transversal 

functions have also been able to 

consolidate, optimize and harmonize 

the best practices from one part of the 

Company to the rest of the Group, 

be it in IT, Purchasing, Energy, Real Estate, 

By-Products Sales, Legal or Shipping. 

A significant leap was that Total Cost 

of Ownership is now entrenched as 

a thought model for all sourcing decisions 

within the Company and will go to 

a new level of maturity.

What is the outlook for the year ahead? 

Aditya Mittal: We are living in exceptional 

times for the global economy and I don’t 

expect there is going to be any quick 

solution. ArcelorMittal cut production 

by 45% in the fourth quarter of 2008 

and we are maintaining these cuts into 

the first quarter of 2009. Real steel 

demand has not fallen by this level, 

but cutting production in this way should 

accelerate the required de-stocking period 

as customers run down their inventories. 

De-stocking should complete in most 

markets by the end of the first quarter 

and we should expect to see a technical 

recovery by the second half of the year. 

Michel Wurth: We face a big challenge. 

As part of a value chain that extends from 

our suppliers at one end to our customers 

at the other, steel consumption is bound 

to be hit if, for instance, people are not 

buying cars or ordering new buildings. 

The answer is that we must focus on the 

three ‘Cs’ – Cash, Customers, and Cost. 

It means cutting fixed costs in line with 

the fall in end-demand. It means limiting 

capex spending to what is strictly 

necessary, working with our supply chain 

to minimize inventories while ensuring 

short lead times for our customers. 

It means listening to those customers 

and delivering better service. One thing is 

certain: there will be no cut in the R&D 

budget. Innovation will play a major role 

in keeping our customers competitive. 

Gonzalo Urquijo: Several factors 

combined in the fourth quarter of 2008: 

customer de-stocking, a rush for cash 

and falling scrap prices. We believe that 

de-stocking will have run its course 

by the end of the first quarter while prices 

– from scrap to finished goods – may 

well have hit bottom. This should give 

buyers more confidence. With little stock 

in the supply chain and underlying demand 

not substantially lower, there is then 

every chance of a pick-up in the market. 

In the meantime, we have important 

cost reduction programs underway 

and are utterly focused on staying close 

to our customers. 

Christophe Cornier: The market backdrop 

is clearly difficult, particularly for 

export-based units such as those 

in Ukraine and Kazakhstan, and we are 

expecting lower demand in 2009. 

To counter these difficulties we are 

engaged in major cost-cutting efforts 

and we have increased our degree 

of vertical integration by sourcing coal for 

Ukraine from our recently acquired mines 

in Russia. We now face the future with 

a highly competitive cost base. 

Sudhir Maheshwari: We are in an 

era of unprecedented uncertainty. 

While the measures taken by governments 

around the world will hopefully work 

through to a recovery in economic activity 

in 2009, there is a risk that this recovery 

will be slow. We therefore need to 

be prepared and our measures to maximize 

cash generation should be seen in this 

light. For the present, our efforts will 

be focused on reducing our debt by 

$10 billion before we engage in any 

further mergers and acquisitions activity. 

Davinder Chugh: 2009 is expected to 

be a tough year, though in a different 

way to 2008. In the first half of 2008, 

we ensured the continuity of supply lines 

in scarce market conditions and delivered 

cost reduction simultaneously. In the latter 

half, the focus was on cash conservation 

and significant cost reduction. Costs will 

continue to be of prime focus in 2009. 

We need to ensure supplies at competitive 

prices while the volatility in the business 

environment will challenge the supply 

chain with continuity risks in the industry. 

This will be an opportunity to strengthen 

our relationships with our suppliers 

and emerge as a stronger and more 

efficient company. 

9 

Questions for the Group Management Board continued 



January 

ArcelorMittal signs a Memorandum 

of Understanding with Société Nationale 

Industrielle et Minière in Mauritania. 

The agreement provides for the 

development of a large iron ore mining 

project in Mauritania. 

ArcelorMittal acquires Unicon, 

the leading manufacturer of welded steel 

pipes in Venezuela. Unicon supplies 

the oil and gas and industrial and 

construction sectors both domestically 

and overseas. The transaction was 

completed in April 2008. 

ArcelorMittal inaugurates Arceo, 

its industrial prototype line for vacuum 

plasma steel coating in Liège, Belgium. 

With this process, steel can be a sensor, 

a reflector, a source of light, more 

aesthetically pleasing or endowed with 

better anti-corrosive properties. 

ArcelorMittal Steel Service Centre Sverige 

and BE Group create a 50/50 processed 

flat carbon steel joint venture in Sweden. 

This combination creates a new number 

three in the Swedish market, with a 20% 

market share. 

February 

ArcelorMittal acquires the remaining 

50% interest in Laminadora Costarricense 

and Trefileria Colima, the only major 

long carbon steel company in Costa Rica. 

ArcelorMittal and the federal 

and regional governments of Belgium 

agree on carbon dioxide (‘CO2’) 

emission allowances. As a consequence, 

the relaunch of ArcelorMittal 

Liège, Belgium, Blast Furnace 

Number 6 is initiated. 

10 

April 

ArcelorMittal enters the Brazilian 

Steel Service Centre market with 

the acquisition of 50% of Gonvarri Brasil. 

The aim is to establish a strong presence 

in the Brazilian flat steel downstream 

segment, building on the product leadership 

of ArcelorMittal’s Tubarão, Vitória, 

and Vega do Sul plants. 

ArcelorMittal acquires three coal mines 

and associated assets in Russia for 

a total consideration of $720 million. 

ArcelorMittal agrees to build a third line 

in its joint venture partnership with 

Nippon Steel by building a new continuous 

galvanizing line at the I/N Kote facility 

in New Carlisle, Indiana, at a cost of 

$240 million. On December 4, 2008, 

Nippon Steel announced that the project 

would be delayed until demand in the 

US automobile industry market strengthens. 

ArcelorMittal concludes a coal off-take 

agreement with Coal of Africa Limited, 

the South African coal development 

company, relating to the Baobab and 

Thuli coal mines. 

May 

The Court appointed trustee completes 

the sale of ArcelorMittal’s Sparrows 

Point steel mill to OAO Severstal for 

$810 million, net of debt. 

June 

ArcelorMittal and its unions sign 

a groundbreaking global agreement 

on occupational Health and Safety. 

It sets out minimum standards 

in every site in order to achieve 

world class performance. 

ArcelorMittal holds an inaugural 

global interactive individual shareholder 

event with Second Life. Through this 

virtual reality website, individual shareholders 

can meet and interact with Mr Mittal. 

ArcelorMittal signs an agreement 

to acquire Bayou Steel, a producer 

of structural steel with facilities 

in LaPlace, Louisiana, and Harriman, 

Tennessee, for $509 million. The 

transaction closed in July 2008. 


to acquire the Mid Vol Coal Group. 

This partnership will increase the 

Company’s upstream self-sufficiency 

in raw materials. 

ArcelorMittal, Hunan Valin Group 

and Hunan Valin Steel Co. launch Valin 

ArcelorMittal Automotive Steel, an industrial 

and commercial automotive joint venture 

that will have an annual production 

capacity of 1.2 million tonnes of flat carbon 

steel, mainly for automotive applications. 

ArcelorMittal enhances its distribution 

activities in the United Arab Emirates. 

The Company intends to acquire 60% 

of Dubai Steel Trading Company LLC 

(‘DSTC LLC’), a newly incorporated 

company located in the Dubai free zone. 

The acquisition is finalized in January 2009. 

ArcelorMittal increases its stake in 

Macarthur Coal of Australia, from 14.9% 

to 19.9%.

July 

ArcelorMittal and AREVA sign an industrial 

partnership agreement for a €70 million 

($110 million) investment aimed at increasing 

production of steel products for the nuclear 

industry at the Group’s Industeel plant. 

ArcelorMittal launches a new clean 

technology venture capital fund, with an 

initial clean technology investment of 

$20 million in MiaSolé, and a new carbon 

fund, as part of its commitment to finding 

solutions for environmental challenges, 

including climate change. 

ArcelorMittal’s Stainless International 

segment acquires the 35% stake in Uginox 

Sanayi ve Ticaret Limited Sirketi (‘Uginox’) 

owned by Primex. Uginox operates 

a coil processing and service centre 

in Turkey dedicated to servicing the 

automotive and white goods markets. 


to acquire Concept Group (‘Concept’), 

located in southern West Virginia, USA. 

Concept’s proximity to Mid Vol’s operations 

will allow the Group to draw on the 

complementary strengths of both companies 

to increase their combined production 

capacity. The transaction is completed 

in August 2008. 

ArcelorMittal announces a €76 million 

($118 million) investment to expand 

electrical steel production capacity at its 

Saint Chély d’Apcher plant, France. 

ArcelorMittal reinforces its Steel Service 

Centre network in Brazil by acquiring 

a 70% share of Manchester Tubos 

e Perfilados, the Brazilian steel processor 

and distributor located in Contagem, 

Minas Gerais. 

August 

ArcelorMittal projects new investments 

of $1.6 billion in its carbon steel operations 

in Brazil. The timing and scope of this 

investment are currently under review. 

ArcelorMittal acquires the Koppers’ 

Monessen coke plant for $170 million. 

The acquisition is an important step 

towards increasing upstream 

self-sufficiency in metallurgical coke 

production. The transaction was completed 

in October 2008. 

Hunan Valin Iron & Steel Group Co. 

Ltd and ArcelorMittal sign a 50/50 joint 

venture agreement for the production and 

sale of electrical (silicon) steel, one more 

milestone following the automotive sheet 

JV agreement signed in June. The new JV, 

named Valin ArcelorMittal Electrical Steel, 

will build cold rolling and processing facilities 

for the production of electrical steels. 

ArcelorMittal acquires Brazilian iron ore 

miner London Mining South America Limited 

and reaches an agreement with Adriana 

Resources Inc. for the development of 

an iron ore port facility in the State 

of Rio de Janeiro, Brazil. Together with 

an investment in Mineração Pirâmide 

Participações Ltda, the acquisition further 

diversifies ArcelorMittal’s iron ore base 

in the face of tighter raw material supply. 

September 

ArcelorMittal and Kalagadi Manganese 

agree a 50/50 joint venture to develop 

Kalagadi’s South African manganese deposits. 

Project implementation has not yet begun 

and its scope and timing are under review. 

ArcelorMittal Warsaw inaugurates a new 

bar rolling mill, one of the most advanced 

rolling lines in Europe, following an investment 

of €80 million. 

ArcelorMittal announces a new 

‘Management Gains’ plan that will target 

$4 billion of cost savings over the next five 

years. The plan focuses on increasing 

employee productivity, reducing energy 

consumption and reducing input costs 

to achieve a higher yield and improved 

product quality. 

ArcelorMittal organizes its Leadership 

Conference in New Delhi, India. The 650 

most senior managers have the opportunity 

to present their strategies, discuss critical 

issues and plan the future. Mr Mittal launches 

the new operating philosophy of Safe 

Sustainable Steel. 

November 

ArcelorMittal meets with its European 

Works Council to present voluntary separation 

programs to be launched across the Group. 

This is to help achieve the Company’s 

stated aim of reducing SG&A expenditure 

by an additional $1 billion in response to the 

current economic situation. 

ArcelorMittal announces measures 

in response to the downturn in the global 

steel industry. These include: postponing 

target completion dates for the realization 

of previously announced shipment growth 

objectives entailing substantial capital 

expenditure, increasing targeted cost savings 

under the ‘Management Gains’ program 

over the next five years to $5 billion through 

additional savings in SG&A costs, increasing 

temporary cuts in steel production to up 

to 35% (later increased to approximately 

40-45%) globally in order to accelerate 

steel inventory reduction, and targeting a 

$10 billion reduction in net debt by the end 

of 2009. In addition, ArcelorMittal suspends 

the share buy-back program until the 

debt reduction targets are achieved. 

December 

ArcelorMittal enters into binding 

agreements to reduce its voting interest 

in Dillinger Hütte Saarstahl AG (‘DHS’) 

from 51.25% to 33.4% (corresponding 

to an economic interest of 30.08% since 

DHS holds 10% of its shares in treasury), 

in line with existing governance rights. 

ArcelorMittal plans to remain a key industrial 

partner to DHS. 

Recent 

Developments 

ArcelorMittal contributes its 76.9% stake 

in Saar Ferngas AG to Luxembourg-based 

utility Soteg, in which it holds a minority 

ownership stake. Upon completion 

of all steps related to this transaction, 

ArcelorMittal’s stake in Soteg will ultimately 

increase from 20% to 25.3%. 

In connection with its 2008 results 

announcement on February 11, 2009, 

ArcelorMittal provides an update on its 

initiatives in response to the difficult market 

environment. It will continue temporary 

production cuts of up to 45% in the first 

quarter of 2009 until the inventory 

reduction process is complete, reduce 

its base dividend for 2009 to $0.75 per share, 

refocus its $5 billion ‘Management Gains’ 

plan, target savings of $2 billion in 2009, 

reduce its planned capital expenditures 

to $3 billion in 2009, and target a reduction 

of working capital rotation days by 

15-25 days during 2009. 

11 



“ Our vision in this regard is very 

simple. We have to become the safest 

steel company in the world. “ 


12

Health and Safety: The Number 1 Priority 

Ensuring the highest standards 

of Health and Safety continues 

to be the overarching priority 

for ArcelorMittal. This will 

continue to be the case despite 

the challenges of the global 

economic environment since 

the end of 2008 and continuing 

into 2009. ‘Journey to Zero’, 

launched in September 2008, 

is the Health and Safety 

improvement process that 

is helping the Group realize 

its commitment and its aim to 

become one of the safest steel 

companies in the world. 

14

Journey to Zero 

At ArcelorMittal, Health and Safety 

is the top priority. As clear evidence, 

every meeting of both the Group 

Management Board and the Management 

Committee begins with a Health 

and Safety review. 

In March 2007, ArcelorMittal’s 

Health and Safety policy was launched. 

Aimed at reducing the frequency 

of accidents on a continuing basis, 

it underlines the commitment ArcelorMittal 

has made to the well-being and safety 

of all employees – both on and off 

the job – and is a key component 

of ‘transforming tomorrow’. 

In September 2008, ‘Journey to Zero’, 

ArcelorMittal’s Health and Safety 

improvement process, was launched 

at the Leadership Conference in New 

Delhi, India. The world class principles 

contained within the Group-wide Health 

and Safety policy form the foundation 

of ‘Journey to Zero’ – a widely held 

and deeply felt initiative – with the goal 

of zero accidents. 

‘Journey to Zero’ represents the 

committed pursuit of an injury-free, 

illness-free and healthy workplace. 

As such, it is a common language used 

to drive ArcelorMittal’s continual Health 

and Safety improvement and to develop 

common leadership actions to deliver 

performance excellence. It leverages 

learning and shared best practices across 

the entire organization and engages 

people at all levels to identify high 

impact improvement priorities. 

The process starts at the top and is led 

by a senior site leader. In every site/ 

location, a ‘talent’ has been selected 

as project leader. Improvement initiatives 

were rapidly developed since the launch 

and have already become part of local 

Health and Safety business plans for 2009. 

The focus is on preventive operational 

activities, improving standards through 

effective implementation of good and 

best practices including hazard 

identification and risk analysis, accident/ 

incident investigation, critical task 

analysis, indicators follow-up, system 

review, communication process, 

layered evaluations/shop floor audits, 

colleague care and much more. 

This becomes part of a complete 

Health and Safety Management System 

(‘HSMS’), underlying actions that are 

shop floor oriented and event analysis 

driven. Each single Health and Safety 

business plan on site can refer to the 

HSMS to devise key initiatives with 

reference to their own culture, 

their past results, their history and 

motivational capabilities. 

Global Joint Health and 

Safety Agreement 

On June 3, 2008, ArcelorMittal and 

the European Metalworkers’ Federation, 

the United Steelworkers and the 

International Metalworkers’ Federation, 

signed a groundbreaking Global Agreement 

on Occupational Health and Safety. 

The agreement, the first of its kind 

in the steel industry, recognizes the 

vital role played by trade unions in 

improving Health and Safety. It sets 

out minimum standards in every site 

in which ArcelorMittal operates in order 

to achieve world class performance. 

These standards include the commitment 

to form joint management/union 

Health and Safety committees as well 

as training and education programs in 

order to make a meaningful impact 

on overall Health and Safety across the 

Group. Also included in the agreement 

is the creation of a joint management/union 

Global Health and Safety Committee 

that will target plants in the Group in order 

to help them to further improve their 

Health and Safety performance. 

Following the Global Health and Safety 

Committee meeting in East Chicago, USA, 

in June 2008, new Global Health and Safety 

standards were refined and finalized. 

These included the new – and very 

critical – global standards for contractors; 

vehicles and driving; cranes and lifting, 

as well as the Alert Procedure. 

From September 30 to October 1, 

2008, members of the Global Joint 

Health and Safety Committee met 

in Kazakhstan. Their primary purpose 

was to support implementation of the 

groundbreaking Global Joint Health 

and Safety Committee agreement. 

Continuing their work, union leaders 

and ArcelorMittal management met 

in Timóteo, Brazil from November 11-13, 

2008. Brazil has joint Health and Safety 

committees – CIPAs – which are a legal 

requirement – composed of appointed 

management and elected employees. 

At this second leg of the 2008 session, 

union members of the Joint Committee 

met union representatives from across 

Brazil in Belo Horizonte. 

Performance 

Despite the current global economic 

uncertainties, the ArcelorMittal Group 

places Health and Safety as its number 

one priority. ArcelorMittal is on 

a ‘Journey to Zero’. The Group’s 

Lost Time Injury Frequency Rate 

improved in 2008 to 2.3 (compared 

with 3.3 in 2007, for steel and mining). 

The driving philosophy underlying 

the Health and Safety process is that 

if some parts of the ArcelorMittal 

Group can deliver best practice, all parts 

can. By learning together and sharing 

best experience across the entire 

organization, they achieve high impact 

Health and Safety improvement 

that protects the company’s greatest 

asset – the people. 

To leverage and improve the Health 

and Safety performance around the Group, 

the Group Management Board identified 

15 high priority plants at end of year 

2008. The implementation of Health 

and Safety improvement plans at these 

sites will be closely monitored on 

a weekly basis with the direct involvement 

of the corporate Health and Safety team. 

Leading by example 

There are many good examples 

of ‘Journey to Zero’ progress in the 

Group that show how the process 

can be implemented. 

In 2008, ArcelorMittal Châtelet, 

Belgium, received the OHSAS 18001 

certification in January, followed by the 

Service Centre based in Genk, Belgium, 

in April, ArcelorMittal Rodange, 

Luxembourg, in August, ArcelorMittal 

Ancerville, France, in September and 

ArcelorMittal Usti, Czech Republic, 

in October. More recently, ArcelorMittal 

Timóteo in Brazil, ArcelorMittal Genk 

in Belgium, ArcelorMittal Gueugnon, 

ArcelorMittal Isbergues, ArcelorMittal 

Pont de Roide and Firminy in France, 

the Service Centre based in Poland and 

another one based in Spain also obtained 

their OHSAS 18001 certification. 

15 

Health and Safety: The Number 1 Priority 


Health and Safety: The Number 1 Priority continued 

16 

Ten Actions of the Health 

and Safety Corporate 

with Global Health Committee 

• Analysis of health status 

and main illness causes 

• Analysis of hygiene status 

• Definition of Group health 

programs contributing 

to ‘Journey to Zero’ 

• Definition of an adequate 

reporting and metrics system, 

introducing leading 

indicators and allowing 

performance measurements 

• Definition of advanced 

environmental-health 

and hygiene concepts 

• Definition of advanced disease 

prevention campaigns 

• Definition of main Group 

health and hygiene standards 

and recommendations 

• Definition of a best practices 

portfolio – benchmarking 

with best of class companies 

• Definition of a health REX 1 system 

• Initiation and follow-up 

of pilot and master 

plan projects 

Thus 18 units are now certified 

to OHSAS 18001 within the Stainless 

segment. All industrial sites are certified. 

These 18 sites cover around 9,000 

employees out of around 12,000 in total 

within the Stainless segment. It means 

that three employees out of four 

are now working on a site accredited 

with OHSAS 18001 Standard. 

On September 29 and 30, Health and 

Safety managers from Long Carbon Europe 

(‘LCE’) highlighted their ‘Journey to Zero’ 

program. 2009 will concentrate on closing 

the gap by aligning the least performing 

sites to LCE’s best in class. 2010 will 

focus on eliminating losses due to failures 

in processes and installations. In 2011, 

they will closely work on the definition 

and the implementation of additional 

improvement tools. Finally, 2012 will more 

specifically stress the health features 

of our action plans, for instance back pain 

or occupational illnesses. 

1 Return on Experience. 

In October 2008, the World Steel 

Association (worldsteel) recognized 

ArcelorMittal Dofasco with the 2008 

Safety and Health Excellence Recognition 

Award. ArcelorMittal Dofasco was 

recognized for its excellence in the pursuit 

of an injury-free, illness-free and healthy 

workplace. With this recognition, worldsteel 

(formerly the International Iron and 

Steel Institute) highlighted the ‘Journey 

to Zero’ initiative as an example of how 

the Company is engaging employees 

in its efforts to improve Health and 

Safety performance. 

In the last month of 2008, Stainless 

Brazil reached an unprecedented result: 

a zero accident rate in all of its units, 

including service centers, the steel plant 

in Timóteo, the tubes manufacturing units 

and the charcoal production complex 

in Vale do Jequitinhonha, besides 

the administrative and commercial 

offices. The result, which covers around 

5,500 employees and approximately 

2,500 subcontractors, proves that 

a zero accident rate is a possible target. 

Health and Safety Day 

Already in March 2007 and 2008, 

ArcelorMittal held a Group-wide Health 

and Safety Day that was observed 

in all of its worldwide operations. 

Now a regular annual event, Health 

and Safety Day is an occasion to involve 

all staff in discussing safety improvements, 

new targets and associated safety 

programs at Group as well as plant level.

50 

Mining activities 

In 2008 ArcelorMittal continued 

to make improvements to the equipment 

and operating practices and continues 

to implement an investment program 

aimed at modernizing the mines, 

ensuring a safe working environment 

for employees and improving productivity. 

The program will take four years 

to complete. It includes upgrading 

of the methane degassing and mine 

ventilation systems and installing electrical 

and gas detection telemetry systems. 

In 2008, the iron ore mining operations 

of ArcelorMittal reduced its Lost 

Time Injury Frequency Rate by 50% and 

the Bosnian operation at Prejidor achieved 

15 months without a lost time injury. 

The focus has been the implementation Unions and ArcelorMittal Health 

of shop floor audits and Leading by Example and Safety management are working 

– the theme of Health and Safety Day together to create a dialogue in order 

2008. The rollout of ‘Journey to Zero’ to make a meaningful impact on Health 

will strengthen the focus in reducing and Safety across the Company, 

accidents and incidents in our operations. including mining. On October 1, 2008, 

Following the Abayskaya Mine incident 

in Kazakhstan in January 2008, where 

30 employees tragically lost their lives, 

ArcelorMittal reviewed its investment 

and modernization program and 

significantly increased the capital 

expenditure during 2008. A lengthy 

investigation into the cause of the 

accident was consequently conducted 

the Global Joint Health and Safety 

Committee met in Kazakhstan. 

Topics discussed included the need 

for employees to be able to raise Health 

and Safety issues freely with local 

management. Attendees also stressed 

the need to accelerate and install planned 

Health and Safety capital improvements 

for mining. 

and an action plan was provided to the Health initiatives: Paying more 

management to ensure the safety 

attention to health 

of all employees engaged in the Group’s 

mining operations. 

ArcelorMittal views the health of its 

workforce as a key element in the success 

ArcelorMittal continues to work 

of its operations. Maintaining good health is 

with the Government improving and critical to the Company’s Health and Safety 

modernizing the coal mines in Kazakhstan. record. A notable difference in 2008 is a 

Part of the investment program provides more unified approach towards Health and 

the latest mine environmental monitoring Safety, placing greater emphasis on the 

system and is now installed at two of the health aspect; a health sub-committee of 

mines, Kazakhstanskaya and Shaktinkskaya, the Global Health and Safety Committee 

providing real time monitoring of the has been formed, signifying no separation 

mine atmosphere. 

of Health and Safety in terms of 

A new technique designed to improve 

importance, best practices and standards. 

the capture of the methane released Along with a focus on major injuries, 

during mining has recently been 

the Group is integrating a stronger campaign of 

implemented at Kuzembaev mine. 

preventative health measures and recognition 

The Group is also working with international of such problems as back pain, carpal tunnel, 

experts reviewing recognized ‘world fatigue syndrome, burns, cardiovascular risks, 

best’ techniques in degassing to develop noise at work, stress, etc. 

and apply the projects in our coal mines. 

A main area of focus in 2008 was 

New coal production equipment is being the development of the Health and Safety 

installed at the Kostenko coal mine Committee’s integrated strategy and 

which will contribute to improving the action plan. A challenge at ArcelorMittal 

safety of employees. ArcelorMittal is creating such plans for a company 

continues its Behavioral Safety program with a broad geographic reach; one which 

‘Each person’s safety is everyone’s safety’ encompasses both aspects of the World 

with support from the internationally Economic Forum’s definition of ‘two’ worlds: 

renowned company DuPont. ArcelorMittal developed and developing. Within this 

remains committed to the Health and context, the new Health Committee 

Safety investment program which 

is implementing initiatives to respond 

is designed to eliminate these tragic specifically to the needs of these two 

incidents in its coal mining operations. worlds, with an ultimate goal of Group-wide 

common standards for all locations. 

% 

In 2008, the iron ore 

mining operations 

of ArcelorMittal reduced 

its Lost Time Injury 

Frequency Rate by 50% 

For example, in places such as Brazil, 

Europe, the USA and Canada, where health 

standards may be higher, more emphasis 

might be placed on screening for illnesses. 

In such locations, the ArcelorMittal 

Group can employ a ‘top down’ approach, 

with the global Committee creating 

initiatives, such as a global Health 

Standards. In the developing world, 

a ‘bottom-up’ approach can prove more 

fruitful; developing localized solutions 

to better suit the ground realities. 

For example, the need may be for basic 

health care infrastructure, as is the case 

in Liberia, or the prevalent health care 

issue might be an illness such as Aids, 

as is the case in South Africa. 

Different locations require different 

investments in the basics of occupational 

health. This is why the Global Health and 

Safety Committee has continental 

representation (one person each for 

Canada, USA, Asia, Africa and Europe). 

The initiatives they develop serve 

therefore to meet the needs of specific 

regions with a final objective of improving 

health care and establishing minimum 

acceptable levels of quality health care 

across the geographies. 

Localized master plans 

One task that Corporate Health and 

Safety has is the implementation 

of master plans for ‘Journey to Zero’, 

meaning zero occupational diseases, 

which involve a more ‘bottom up’ approach, 

meaning direct help for the operations. 

Over a period of approximately three 

years, analysis will be conducted, resulting 

in the creation of a localized action plan. 

This process can be quite complex, 

particularly in places such as Kazakhstan 

where there are mining and steel 

operations. Assistance is provided by 

the Joint Health and Safety Committees, 

who offer advice and help to create 

Health and Safety action plans, provide 

training and assist with the technical 

aspects of knowledge transfer. 

The key is for the health team to build 

up practical help and to be active 

in projects with concrete actions. 

One example where this call to action 

is being applied is in Kazakhstan. 

At ArcelorMittal Temirtau, a new CEO 

was appointed in 2008 who has taken 

a very pragmatic approach to improving 

health and hygiene. This resulted 

in a Directive, a Medical Coordinator, 

and a consulting group; all valuable 

elements in developing a local plan. 

Lessons learned in one country 

can be useful company-wide. 

17 

Health and Safety: The Number 1 Priority continued 


In 2008, ArcelorMittal and 

trade unions across the globe 

signed a groundbreaking 

agreement to further improve 

Health and Safety standards 

throughout the Company. 

The agreement sets out 

minimum standards in every 

site that the Company operates 

in, so as to achieve world-class 

performance. These standards 

include the commitment 

to form joint management/union 

Health and Safety committees 

as well as training and 

education programs in order 

to make a meaningful impact 

on overall Health and Safety 

across the Company. 

18 

A number of new Health and 

Safety initiatives were realized 

in 2008. These include the new injury 

tracking and reporting database. 

Fatality prevention standards 

(such as protocols for working 

at heights) and process standards 

(such as required protective 

equipment) have been developed 

and rolled-out across the Group. 

These are reinforced through a set 

of golden rules such as coming 

to work ‘in a fit and able condition’. 

The Group is placing significant 

emphasis on establishing 

strict contractor standards 

and implementing behavioral safety 

programs. In addition, a new 

operations standard has been 

rolled out involving frequent 

plant – or shop floor – audits, 

to augment safer ways 

of working.

‘Leading by Example’ is an essential 

concept to promote Health 

and Safety within the Group. 

19

Board of Directors 

Lakshmi N Mittal, 58, is the Chairman 

and CEO of ArcelorMittal. Mr Mittal 

founded Mittal Steel Company 

(formerly the LNM Group) in 1976 

and guided its strategic development, 

culminating in the merger with Arcelor, 

agreed in 2006, to found the world’s 

largest steelmaker. Since the merger, 

Mr Mittal has led a successful integration, 

establishing ArcelorMittal as one of 

the world’s foremost industrial companies. 

He is widely recognized for the leading 

role he has played in restructuring 

the steel industry towards a more 

consolidated and globalized model. 

Mr Mittal is an active philanthropist 

and a member of various trusts and 

boards, including Goldman Sachs’ Board 

of Directors, EADS Board of Directors 

and ICICI Bank Limited’s Board of Directors. 

He is also a member of the Foreign 

Investment Council in Kazakhstan, 

the International Investment Council 

in South Africa, the Investors’ Council 

to the Cabinet of Ministers of Ukraine, 

the World Economic Forum’s International 

Business Council, the World Steel 

Association’s Executive Committee 

and the Presidential International Advisory 

Board of Mozambique. He also sits 

on the Advisory Board of the Kellogg 

School of Management in the 

United States. 

20 

Mr Mittal began his career working 

in the family’s steelmaking business in India, 

and has over 30 years of experience 

working in steel and related industries. 

In addition to forcing the pace of industry 

consolidation, he has also championed 

the development of integrated mini-mills 

and the use of DRI as a scrap substitute 

for steelmaking. Following the transaction 

combining Ispat International and LNM 

Holdings to form Mittal Steel in December 

2004, together with the simultaneous 

announcement of the acquisition of 

International Steel Group in the United 

States to form the world’s then-leading 

steel producer, Mr Mittal was awarded 

Fortune magazine’s ‘European Businessman 

of the Year 2004’. 

In 1996, Mr Mittal was awarded 

‘Steelmaker of the Year’ by New Steel 

in the United States and the ‘Willy Korf 

Steel Vision Award’ by World Steel 

Dynamics in 1998 for outstanding vision, 

entrepreneurship, leadership and success 

in global steel development. Following 

the creation of ArcelorMittal, Mr Mittal 

was awarded ‘Business Person of 2006’ 

by the Sunday Times, ‘International 

Newsmaker of the Year 2006’ by Time 

Magazine and ‘Person of the Year 2006’ 

by the Financial Times for his outstanding 

business achievements. In January 2007, 

Mr Mittal was presented with a Fellowship 

from King’s College London, the college’s 

highest award. He also received the 2007 

Dwight D Eisenhower Global Leadership 

Award, the Grand Cross of Civil Merit from 

Spain and was named AIST Steelmaker 

of the year. In January 2008, Mr Mittal 

was awarded the Padma Vibhushan, 

India’s second highest civilian honor, 

by the President of India. In September 

2008, Mr Mittal was chosen for the third 

‘Forbes Lifetime Achievement Award’, 

which honors heroes of entrepreneurial 

capitalism and free enterprise. 

ArcelorMittal’s Board 

of Directors is responsible 

for the overall supervision 

of the Company. On May 13, 

2008, following the end of 

Mr Joseph Kinsch’s mandate 

as Chairman, Mr Lakshmi 

N Mittal became Chairman 

of the Board. Currently, 

the Board of Directors is 

comprised of 16 directors, 

15 of whom are non-executive 

directors, one of whom 

is an executive director and 12 

of whom are independent 

directors. The Board is 

truly international in character. 

Mr Mittal was born in Sadulpur in 

Rajasthan, India on June 15, 1950. 

He graduated from St Xavier’s 

College in Kolkata where he received 

a Bachelor of Commerce degree. 

Mr Mittal is married to Usha Mittal, 

and has a son, Aditya Mittal and 

a daughter, Vanisha Mittal Bhatia. 

Lewis B Kaden, 66, is the Lead 

Independent Director of ArcelorMittal. 

He has approximately 38 years of 

experience in corporate governance, 

financial services, dispute resolution 

and economic policy. He is currently Vice 

Chairman of Citigroup. Prior to that, 

he was a partner of the law firm Davis 

Polk & Wardwell, and served as Counsel 

to the Governor of New Jersey, 

as a Professor of Law at Columbia 

University and as director of Columbia 

University’s Centre for Law and Economic 

Studies. He has served as a director 

of Bethlehem Steel Corporation for ten 

years and is currently Chairman of the 

Board of Directors of the Markle 

Foundation. He is a member of the Council 

on Foreign Relations and has been a 

moderator of the Business-Labor Dialogue. 

Mr Kaden is a magna cum laude graduate 

of Harvard College and of Harvard Law 

School. He was the John Harvard Scholar 

at Emmanuel College, Cambridge 

University. Mr Kaden’s principal duties 

and responsibilities as Lead Independent 

Director are as follows: 

• Coordination of activities of the 

other Independent Directors; 

• Liaison between the Chairman and 

the other Independent Directors; 

• Calling meetings of the 

Independent Directors when 

necessary and appropriate; and 

• Such other duties as are assigned 

from time to time by the Board 

of Directors.

First row (left to right) 


Lewis B Kaden 

Vanisha Mittal Bhatia 

Narayanan Vaghul 

Second row (left to right) 

Wilbur L Ross 

François Pinault 

José Ramón Álvarez Rendueles 

Sergio Silva de Freitas 

Third row (left to right) 

Georges Schmit 

Michel Angel Marti 

Jean-Pierre Hansen 

John O Castegnaro 

Fourth row (left to right) 

Antoine Spillmann 

H.R.H. Prince Guillaume de Luxembourg 

Ignacio Fernández Toxo 

Malay Mukherjee 



Board of Directors continued 

Vanisha Mittal Bhatia, 28, was appointed 

as a member of the LNM Holdings Board 

of Directors in June 2004. Mrs Vanisha 

Mittal Bhatia was appointed to Mittal 

Steel’s Board of Directors in December 

2004. She has a Bachelor of Arts degree 

in Business Administration from the 

European Business School and has 

completed corporate internships at Mittal 

Shipping Ltd., Mittal Steel Hamburg 

GmbH and an Internet-based venture 

capital fund. She is the daughter 

of Mr Lakshmi N Mittal. 

Narayanan Vaghul, 72, has over 50 years 

of experience in the financial sector 

and has been the Chairman of ICICI Bank 

Limited since 2002. Previously, he served 

as the Chairman of the Industrial Credit 

and Investment Corporation of India, 

a long-term credit development bank 

for 17 years and, prior to that, served 

as Chairman of the Bank of India and 

Executive Director of the Central Bank 

of India. He was chosen as Businessman 

of the Year in 1992 by Business India 

and has served as a consultant to the 

World Bank, the International Finance 

Corporation and the Asian Development 

Bank. Mr Vaghul was also a visiting 

Professor at the Stern Business School 

at New York University. Mr Vaghul 

is Chairman of the Indian Institute of 

Finance Management & Research and 

is also a Board member of various other 

companies, including Wipro, Mahindra 

& Mahindra, Nicholas Piramal India, Apollo 

Hospitals and Himatsingka Seide. 

22 

Wilbur L Ross, Jr, 71, has served as 

the Chairman of the ISG Board of Directors 

since ISG’s inception. Mr Ross is the 

Chairman and Chief Executive Officer 

of WL Ross & Co. LLC, a merchant banking 

firm, a position that he has held since 

April 2000. Mr Ross is also the Chairman 

and Chief Executive Officer of WLR 

Recovery Fund L.P., WLR Recovery Fund II 

L.P., Asia Recovery Fund, Asia Recovery 

Fund Co-Investment, Nippon Investment 

Partners and Absolute Recovery Hedge 

Fund. Mr Ross is also Chairman of Invesco 

Private Capital, Ohizumi Manufacturing 

Company in Japan, International Textile 

Group, International Coal Group and 

of American Home Mortgage Servicing 

Inc. Mr Ross is a Board member of the 

Turnaround Management Association, 

Nikko Electric in Japan, Clarent Hospital 

Corp. and International Automotive 

Components. He also serves as a Director 

to Compagnie Européenne de Wagons 

SARL, Luxembourg, Wagon PLC, UK, 

the Japan Society, the Whitney Museum 

of American Art and the Yale School 

of Management. Previously, Mr Ross 

served as the Executive Managing Director 

at Rothschild, the investment banking firm, 

from October 1974 to March 2000 

and as Chairman of the Smithsonian 

Institution National Board. 

François Pinault, 72, is the founder 

and former President of the Artemis Group 

and PPR. The Artemis Group is a global 

investment holding company including 

42% of the listed company PPR. PPR 

includes retail brands such as FNAC, 

La Redoute, Conforama, and luxury brands 

such as Gucci Group, which includes 

Gucci, Bottega Veneta, Yves Saint Laurent, 

Boucheron and Balenciaga. Artemis 

also owns the Chateau Latour vineyard 

in France and Christie’s auction house. 

Mr Pinault also owns insurance and media 

businesses and holds minority shares 

in the French groups Bouygues and Vinci. 

Mr Pinault also serves on the Board of 

Directors of Financière Pinault and Artemis. 

José Ramón Álvarez Rendueles, 68, 

has extensive experience in the financial, 

economic and industrial sectors. 

He is a former Governor of the Bank 

of España and President of the Bank 

Zaragozano. He is President of the Board 

of Directors of ArcelorMittal España 

and Peugeot España. He is also a retired 

full professor of public finance at the 

Universidad Autónoma de Madrid and 

a Director of Gestevisión Telecinco S.A., 

Generali España and Sanitas.

Sergio Silva de Freitas, 65, has over 

40 years of experience in the financial 

sector. He is President of the Board of 

Directors of ArcelorMittal Brasil. From 

1975 to 1979, he was Secretary of 

Finance of São Paulo and served as Director 

of the Central Bank of Brasil in 1996. 

After several years spent in high-ranking 

positions in important financial institutions 

in São Paulo, London and Washington, 

he became Senior Vice President of Banco 

Itaú and is currently a member of the 

International Advisory Board of Banco 

Itaú, São Paulo, Brazil. He is also a member 

of the Board of several Brazilian and 

foreign companies. He has a Bachelor’s 

degree in Electrical Engineering from 

Escola Nacional de Engenharia da 

Universidade Brasil. 

Georges Schmit, 55, is Director General 

at the Ministry of the Economy and 

Foreign Trade and Member of the Board 

of Economic Development of the 

Grand-Duchy of Luxembourg. He is also 

Vice Chairman of the Société Nationale 

de Crédit et d’Investissement (SNCI) 

and of the Entreprise des Postes et 

Télécommunications, Luxembourg, 

and a Director of SES, Banque et Caisse 

d’Epargne de l’Etat and Paul Wurth. 

Mr Schmit graduated from the University 

of Louvain, Belgium and holds a Master 

of Arts degree in Economics from 

the University of Michigan. 

Michel Angel Marti, 61, serves as 

a representative of the employees 

of ArcelorMittal. He is a former Secretary 

of the Conféderation Française 

Démocratique du Travail (CFDT) union, 

located in Broye, France. 

Jean-Pierre Hansen, 60, is Vice Chairman 

of the Executive Committee and 

Senior Executive Vice President of Suez, 

in charge of Operations. He entered 

the electricity and gas sector in 1975. 

Since January 2005, Mr Hansen has been 

Vice Chairman and CEO of Electrabel, 

a role he had previously held from 1992 

to March 1999. Since March 1999, 

he has also held the position of Chairman 

of the Executive Committee of Electrabel. 

He is also CEO of Suez-Tractebel, 

Chairman of Fabricom and Director 

of Distrigas, Fluxys, AGBAR and ACEA, 

Vice Chairman of the Federation of 

Enterprises in Belgium and associate 

professor of economics at the UCL 

and at the École Polytechnique, Paris. 

Mr Hansen holds a Master’s degree 

in Electrical Engineering, a degree in 

Economics and a Doctorate in Engineering. 

John O Castegnaro, 64, serves as 

a representative of the employees 

of ArcelorMittal. He is a member 

of the Luxembourg Parliament and 

Honorary Chairman of the Onhofhängege 

Gewerkschaftsbond Lëtzebuerg 

(OGB-L) trade union. 

Antoine Spillmann, 45, worked for leading 

investment banks in London from 1986 

to 2000. He is now an Asset Manager 

and executive partner at the firm Bruellan 

Wealth Management, an independent asset 

management company based in Geneva. 

Mr Spillmann studied in Switzerland and 

London, receiving diplomas from the 

London Business School in Investment 

Management and Corporate Finance. 

H.R.H. Prince Guillaume de Luxembourg, 

45, worked for six months at the 

International Monetary Fund in Washington 

D.C. and spent two years working for 

the Commission of European Communities 

in Brussels. He studied at the University 

of Oxford in the United Kingdom, 

and Georgetown University in Washington 

D.C. from which he graduated. 

Ignacio Fernández Toxo, 56, 

has approximately 30 years of experience 

in trade union matters. He is currently 

a member of the Confederal Executive 

Committee of Comisiones Obreras 

(CC.OO.), serving as Secretary of Acción 

Sindical y Políticas Sectoriales. 

Malay Mukherjee, 60, has over 30 years 

of experience in a variety of technical 

and commercial functions in the steel 

industry, including iron ore mining, project 

implementation, materials management 

and steel plant operations. He joined 

the LNM Group in 1993 after working 

at the Steel Authority of India Limited 

(SAIL), where he last served as Executive 

Director (Works) at the Bhilai Steel Plant, 

the largest integrated steel plant in 

India, which has a production capacity 

of approximately four million tonnes. 

Mr Mukherjee has a Master’s degree 

in Mining from the U.S.S.R. State 

Commission in Moscow and a Bachelor 

of Science degree from the Indian Institute 

of Technology in Kharagpur, India. 

Mr Mukherjee also completed an advanced 

management program conducted by 

the Commonwealth Secretariat in joint 

association with the University of Ottawa, 

Canada, and the Indian Institute 

of Management, Ahmedabad. Mr 

Mukherjee joined Ispat Karmet in 1996 

after serving as Managing Director 

of Ispat Mexicana, joining Ispat Europe 

as President and CEO in June 1999. 

Formerly the President and Chief Operating 

Officer of Ispat International N.V., 

Mr Mukherjee became the Chief 

Operating Officer of Mittal Steel Company 

in October 2004. He is a former Member 

of ArcelorMittal’s Group Management 

Board with responsibility for Asia, 

Africa, CIS, Mining, Stainless, Pipes 

and Tubes as well as Technology. 

23 

Board of Directors continued 


Senior Management - Group Management Board 

Aditya Mittal, CFO, Responsible 

for Flat Americas, Mergers and Acquisitions 

(M&A), Investor Relations, Strategy 

and Communications 

Aditya Mittal, 33, is Chief Financial 

Officer of ArcelorMittal with additional 

responsibility for M&A Business 

and Project Development, Flat Americas, 

Strategy, Investors Relations and 

Communications. Prior to the merger 

to create ArcelorMittal, Aditya Mittal 

held the position of President and CFO 

of Mittal Steel Company from October 

2004 to 2006. He joined Mittal Steel 

in January 1997 and has held various 

finance and management roles within 

the company. In 1999, he was appointed 

Head of Mergers and Acquisitions 

for Mittal Steel. In this role, he led the 

company’s acquisition strategy, resulting 

in Mittal Steel’s expansion into Central 

Europe, Africa and the United States. 

Besides the Merger and Acquisition 

responsibilities, Aditya Mittal was involved 

in post-integration, turnaround and 

improvement strategies. As CFO of Mittal 

Steel, he also initiated and led Mittal 

Steel’s offer for Arcelor to create the first 

100 million tonne plus steel company. 

In 2008, Aditya Mittal was awarded 

‘European Business Leader of the Future’ 

by CNBC Europe. He is a member of the 

World Economic Forum’s Young Global 

Leaders Forum, the Young President’s 

Organization, a Board Member at the 

Wharton School, a Board Member at 

Bennett, Coleman & Co. and a member of 

Citigroup’s International Advisory Board. 

Aditya Mittal holds a Bachelor’s degree 

of Science in Economics with 

concentrations in Strategic Management 

and Corporate Finance from the Wharton 

School in Pennsylvania. Aditya Mittal is the 

son of Mr Lakshmi N Mittal. 

24 

Gonzalo Urquijo, Responsible 

for Long Products, China, Stainless, 

Tubular Products, Corporate Responsibility, 

ArcelorMittal Foundation, Investment 

Allocation Committee (IAC) Chairman 

Gonzalo Urquijo, 47, previously Senior 

Executive Vice President and Chief Financial 

Officer of Arcelor, held the following 

responsibilities: Finance, Purchasing, IT, 

Legal Affairs, Investor Relations, Arcelor 

Steel Solutions and Services, and other 

activities. Gonzalo Urquijo also held several 

other positions within Arcelor, including 

Deputy Senior Executive Vice President 

and Head of the functional directorates 

of distribution. Until the creation of Arcelor 

in 2002, when he became Executive Vice 

President of the Operational Unit South 

of the Flat Carbon Steel sector, Mr Urquijo 

was CFO of Aceralia. Between 1984 

and 1992, he held a variety of positions 

at Citibank and Crédit Agricole before 

joining Aristrain in 1992 as CFO and later 

Co-CEO. Gonzalo Urquijo is a graduate 

in Economics and Political Science of Yale 

University and holds an MBA from 

the Instituto de Empresa in Madrid. 

Michel Wurth, Responsible for Flat Europe, 

Steel Solutions and Services, Products 

Development and R&D, Global Customers 

Michel Wurth, 54, was previously Vice 

President of the Group Management 

Board of Arcelor and Deputy CEO, 

with responsibility for Flat Carbon Steel 

Europe and Auto, Flat Carbon Steel 

Brazil, Coordination Brazil, Coordination 

Heavy Plate, R&D, NSC Alliance. 

The merger of Aceralia, Arbed and 

Usinor leading to the creation of Arcelor 

in 2002 led to Michel Wurth’s 

appointment as Senior Executive Vice 

President and CFO of Arcelor, with 

responsibility over Finance and 

The strategic direction 

of the business is the responsibility 

of the Group Management 

Board (GMB). The GMB members 

are elected by the Board of 

Directors and are headed by 

Lakshmi N Mittal as Chief Executive. 

On April 21, 2008, the GMB was 

expanded, to reflect the increasing 

size, scope and ambitions of 

ArcelorMittal. Sudhir Maheshwari, 

Christophe Cornier and Davinder 

Chugh have joined the GMB. 

This ensures that the senior 

executive team continues to enjoy 

the relevant talent and expertise 

it needs to continue to deliver 

the best possible performance 

to all stakeholders. 

Management by Objectives. Michel Wurth 

joined Arbed in 1979 and held a variety 

of functions including Secretary of the 

Board of Directors, head of the Arbed 

subsidiary Novar and Corporate Secretary, 

before joining the Arbed Group 

Management Board and becoming its 

Chief Financial Officer in 1996. He was 

named Executive Vice President in 1998. 

Michel Wurth holds a law degree from 

the University of Grenoble, a degree 

in Political Science from the Institut 

d’Études Politiques de Grenoble and 

a Master of Economics degree from the 

London School of Economics. 

Sudhir Maheshwari, Responsible 

for M&A, Business Development, 

Corporate Finance and Tax 

Committee (reporting to CFO) 

Sudhir Maheshwari, 45, was previously 

Member of the Management Committee 

of ArcelorMittal, Responsible for Finance 

and M&A. Prior to this, Mr Maheshwari 

was Managing Director of Business 

Development and Treasury at Mittal Steel 

and has over 20 years of experience 

in steel and related industries. Prior to this 

he was the Chief Financial Officer of 

LNM Holdings N.V. from January 2002 

until its merger with Ispat International 

in December 2004. He played an integral 

role in all Mittal Steel acquisitions in recent 

years, including turnaround and integration 

activities. He also played a key role in 

various corporate finance and capital 

market projects including the initial public 

offering in 1997. Over a 20-year career 

with Mittal Steel, Mr Maheshwari also held 

the positions of Chief Financial Officer 

at Mittal Steel Europe S.A., Mittal Steel 

Germany and Mittal Steel Point Lisas, 

and Director of Finance and Mergers 

and Acquisitions at Mittal Steel. 

Mr Maheshwari also served on the Board 

of various subsidiaries of Mittal Steel.

He is the Alternate Chair of the Strategic 

Finance and Tax Committee. Mr 

Maheshwari is an Honors Graduate 

in Accounting and Commerce from St. 

Xavier’s College, Calcutta and a Fellow 

of The Institute of Chartered Accountants 

and The Institute of Company Secretaries 

in India. 

Christophe Cornier, Responsible for Asia, 

Africa, Technology and Projects 

Christophe Cornier, 56, was previously 

a Member of the Management 

Committee of ArcelorMittal, Responsible 

for Flat Carbon Western Europe. Prior to 

that, Christophe Cornier was responsible 

for Arcelor’s flat products activities 

in Europe and for its worldwide automotive 

sector since December 2005, when he 

was appointed a member of Arcelor’s 

Management Committee. In June 2005, 

he was appointed head of Arcelor’s Client 

Value Team. Upon the creation of Arcelor 

in 2002, he was named Executive Vice 

President of FCS Commercial Auto. 

Before that, he was CEO of Sollac 

Mediterranée. In 1998, he was appointed 

CEO of La Magona, after joining Sollac 

Packaging as Managing Director in 1993. 

In 1985 he joined Usinor, where he was 

Business Development Director and Chief 

Controller of Sollac. He began his career 

with the French Ministry of Industry, which 

he left as a Deputy Director. Mr Cornier 

is a graduate of the École Polytechnique 

and the École des Mines in Paris. 

Davinder Chugh, Responsible for Shared 

Services (reporting to CEO), IAC Member 

Davinder Chugh, 52, has over 30 years 

of experience in the steel industry in 

general management, materials purchasing, 

marketing, logistics, warehousing and 

shipping. Davinder Chugh was previously 

a Member of the Management Committee 

of ArcelorMittal until 2007. Before 

becoming a Member of the Management 

Committee, he served as the CEO of Mittal 

Steel South Africa until 2006. Mr Chugh 

also worked in South Africa from 2002 

after the acquisition of Mittal Steel South 

Africa (ISCOR) and was involved in the 

turnaround and consolidation of the South 

African operations of ArcelorMittal. 

First row (left to right) 


Aditya Mittal 

Gonzalo Urquijo 

Michel Wurth 

Second row (left to right) 

Sudhir Maheshwari 

Christophe Cornier 

Davinder Chugh 

He also served as Director of Commercial 

and Marketing at Mittal Steel South Africa, 

among other positions. Mr Chugh was 

Vice President of Purchasing in Mittal Steel 

Europe until 2002, where he consolidated 

procurement and logistics across plants 

in Europe. Prior to this, he held several 

senior positions at the Steel Authority 

India Limited in New Delhi, India. 

He holds degrees in science and law and 

has a Master of Business Administration. 

Senior Management - Management Committee 

Name Age 1 Position 

Bhikam Agarwal 56 Executive Vice President, Head of Finance 

Vijay Bhatnagar 61 Executive Vice President, CEO India 

José Armando Campos 60 Executive Vice President, CEO Flat South America 

Philippe Darmayan 56 Executive Vice President, CEO Steel Solutions 

and Services 

Bernard Fontana 47 Executive Vice President, Head of Human Resources 

Jean-Yves Gilet 52 Executive Vice President, CEO Stainless 

Pierre Gugliermina 57 Executive Vice President, Chief Technology Officer 

Robrecht Himpe 50 Executive Vice President, CEO Flat Europe 

Peter Kukielski 2 52 Senior Executive Vice President, Head of Mining 

Carlo Panunzi 59 Executive Vice President, CEO Long Americas 

Michael Pfitzner 59 Executive Vice President, Head of Marketing 

and Commercial Coordination 

Arnaud Poupart-Lafarge 43 Executive Vice President, CEO Africa and CIS 

Gerhard Renz 61 Executive Vice President, CEO Long Europe 

Michael Rippey 51 Executive Vice President, CEO USA 

Lou Schorsch 59 Executive Vice President, CEO Flat Americas 

Bill Scotting 50 Executive Vice President, Head of Strategy 

Invitee - John Macnamara 58 Vice President, Health and Safety 

1 Age as of December 31, 2008 

2 Effective at December 15, 2008 

25 

Senior Management 


“ When people hear the word sustainability, 

they often think first about the environment. 

But arguably the highest prize of all is to 

sustain your reputation because a reputation 

is a cumulative measure – it is the running 

scorecard on all that we do. “ 


26

Business Strategy 

ArcelorMittal has been built on a management 

philosophy that values scale, vertical 

integration, product diversity and quality, 

continuous growth in higher value products 

and a strong employee well-being and 

customer service focus. The Company has 

continued to enhance these characteristics 

through its three dimensional strategy for 

sustainability and growth. As a result, the 

Company enjoys unique geographical and 

product diversification, coupled with upstream 

and downstream integration that reduces 

exposure to risk and cyclicality. This strategy 

can be broken down into three major elements: 

Geography: ArcelorMittal is the largest 

producer of steel in Europe, North and South 

America, Africa, the second largest steel 

producer in the CIS region, and has a growing 

presence in Asia, particularly in China. 

ArcelorMittal has steel-making operations 

in 20 countries on four continents, including 

66 integrated, mini-mill and integrated 

mini-mill steel-making facilities which provide 

a high degree of geographic diversification. 

Approximately 36% of its steel is produced in 

the Americas, approximately 49% is produced 

in Europe and approximately 15% is produced 

in other countries, such as Kazakhstan, 

South Africa and Ukraine. ArcelorMittal is able 

to improve management and spread its risk 

by operating in six segments (Flat Carbon 

Americas, Flat Carbon Europe, Long Carbon 

Americas and Europe, AACIS, Stainless Steel, 

and Steel Solutions and Services) reflecting 

its geographical and product diversity. 

Worldwide steel demand in recent years has 

been driven by growth in developing 

economies, in particular the BRICET1 countries. 

The Company’s expansion strategy over recent 

years has given it a leading position in Africa, 

Central and Eastern Europe, South America 

and Asia. As these economies develop, local 

customers will require increasingly advanced 

steel products as market needs change. 

Products: As a global steel producer, 

ArcelorMittal is able to meet the needs 

of diverse markets. Steel consumption 

28 

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. 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. The Company produces 

a broad range of high-quality finished, 

semi-finished carbon steel products and 

stainless steel products. 

Value chain: Vertical integration is key 

to ArcelorMittal. The Company has access 

to high-quality and low-cost raw materials 

through its captive sources and long-term 

contracts. ArcelorMittal plans to continue 

to develop its upstream and downstream 

integration in the medium term, following a 

return to a more favorable market environment. 

Accordingly, the Company intends in the 

medium-term to increase selectively its access 

to and ownership of low-cost raw material 

supplies, particularly in locations adjacent to, 

or accessible from, its steel plant operations. 

Downstream integration is a key element 

of ArcelorMittal’s strategy to build a global 

customer franchise. In high-value products, 

downstream integration allows steel companies 

to be closer to the customer and capture 

a greater share of value-added activities. 

As its key customers globalize, ArcelorMittal 

intends to invest in value-added downstream 

operations, such as steel service centers 

and building and construction support unit 

services for the construction industry. 

In addition, the Company intends to continue 

to develop its distribution network in selected 

geographic regions. ArcelorMittal believes that 

these downstream and distribution activities 

should allow it to benefit from better market 

intelligence and to better manage inventories 

in the supply chain to reduce volatility 

and improve working capital management. 

Furthermore ArcelorMittal will continue to 

expand its production of value-added products 

in developing markets, leveraging off its 

experience in developed markets. 

Organic growth: Notwithstanding the current 

downturn, ArcelorMittal’s management 

believes there will be strong global steel 

demand growth in the medium and long-term. 

Accordingly, the Company is maintaining its 

previously announced strategic growth plan 

to increase shipments in the medium-term 

to 130 million tonnes, which represents a 20% 

increase over 2006 levels, primarily through 

production improvements at existing facilities. 

Realization of this plan will nonetheless be 

delayed due to the postponement of capital 

expenditure in light of current market 

conditions and uncertainties. 

Mergers and acquisitions and 

Greenfield growth: Mergers and acquisitions 

have historically been a key pillar of 

ArcelorMittal’s strategy to which it brings 

unique experience, particularly in terms of 

integration. Instead of creating new capacity, 

mergers and acquisitions increase industry 

consolidation and create synergies. 

ArcelorMittal has also placed strong emphasis 

on growth in emerging economies through 

Greenfield developments. In light of the current 

economic and market conditions, ArcelorMittal 

has temporarily curtailed merger and acquisition 

and Greenfield investment activity until a return 

to a more favorable market environment. 

Despite the unprecedented global 

economic situation which has resulted in 

some postponements or temporary 

adjustments of growth targets, the Company’s 

three dimensional strategy remains its key 

to sustainability and growth over the 

long-term. However, given the current 

economic challenges, the Company has 

temporarily put its growth plans on pause, 

focusing instead on adapting the Company 

to the current difficult environment. 

1 Brazil, Russia, India, China, Eastern Europe and Turkey.

ArcelorMittal is the largest producer of steel in Europe, 

North and South America, Africa, the second largest steel 

producer in the CIS region, and has a growing 

presence in Asia, particularly in China. 

29 

Business Strategy ArcelorMittal Annual Report 2008

Corporate Responsibility 

ArcelorMittal continues to support 

the Bone Marrow Registry project, 

started in France 20 years ago 

and is steadily expanding to new countries 

around the world. The international 

expansion of the potential donor base 

improves the chances of finding 

compatible donors, thus increasing 

number of people who could benefit 

from potentially life-saving bone marrow 

transplants each year. 

30 

December 2008. 

ArcelorMittal staged its first global 

Volunteer Work Day that mobilized 

more than 10,000 employees 

across all regions of operations 

to volunteer for good causes and 

to the benefit of the community.

ArcelorMittal’s brand promise 

is ‘transforming tomorrow’. 

The Group understands that its 

leadership position in the steel industry 

brings unique responsibilities. 

ArcelorMittal works towards building 

the sustainability of its business as well 

as the communities in which it operates 

by investing in its people, making steel 

more sustainable, enriching its 

communities, and running its operations 

in an open and transparent way. 

It is ArcelorMittal’s conviction that 

business growth, sustainable communities 

and the creation of shareholder value 

go hand-in-hand. Only by addressing 

the global issues affecting its business, 

its people and its communities can 

ArcelorMittal help establish mutually 

beneficial stakeholder relationships, 

attract and retain top talent and maintain 

its ‘license to operate’. While contributing 

to the Group’s stated aim of becoming 

one of the world’s most admired 

companies and demonstrating clear 

evidence of its commitment to 

sustainability, an effective Corporate 

Responsibility (‘CR’) program should 

also bring significant returns. 

ArcelorMittal aims to adhere to best 

practice environmental, social and 

governance disclosure guidelines in this 

Annual Report, as well as in its CR Reports. 

In 2008, the Group published its first full 

CR report, providing an overview of 

progress made since the merger of Arcelor 

and Mittal Steel in addressing the key 

economic, environmental and social 

challenges that confront it. The next report 

will be a comprehensive review of 

ArcelorMittal’s CR performance including 

a more detailed account of significant and 

relevant CR risks and opportunities. 

This report will be published during summer 

of 2009 on www.arcelormittal.com 

To help manage risk and enhance value 

creation, ArcelorMittal has a clearly defined 

strategy for Corporate Responsibility. 

ArcelorMittal believes that the Corporate 

Responsibility strategy will enhance growth 

of shareholder value, improve the Group’s 

capability to deal with local and global 

issues affecting its operations and improve 

its stakeholder relations. 

Corporate Responsibility governance 

During 2008 the CR governance structure 

at ArcelorMittal was reviewed. The aim 

was to make the business quicker to 

respond and internalize the management 

of issues that arise through stakeholder 

engagement, specifically in reference 

to social, environmental and ethical risks. 

The new CR governance structure 

at Group level provides regular reporting 

to the Board of Directors and the GMB 

by the CR GMB representative. Board 

reports that include performance 

monitoring are prepared by the corporate 

CR team, with the support of the new 

CR Coordination Group to ensure that 

the management of the Company is given 

adequate information for their decisionmaking. 

The CR Coordination Group is 

constituted by a minimum of four corporate 

representatives and invited guests from 

the corporation, operating units and 

external experts. Each subsidiary is asked 

to establish its own formal CR governance 

structure, in adherence to the Group level 

arrangement. The aim is to establish 

a participatory CR governance structure 

locally that would support effective 

community relations and CR management. 

To ensure effective, efficient and 

strategic execution of CR across the 

Group, the governance structure is 

supported by roles and accountability 

descriptions for CEOs/plant managers 

and CR Coordinators at all levels. 

To further improve the capacity of the 

organization to deal with CR issues and 

to drive and evaluate performance in line 

with our business objectives, a set 

of CR competencies have been developed 

specifically for the appointed CR 

Coordinators, in collaboration with 

ArcelorMittal University. 

The new CR governance principles are 

also designed to aid the ongoing 

commitment to improve transparency 

in our operation and external reporting. 

Corporate Responsibility strategy 

In 2008, the Group embarked on a study 

to analyze the financial impact of CR 

on the business and to investigate ways 

of embedding CR into mainstream 

decision-making. The study highlighted 

the potential significance of the CR agenda 

to ArcelorMittal’s business and its role 

in generating value by managing the 

upsides of risks, operating efficiently and 

supporting the core business strategy. 

In support of this, ArcelorMittal has 

a clearly defined strategy for CR. 

The CR strategy is aimed at enhancing 

growth of shareholder value, improving 

the Group’s capability to deal with local 

and global issues affecting its operations 

and improving its stakeholder relations. 

ArcelorMittal’s CR strategy 

comprises four themes: 

Investing in our people. ArcelorMittal’s 

people are the key to its future. It is a 

core tenet of its policy that each and every 

one is made to feel valued, is treated 

with dignity and respect, is provided with 

a safe and healthy environment in which 

to work, and is given every opportunity 

for personal development. 

Making steel more sustainable. The Group’s 

efforts are focused on achieving a 

continuous improvement in environmental 

performance through increased efficiency, 

the development of pioneering new 

processes and acting with customers 

and others to help them achieve their 

environmental goals. 

Enriching our communities. ArcelorMittal 

seeks to contribute to the development 

of strong and sustainable local communities 

wherever it operates. It aims to achieve 

this by being sensitive to local needs 

and priorities, by engaging with local 

communities in an open and straightforward 

way and by working in active partnership 

with local organizations. 

The strategy is supported by 

a commitment to transparent governance. 

ArcelorMittal will take steps to understand 

the true impact of its business, predict 

future consequences and manage 

risks consistently across its operations. 

This is done through incorporating 

environmental, social and governance 

considerations into risk management 

procedures, as well as other existing 

systems and processes. It will engage 

meaningfully with key stakeholders 

and respond in a transparent manner. 

To that end it will seek constantly 

to improve the quality of disclosures 

to investors and of CR reporting, treat 

all shareholders equally and communicate 

with them proactively, implement 

governance policies and frameworks 

though the business, and integrate 

CR principles into all business and 

management practices. 

The progress made against the 

CR strategy is carefully monitored 

through 14 Key Performance Indicators 

addressing material CR issues. 

The indicators will be measured 

locally through existing procedures, 

where applicable, and monitored through 

local CR committees. 

31 

Corporate Responsibility 


Corporate Responsibility – Investing in our People 

32 

A number of initiatives were introduced 

in 2008 to bring the business closer 

to employees and facilitate the cascading 

of key information. These include among 

other things: quarterly meetings with the 

Human Resources Leadership Team, 

an internal newsletter, Knowledge 

Management Programs and proximity 

meetings. In 2008, over 50 proximity 

meetings were conducted in more than 

20 countries serving to align priorities 

and initiatives, narrow the gap between 

Corporate and local operations, 

shop floor workers, white collar workers, 

young talents and employee representatives, 

and to stimulate the exchange 

of information. 

Human Resources achievements in 2008 

‘Speak Up’ survey 

In June 2008, Human Resources at 

ArcelorMittal launched its first survey, 

called ‘Speak Up’, for ‘exempts’ 1 designed 

to assess how ArcelorMittal leaders combine 

competitiveness and HR management, 

two critical challenges for the Group to 

ensure a successful execution of its strategies. 

In total, 22,750 exempts, in 76 countries, 

participated. The results of the survey helped 

to enrich managers’ understanding at all levels 

and to build local and Company-wide action 

plans to help improve the way management 

and leadership of the Company is practiced. 

More specifically, the results confirmed that 

employees perceived a significant 

improvement in the leadership practices 

of ArcelorMittal owing to the strong support 

of HR initiatives and processes. A majority 

of respondents declared that they would 

recommend ArcelorMittal as a great place 

to work. 

Dialogue with trade unions and employees 

The majority of ArcelorMittal employees 

are represented by trade unions. The Group 

is party to collective bargaining agreements 

with many employee organizations as part 

of its commitment to open dialogue. 

The ArcelorMittal 

Human Resources (HR) 

professionals support 

Company leadership 

to attract, develop and 

retain tomorrow’s leaders, 

enable employees at all 

levels to manage their 

performance, realize their 

potential and build and 

maintain good relations 

and social dialogue with 

employees and their 

representatives. They support 

the Cost Leadership 

programs of the Company. 

On June 3, 2008, ArcelorMittal signed 

a landmark Global Joint Health and Safety 

Agreement with all of its trade unions. 

A Joint Health and Safety Committee 

in every plant now meets at least once 

a month. The process is monitored by 

a Joint Global Health and Safety Committee 

comprising both management and trade 

union bodies. 

In 2008, as part of its commitment 

to open dialogue at multiple management 

levels, ArcelorMittal introduced a new 

process based around monthly meetings 

between management and employee 

representatives. Implemented plant 

by plant over the second half of the year, 

the new process aims to put regular, 

constructive discussions at the heart 

of ArcelorMittal’s employee relations. 

For additional information about 

Employee Benefits, see Note 23 of the 

Consolidated Financial Statements. 

Employee Share Purchase Plan 

In 2008, ArcelorMittal launched its first 

Employee Share Purchase Plan (‘ESPP’) 

as part of a global employee engagement 

and participation policy. This plan was 

aimed at rewarding employees through 

ownership, improving awareness of 

economic and financial developments, 

and ultimately incentivizing them towards 

shareholder value creation. The plan 

was offered to approximately 216,000 

employees in locations with more than 

250 employees. In total, employees across 

the globe bought nearly one million shares. 

Shares were sold at the then prevailing 

market price, minus a discount of 15% 

for the first 100 shares per employee 

and 10% for the second 100 shares. 

Any shares bought are subject to 

a three-year holding requirement. 

As it met with great interest from 

employees, the ESPP initiative will be 

re-conducted in 2009.

International mobility 

International mobility is a key factor 

for the career development of employees 

and to further develop the Company’s 

competitive advantage. Some 390 mobility 

cases were finalized in 2008, resulting 

in a total number of 847 expatriates. 

The updated mobility policy was introduced 

in 2008 and includes relocation and 

cultural support as well as succession 

plans for expatriates. 

Employer branding campaign 

At the beginning of 2008, Human 

Resources underwent an Employee 

Value Proposition study to understand 

what ArcelorMittal represents. From this 

study, ArcelorMittal can differentiate itself 

as a world leader, known for its technology 

and innovation, its entrepreneurship 

and the Company is synonymous with 

boldness. The Employer Branding campaign 

was rolled out in the press and online 

media in Mexico, South Africa, France, 

Czech Republic, Ukraine, Spain, Poland, 

Romania and India. The key message 

to young graduates and experienced 

professionals was that ArcelorMittal would 

afford them the rare opportunity 

to address some of the world’s most 

important and complex challenges 

and make their own contribution 

to ‘transforming tomorrow’. 

Resourcing: The challenge of getting 

the right people for the right job 

Up until September 2008, recruitment was 

one of the biggest challenges for 

ArcelorMittal’s HR department. In 2008, 

249 Group Engineers were recruited for 

international careers; there were 46 

recruitments to the redesigned Business 

Leaders Program (MBA); 300 internal 

candidates were identified and 186 people 

enrolled in the Project Leaders Program. 

In addition, through the Group’s 

e-recruitment tool for exempts, 

JobMarketOnline, 6,669 candidates 

(internal and external) applied for jobs. 

Of the 1,523 vacancies posted in 2008, 

approximately 1,000 jobs were filled. 

Induction: Introducing new employees to 

the Company’s values and business strategy 

Effective induction not only helps 

to promote the Group’s culture and 

reputation but is a clear investment 

in ‘transforming tomorrow’. In 2008 

a comprehensive Group-wide global 

Induction Program was designed and rolled 

out. The Induction Program facilitates 

the integration of newcomers into the 

ArcelorMittal environment and enables 

them to maximize their contribution 

to the Group’s objectives. In addition, 

it accelerates their understanding 

of the ArcelorMittal philosophy 

and business strategy. 

Training and development 

The 2008 budget for the ArcelorMittal 

University (‘The University’) was 

$25 million. The ArcelorMittal University 

plays a central role in the area of training 

and development, delivering its courses 

both through local training centers 

and online. The program was expanded 

significantly in 2008 in areas such as Health 

and Safety, intensive language training, 

core leadership and management skills, 

executive education and technical and 

functional skills. More than 30,000 people 

have received training through the 

University since its inception in 2007. 

Last year, over 10,000 people 

participated in ArcelorMittal University 

Core Leadership and Management 

Programs in 20 different countries. 

These programs are 1-2 day management 

courses, based on ArcelorMittal’s vision, 

mission and values. They are delivered 

country by country in the local language, 

enabling the Company to deliver 

consistent training across the Group. 

The University is supported by regional 

and country-specific programs. In South 

Africa, for instance, virtual classrooms 

at operating sites across the country 

allow for simultaneous video conferences 

and recorded presentations. This model 

will be applied to the transfer of knowledge 

from the Group’s best practice mining 

sites to its other operations in countries 

such as Senegal and Liberia. 

In August 2008, ArcelorMittal’s online 

English training program was honored 

with an Optimas Award in the category 

‘Global Outlook’. The recognition confirms 

the University’s success in implementing 

a program that will help the Company 

to thrive in the global market. Created in 

2006, this online tool gives ArcelorMittal 

employees the opportunity to learn English, 

the Group’s official corporate language. 

In addition, e-Learning is proving to be 

the most cost-efficient didactic tool for 

ArcelorMittal during the current challenging 

economic period. 

1 Exempts consist of employees with an education level of Master and above, with managerial 

responsibility over a department or a large service, or designated as such by the CEO of the entity they work in. 

A most ambitious project came 

to completion at the end of the year 

with the inauguration of the new 

ArcelorMittal University Campus located 

in Luxembourg. 

Group Engineers Program 

In order for ArcelorMittal to attract the 

necessary young, talented and mobile 

engineers to help the Group transform 

tomorrow, the Group Engineers Program 

was developed. Its aim is to create a pool 

of internationally mobile engineers – with 

strong potential for growth and the ability 

to assume leading positions in the future. 

Business Leaders Program 

ArcelorMittal has been running its Business 

Leaders Program since 2003. Each year 

this program targets external recruitment 

of MBAs or other functional Masters 

degrees, who have proven managerial 

experience. The objective of the program 

is to attract new ideas to continuously 

refresh the organization and provide 

a globally mobile pool of international 

managers who will develop into the 

future leaders of the Group’s business. 

The program also assists in addressing 

some of the key skills gaps in organizational 

succession plans including skills shortages 

in emerging markets and demographic 

challenges in developed markets. 

The exchange of knowledge also taps into 

the latest thinking from the top business 

schools worldwide. 

‘Steelworker for the Future’ 

The Steelworker for the Future initiative 

is part of the North America Footprint 

project, to strengthen ArcelorMittal’s 

human capital, Students in the program 

complete two years of course work 

and 24 weeks of onsite job training that 

culminate in an associate’s degree 

in applied science and the prospect of 

a steelworker’s job. 

33 

Corporate Responsibility – Investing in our People 


Corporate Responsibility – Making Steel more Sustainable 

While technical developments have reduced 

relative CO2 emissions in Western European 

countries by nearly 50% in the last 30 years, 

on average every tonne of primary steel 

produced in a blast furnace (the ‘integrated 

production route’) results in one-and-a-half 

to two tonnes of direct CO2 emissions. 

As a material, however, steel is almost 

endlessly recyclable, with scrap steel providing 

the main feedstock for the alternative 

production method – the electric arc furnace 

(‘EAF’) route – where CO2 emissions are 

significantly lower than in the integrated 

route. However, EAF production remains 

limited by the availability of scrap and scrap 

substitutes. ArcelorMittal is the largest recycler 

of scrap steel in the world and also the 

biggest producer of direct reduced iron 

(‘DRI’) used in EAF plants. 

Steel is also at the forefront of the growing 

‘green’ building markets and is playing 

a major role in the automotive market helping 

make vehicles more energy-efficient. 

In the construction market, ArcelorMittal’s new 

High Strength Steels (‘HSS’), such as HISTAR®, 

contribute to a major reduction in greenhouse 

gases by making it possible to use lighter 

structures. Substituting HISTAR® for common 

steels reduces the weight of steel columns 

by 32% and that of beams by 19%. In the 

automotive market, the use of Advanced High 

Strength Steels (‘AHSS’) and the stronger HSS 

steels has the potential to reduce the weight 

of a vehicle by up to 25%. ArcelorMittal 

is a leading producer of both these steels. 

34 

As the world’s 

largest steel company, 

ArcelorMittal recognizes 

that its environmental 

footprint is considerable. 

Steelmaking is 

highly energy-intensive. 

Confronting climate change 

The second area is energy saving. 

The challenge of climate change is a global 

issue and must be addressed through global 

solutions. ArcelorMittal has advocated 

the adoption of a sectoral approach in the 

search for solutions that are acceptable 

to developing, as well as developed countries 

A new Group-wide energy policy was launched 

in May 2008. It encompasses the procurement 

of energy-related commodities, the integration 

of energy considerations into process and 

equipment design, technology selection and 

procurement and individual employee behavior. 

and avoid creating competitive distortions. An energy management system is being 

The Group is working with the World Steel implemented throughout the Group. 

Association in taking this forward. The dialogue It includes the establishment and monitoring 

extends beyond European Union boundaries of corporate performance objectives, 

to include US and Canadian legislative bodies. benchmarking and best practice operations, 

Internally, ArcelorMittal is engaged in 

a multi-faceted approach that encompasses 

short, medium and long-term goals through 

the generation of technology standards 

and best operating practice guidelines 

and investment and technology upgrades. 

technological support, the use of market At the same time, trials are under way 

mechanisms and the promotion of innovation. to establish the viability of recycling coke oven 

Its Environmental Policy places responsibility gas into the production of DRI. Indications 

and environmental excellence at its core. are that this produces higher yields than 

ISO 14001, the internationally recognized recycling the same gas into a power plant. 

standard for environmental management Using the resultant DRI in blast furnace 

systems, is now mandatory for all production steelmaking has the potential to achieve 

facilities. By the end of 2008, 91% of a significant reduction in energy consumption 

production sites had attained certification, and therefore CO2 emissions. 

with all remaining facilities expected to be 

certified by the end of 2010. 

Breakthrough technologies 

The search for quick wins in the area 

of emissions reduction focuses on two prime 

areas. The first of these is process performance 

benchmarking and target-setting. While many 

of the Group’s European and US sites are 

close to their technical limits for CO2 reduction, 

others have further to go. ArcelorMittal has 

now developed an internal methodology 

that monitors the CO2 efficiency of steel 

production at each site – taking into account 

ArcelorMittal’s longer-term response 

to the emissions reduction challenge focuses 

on the development of breakthrough 

technologies. It is one of the leading companies 

in the EU-sponsored Ultra Low CO2 

Steelmaking (‘ULCOS’) project, which seeks 

to achieve a reduction of more than 50% 

in steel industry CO2 emissions. Four potential 

breakthrough routes are to be evaluated 

on an industrial scale. 

all the multiple processes, differences 

The first stage of the project, which is planned 

in plant structure, power generation and to be in operation by 2015, envisages the 

products involved. 

removal of CO2 from the emitted gases, 

The methodology benchmarks each plant 

against the reference performance for the 

Group and can be used to determine resource 

allocation between sites and help share best 

practice. It provides the basis for modeling 

emissions scenarios and the setting of realistic 

but challenging targets. 

their reheating and recycling. The second stage, 

which is dependent on the identification and 

authorization of an appropriate storage site, 

would include the further purification and 

storage of the CO2, thereby achieving a 

reduction in carbon emissions of at least 50%. 

For more information, please see www.ulcos.org.

ArcelorMittal’s longer-term response to the emissions 

reduction challenge focuses on the development 

of breakthrough technologies. It is one of the leading 

companies in the EU-sponsored Ultra Low CO2 

Steelmaking (‘ULCOS’) project. 

35 

Corporate Responsibility – Making Steel more Sustainable 


Corporate Responsibility – Enriching our Communities 

In 2008, ArcelorMittal published its 

Community Engagement Standard, 

supported by a practical manual. 

The standard defines minimum community 

engagement requirements that all the 

Group’s major operations must meet, 

both nationally and locally. It places 

great emphasis on regular contact with 

stakeholders, the establishment of 

communications channels through which 

they can raise any concerns and the 

need to run at least one formal event 

each year. 

ArcelorMittal has stepped up its dialogue 

with stakeholders at many of its operations 

in the past year, demonstrating its 

commitment to deal with issues raised 

at a local level. For instance, in Ostrava, 

Czech Republic, that dialogue now 

includes regular meetings with political 

and community representatives. 

ArcelorMittal also launched a formal 

collaboration with the Technical University 

of Ostrava to assess the impact of two 

major environment-related investment 

projects and a regular newsletter is now 

being produced to keep all stakeholders 

informed of progress. 

36 

ArcelorMittal Kazakhstan is now holding 

quarterly reviews of its engagement 

plan involving local stakeholder groups. 

Some 70 representatives of local 

Non-Governmental Organizations (‘NGOs’), 

Mayors and union representatives attended 

the first in March 2008. A community 

liaison system is now in place, supported 

by a formal grievance procedure that 

guarantees documented answers to 

complaints within ten days. A process 

of public disclosure with a focus on Health 

and Safety and the environment allows 

public access to all information submitted 

to the Government. 

In Prijedor, Bosnia, where ArcelorMittal 

began mining operations in 2004, 

the Company is focusing its efforts on 

a variety of socio-economic projects 

designed to help bring together local 

Serb, Muslim, Ukrainian, Macedonian 

and Croatian communities in this post-war 

region. ArcelorMittal has developed a 

healthcare centre and a maternity centre 

(the only one in the Republic of Srprska), 

sponsored schools for children with special 

needs, opened an office for the treatment 

of diabetes and provided support for local 

schools, camps, sports teams and a folklore 

festival. Increasing numbers of people 

who fled Prijedor during the war are 

returning and a concerted effort is being 

made to ensure hiring practices are fair 

and equitable. 

ArcelorMittal benefits 

from maintaining good 

relationships with all 

of its stakeholders and 

particularly with the local 

communities in which it 

operates. These wider 

relationships can have 

a direct impact on the Group’s 

success in strengthening 

its reputation as a trusted 

and responsible organization 

– one that works for 

a more sustainable future. 

Greenfield projects pose particular 

engagement challenges where they 

involve the need for resettlement 

and rehabilitation. While resettlements 

are generally conducted by local and 

national governments, ArcelorMittal makes 

it a priority to engage in the process 

and encourages reference to international 

standards with regard to community 

engagement and compensation. 

Where possible, the Group seeks to 

exceed minimum practice standards 

by developing regional action plans 

and toolkits. 

In India, where the Group is planning 

to build two large steel plants in the 

states of Orissa and Jharkhand, detailed 

census and socio-economic studies 

of the affected populations have been 

conducted as the basis of action plans 

submitted to the state governments. 

Together with the government and local 

administration, ArcelorMittal is identifying 

available land suitable for resettlement 

and a land acquisition program will 

commence shortly. A compensation 

framework for those subject to 

resettlement has been devised, discussed 

and shared with affected communities 

and villages, and a number of workshops 

have been held with local NGOs. 

A variety of educational and vocational 

training moves are underway. Importantly, 

the plan includes the whole community 

and not just families affected by the 

two projects. Built on local consultation 

and participation, it is designed to protect 

the social, cultural and economic fabric 

of the two regions.

ArcelorMittal Foundation 

The ArcelorMittal Foundation is a 

non-profit organization that focuses 

on providing support for the communities 

in which the Group operates. Working 

with the local business units, its priority 

areas are education, Health and Safety 

and social promotion. Its strategy is to 

set up projects to maximize the potential 

of each community, respecting its specific 

needs and empowering local resources. 

It favors projects that can become 

self-sustainable after initial support in 

order to maximize the number of potential 

beneficiaries. In 2008, the ArcelorMittal 

Foundation supported projects in 

27 countries with a monetary value 

of $57.1 million. In addition to supervising 

local programs implemented by 

ArcelorMittal units, it also invests in 

global programs to support humanitarian 

initiatives aligned with its mission and 

provides emergency aid. 

Educational projects supported in the 

past year include the continued support 

to the Science Centre in Sedibeng, South 

Africa, catering for 1,800 students; 

a Youth Centre built in Nowa Huta, near 

Kraków in Poland; management and 

improvement of the two schools in Yekepa, 

Liberia; and a new partnership with 

the International Baccalaureate NGO, 

to develop their two-year diploma program 

in three colleges in Bosnia with the aim 

to gather students from all ethnic 

communities and to promote reconciliation. 

In the area of Health and Safety, 

the ArcelorMittal Foundation has 

supported, among other projects, 

investments in hospital equipment, 

refurbishment and transportation 

for seven hospitals in Kryviy Rih, 

Ukraine; an AIDS care centre in South 

Africa; a sexual education program 

in Brazil, mobile health clinics in the 

state of Orissa, India; and the continued 

running and upgrading of the two 

hospitals in Yekepa and Buchanan, 

Liberia. The Foundation’s activities in Social 

Promotion include a wide variety 

of social projects on four continents, 

with the aim to support the integration 

of disadvantaged people into the society. 

In Algeria, funding has helped set up 

the ‘Dar el Insania’ home for abused 

women, which delivers shelter and support. 

In Spain, several projects with associations 

around the Asturias plants are working to 

support the social acceptance of disabled 

people. In Brazil, the Bem Bank micro-credit 

initiative, set up in 2005 and supported 

by ArcelorMittal Tubarão, has been 

expanded to include a brick factory and 

small-scale production of house-cleaning 

products. Bem Bank serves a population 

of around 30,000 in the São Benedito 

area in Vitória. 

Emergency Aid initiatives include 

partnerships with other associations 

to help the people of Myanmar in the 

wake of the devastation caused by the 

cyclone of May 2008. A donation of 

€100,000 to Save the Children helped 

the charity reach over 500,000 people, 

distributing food, water, purification 

tablets, canvas and other essential items. 

In the same period, the Sichuan province 

in China was hit by an earthquake and 

the ArcelorMittal Foundation sent another 

emergency donation of around €80,000 

to the Chinese Red Cross. 

The Foundation also supports a number 

of global projects. One example is the 

partnership with Habitat for Humanity, 

which provides low-cost housing for 

people in need, including victims of 

catastrophes such as the recent floods 

in Romania. ArcelorMittal agreed to sponsor 

the organization in April 2008 with 

an initial focus on building or renovating 

homes in Romania, Costa Rica and 

Argentina. The partnership agreement 

includes ArcelorMittal’s expertise in steel 

construction – this resulted in the design 

of the ‘Casa Buna’ steel frame housing 

concept, and the construction of the 

first prototype in October 2008 near 

Bucharest, Romania. 

Another global project is the continued 

support to the Bone Marrow Registry 

project, started in France 20 years ago 

and steadily expanding to new countries 

around the world. The international 

expansion of the potential donor base 

improves the chances of finding compatible 

donors, thus increasing number of 

people who could benefit from potentially 

life-saving bone marrow transplants 

each year. 

December 2008. 

ArcelorMittal staged its first global 

Volunteer Work Day that mobilized 

more than 10,000 employees 

across all regions of operations 

to volunteer for good causes and 

to the benefit of the community. 

37 

Corporate Responsibility – Enriching our Communities 


2009 

ArcelorMittal is 

constructing 3 ‘Casa Buna’ 

homes for 12 families 

38

The Casa Buna prototype was 

constructed in the ArcelorMittal 

facility in Pantelimon, Bucharest. 

It uses a steel frame superstructure, 

steel roof tile system, steel rainwater 

extraction system and a steel 

cladding. The model has been 

tested for energy efficiency 

and carefully assessed to ensure 

comfort and adequate living space. 

As a result of its partnership 

with Habitat for Humanity, 

in 2009 ArcelorMittal is constructing 

three ‘Casa Buna’ homes (housing 

12 families) in Romania. The Group 

is also providing funding for critically 

needed renovations to more 

than 20 apartment block homes 

in the country. These renovations 

also include measures to improve 

energy efficiency. 

The ArcelorMittal Foundation’s 

global partnership with 

Habitat for Humanity began 

in April 2008. By the end 

of the year, results were already 

remarkable: 89 families were 

enjoying new or improved 

homes, and a joint team 

of ArcelorMittal and Habitat 

experts designed an innovative 

home prototype called ‘Casa 

Buna’. Casa Buna, ‘Good House’ 

in Romanian, is a steel-intensive 

four-unit housing solution 

over two floors that can be 

easily constructed by volunteers 

and has a long life span. 

39

Global Presence 

ArcelorMittal is the largest producer 

of steel in Europe, North and South 

America, Africa, the second largest 

steel producer in the CIS region, 

and has a growing presence in Asia, 

particularly in China. ArcelorMittal 

has steelmaking operations 

in 20 countries on four continents, 

including 66 integrated, mini-mill 

and integrated mini-mill steelmaking 

facilities which provide a high degree 

of geographic diversification. 

40

Las Truchas 

Vinton 

Guanajuato 

Lázaro Cárdenas 

Gilbert; Hibbing; Minorca, Minnesota 

Burns Harbor; East Chicago; Gary; 

Indiana Harbor, Indiana 

Chicago, Illinois 

Gallatin, Kentucky 

Pine Bluff, Arkansas 

Jackson, Mississippi 

Monterrey 

Riverdale, Illinois 

Hennepin, Illinois 

Mexico City; Peña 

Veracruz 

New Carlisle, Indiana 

Caldera; Escazit; 

Guapiles; Tibas 

Marion; Shelby, Ohio 

Columbus; Obetz, Ohio 

Weirton, West Virginia 

LaPlace, 

Louisiana 

Fire Lake; Mont-Wright, Québec 

Contrecoeur (East & West); 

Coteau du Lac; Montreal, Québec 

Cleveland, Ohio 

London; Woodstock, Ontario 

Brampton; Hamilton, Ontario 

Lackawanna, New York 

Warren, Ohio 

Parsippany, New Jersey 

Coatesville; Steelton; 

Conshohocken, Pennsylvania 

Washington, D.C. 

Monessen, Pennsylvania 

Georgetown, South Carolina 

Caracas 

Feira de Santana 

Andrade; João Monlevade; Timóteo 

Belo Horizonte; Contagem; Sabará; Vespasiano 

Itaúna 

Rosario 

Villa Mercedes 

Americas 

Point Lisas 

Venezuela (Unicon) 

Piracicaba 

São Paulo 

São Francisco do Sul 

Wabush, Newfoundland 

Port-Cartier, Québec 

San Nicolás; Villa Constitución 

Montevideo 

Buenos Aires; La Tablada 

Juiz de Fora 

Serra; Vitória 

41 

Global Presence ArcelorMittal Annual Report 2008

Europe 

Brussels; Charleroi; Châtelet; La Praye 

Ghent 

Hautmont 

Dunkerque 

Montataire; Paris; Rueil-Malmaison; 

Saint Denis; Vitry-sur-Seine 

Madrid 

Noblejas 

Basse-Indre 

Asturias (Avilés & Gijón); 

Langreo 

Bergara; Olaberría; 

Zumárraga 

Basauri; Etxebarri; Sestao 

42 

Salvatierra 

Sheffield 

Desvres 

Isbergues 

Reims 

Chevillon 

Imphy 

Le Creusot 

Saint-Chély d’Apcher 

Lesaka; Berrioplano 

Zaragoza 

Sagunto 

Mouzon 

Hamburg 

Bremen 

Duisburg (Hochfeld & Ruhrort) 

Geel; Genk 

Flémalle; Liège; Seraing 

Gueugnon 

Fos-sur-Mer 

Luxembourg; Belval; Differdange; 

Dudelange; Schifflange 

Florange; Gandrange 

Pont de Roide 

Piombino 

Ried im Innkreis 

Firminy; Saint-Chamond & Châteauneuf 

Milan 

Eisenhüttenstadt 

Szengotthárd 

Avellino 

Sycow 

Omarska 

Buvač 

Warsaw 

Dąbrowa Górnicza; Katowice; 

Świętochłowice; Sosnowiec 

Kraków 

Hunedoara 

Zenica 

Skopje 

Tallinn 

Frýdek Místek; Karvina; Ostrava 

Roman 

Iasi 

Galati 

Kryviy Rih

Africa 

Jorf Lasfar 

Tiris Zemmour 

Yekepa 

Buchanan 

Nador 

Annaba 

Ouenza 

Boukhadra 

Saldanha 

Sishen 

Gemlik 

Thabazimbi 

Istanbul 

Maputo 

Vanderbijlpark; Vereeniging 

Newcastle 

43 

Global Presence continued ArcelorMittal Annual Report 2008

Asia 

44 

Lisakovski 

Dubai 

Temirtau 

Atasu 

Atansore 

Karaganda 

Aktau 

Kentobe 

Beijing 

Rongcheng 

JV Valin Steel (Hunan) 

JV Oriental (Hebei) 

Shanghai

Mergers and acquisitions have 

historically been a key pillar 

of ArcelorMittal’s strategy to which 

it brings unique experience, 

particularly in terms of integration. 

Instead of creating new capacity, 

mergers and acquisitions increase 

industry consolidation and create 

synergies. ArcelorMittal has also 

placed strong emphasis on growth 

in emerging economies through 

Greenfield developments. 

45 

Message Global Presence from the continued President and CEO 


2008 $124.9 billion 

2007 $105.2 billion 

ArcelorMittal sales 

Operational Review – Sales, steel shipments and average steel selling prices 

46 

Sales in the Flat Carbon Europe segment were 

$38.3 billion for the year ended December 31, 2008, 

representing 30.7% of total consolidated sales 

for 2008, an increase of 10% as compared to $34.9 billion, 

or 33.2% of the total consolidated sales, for the year 

ended December 31, 2007.

The following table provides a summary 

of ArcelorMittal’s sales by operating segment 

for the year ended December 31, 2008 as 

compared to the year ended December 31, 2007: 

Sales for the 

year ended December 31 

Changes in 

1 

Segment 2007 2008 Sales 

Steel 

Shipments 

Average Steel 

Selling Price 

(in $ millions) (in $ millions) (%) (%) (%) 

Flat Carbon Americas 21,839 27,031 24 (4) 31 

Flat Carbon Europe 34,924 38,300 10 (6) 23 

Long Carbon Americas and Europe 27,035 32,268 19 (4) 36 

AACIS 14,971 13,133 (12) (19) 37 

Stainless Steel 9,349 8,341 (11) 1 (11) 

Steel Solutions and Services 16,988 23,126 36 16 20 

1 Amounts are prior to inter-company eliminations and include non-steel sales. 

ArcelorMittal had sales of $124.9 billion 

for the year ended December 31, 2008, 

representing an increase of 19% over sales 

of $105.2 billion for the year ended 

December 31, 2007. Sales were higher 

overall primarily due to increases in average 

steel selling prices (except Stainless Steel 

due to falling nickel prices), partially 

offset by decreases in shipment volumes. 

Generally strong conditions in the 

Company’s main markets during the first 

nine months of the year were offset 

by a sharp slowdown in the fourth quarter 

following the severe downturn in the 

global economy. 

ArcelorMittal had steel shipments 

of 101.7 million tonnes for the year 

ended December 31, 2008, representing 

a 7% decrease from steel shipments 

of 109.7 million tonnes for the year ended 

December 31, 2007. Overall shipment 

volumes were lower due to the substantial 

decline in the fourth quarter, in line with 

the global economic slowdown and 

reduction in market demand. 

Average steel selling prices for the year 

ended December 31, 2008 increased 

27% as compared to the average steel 

selling prices for the year ended December 

31, 2007, reflecting strong steel demand 

and high raw material prices in the first 

nine months of 2008, partially offset 

by sharp price declines in the fourth 

quarter amid the global economic crisis. 

Average steel selling prices were higher 

when comparing the year ended December 

31, 2008 to December 31, 2007 in all 

segments except for Stainless Steel where 

prices decreased 11%, primarily as a result 

of lower nickel prices. 

Flat Carbon Americas 

Sales in the Flat Carbon Americas segment 

reached $27.0 billion for the year ended 

December 31, 2008, representing 21.6% 

of the total consolidated sales for 2008, 

an increase of 24% as compared to $21.8 

billion, or 20.8% of total consolidated sales, 

for the year ended December 31, 2007. 

Sales were higher mainly due to a higher 

average steel selling price, partially offset 

by lower steel shipment volumes. As with 

the rest of the Company, generally strong 

conditions during the first nine months 

of the year were partially offset by a sharp 

slowdown in the fourth quarter following 

the downturn in the global economy. 

Total steel shipments were 25.8 million 

tonnes for the year ended December 31, 

2008, a decrease of 4% from shipments 


Shipment volumes decreased on account 

of the sharp drop in demand in the fourth 

quarter (with shipments decreasing nearly 

43% compared to the third quarter) 

as a result of rapidly deteriorating 

economic conditions, inventory reduction 

by customers. In addition, total steel 

shipments decreased due to the sale 

on May 7, 2008 of ArcelorMittal’s 

Sparrows Point steel mill to OAO Severstal 

partially offset by the additional shipment 

volumes from ArcelorMittal Brasil 

following the completion of its capacity 

expansion project. Excluding the impact 

of Sparrows Point, total steel shipments 

were 25.0 million tonnes for the year ended 

December 31, 2008, as compared to 

25.2 million tonnes for the year ended 

December 31, 2007. 

Average steel selling prices for the year 

ended December 31, 2008 increased 

31% as compared to the average steel 

selling price for the year ended December 

31, 2007, due mainly to strong steel 

demand in the first nine months of 2008, 

as well as the ability to pass on higher input 

costs to customers during this period. 

This was partially offset by sharp price 

declines in the fourth quarter amid the 

global economic crisis, with average 

steel selling prices decreasing by 8.7% 

compared to the third quarter. 

Flat Carbon Americas implemented 

production cuts in excess of 50% in the 

fourth quarter due to a further decline 

in global economic conditions and the 

reduction in market demand. Production 

in the fourth quarter was cut to 

approximately 3.5 million tonnes, which 

was approximately 3.9 million tonnes lower 

than in the third quarter, and 4.2 million 

tonnes (or more than 55%) lower than 

in the second quarter of 2008. 

Flat Carbon Europe 

Sales in the Flat Carbon Europe segment 

were $38.3 billion for the year ended 


of total consolidated sales for 2008, an 

increase of 10% as compared to $34.9 

billion, or 33.2% of the total consolidated 

sales, for the year ended December 31, 

2007. The increase was primarily due to 

a 23% increase in average steel selling 

prices, partially offset by the 6% decrease 

in total steel shipments. 

Total steel shipments reached 33.5 million 


2008, a decline of 6% from steel shipments 


This decrease was primarily the result of 

sharply lower demand in the fourth quarter 

(with shipments dropping 27% as 

compared to the third quarter) as a result 

of rapidly deteriorating economic conditions 

and inventory reduction by customers. 

47 

Operational Review 


The average steel selling price for the year 

ended December 31, 2008 increased 23% 

as compared to the average steel selling price 

for the year ended December 31, 2007, 

due mainly to strong steel demand, strength 

of the euro to US dollar in the first nine 

months of 2008, and the ability to pass on 

higher input costs to customers during this 

period. This was partially offset by sharp 

price declines in the fourth quarter as a result 

of the global economic crisis, with average 

steel selling price decreasing by 15.0% 


Flat Carbon Europe implemented production 

cuts of approximately 46% for the fourth 

quarter in response to declining global 

economic conditions and the reduction in 

market demand. Production in the fourth 

quarter was cut to approximately 5.1 million 

tonnes, which was approximately 4.3 million 

tonnes lower than for the third quarter, and 

4.9 million tonnes (or more than 49%) 

lower than for the second quarter. 

Long Carbon Americas and Europe 

In the Long Carbon Americas and Europe 

segment, sales reached $32.3 billion 


representing 25.8% of the total consolidated 

sales for 2008, an increase of 19% over 

sales of $27.0 billion, or 25.7% of the total 

consolidated sales, for the year ended 

December 31, 2007. Sales were higher 

mainly due to a 36% higher average steel 

selling price, which was partially offset 

by a 4% decrease in steel shipment volumes. 



2008, a decrease of 4% from steel 

shipments for the year ended December 31, 

2007. This decrease was primarily a result 

of sharply reduced demand in the fourth 

quarter due to rapidly deteriorating economic 

conditions and inventory reduction by 

customers. Steel shipments fell 32% for 

the fourth quarter of 2008 as compared 

to the third quarter of 2008. 

Average steel selling price increased 36% 


as compared with average steel selling price 


due mainly to strong steel demand in the 

first nine months of 2008 and the ability 

to pass on higher input costs to customers 

during this period. However, average steel 

selling price decreased by 20.7% for the 

fourth quarter compared to the third quarter. 


implemented production cuts of 

approximately 45% for the fourth quarter 

due to the declining global economic 

conditions and the reduction in market 

demand. Production for the fourth quarter 

of 2008 was cut to approximately 3.7 million 

tonnes, which was approximately 3.1 million 

tonnes lower than for the third quarter, 

and 3.7 million tonnes (or approximately 

50%) lower than for the second quarter. 

48 

AACIS 

In the AACIS segment, sales were 

$13.1 billion for the year ended December 

31, 2008, representing 10.5% of the total 

consolidated sales in 2008, a decrease 

of 12% over sales of $15.0 billion, 

or 14.2% of total consolidated sales, 


The main reason for the decrease was 

a reduction in steel shipment volumes 

caused by the sharp decline in demand 

in the fourth quarter, particularly in 

operations in Ukraine and Kazakhstan, 

which were partially offset by an increase 

in the average selling price. 

Total steel shipments reached 13.3 million 


2008, a decrease of 19% from steel 

shipments for the year ended December 

31, 2007. This decrease resulted primarily 

from plummeting demand for products 

at our Ukrainian and Kazakhstan operations 

during the fourth quarter of 2008, 

as the credit crisis had a particularly strong 

impact on the CIS region; steel shipments 

fell 34% for the fourth quarter as compared 

to the third quarter. 

Average steel selling price increased 

37% for the year ended December 31, 

2008, as compared to the average steel 


31, 2007, primarily due to the ability 

to pass on increased input costs to 

customers and the strong market demand 

during the first nine months of the year. 

However, average steel selling price 

decreased by 40.4% for the fourth quarter 


AACIS implemented production cuts 

in excess of 50% for the fourth quarter 

due to declining global economic conditions 

and the reduction in market demand. 

Production in the fourth quarter of 2008 

was cut to approximately 2.1 million 

tonnes, which was approximately 

2.1 million tonnes lower than for the 

third quarter, and 2.3 million tonnes 

(or more than 52%) lower than for the 

second quarter. 

Stainless Steel 

Sales in the Stainless Steel segment 

were $8.3 billion for the year ended 


of the total consolidated sales in 2008, 

a decrease of 11% over sales of $9.3 billion, 

or 8.9% of total consolidated sales, for the 

year ended December 31, 2007. This 

decrease was mainly due to a lower average 

selling price caused by falling nickel prices. 

Total steel shipments were essentially 

flat (1% increase) at 2.0 million tonnes 

for the year ended December 31, 2008. 

This outcome reflected strength in the 

first half of the year, particular in the 

austenitic stainless market through inventory 

replenishment, and weakness in the second 

half including a sharp downturn in the 

fourth quarter (shipments dropped 25% 

in the fourth quarter as compared with 

the third quarter). 

Average steel selling price decreased 

11% for the year ended December 31, 

2008, as compared to the average steel 


31, 2007, mainly due to lower nickel prices 

in the second half of the year and the fall 

in customer demand in the fourth quarter 

due to declining economic conditions. 

Average steel selling price decreased 

by 17.7% for the fourth quarter compared 

to the third quarter. 

Stainless Steel implemented production 

cuts of approximately 26% due to the 

declining global economy and the reduction 

in customer demand. Production for the 

fourth quarter of 2008 was cut to 

approximately 0.4 million tonnes, which 

was approximately 0.1 million tonnes lower 

than in the third quarter, and 0.3 million 

tonnes (or more than 43%) lower than 

in the second quarter. 

Steel Solutions and Services 

In the Steel Solutions and Services 

segment, sales reached $23.1 billion 


representing 18.5% of the total 

consolidated sales for 2008, an increase 

of 36% over sales of $17.0 billion, 

or 16.1% of the total consolidated sales, 


The increase was driven by higher selling 

prices and increased shipments primarily 

during the first nine months of 2008, 

which was partially offset by a slowdown 

in demand during the fourth quarter 

of 2008 following the downturn in the 

global economy. 



2008, an increase of 16% over steel 

shipments for the year ended December 

31, 2007 due to favorable demand 

for the first three quarters of the year, 

as well as the inclusion of new entities, 

although shipments dropped 14% in the 

fourth quarter as a consequence of the 

economic downturn. The shipments 

of ArcelorMittal Steel Solutions and 

Services are not consolidated. 

Average steel selling price increased 20% 


as compared to the average steel selling 

prices for the year ended December 31, 

2007, primarily due to the ability to pass 

on increased input costs to customers 

and the strong market demand during the 

first nine months of the year. However, 

average steel selling price decreased by 

18.7% for the fourth quarter compared 

to the third quarter.

Operational Review – Operating income 

2008 $4.2 billion 

2007 $4.1 billion 


segment operating income 

In the AACIS segment operating income 

amounted to $3.1 billion for the year ended December 31, 2008, 

representing an increase of 11% compared to operating 

income of $2.8 billion for the year ended December 31, 2007. 

49 

Operational Review continued ArcelorMittal Annual Report 2008

The following table provides a summary of the operating 

income and operating margin of ArcelorMittal for the 

year ended December 31, 2008, as compared with 

the operating income and operating margin for the year 

ended December 31, 2007: 

ArcelorMittal’s operating income amounted 

to $12.2 billion for the year ended 

December 31, 2008, representing 

a decrease of 17% compared to operating 

income of $14.8 billion for the year 

ended December 31, 2007. Contributing 

substantially to this decrease was 

$6.1 billion of pre-tax expenses that 

ArcelorMittal recorded in the second half 

of the year. Of these pre-tax charges, 

approximately $4.1 billion resulted directly 

from the rapidly deteriorating economic 

and market conditions in the fourth quarter 

of the year and consisted of write-downs 

of inventory (approximately $2.5 billion), 

provisions for onerous raw material supply 

contracts (approximately $0.7 billion) 

and provisions for workforce reductions 

(including voluntary separation programs 

of approximately $0.9 billion). The other 

expenses consisted of a provision taken 

in connection with ArcelorMittal USA’s new 

four-year labor contract with its union 

employees (approximately $1.6 billion) 

and provisions for litigation (approximately 

$0.4 billion). For 2008 as a whole, 

inventory write-downs and litigation 

provisions amounted to approximately 

$2.7 billion and $0.6 billion, respectively. 

50 

Further details of these expenses 

are set out below. 

• Write-downs of inventory. On each balance 

sheet date, inventories are measured 

and valued at the lower of cost and net 

realizable value. Due to the rapid and sharp 

decline in demand for, and prices of, 

steel products and the expectation of lower 

demand and selling prices in the near-term, 

the net realizable value of certain inventories 

of finished steel products, works in process 

and raw materials (in particular iron ore 

and coking coal) after processing of these 

raw materials / works in process into steel 

products at the Company’s facilities across 

its segments at year-end were lower 

than their cost, resulting in write-downs. 

• Provision for onerous raw material 

supply contracts. ArcelorMittal sources 

a portion of its raw materials 

requirements under contracts whereby 

it has a firm commitment to purchase 

specified quantities at a set price over 

a set period. Due to the sharp decline 

in steel selling prices in the second half 

of 2008, the Company has recorded 

a provision with respect to raw materials 

sourced under these contracts because 

the net realizable value of such raw 

materials (assuming their processing into 

steel products at year-end) was expected 

to be lower than their cost and to result 

in write-downs. 

Operating Income Operating 

year ended December 31 Margin 

Segment 1 2007 2008 2007 2008 

(in $ millions) (in $ millions) (%) (%) 

Flat Carbon Americas 3,163 2,524 14 9 

Flat Carbon Europe 4,148 2,773 12 7 

Long Carbon Americas and Europe 4,083 4,154 15 13 

AACIS 2,843 3,145 19 24 

Stainless Steel 876 383 9 5 

Steel Solutions and Services 559 206 3 1 

1 Amounts are prior to inter-company eliminations and include non-steel sales. 

• Provision for workforce reduction 

(including voluntary separation 

programs). This provision relates to costs 

(including severance costs) expected 

to be incurred in connection with 

the voluntary separation plans that 

ArcelorMittal has communicated 

to employee representatives and is 

in the process of implementing. 

These plans include the voluntary 

separation plan announced by 

ArcelorMittal in November 2008 relating 

in particular to employees in 

administrative or other non-production 

functions at numerous sites worldwide, 

as well as the extension of such 

voluntary separation plans to production 

employees at various sites worldwide 

on a site-by-site basis pursuant 

to consultations undertaken with local 

employee representatives. 

• Provision for ArcelorMittal USA 

labor contract. On August 30, 2008 

ArcelorMittal USA reached a labor 

agreement with the United Steelworkers 

of America (the ‘USW’) for most 

of its steel plants and iron ore operations 

in the US and recorded an expense 

of $1.6 billion in this respect. For a full 

description of the agreement and the 

accounting treatment, see note 

23 to the ArcelorMittal Consolidated 

Financial Statements. The most significant 

feature of this agreement from a financial 

statement perspective is the change 

in the funding principles of a ‘voluntary 

employee benefit association’ for 

retiree healthcare from a profit-sharing 

arrangement to providing defined benefits. 

The change in the contractual obligation 

led to the recognition of a liability 

and other post-employment expense 

of $1.4 billion for those obligations that 

had previously vested. The cash outflow 

related to these benefits is expected to 

be approximately $25 million per quarter 

for the first four years.

Operating income for the year ended 

December 31, 2008 was further 

reduced by impairment expenses 

amounting to $1.1 billion, consisting 

of asset impairments of $499 million, 

goodwill impairment of $131 million 

and reduction of goodwill of $429 million. 

The impairments included a $200 million 

loss on the disposal of the Sparrows 

Point plant in the United States and 

asset impairments of $74 million 

(various ArcelorMittal USA sites), $60 million 

(Gandrange, France) and $54 million 

(Zumarraga, Spain). In determining these 

expenses, the Company analyzed the 

recoverable amount of these facilities 

based on their value in use and determined 

that the recoverable amount from these 

facilities was less than their carrying 

amount. The reduction of goodwill resulted 

primarily from the recognition of deferred 

tax assets on acquired net operating 

losses not previously recognized in 

purchase accounting which were 

subsequently recognized (with the amount 

of the reduction also included within 

cost of sales in the statement of income). 

These goodwill reductions were (among 

other factors) due to reorganizations 

in the Flat Carbon Europe segment 

($117 million) and in the Long Carbon 

Americas and Europe segment 

($291 million). For further information 

regarding accounting for goodwill, 

see note 8 to the ArcelorMittal 

Consolidated Financial Statements. 

The impairment losses compared 

to impairment losses for the twelve 

months ended December 31, 2007 

of $432 million, including impairments 

of $172 million (resulting primarily from 

restructurings of the Company’s facilities 

in Contrecoeur, Canada ($82 million) 

and Gandrange, France ($50 million)) 

and the reduction of goodwill of 

$260 million. 

Conversely, operating income was 

increased in 2008 by the recognition 

of a $349 million gain relating to the 

ineffective portion of forward exchange 

and options contracts initially executed 

in order to hedge currency exposure on 

expected raw material supply purchases 

that were unwound during the year. 


In the Flat Carbon Americas segment, 

operating income amounted to $2.5 billion 


representing a decrease of 20% from 

operating income of $3.2 billion for 

the year ended December 31, 2007. 

This decrease resulted from $2.1 billion 

in charges recorded in the third and fourth 

quarters. These included an approximately 

$1.5 billion expense relating to the 

new labor agreement entered into 

by ArcelorMittal USA, and expenses 

relating to write-downs of inventory 

(approximately $0.4 billion) and provisions 

for onerous raw material supply contracts. 

Operating income was also affected 

by impairment expenses of $291 million 

related primarily to Sparrows Point 

($200 million) and the asset impairments 

at various ArcelorMittal USA facilities 

($74 million). 


In the Flat Carbon Europe segment, 

operating income amounted to $2.8 billion 


representing a decrease of 33% from 

operating income of $4.1 billion for 


This decrease resulted from $1.8 billion 

in expenses recorded in the fourth quarter. 

These related to write-downs of inventory 

(approximately $1.0 billion), provisions 

for onerous raw material supply contracts, 


(including voluntary separation programs). 

Operating income was also affected 

by impairment expenses of $275 million, 

primarily related to goodwill impairment 

of $246 million, which included a 

$116 million reduction in goodwill relating 

to Noble International Ltd., as well as 

the recognition of deferred tax assets 

on acquired net operating losses not 

previously recognized in purchase 

accounting in connection with the 

reorganization of certain legal entities. 


In the Long Carbon Americas and Europe 

segment, operating income amounted 


December 31, 2008, essentially flat 

(up 2%) from operating income of 

$4.1 billion for the year ended December 

31, 2007. Operating income for 2008 

included $0.8 billion in expenses recorded 

in the third and fourth quarters, including 

approximately $0.1 billion expense relating 

to ArcelorMittal USA’s new four-year 

agreement with its union employees, 

and expenses relating to write-downs 

of inventory (approximately $0.4 billion) 

and provisions for onerous raw material 

supply contracts, as well as provisions for 

workforce reductions (including voluntary 

separation programs). 

Operating income was affected by 

impairment expenses of $458 million 

consisting primarily of reduction of 

goodwill of $296 million (resulting from 

the recognition of deferred tax assets 

on acquired net operating losses not 

previously recognized in purchase 

accounting in connection with the 

reorganization of certain legal entities 

in Europe and asset impairments of 

$162 million, mainly from asset 

impairments of $60 million (Gandrange, 

France) and $54 million (Zumarraga, Spain). 

AACIS 

In the AACIS segment operating income 

amounted to $3.1 billion for the year 

ended December 31, 2008, representing 

an increase of 11% compared to operating 

income of $2.8 billion for the year ended 

December 31, 2007. The result included 

expenses of $0.3 billion taken in the 

fourth quarter relating to write-downs 

of inventory (approximately $0.2 billion) 



51 

Operational Review continued 



Financing costs 

Income tax 

In the Stainless Steel segment, 

Net financing costs include net interest ArcelorMittal recorded a consolidated 

operating income amounted to $0.4 billion expense, revaluation of financial 

tax expense of $1,098 million for the 

for the year ended December 31, 2008, instruments, net foreign exchange 

year ended December 31, 2008, compared 

representing a decrease of 56% compared income / expense (i.e., the net effects to income tax expense of $3,038 million 

to operating income of $0.9 billion of transactions in a foreign currency for the year ended December 31, 2007. 

for the year ended December 31, 2007 other than the functional currency 

The effective tax rate (ETR) for the 

(mainly due to sharp fall in nickel prices of a subsidiary) and other financing costs. twelve months ended December 31, 

described above). The result included Net financing costs were 154% higher 2008 was lower at 9.5% (or 12.7% before 

expenses of approximately $0.2 billion for the year ended December 31, 2008, the recognition of deferred tax assets 

recorded in the fourth quarter relating at $2,352 million, as compared with on acquired net operating losses) as 

to a write-down of inventory and 

$927 million for the year ended December compared with the effective tax rate for 

provisions for workforce reductions 31, 2007. 

the twelve months ended December 31, 



In the Steel Solutions and Services 

segment, operating income amounted 


December 31, 2008, representing 

a decrease of 63% compared to operating 

income of $0.6 billion for the year ended 

December 31, 2007. The decline also 

reflected expenses of $0.7 billion recorded 

in the fourth quarter, relating primarily 

to a provision for litigation ($0.4 billion), 

write-downs of inventory (approximately 

$0.2 billion), provisions for onerous raw 

material supply contracts and provisions 

for workforce reductions (including 

voluntary separation programs). 

Income from investment in associates and 

joint ventures 

Interest expense, which includes bank 

fees, interest on loans and interest 

on pensions, increased to $2.5 billion 

for the year ended December 31, 

2008 compared to $2.2 billion for the 

year ended December 31, 2007, due to 

an increased average level of borrowing. 

As of December 31, 2008, ArcelorMittal’s 

total debt was $34.1 billion (compared 

to $30.6 billion as of December 31, 2007). 

Also contributing to the increase was higher 

interest cost on pensions, particularly 

in the United States. 

Interest income for the year ended 

December 31, 2008 was $0.5 billion 

as compared to $0.6 billion for the 

year ended December 31, 2007, 

due a reduction in average interest rates 

on deposits. 

2007 of 20.4% on income before taxes 

of $11,537 million and $14,888 million, 

respectively. The lower ETR for the year 

is primarily due to a change in the 

geographical mix of ArcelorMittal’s sources 

of income and a decrease in the statutory 

tax rates in some countries. 

For additional information related to 

ArcelorMittal’s income taxes, see note 

19 to the ArcelorMittal Consolidated 

Financial Statements. 

Minority interest 

Minority interest was $1,040 million 


as compared with $1,482 million for 


The decrease resulted primarily from the 

repurchase of minority interests in Arcelor 

(via the second-step merger in 2007), 

ArcelorMittal recorded income 

of $1.7 billion from investments accounted 

for using the equity method for the 

year ended December 31, 2008, 

as compared with income from equity 

method investments of $985 million for 

the twelve months ended December 31, 

2007. The increase is primarily related 

to ArcelorMittal’s investments in Dillinger 

Hütte Saarstahl AG (‘DHS’) in Germany, 

China Oriental and Hunan Valin in China, 

MacArthur coal in Australia, Kalagadi 

Manganese in South Africa and Eregli 

Losses related to the fair value 

of derivative instruments for the year 

ended December 31, 2008 amounted 

to $177 million, as compared with 

$431 million of gains for the year ended 

December 31, 2007. The Company 

recorded a substantial loss on forward 

contracts on freight in 2008 (primarily 

in the fourth quarter), whereas in 2007 

it had recorded a substantial gain 

on derivative instruments primarily 

in connection with its purchase of a stake 

in a Turkish entity. 

ArcelorMittal Brasil, ArcelorMittal Inox Brasil 

and Acindar, partially offset by higher 

income from ArcelorMittal South Africa 

and ArcelorMittal Ostrava. 

Net income attributable to equity holders 

of the parent 

ArcelorMittal’s net income attributable 

to equity holders of the parent for the 

year ended December 31, 2008 decreased 

to $9,399 million from $10,368 million 


for the reasons discussed above. 

Demir Ve Celik Fab.T.AS (‘Erdemir’) Foreign exchange and other financing 

in Turkey. On December 15, 2008, expenses were $156 million for 

ArcelorMittal sold a 17.82% stake in the twelve months ended December 31, 

DHS for €695 million (plus a dividend 2008, compared to foreign exchange 

of €82 million to be received in 2009). and other financing income of 

$239 million for the twelve months 

ended December 31, 2007. 

52

Customers and Innovation 

Much of the R&D team’s work extends beyond 

the development of new steels to the design of total 

engineering solutions to meet manufacturing 

and other challenges faced by customers. 

53 

Customers and Innovation 


Customers and Innovation continued 

ArcelorMittal seeks to develop high-value 

and strategic niche products to increase 

its market share, especially against 

competing materials. Increasingly, 

it has a parallel goal – to meet the wider 

demands of society for a lower carbon 

dioxide world. It does this by constantly 

reducing the CO2 content both of its 

own products – by minimizing the use 

of energy, the production of waste, 

and optimizing the use of raw materials 

– and those of its customers through 

the development of lighter, stronger, 

better designed steel solutions. 

Some 40 new products and numerous 

design solutions were commercialized 

in 2008 – a new record. They were 

developed for a wide spectrum of customer 

segments. In addition to delivering new 

functionalities and meeting the specific 

needs of a developing marketplace, 

many reflect the growing importance 

of product life cycle analysis that takes 

account of the CO2 emitted at every 

stage from production through usage 

to end of life. 

54 

Total engineering solutions 

Much of the R&D team’s work extends 

beyond the development of new steels 

to the design of total engineering 

solutions to meet manufacturing and 

other challenges faced by customers. 

Three examples in the area of construction 

entered production in 2008: 

• The Arsolar solar roof, which won 

the Golden Innovation Medal at the 

Batimat trade fair in late 2007, is a 

visually attractive roofing or cladding 

system with an integrated photovoltaic 

solution that reduces energy 

consumption in buildings. 

• The Angelina® beam, which has won 

a number of awards, is a highly versatile 

beam offering new architectural 

possibilities within an environmentally 

friendly approach. 

• The Firebreak Wall 4H, is a fire 

resistant wall for storage facilities that 

need four-hour fire resistance in each 

of their compartments. 

Automotive developments 

Throughout the world, automotive 

manufacturers face a similar challenge: 

to develop a new generation of vehicles 

with improved fuel consumption and lower 

CO2 emissions while meeting ever more 

stringent safety requirements. ArcelorMittal 

works closely with its customers from 

the design stage of new product launches, 

helping them develop vehicles that meet 

the demands of a lower carbon world while 

still delivering the safety and design appeal 

expected by end-customers. 

ArcelorMittal’s 1,500 

strong R&D team works 

in close collaboration 

with customers, often 

in committed co-engineering 

programs, devising 

new steels and design 

solutions that improve 

the competitiveness 

of their products. 

ArcelorMittal also launched its 

‘S-in Motion’ project, which targets 

a 20% weight reduction in vehicle body 

structures compared with current 

levels and is expected to be completed 

in 2010. The ‘S’ stands for steel, safety, 

stiffness, savings – all key issues for 

original equipment manufacturers – and 

is a follow-up to the ArcelorMittal Body 

Concept launched in 2005. Some of the 

new steels developed in the ‘S for Motion’ 

program are expected to be deployed 

by 2010. 

Construction 

In the construction and civil engineering 

markets, the Group develops new 

products and solutions to help customers 

cut construction costs, improve safety 

or comfort, achieve specific architectural 

requirements, extend durability 

or reduce environmental impact. 

Besides earthquake-resistant structures 

projects, the Group has developed 

a modular building design to facilitate 

the quick build of emergency housing 

for victims of natural disasters. 

The Group’s advanced high-strength 

steels have played a major role in 

a number of the world’s high-profile 

commercial developments: 

• The 492 meter-tall Shanghai World 

Financial Center, which opened 

in August 2008, incorporates 

24,000 tonnes of high-quality, 

heavy plate from ArcelorMittal 

associate Dillinger Hütte and 

12,000 tonnes of rolled sections 

from different Group plants 

around Europe.

• In Russia, ArcelorMittal was involved 

in two prestigious projects, the 300 

meter-high Moscow International 

Business Center and the 360 meter-high 

Federation Tower. Together, the two 

projects incorporate 20,000 tonnes 

of ArcelorMittal sections. 

• In New York, ArcelorMittal delivered 

2,100 tonnes of very advanced jumbo 

beams for the 415 meter Freedom 

Tower project. The jumbo beams were 

made at ArcelorMittal’s Differdange 

plant in Luxembourg, the only steelmaker 

in the world capable of producing 

beams of this scale with a 460 MPa 

tensile strength. 

• Since 2004, 100,000 tonnes of sheet 

piles have been delivered for a foundation 

project to protect the Lagoon of Venice, 

Italy, from the floods. 

By supplying innovative products and 

applications and delivering high-quality 

steel solutions, ArcelorMittal aims 

at making steel the material of choice 

in construction. 

Specialty plate developments 

In 2008, the R&D team developed a range 

of quenched and tempered plates for use 

in the transportation industry, typically 

in the building of large wagons for the 

transport of compressed natural gas. 

In addition, a new heavy plate product, 

1.6 inches thick, developed in the Group’s 

laboratories, went into production in the 

Burns Harbor heavy plate mill in August 

for the pipe manufacturer and fabricator, 

Canadoil. A new Duplex grade, 2202, 

has also been developed. With its 

outstanding mechanical properties enabling 

weight reduction of the final application 

and lower alloying element content, 

Duplex 2202 leads to important cost 

savings at our customers. This grade 

is already used in sea water desalination 

plants as well as chemical and pulp 

and paper industries. 

Stainless Steels 

After the successful promotion of the 

ferritic stainless steels ‘Kara’ (nickel free 

grades) in 2007, new grades have been 

developed in 2008. The most popular 

one has a 20% chrome content and 

is a substitute to the usual 304 austenitic 

stainless steel used in various applications 

such as appliances and construction items. 

Arceo 

In January 2008, ArcelorMittal inaugurated 

Arceo, a pilot line for a ground-breaking 

vacuum plasma steel coating process 

developed by the Group’s R&D team 

in partnership with the Walloon Region 

of Belgium. The vacuum plasma process 

offers a range of new surface 

functionalities, allowing steel to become 

a sensor, a reflector, a source of light, 

an anti-bacterial or self-cleaning surface 

or simply more aesthetically pleasing. 

It also offers better anti-corrosion 

properties and is environmentally friendly. 

It does not use solvents or chemical 

preparations and does not generate 

effluents or gases that require treatment. 

With a wide spectrum of potential 

applications in the appliance, automotive, 

lighting and metal processing sectors, 

commercial development is expected 

to commence in 2009. 

Breakthrough projects 

The R&D team continues to work on 

a large number of breakthrough projects. 

Some are still at the exploratory stage. 

Others, such as titanium oxide-coated 

steel offering air purification qualities 

and with applications in air conditioning, 

are a year or two away from 

commercialization. A number of initiatives 

are on the verge of full-scale production. 

They include a new, ultra fine grain steel 

called High Fatigue Limit, which offers 

enhanced fatigue resistance. It is expected 

to enter production in 2009 for use 

in automotive wheels. 

Large Hadron Collider. 

As a testimony to its strengths 

in electrical steels, ArcelorMittal was 

a major contributor to the Large Hadron 

Collider particle accelerator project 

developed by the European Organization 

for Nuclear Research (CERN). The Group’s 

Industeel unit in France was the only 

steel producer that could meet the 

specification for 16-metre plates made 

of a special type of fully non-magnetic 

stainless steel required for the external 

envelope of the LHC ring. In all, Industeel 

delivered 3,000 tonnes of plates 

and the Group’s flat carbon plant in Liège 

delivered 70,000 tonnes of high 

permeability low carbon ‘Magnetil’ 

electrical steel for the magnet guiding 

of the particle flow. 

55 

Customers and Innovation continued 



ArcelorMittal, with its diversified business 

model, strong cash flow and cost leadership 

position, is well placed to weather the 

current challenging economic environment 

and has the ambition to develop and 

balance its shareholder base on the major 

listed markets and to attract new investors. 

ArcelorMittal remains optimistic about 

the industry’s medium-term growth 

prospects, but believes it is appropriate 

to take a pause in its growth strategy until 

the economic outlook is more settled. 

Share price performance 

As a result of the challenging economic 

environment and the strong de-stocking 

of steel taking place in the developed and 

emerging world, the ArcelorMittal share 

has decreased by 35% since the creation 

of the Group, or by 78% compared to the 

highest share price of early June 2008. 

Industrial plan 

ArcelorMittal has taken rapidly significant 

initiatives to face the economic downturn, 

such as large production cuts to adapt 

production to the de-stocking phase, 

refocusing the $5 billion management gains 

program to target savings of $2 billion 

in 2009, targeting a reduction of working 

capital rotation by 15-25 days during 

2009, reducing CAPEX to $3 billion 

in 2009 and reducing the dividend to 

$0.75/share. ArcelorMittal is also targeting 

a $10 billion net debt reduction to ensure 

financial flexibility once markets recover. 

56 

Indexes 

ArcelorMittal is member of more than 

120 indices including the following leading 

indices: DJ STOXX 50, DJ EURO STOXX 50, 

CAC40, AEX, FTSE Eurotop 100, 

MSCI Pan-Euro, DJ Stoxx 600, S&P Europe 

500, Bloomberg World Index and 

NYSE Composite Index. Recognized 

for its commitment to Sustainable 

Development, the Group is also a member 

of the FTSE4Good index. 

Dividend 

Considering the exceptional global 

economic conditions since mid-September 

2008, ArcelorMittal’s Board of Directors 

has recommended reducing the quarterly 

dividend payment by half to $0.1875 

in 2009, resulting in an annual dividend 

per share of $0.75, subject to the 

approval of the annual general meeting 

of shareholders on May 12, 2009. 

Once market conditions have normalized, 

the Board of Directors will review 

the dividend policy. 

The dividend payments will occur on 

a quarterly basis for the full year 2009 

(see financial calendar). Dividends are 

announced in US$ and paid in US$ for 

shares listed on the New York Stock 

Exchange and paid in euros for shares 

listed on the European stock exchanges 

(Netherlands, France, Spain, Luxembourg 

and Belgium). 

ArcelorMittal is listed on the 

stock exchanges of New York, 

Amsterdam, Paris, Brussels 

and Luxembourg (MT) and on 

the Spanish stock exchanges of 

Barcelona, Bilbao, Madrid and 

Valencia (MTS). 

Investor Relations 

By implementing high standards 

of financial information disclosure 

and providing clear, regular, transparent 

and even-handed information to all 

its shareholders, ArcelorMittal aims 

to be the first choice for investors 

in the sector. 

To meet this objective and provide 

information to fit the needs of all parties, 

ArcelorMittal has decided to implement 

an active and broad communications policy: 

road shows with the financial community, 

conference calls, plant visits, meetings 

with retail and private investors, 

a virtual meeting and conference center 

on Second Life and a website featuring 

management comments on quarterly, 

half-year and full-year results. 

Private Investors 

ArcelorMittal’s senior management 

intends to meet private investors and 

shareholder associations in road shows 

throughout 2009. In order to improve 

the communication and debate with 

its private investors, ArcelorMittal has 

opened a virtual meeting and conference 

centre on Second Life. The ArcelorMittal 

virtual meeting and conference centre 

enables investors to have access to 

Group documentation, corporate videos, 

discuss in real time with company 

representatives or other shareholders 

present on the location or leave 

questions in the dedicated question box. 

This is also the optimal location to 

arrange interactive Group presentations 

and courses. A dedicated toll free 

number for private investors is available 

at 00800 4792 4792. Requests 

for information or meetings on 

the virtual meeting and conference 

centre may also be sent to: 

PrivateInvestors@arcelomittal.com

Analysts and Investors 

As the world’s leading steel company 

and major investment vehicle in the steel 

sector, ArcelorMittal constantly seeks 

to develop relationships with financial 

analysts and international investors. 

Depending on their geographical location, 

investors may use the following e-mails: 

InstitutionalsAmericas@arcelormittal.com 

InstitutionalsEurope@arcelormittal.com 

Socially Responsible Investors 

The Investor Relations team is also 

a privileged source of information for the 

growing Socially Responsible Investment 

community. The team organizes special 

events on ArcelorMittal’s Corporate 

Responsibility strategy and answers 

all requests for information sent 

to the Group (SRI@arcelormittal.com). 

Credit and Fixed Income Investors 

Credit, Fixed Income Investors and rating 

agency are followed by a dedicated 

team from Investor Relations 

(CreditFixedIncome@arcelormittal.com). 

ArcelorMittal share price performance since creation 

Base 100 at 1st August 2006 (US$) 

350 

300 

250 

200 

150 

100 

50 

0 

Financial Calendar 

ArcelorMittal 

HSBC Global Metals & Mining Index 

01/08/06 01/11/06 01/02/07 01/05/07 01/08/07 01/11/07 01/02/08 01/05/08 01/08/08 01/11/08 01/02/09 

Financial Results* 

April 29, 2009 Results for 1st quarter 2009 

July 29, 2009 Results for 2nd quarter 2009 and 6 months 2009 

October 28, 2009 Results for 3rd quarter 2009 and 9 months 2009 

* Earnings results are issued before the opening of the stock exchanges on which ArcelorMittal is listed 

Dividend payment 

March 16, 2009 1st quarterly payment of base dividend 

(interim dividend) 

June 15, 2009 2nd quarterly payment of base dividend** 

September 14, 2009 3rd quarterly payment of base dividend** 

December 14, 2009 

** Subject to shareholder approval 

4th quarterly payment of base dividend** 

Shareholder and investor meetings 

March 26 and 27, 2009 Plant tour with analysts and institutional investors 

May 12, 2009 Annual shareholder meeting in Luxembourg 

June 17, 2009 Individual investor event 

September 16, 2009 Investor day with Group Management Board members 

To subscribe to ArcelorMittal releases and results, please visit the subscription form section under 

‘Investors & Shareholders – Contacts’ on www.arcelormittal.com 

57 



“ We need world-class Leadership to propel 

us forward. We must be visionary thinkers, 

creating opportunities every day. We must maintain 

the entrepreneurial spirit that has brought us 

to the forefront of the steel industry. We must move 

beyond what the world expects of steel. “ 


58

Corporate Governance 

Board of Directors, Group Management 

Board and Management Committee 

ArcelorMittal is governed by a Board 

of Directors and a Group Management 

Board. The Group Management Board 

is assisted by a Management Committee. 


The Board of Directors is in charge 

of the overall management of ArcelorMittal. 

It is responsible for the performance 

of all acts of administration necessary 

or useful in furtherance of the corporate 

purpose of ArcelorMittal, except for 

matters expressly reserved by Luxembourg 

law or the Articles of Association to 

the general meeting of shareholders. 

The Articles of Association provide that 

the Board of Directors is composed of 

a minimum of three and a maximum 

of 18 members, all of whom, except 

the Chief Executive Officer, must be 

non-executive directors, and none of 

the members of the Board of Directors, 

except for the Chief Executive Officer, 

may hold an executive position or executive 

mandate within ArcelorMittal or any 

entity controlled by ArcelorMittal. 

At ArcelorMittal’s annual general 

meeting of shareholders on May 13, 

2008, Mr Joseph Kinsch stepped down 

as Chairman and Mr Lakshmi N Mittal 

became the new Chairman following 

a unanimous nomination by the Board 

of Directors. Mr Mittal also continues to 

hold his position as Chief Executive Officer. 

As of the date hereof, the Board of 

Directors is comprised of 15 non-executive 

directors, 12 of whom are independent, 

and one executive director. The Chief 

Executive Officer of ArcelorMittal is the 

sole executive director. 

The Articles of Association and the 

Memorandum of Understanding entered 

into among Mittal Steel NV, Arcelor 

SA and ArcelorMittal’s largest shareholder 

on June 25, 2006 (‘Memorandum 

of Understanding’ or ‘MoU’) both 

provide that at least half of the Board 

of Directors must be composed 

of independent members. Currently, 

12 of the 16 members of the Board 

of Directors are independent. A director 

is considered to be ‘independent’ if 

(a) he or she is independent within the 

meaning of the Listed Company Manual 

of the New York Stock Exchange, Inc., 

as it may be amended from time to time, 

or any successor provision, subject to 

the exemptions available for foreign private 

issuers, and (b) he or she is unaffiliated 

with any shareholder owning or controlling 

more than two percent of the total issued 

share capital of ArcelorMittal. For these 

purposes, a person is deemed affiliated 

to a shareholder if he or she is an executive 

officer, a director who also is an employee, 

a general partner, a managing member 

or a controlling shareholder of such 

shareholder. There is no requirement in the 

Articles of Association that directors be 

shareholders in the Company. 

The Memorandum of Understanding provides 

that until August 1, 2009, subject to the 

Significant shareholder1 owning or controlling 

at least 15% of the outstanding share 

capital of ArcelorMittal, the Significant 

shareholder will be entitled to elect to the 

Board of Directors a maximum of six directors, 

comprising three directors affiliated 

(directly or indirectly) with the Significant 

shareholder and three independent directors. 

The Articles of Association provide that 

the Significant shareholder will be entitled 

to a proportional right of representation on 

the Board of Directors after August 1, 2009. 

1 ‘ Significant shareholder’ refers to Mr Lakshmi N Mittal and his wife, Mrs Usha Mittal, who together 

own approximately 45.63% of ArcelorMittal’s outstanding voting equity as at December 31, 2008. 

60 

One of the elements in the 

Corporate Responsibility strategy 

is ‘transparent governance’, 

showing ArcelorMittal’s 

commitment to visible 

governance based on an 

understanding of business reality. 

This section provides a summary 

of the corporate governance 

practices of ArcelorMittal, 

including in particular the 

practices of its Board of Directors. 

As a general matter, the Articles 

of Association provide that directors 

are elected and removed by the general 

meeting of shareholders by a simple 

majority of votes cast. Except as described 

above, no shareholder has any specific 

rights to nominate, elect or remove 

directors. All directors are elected by 

the general meeting of shareholders for 

three-year terms, except in the event 

of the replacement of a member of the 

Board of Directors during his or her mandate. 

None of the members of the Board 

of Directors, including the executive 

director, have entered into service 

contracts with ArcelorMittal or any of 

its subsidiaries that provide for benefits 

upon the termination of their mandate. 

Operation of the Board of Directors 

The Board of Directors meets when 

convened by the Chairman of the Board 

or two members of the Board of Directors. 

In order for a meeting of the Board 

of Directors to be validly held, a majority 

of the directors must be present 

or represented, including at least the 

Chairman and a majority of the 

independent directors. The Chairman 

may decide not to participate in a Board 

of Directors meeting, provided he has 

given a proxy to one of the directors 

who will be present at the meeting. 

The previously existing role of ‘President’ 

of the Board of Directors was replaced 

by the role of ‘Lead Independent Director’ 

as a result of changes approved in 

April 2008 to the Memorandum of 

Understanding. Please see ‘Memorandum 

of Understanding and Initial Term’ below.

Each director has one vote and none 

of the directors, including the Chairman, 

has a casting vote. Decisions of the Board 

of Directors are made by a majority 

of the directors present and represented 

at a quorate meeting. 

The agenda of the meeting of the Board 

of Directors is agreed by the Chairman 

of the Board of Directors and the Lead 

Independent Director. 

Separate Meetings 

of Independent Directors 

The Lead Independent Director may 

schedule meetings of the independent 

members of the Board of Directors 

outside the presence of management 

and of the non-independent directors. 

There is no minimum number of such 

meetings that must be held per year, 

and no such meetings were held in 2008. 

Board of Directors Committees 

The Board of Directors has two 

committees: the Audit Committee 

and the Appointments, Remuneration 

and Corporate Governance Committee. 

Audit Committee 

The Articles of Association provide 

that the Audit Committee is composed 

solely of independent members of the 

Board of Directors. The MoU further 

provides that the Audit Committee must 

be composed of at least three members 

and that the applicable standard of 

independence is that defined in Rule 

10A-3 of the U.S. Securities Exchange 

Act of 1934. The members are 

appointed by the Board of Directors. 

The Audit Committee makes decisions 

by a simple majority with no member 

having a casting vote. 

The primary function of the Audit 

Committee is to assist the Board 

of Directors in fulfilling its oversight 

responsibilities by reviewing: 

• the financial reports and other financial 

information provided by ArcelorMittal 

to any governmental body or the public; 

• ArcelorMittal’s system of internal 

control regarding finance, accounting, 

legal compliance and ethics that 

the Board of Directors and members 

of management have established; and 

• ArcelorMittal’s auditing, accounting and 

financial reporting processes generally. 

The Audit Committee’s primary duties 

and responsibilities are to: 

• be an independent and objective 

party to monitor ArcelorMittal’s 

financial reporting process and 

internal controls system; 

• review and appraise the audit efforts 

of ArcelorMittal’s independent auditors 

and internal auditing department; 

• provide an open avenue of 

communication among the independent 

auditors, senior management, 

the internal audit department and 

the Board of Directors; 

• approve the appointment and fees 

of the independent auditors; and 

• monitor the independence of the 

independent auditors. 

The three members of the Audit 

Committee are Messrs Narayanan Vaghul, 

José Ramón Álvarez Rendueles and 

Wilbur L Ross, each of whom is an 

independent director under ArcelorMittal’s 

Corporate Governance guidelines 

and the NYSE standards. The Chairman 

of the Audit Committee is Mr Vaghul, 

who has significant experience and 

financial expertise. Mr Vaghul is the 

Chairman of ICICI Bank Ltd., a company 

that is listed on the NYSE and the Mumbai 

Stock Exchange. Mr Álvarez Rendueles, 

a former Governor of the Banco de España 

and former President of the Banco 

Zaragozano, also has significant experience 

and financial expertise. Mr Ross has been 

the Chairman of International Steel Group 

(ISG) since its creation, he is the Chairman 

of a number of international companies 

and is the Chairman and Chief Executive 

Officer of private equity firm WL Ross & Co. 

LLC. As such, he has acquired significant 

experience in the steel industry and in 

the management of international 

companies in various economic sectors. 

According to its charter, the Audit 

Committee is required to meet at least 

four times per year. During 2008, 

the Audit Committee met twelve times, 

seven of which were meetings held 

in person and five of which were held 

by teleconference. 

Appointments, Remuneration and 

Corporate Governance Committee 

The Appointments, Remuneration and 

Corporate Governance Committee 

is comprised of three directors, each 

of whom is an independent director 

under ArcelorMittal’s Corporate 

Governance guidelines and the NYSE 

standards. The members are 

appointed by the Board of Directors. 

The Appointments, Remuneration 

and Corporate Governance Committee 

makes decisions by a simple majority 

with no member having a casting vote. 

The Board of Directors has established 

the Appointments, Remuneration 

and Corporate Governance Committee to: 

• determine, on its behalf and 

on behalf of the shareholders 

within agreed terms of reference, 

ArcelorMittal’s remuneration 

and compensation framework, 

including stock options for the 

Chief Executive Officer, the Chief 

Financial Officer, the members 

of the Group Management 

Board and the members of 

the Management Committee; 

• consider any candidate for 

appointment or reappointment 

to the Board of Directors 

at the request of the Board 

of Directors and provide advice 

and recommendations to 

it regarding the same; 

• evaluate the functioning of the 

Board of Directors and monitor 

the Board of Directors’ 

self-assessment process; and 

• develop, monitor and review 

corporate governance principles 

applicable to ArcelorMittal. 


and Corporate Governance Committee’s 

principal criteria in determining 

the compensation of executives 

is to encourage and reward performance 

that will lead to long-term enhancement 

of shareholder value. 

The three members of the Appointments, 

Remuneration and Corporate 

Governance Committee are Messrs 

Lewis Kaden, Sergio Silva de Freitas 

and Jean-Pierre Hansen, each of whom 

is ‘independent’ under ArcelorMittal’s 

Corporate Governance guidelines 

and the NYSE standards. The Chairman 

of the Appointments, Remuneration 


is Mr Kaden. 



is required to meet at least twice 

a year. During 2008, this committee 

met six times. 

61 

Corporate Governance 


Corporate Governance continued 

Group Management Board 

The Group Management Board 

is entrusted with the day-to-day 

management of ArcelorMittal. Mr Lakshmi 

N Mittal, the Chief Executive Officer, 

is the Chairman of the Group Management 

Board. The members of the Group 

Management Board are appointed and 

dismissed by the Board of Directors. 

As the Group Management Board is not 

a corporate body created by Luxembourg 

law or ArcelorMittal’s Articles of 

Association, the Group Management Board 

may exercise only the authority granted 

to it by the Board of Directors. 

In establishing ArcelorMittal’s strategic 

direction and corporate policies, 

Mr Lakshmi N Mittal is supported 

by members of ArcelorMittal’s senior 

management, who have substantial 

professional and worldwide steel industry 

experience. Some of the members 

of ArcelorMittal’s senior management 

team are also members of the Group 

Management Board. 

Management Committee 

The Group Management Board is assisted 

by a Management Committee comprised 

of the members of the Group Management 

Board, 16 other senior executive officers, 

and one invitee to the Management 

Committee. The Management Committee 

discusses and prepares Group decisions 

on matters of Group-wide importance, 

integrates the geographical dimension 

of the Group, ensures in-depth discussions 

with ArcelorMittal’s operational and 

resources leaders, and shares information 

about the situation of the Group and 

its markets. 

1 As such term is defined in the introduction to the Board of Directors 

section of this Corporate Governance section. 

62 

Memorandum of Understanding 

and initial term 

On June 25, 2006, Mittal Steel, 

the ‘Significant shareholder’ 1 and Arcelor 

signed a binding Memorandum of 

Understanding based on which Arcelor’s 

Board of Directors recommended Mittal 

Steel’s offer for Arcelor and the parties 

agreed to certain corporate governance 

matters relating to the Arcelor-Mittal 

combined Group. Certain provisions 

of the MoU relating to corporate 

governance were incorporated into the 

Articles of Association of ArcelorMittal 

at the extraordinary general meeting 

of shareholders on November 5, 2007. 

In April 2008, the Board of Directors 

completed a review of certain 

provisions of the MoU to adapt 

it to the Company’s needs in the 

post-merger and post-integration phase. 

In particular, the Board decided to 

create the role of Lead Independent 

Director. The Lead Independent Director 

replaces the ‘President’ of the Board 

of Directors created by the MoU and 

his/her function is to: 

• co-ordinate the activities of 

the independent directors; 

• liaise between the Chairman 

of the Board of Directors and the 

independent directors; 

• call meetings of the independent 

directors when necessary and 

appropriate; and 

• perform such other duties as may 

be assigned to him or her by the 

Board from time to time. 

Mr Lewis B Kaden was elected by 

the Board of Directors as ArcelorMittal’s 

first Lead Independent Director 

in April 2008. 

Furthermore, the Board of Directors 

decided to remove references in the MoU 

to the size of the Board of Directors 

and the distinction between former 

Arcelor and Mittal directors. Finally, 

the Board of Directors decided that the 

Audit Committee and the Appointments, 

Remuneration and Corporate Governance 

Committee will each be composed of 

a minimum of three independent directors. 

In accordance with the Memorandum 

of Understanding, until August 1, 2009, 

with respect to Board of Directors’ decisions 

that require shareholders approval, 

the Significant shareholder will vote 

in accordance with the position expressed 

by the Board of Directors, unless the 

Significant shareholder opposes any such 

position, in which case the Significant 

shareholder can vote as it wishes subject 

to the following requirements. Until August 1, 

2009, if Mr Lakshmi N Mittal opposes 

any decision of the Board of Directors 

on a matter that does not require shareholder 

approval and that was not proposed by 

him, he will have the right to request 

that such action first be approved by 

a shareholders’ meeting and the Significant 

shareholder will have the right to vote at 

such meeting as it sees fit. The Board 

of Directors will not approve any action 

rejected by the shareholders’ meeting. 

The Memorandum of Understanding 

further provides that until August 1, 2009, 

subject to the Significant shareholder 

owning or controlling at least 15% of the 

outstanding share capital of ArcelorMittal, 

the Significant shareholder is entitled 

to elect to the Board of Directors a maximum 

of six directors comprised of three 

directors affiliated (directly or indirectly) 

with the Significant shareholder and three 

independent directors. Thereafter, 

the Significant shareholder will be entitled 

to representation on the Board of 

Directors in proportion to its shareholding 

in ArcelorMittal.

Upon expiration of a three-year 

transitional period (referred to as the 

Initial Term) on August 1, 2009, 

ArcelorMittal’s corporate governance 

rules described above will be revised 

to reflect, subject to certain provisions 

of the MoU incorporated into the 

Articles of Association, the best standards 

of corporate governance for comparable 

companies and to conform with the 

corporate governance aspects of the 

NYSE listing standards applicable to 

non-U.S. companies and the Luxembourg 

Stock Exchange code of governance. 

Other corporate governance practices 

ArcelorMittal is committed to adopt 

best practice standards in terms 

of corporate governance in its dealings 

with shareholders and aims to ensure 

good corporate governance by applying 

rules on transparency, quality of reporting 

and the balance of powers. ArcelorMittal 

continually monitors U.S., European Union 

and Luxembourg legal requirements 

and best practices in order to make 

adjustments to its corporate governance 

controls and procedures when necessary. 

Ethics and Conflicts of Interest 

Ethics and conflicts of interest 

are governed by ArcelorMittal’s Code 

of Business Conduct, which establishes 

the standards for ethical behavior that 

are to be followed by all employees 

and directors of ArcelorMittal in the 

exercise of their duties. They must always 

act in the best interests of ArcelorMittal 

and must avoid any situation in which 

their personal interests conflict, or could 

conflict, with their obligations to 

ArcelorMittal. As employees, they may 

not acquire any financial or other interest 

in any business or participate in any activity 

that could deprive ArcelorMittal of the 

time or the attention needed to devote 

to the performance of their duties. 

Any behavior that deviates from the 

Code of Business Conduct is to be reported 

to the employee’s supervisor, a member 

of management, the head of the 

legal department or the head of the internal 

audit/internal assurance department. 

Code of Business Conduct training 

is offered throughout ArcelorMittal. 

All new employees of ArcelorMittal must 

acknowledge the Code of Business 

Conduct in writing upon joining and are 

periodically trained about the Code 

of Business Conduct in each location 

where ArcelorMittal has operations. 

The Code of Business Conduct is available 

in the ‘Corporate Governance – Code of 

Business Conduct’ section of ArcelorMittal’s 

website at www.arcelormittal.com. 

Process for Handling Complaints 

on Accounting Matters 

As part of the procedures of the Board 

of Directors for handling complaints 

or concerns about accounting, internal 

controls and auditing issues, ArcelorMittal’s 

Code of Business Conduct encourages 

all employees to bring such issues 

to the Audit Committee’s attention on 

a confidential basis. In accordance with 

ArcelorMittal’s Whistleblower Policy, 

concerns with regard to possible 

irregularities in accounting, auditing 

or banking matters or bribery within 

ArcelorMittal or any of its subsidiaries 

or other controlled entities may 

also be communicated through the 

‘Corporate Governance – Whistleblower’ 

section of the ArcelorMittal website 

at www.arcelormittal.com, where 

ArcelorMittal’s Whistleblower Policy 

is also available. 

During 2008, employees reported 

184 total complaints, of which 32 were 

deemed significant complaints by the 

Internal Assurance team. 

Internal Assurance 

ArcelorMittal has an Internal Assurance 

function that, through its Head 

of Internal Assurance, reports to the 

Audit Committee. The function is staffed 

by full-time professional staff located 

within each of the principal operating 

subsidiaries and at the corporate level. 

Recommendations and matters relating 

to internal control and processes are made 

by the Internal Assurance function 

and their implementation is regularly 

reviewed by the Audit Committee. 

Independent Auditors 

The appointment and determination 

of fees of the independent auditors 

is the direct responsibility of the Audit 

Committee. The Audit Committee is further 

responsible for obtaining, at least once 

each year, a written statement from 

the independent auditors that their 

independence has not been impaired. 

The Audit Committee has also obtained 

a confirmation from ArcelorMittal’s principal 

independent auditors to the effect 

that none of its former employees are 

in a position within ArcelorMittal that may 

impair the principal auditors’ independence. 

Measures to Prevent Insider Dealing 

and Market Manipulation 

The Board of Directors of ArcelorMittal 

has adopted Insider Dealing Regulations 

(‘IDR’), which are updated when 

necessary and in relation to which training 

is conducted throughout the Group. 

The most recent version of the IDR 

is available on ArcelorMittal’s website, 

www.arcelormittal.com, under ‘Investors 

& Shareholders – Corporate Governance 

– Insider Dealing Regulations’. 

The IDR apply to the worldwide 

operations of ArcelorMittal. The Company 

Secretary of ArcelorMittal is the IDR 

compliance officer and answers questions 

that members of senior management, 

the Board of Directors, or employees may 

have about the IDR’s interpretation. 

The IDR compliance officer may also assist 

senior executives and directors with 

the filing of notices required by Luxembourg 

law to be filed with the Luxembourg 

financial regulator, the CSSF (Commission 

de Surveillance du Secteur Financier). 

Furthermore, the IDR compliance officer 

has the power to conduct investigations 

in connection with the application 

and enforcement of the IDR, in which 

any employee or member of senior 

management or of the Board of Directors 

is required to cooperate. 

Selected new employees of ArcelorMittal 

are required to participate in a training 

course about the IDR upon joining 

ArcelorMittal and every three years 

thereafter. The individuals who must 

participate in the IDR training include 

the members of senior management, 

employees who work in finance, legal, 

sales, mergers and acquisitions and other 

areas that the Company may determine 

from time to time. In addition, 

ArcelorMittal’s Code of Business 

Conduct contains a section on ‘Trading 

in the Securities of the Company’ 

that emphasizes the prohibition to trade 

on the basis of inside information. 

63 




Compensation 

Compensation information 

The total annual compensation of the members of ArcelorMittal’s Board of Directors paid in 2007 and 2008 was as follows: 

Year ended Year ended 

31 December 31 December 

2007 2008 

(Amounts in $ thousands except option information) 

Base salary and/or directors fees 4,334 5,569 

Short-term performance-related bonus 2,181 2,200 

Long-term incentives (number of options) 60,000 60,000 

The annual compensation paid to the members of ArcelorMittal’s Board of Directors for services in all capacities 

in 2007 and 2008 was as follows: 

2007 1 2008 2007 2008 2007 2008 

Short-term Short-term Long-term Long-term 

Performance Performance Number Number 

Related Related of Options of Options 

(Amounts in $ thousands except option information) 

Lakshmi N Mittal 2,001 1,916 2,181 2,200 60,000 60,000 

Vanisha Mittal Bhatia — 199 — — — — 

Narayanan Vaghul — 240 — — — — 

Malay Mukherjee 2 — — — — — — 

Wilbur L Ross, Jr — 224 — — — — 

Lewis B Kaden — 221 — — — — 

François Pinault — 176 — — — — 

Joseph Kinsch 3 338 368 — — — — 

José Ramón Álvarez Rendueles 297 227 — — — — 

Sergio Silva de Freitas 181 206 — — — — 

Georges Schmit 197 196 — — — — 

Edmond Pachura 4 213 227 — — — — 

Michel Angel Marti 180 199 — — — — 

Manuel Fernández López 5 163 187 — — — — 

Jean-Pierre Hansen 200 199 — — — — 

John Castegnaro 180 199 — — — — 

Antoine Spillmann 6 163 196 — — — — 

HRH Prince Guillaume de Luxembourg 184 199 — — — — 

Romain Zaleski 7 37 190 — — — — 

Ignacio Fernández Toxo 8 — — — — — — 

Total 4,334 5,569 2,181 2,200 60,000 60,000 

1 The compensation that was paid in 2007 to the former Arcelor Board Members was 

for their services to Arcelor in 2006. No compensation was paid to the former Mittal 

Steel Board Members on the ArcelorMittal Board in 2007. Compensation with respect 

to 2007 was paid after shareholder approval at the AGM held on May 13, 2008. 

Attendance fees for 2007 amounting to approximately $0.4 million were paid in February 

2008 and are included in the 2008 column above. Compensation with respect 

to 2008 will be paid after shareholder approval at the AGM held on May 12, 2009. 

Attendance fees for 2008 amounting to approximately $0.4 million were paid 

in January 2009 and are not included in the 2008 column above. 

2 Mr Mukherjee was elected to ArcelorMittal’s Board of Directors on May 13, 2008, 

prior to which he was a Member of the Group Management Board, responsible for Asia, 

Africa, Mining and CIS. Mr Mukherjee was compensated as a member of senior management 

in 2007 and in 2008 until his appointment to the Board, and as a Director since then. 

The table above relates solely to compensation received by Mr Mukherjee while a Director. 

Compensation received by Mr Mukherjee in 2008 prior to becoming a Director is included 

in the aggregate amount disclosed below for senior management. 

64 

3 The mandate of Mr Kinsch ended on May 13, 2008. 

4 The mandate of Mr Pachura ended on May 13, 2008. 

5 Mr Fernández López resigned on May 13, 2008. 

6 Mr Spillmann was elected to ArcelorMittal’s Board of Directors on May 13, 

2008, replacing Corporación JMAC. Mr Spillmann had been the representative 

of Corporación JMAC on the Board before May 13, 2008. Compensation 

received by Mr Spillmann both as a representative of Corporación JMAC 

and as a Director in his own right is included in this table. 

7 Mr Zaleski resigned on March 5, 2008. 

8 Mr Fernández Toxo was elected to ArcelorMittal’s Board of Directors 

on May 13, 2008.

On February 10, 2009 the Board 

of Directors decided that it would propose 

to the next annual general meeting 

of shareholders to reduce the annual 

remuneration of board members 

(including the Chairman and Chief 

Executive Officer) by 15% as compared 

to the previous year as an additional 

measure to address the current situation 

in the steel industry and to show leadership 

and solidarity with the Company’s 

employees affected by redundancies 

and temporary lay-offs. 

Granted Granted Granted Granted Granted Granted Granted Total Weighted 

in 1999 in 2000 in 2002 in 2005 in 2006 in 2007 in 2008 Average 

Exercise 

Price 

Lakshmi N Mittal 80,000 80,000 80,000 100,000 100,000 60,000 60,000 560,000 $30.15 

Vanisha Mittal Bhatia — — — — — — — — — 

Narayanan Vaghul — — — — — — — — — 

Malay Mukherjee 1 — — — — — — — — — 

Wilbur L Ross — — — — — — — — — 

Lewis B Kaden — — — — — — — — — 

François Pinault — — — — — — — — — 

Joseph Kinsch 2 — — — — — — — — — 

José Ramón Álvarez Rendueles — — — — — — — — — 

Sergio Silva de Freitas — — — — — — — — — 

Georges Schmit — — — — — — — — — 

Edmond Pachura 3 — — — — — — — — — 

Michel Angel Marti — — — — — — — — — 

Manuel Fernández López 4 — — — — — — — — — 

Jean-Pierre Hansen — — — — — — — — — 

John Castegnaro — — — — — — — — — 

Antoine Spillmann 5 — — — — — — — — — 

HRH Prince Guillaume de Luxembourg — — — — — — — — — 

Romain Zaleski 6 — — — — — — — — — 

Ignacio Fernández Toxo 7 — — — — — — — — — 

Total 80,000 80,000 80,000 100,000 100,000 60,000 60,000 560,000 — 

Exercise price $11.94 $8.57 $2.26 $28.75 $33.755 $64.30 $82.57 — $30.15 

Term (in years) 10 10 10 10 10 10 10 — — 

Expiration date September 14, June 1, April 5, August 23, September 1, August 2, August 5, — — 

2009 2010 2012 2015 2016 2017 2018 

1 Mr Mukherjee was elected to ArcelorMittal’s Board of Directors on May 13, 

2008, prior to which point he was a Member of the Group Management Board, 

responsible for Asia, Africa, Mining and CIS. Mr Mukherjee was compensated 

as a member of senior management in 2007 and in 2008 until his 

appointment to the Board on May 13, 2008, and as a Director since then. 

Options granted before this date are not included in this table but are included 

in the table with respect to outstanding share options held by senior management. 

2 The mandate of Mr Kinsch ended on May 13, 2008. 

3 The mandate of Mr Pachura ended on May 13, 2008. 

4 Mr Fernández López resigned on May 13, 2008. 

5 Mr Spillmann was elected to ArcelorMittal’s Board of Directors on May 13, 

2008, replacing Corporación JMAC. Mr Spillmann had been the representative 

of Corporación JMAC on the Board before May 13, 2008. 

6 Mr Zaleski resigned on March 5, 2008. 

7 Mr Fernández Toxo was elected to ArcelorMittal’s Board of Directors on May 13, 2008. 

As of December 31, 2007 and 2008, 

ArcelorMittal did not have outstanding 

any loans or advances to members of 

its Board of Directors, and, as of December 

31, 2008, ArcelorMittal had not given 

any guarantees for the benefit of any 

member of its Board of Directors. 

The following table provides a summary 

of the options outstanding and the exercise 

of the options granted to ArcelorMittal’s 

Board of Directors (in 2001, 2003 

and 2004, no options were granted 

to members of ArcelorMittal’s Board 

of Directors): 

65 




The total compensation paid in 2008 

to members of ArcelorMittal’s senior 

management was $20.5 million in base 

salary (including various allowances 

paid in cash) and $21 million in short-term 

performance-related bonuses. As of 

December 31, 2008, approximately 

$1.2 million was accrued by ArcelorMittal 

to provide pension benefits to its 

senior management. 

In connection with the Board of Directors’ 

decision in February 2009 to reduce 

its compensation in light of conditions 

in the steel market, Group Management 

Board members similarly voluntarily decided 

to reduce their salary by 12%, and the 

members of the Management Committee 

voluntarily decided to reduce their salary 

by 10%, as compared to the previous year. 

During 2008, no loans or advances to 

ArcelorMittal’s senior management were 

outstanding. As of December 31, 2007, 

no loan was outstanding. 

Executive compensation policy 

Philosophy 

The ArcelorMittal Compensation 

Policy for executives is based on the 

following principles: 

• Provide a total compensation competitive 

with executive compensation levels 

of industrial companies of a similar 

size and scope; 

• Promote internal equity and 

market median base pay levels 

for our executives, combined with 

‘pay for performance’; 

• Motivate managers towards 

the achievement of Group-wide 

and personal goals, including 

efficiency and growth; and 

• Retain individuals who consistently 

perform at expected levels 

and contribute to the success 

of the organization. 

66 

Governance Principles 



of ArcelorMittal reviews and recommends 

proposals annually for the Board 

of Directors on ArcelorMittal’s executive 

compensation. The Committee also 

prepares proposals on the fees to 

be paid annually to the members of the 

Board of Directors. Such proposals relating 

to executive compensation comprise 

the following elements: 

• Fixed annual salary, 

• Short-term incentives, e.g., 

performance-related bonus, and 

• Long-term incentives, e.g., stock options, 

and apply to the group of senior 

executives, i.e. 

• the Chief Executive Officer, 

• the members of the Group 

Management Board, and 

• the members of the Management 

Committee. 

Decisions on short and long-term 

incentive plans may apply to a larger 

group of employees. The Appointments, 

Remuneration and Corporate Governance 

Committee receives updates about 

the application of these plans on 

a regular basis. 

Fixed Annual Salary 

The size of the fixed annual salary 

is targeted to the median salary level 

of the peer group of companies, 

i.e. industrial companies of a similar size 

and scope. The base salary levels 

are reviewed annually to ensure that 

ArcelorMittal remains competitive. 

Short-term Incentives: 

Performance-related Bonus 

A discretionary bonus plan is in place 

at ArcelorMittal. The performance 

of the ArcelorMittal Group as a whole, 

the performance of the relevant 

business units, the achievement 

of specific objectives and the individual’s 

overall performance and potential 

determine the outcome of the bonus 

calculation. This bonus plan, called 

the Global Performance Bonus Plan, 

is applicable to more than 2,000 

executives and managers worldwide. 

The bonus is calculated as a percentage 

of the individual’s base salary. Different 

percentage ranges are used depending 

on the hierarchical level of the individual. 

Performance-related bonuses are paid 

only if certain minimum performance 

thresholds are exceeded by the 

ArcelorMittal Group as a whole and/or 

the relevant business segment. 

Long-term Incentives: Stock Options 

The Chief Executive Officer, 

the Group Management Board members 

and the Management Committee 

members benefit from the Global Stock 

Option Plan. This plan also applies to 

a larger group of employees. The overall 

cap on options available for grants during 

a year is approved by the shareholders 

at the annual general meeting. The stock 

option plan is detailed in Note 17 

of the Consolidated Financial Statements. 

Other Benefits 

In addition to the main compensation 

elements described above, other 

benefits may be provided to executives, 

such as company cars and contributions 

to pension plans and insurance policies.

Share Ownership 

As of December 31, 2008, the aggregate 

beneficial share ownership of ArcelorMittal 

directors and senior management 

(37 individuals) totaled 1,610,922 

ArcelorMittal shares (excluding shares 

owned by ArcelorMittal’s Significant 

shareholder and including options to acquire 

596,453 ArcelorMittal common shares 

that are exercisable within 60 days 

of December 31, 2008), representing 

0.11% of the total issued share capital 

of ArcelorMittal. Excluding options 

to acquire ArcelorMittal common shares, 

these 37 individuals beneficially own 

1,014,469 ArcelorMittal common shares. 

Other than the Significant shareholder, 

each director and member of senior 

management beneficially owns less 

than 1% of ArcelorMittal’s shares. 

The percentage of total common shares 

in the possession of the Significant 

shareholder (including treasury stock) 

decreased from 44.79% prior to November 

13, 2007 to 43.05% after that date 

as a result of the second step of the merger 

of Mittal Steel and Arcelor. In 2006, 

the number of Mittal Steel options granted 

to its directors and senior management 

(including the Significant shareholder) 

was 388,541 at an exercise price 

of $33.755, and the number of Arcelor 

options granted to its directors and senior 

management was 312,146 at an exercise 

price of €34.43. In 2007, the number 

of ArcelorMittal (or Mittal Steel) 

options granted to directors and 

then-senior management (including the 

Significant shareholder) was 695,001 

at an exercise price of $64.30. 

In 2008, the number of ArcelorMittal 

options granted to directors and 

then-senior management (including the 

Significant shareholder) was 740,500 

at an exercise price of $82.57. 

The Mittal Steel and ArcelorMittal options 

vest either ratably upon each of the 

first three anniversaries of the grant 

date (or in total upon the death, 

disability or retirement of the grantee) 

and expire ten years after the grant date. 

The following table summarizes 

outstanding share options, as of December 

31, 2008, granted to the members 

of senior management of ArcelorMittal 

(or its predecessor company Mittal Steel, 

depending on the year): 

Year of Year of Year of Year of Year of Year of Year of Total** Average 

Grant Grant Grant Grant Grant Grant Grant weighted 

1999* 2000* 2002* 2005* 2006* 2007* 2008* exercise 

price** 

Senior Managers*** (including 87,500 87,500 105,000 275,348 388,541 695,001 740,500 2,474,390 — 

the Significant shareholder) 

Exercise price $ 11.94 $ 8.57 $ 2.26 $ 28.75 $ 33.76 $ 64.30 $ 82.57 — $ 62.74 

Term (in years) 10 10 10 10 10 10 10 — — 

Expiration date September 14, June 1, April 5, August 23, September 1, August 2, August 5, — — 

2009 2010 2012 2015 2016 2017 2018 

* Options awarded under ArcelorMittalShares. 

** The options granted by Arcelor (noted above) have been included in the total 

number of options and the average weighted exercise price 

(at a conversion rate of €1 = $1.3705). 

*** Includes options granted to Mr Mukherjee, all of which were received in his capacity 

as a member of senior management. Mr Mukherjee was elected to ArcelorMittal’s 

Board of Directors on May 13, 2008, prior to which point he was a Member 

of the Group Management Board, responsible for Asia, Africa, Mining and CIS. 

In 2001, 2003 and 2004, no options 

were granted to members of Mittal 

Steel’s senior management. 

In accordance with the Luxembourg 

Stock Exchange’s Ten Principles 

of Corporate Governance, independent 

non-executive members 

of ArcelorMittal’s Board of Directors 

do not receive share options. 

67 

Share Ownership 


Share Capital and Voting Rights 


Common Shares 1 

Number % 

Significant shareholder 2 623,751,667 43.05 

Treasury Stock 3 81,760,949 5.64 

Other Public Shareholders 743,317,731 51.31 

Total 1,448,826,347 100.00 

Directors and Senior Management 4 5 1,610,922 0.11 

1 For purposes of this table, a person or group of persons is deemed to have beneficial ownership of any ArcelorMittal 

common shares as of a given date on which such person or group of persons has the right to acquire such shares within 

60 days after December 31, 2008 upon exercise of vested portions of stock options. The first-third of the stock 

options granted on August 2, 2007 and the first- and second-thirds of the stock options granted on September 

1, 2006 vested on August 2, 2008, and September 1, 2008, respectively, and all stock options of the previous grants 

have vested. None of the stock options granted on August 5, 2008 has vested; the first-third of such options, 

however, will vest on August 5, 2009. 

2 Mr Lakshmi Mittal and his wife, Mrs Usha Mittal, have direct ownership of ArcelorMittal common shares and indirect 

ownership of holding companies that own ArcelorMittal common shares. Ispat International Investments S.L. is the owner 

of 98,250,000 ArcelorMittal common shares. Mittal Investments S.à r.l., a limited liability company organized under 

the laws of Luxembourg, is the owner of 525,000,000 ArcelorMittal common shares. Mr Mittal is the direct owner 

of 30,000 ArcelorMittal common shares and holds options to acquire an additional 560,000 ArcelorMittal common shares, 

of which 426,667 are, for the purposes of this table, deemed to be beneficially owned by Mr Mittal due to the fact that 

those options are exercisable within 60 days. Mrs Mittal is the direct owner of 5,000 ArcelorMittal common shares and holds 

options to acquire an additional 40,000 ArcelorMittal common shares, of which all 40,000 options are, for the purposes 

of this table, deemed to be beneficially owned by Mrs Mittal due to the fact that those options are exercisable within 60 days. 

Mr Mittal and Mrs Mittal share equally beneficial ownership of 100% of Ispat International Investments S.L. and share 

equally beneficial ownership of 100% of Mittal Investments S.à.r.l. Accordingly, Mr Mittal is the beneficial owner 

of 623,706,667 ArcelorMittal common shares and Mrs Mittal is the beneficial owner of 623,295,000 common shares. 

Excluding options, Mr Lakshmi Mittal and Mrs Usha Mittal together, directly and indirectly through intermediate holding 

companies, own 623,285,000 ArcelorMittal common shares. 

3 Represents ArcelorMittal common shares repurchased by ArcelorMittal pursuant to share repurchase programs. 

Consisting of 27,375,557 ArcelorMittal common shares purchased between November 13, 2007 and December 31, 

2007; 56,523,212 ArcelorMittal common shares purchased between December 31, 2007 and December 31, 2008; 

and excluding (1) 119,856 options that were exercised during the November 13, 2007—December 31, 2007 period 

and 954,844 options that were exercised during the December 31, 2007—December 31, 2008 period; (2) 596,453 

stock options that can be exercised by directors and senior management (other than the Significant shareholder); 

and (3) 466,667 stock options that can be exercised by the Significant shareholder, in each case within 60 days of 

December 31, 2008. The ArcelorMittal common shares are, for the purposes of this table, deemed to be beneficially 

owned by the stock options holders due to the fact that those options are exercisable within 60 days. 

4 Excludes shares beneficially owned by the Significant shareholder. 

5 These 1,610,922 ArcelorMittal common shares are included in shares owned by the public shareholders 

indicated above. 

68 

As of December 31, 2008, the authorized 

share capital of ArcelorMittal consisted 

of 1,617,000,000 common shares without 

nominal value. At December 31, 2008 

and 2007, 1,448,826,347 common 

shares were issued and at December 31, 

2008, 1,366,002,278 common 

shares, compared to 1,421,570,646 

common shares at December 31, 2007, 

were outstanding, the difference consisting 

in common shares held in treasury 

by ArcelorMittal. 

The preceding table sets forth information 

as of December 31, 2008 with respect 

to the beneficial ownership of ArcelorMittal 

common shares by each person who is 

known to be the beneficial owner of more 

than 5% of the shares and all directors 

and senior management as a group. 

The ArcelorMittal common shares may 

be held in registered form only. Registered 

shares may consist of (i) shares traded 

on the NYSE, or New York Shares, which are 

registered in a register kept by or on behalf 

of ArcelorMittal by its New York transfer 

agent, or (ii) shares traded on Euronext 

Amsterdam by NYSE Euronext, Euronext 

Brussels by NYSE Euronext, Euronext Paris 

by NYSE Euronext, the regulated market 

of the Luxembourg Stock Exchange and the 

Spanish Stock Exchanges (Madrid, Bilbao, 

Valencia and Barcelona), which are 

registered in ArcelorMittal’s shareholders’ 

register, or ArcelorMittal European Register 

Shares, which are registered in a local 

shareholder register kept by or on behalf 

of ArcelorMittal by Royal Bank of Scotland, 

or directly on ArcelorMittal’s Luxembourg 

shareholder register without being held 

on ArcelorMittal’s local Dutch shareholder 

register. Under Luxembourg law, the 

ownership of registered shares is evidenced 

by the inscription of the name of the 

shareholder, the number of shares held 

by such shareholder and the amount paid 

up on each share in the shareholder register 

of ArcelorMittal.

At December 31, 2008, there were 

3,028 shareholders other than the Significant 

shareholder holding an aggregate of 

53,550,631 ArcelorMittal common shares 

registered in ArcelorMittal’s shareholder register, 

representing approximately 3% of the common 

shares issued (including treasury shares). 


133 U.S. shareholders holding an aggregate 

of 46,060,462 New York Shares, representing 

approximately 3.17% of the common shares 

issued (including treasury shares). ArcelorMittal’s 

knowledge of the number of New York Shares 

held by U.S. holders is based solely on the 

records of its New York transfer agent regarding 

registered ArcelorMittal common shares. 


723,506,498 ArcelorMittal common shares 

being held through the Euroclear/Iberclear 

clearing system in The Netherlands, France, 

Luxembourg and Spain. 

As of December 31, 2008, ArcelorMittal’s 

Significant shareholder owned directly 

and indirectly through holding companies 

623,285,000 ArcelorMittal common shares, 

representing approximately 45.67% of the 

combined voting interest in ArcelorMittal. 

In the merger between ArcelorMittal and Arcelor, 

31,619,094 ArcelorMittal shares were issued 

on November 13, 2007. After closing of the 

third offer period for Arcelor shares on 

November 17, 2006, a total of 679,416,607 

shares had been issued to the shareholders 

of Arcelor since July 31, 2006, as partial 

payment for Arcelor (the other part was paid 

in cash). Prior to closing of the third offer period 

for Arcelor shares on November 17, 2006, 

Mittal Steel’s Significant shareholder owned 

directly and indirectly through holding companies 

165,794,790 Mittal Steel class A common 

shares (approximately 67% of the issued and 

outstanding class (except for class A common 

shares held in treasury)) and 457,490,210 

Mittal Steel class B common shares (100% of 

the issued and outstanding class), representing 

approximately 98% of the combined voting 

interest in Mittal Steel. Upon completion 

of the merger with ISG on April 15, 2005, 

60,891,883 shares were issued to the former 

shareholders of ISG as partial payment 

for ISG (the other part was paid in cash). 

Prior to the merger with ISG, Mittal Steel’s 

Significant shareholder owned directly and 

indirectly through holding companies 

165,794,790 Mittal Steel class A common 

shares (approximately 89.5% of the issued 

and outstanding class (except for class A 

common shares held in treasury)) and 

457,490,210 Mittal Steel class B common 

shares (100% of the issued and outstanding 

class), representing approximately 99.6% 

of the combined voting interest in Mittal Steel. 

On completion of the acquisition of LNM 

Holdings on December 17, 2004, 139,659,790 

Mittal Steel class A common shares and 

385,340,210 Mittal Steel class B common 

shares were issued to an intermediate holding 

company owned by the Significant shareholder. 

Prior to the completion of the acquisition 

of LNM Holdings, the Significant shareholder 

owned 26,135,000 Mittal Steel class A 

common shares (approximately 57.5% of the 

then issued and outstanding class 

(save for class A common shares held in 

treasury)) and 72,150,000 Mittal Steel class B 

common shares (100% of the then issued 

and outstanding class), representing 

approximately 97.5% of the combined voting 

interest in Mittal Steel. 

Share buy-back program 

In 2008, ArcelorMittal implemented two 

types of share buy-backs: Dividend policy 

share buy-backs and specific supplementary 

share buy-backs. 

ArcelorMittal’s general meeting of shareholders 

held on May 13, 2008 authorized share 

buy-backs for a period of 18 months. 

The maximum number of shares that may be 

acquired is the maximum allowed by the 

Luxembourg law on commercial companies 

(the ‘Law’) in such a manner that the accounting 

par value of the Company’s shares held by the 

Company (or other Group companies) does 

not exceed 10% of its subscribed share capital. 

Dividend Policy Share Buy-backs 

The policy of ArcelorMittal aims to return 

30% of ArcelorMittal’s prior year’s annual net 

income to shareholders every year through an 

annual base dividend supplemented by share 

buy-backs. ArcelorMittal confirmed on February 

22, 2008 that, with the acquisition of 25 million 

shares from Carlo Tassara International S.A. 

announced on February 20, 2008, it completed 

its $1 billion share buy-back program announced 

in November 2007 and on February 13, 2008, 

which was part of its policy to return 30% 

of the previous year’s net income to 

shareholders, together with the Company’s 

2008 base cash dividend of $1.50. Out of the 

25 million shares purchased at a price of 

€46.6 ($68.70) per share, 14.6 million have 

been purchased under the $1 billion share 

buy-back program and 10.4 million under the 

44 million shares buy-back program which 

started on December 18, 2007 and is to be 

completed over two years. 

On March 17, 2008, June 16, 2008, 

September 15, 2008 and December 15, 

2008, an interim dividend of $0.375 cents 

per share was paid. 

Considering the exceptional global economic 

conditions since September 2008, share 

buy-backs were suspended after September 5, 

2008 and on February 10, 2009, ArcelorMittal’s 

Board of Directors recommended reducing the 

annual dividend in 2009 to $0.75 per share 

(with quarterly dividend payments of $0.1875), 

subject to the approval of the annual general 

meeting of shareholders on May 12, 2009. 

The new quarterly dividend payments would 

take place on March 16, 2009 (an interim 

dividend), June 15, 2009, September 14, 2009 

and December 14, 2009. The Company has 

suspended its previously announced policy 

to return 30% of net income to shareholders 

through an annual base dividend supplemented 

by share buy-backs. Once market conditions 

have normalized, the Board intends to review 

the Company’s policy. 

Supplementary Share Buy-backs 

On December 12 and 18, 2007, ArcelorMittal 

announced a share buy-back program for up 

to a maximum of 44 million shares. This share 

buy-back program is aimed at offsetting 

the issuance of 44 million ArcelorMittal shares 

that took place in connection with the 

ArcelorMittal merger on November 13, 2007. 

This program started on December 18, 2007 

and is to be realized in a 2-year time frame. 

The shareholders’ meeting on May 13, 2008 

authorized the use of the repurchased shares 

for any purpose permitted by Luxembourg law, 

including future corporate opportunities, 

allocation to employees, or cancellation. 

Under this program, ArcelorMittal had, 

as of the close of business on January 31, 

2009, repurchased a total of 43.9 million 

shares, leaving 100,000 shares for repurchasing 

under this program. 

ArcelorMittal held, indirectly and directly, 

approximately 82.8 million shares in treasury 

as at December 31, 2008. This is equivalent 

to approximately 5.72% of the total issued 

number of ArcelorMittal shares at that date. 

Additional Information 

about ArcelorMittal 

ArcelorMittal, incorporated under the 

laws of Luxembourg, is the parent company 

of the ArcelorMittal Group and is expected 

to continue this role over the coming 

years. The Company has no branch 

offices. ArcelorMittal generated a profit 

of $19,094 million in 2008, primarily 

from revenues from its holdings including 

a gain of $18,525 million following 

a legal restructuring of its investments 

in affiliated undertakings mainly 

in Luxembourg and Belgium. 

On January 8, 2008, the Company 

received a writ of summons on behalf 

of four of its hedge fund shareholders 

to appear before the civil court of 

Luxembourg. The summons was also 

served on all natural persons sitting on 

the Board of Directors of the Company 

at the time of the merger and on the 

Significant shareholder. The claimants 

request, among other things (1) 

the cancellation and the amendment 

of the corporate decisions relating to 

the second-step merger in order to reflect 

an exchange ratio of 11 ArcelorMittal 

(the entity resulting from the first step 

merger) shares for seven Arcelor shares 

(ignoring the impact of the share capital 

restructuring of Arcelor) accompanied 

by the allocation by the Significant 

shareholder or the Company of additional 

shares to the claimants to reflect 

this revised ratio, and alternatively, 

(2) the payment of damages by the 

defendants (jointly and severally 

or severally, at the court’s discretion), 

in an amount of EUR 180 million. 

ArcelorMittal submitted its brief in response 

on October 16, 2008, challenging the 

validity, the admissibility and the merits 

of the claims. Hearing and judgment 

in the first instance are not expected 

before the end of 2009 or early 2010. 

69 

Share Capital and Voting Rights 


By 2012, Spain is expected 

to have the largest high 

speed rail network in the 

world, with over 2,200 km. 

By 2020, its length will reach 

10,000 km, which means that 

90% of the Spanish population 

will live within a distance 

of 50 km of a high speed train 

station. ArcelorMittal Asturias 

is supplying the rails for the 

project, meeting the stringent 

quality controls that enable 

these trains to travel safely 

at 350 km/h. 

70 

The first high-speed rail line in Spain, 

linking Madrid and Seville, was 

commissioned in 1992. Since then, 

the proven quality of the rails produced 

by ArcelorMittal has led to them 

being chosen for all high speed rail 

tracks currently in service in Spain. 

The production of these rails requires 

very stringent controls; they have 

to meet exacting requirements in terms 

of durability, cost, minimum acoustic 

impact, passenger comfort and safety. 

The Rail Mill operated by ArcelorMittal 

Asturias has an annual production 

capacity of 250,000 tonnes and can 

roll rails in lengths of up to 90 meters. 

It has supplied over 500,000 tonnes 

of high-speed rails which have also been 

installed in France, Germany and Turkey, 

amongst other countries.

By2012 over 2200km 

of rail track in Spain. 

71

Underpinning all our operations is a philosophy to produce 

72

Directors’ Responsibility Statement 

We confirm to the best of our knowledge: 

1. the consolidated financial statements of ArcelorMittal presented in this Annual Report 

and established in conformity with International Financial Reporting Standards as adopted 

in the European Union give a true and fair view of the assets, liabilities, financial position 

and profit of ArcelorMittal and the undertakings included within the consolidation 

taken as a whole; and 

2. the management report includes a fair review of the development and performance 

of the business and position of ArcelorMittal and the undertakings included within 

the consolidation taken as a whole, together with a description of the principal risks 

and uncertainties they face. 

By order of the Board of Directors 

Chief Executive Officer 

Mr Lakshmi N Mittal 

February 26, 2009 

Chief Financial Officer 

Mr Aditya Mittal 


73 

Directors’ Responsibility Statement 


Consolidated Balance Sheets 

ArcelorMittal and Subsidiaries 

(millions of U.S. dollars, except share and per share data) 

December 31, December 31, 

Assets 2007 2008 

Current assets: 

Cash and cash equivalents 7,860 7,576 

Restricted cash 245 11 

Assets held for sale (note 4) 1,296 910 

Trade accounts receivable and other (note 5) 9,533 6,737 

Inventories (note 6) 21,750 24,741 

Prepaid expenses and other current assets (note 7) 4,644 4,439 

Total current assets 45,328 44,414 

Non-current assets: 

Goodwill and intangible assets (note 8) 15,031 16,119 

Property, plant and equipment (note 9) 61,994 60,755 

Investments in associates and joint ventures (note 10) 5,887 8,512 

Other investments (note 11) 2,159 437 

Deferred tax assets (note 19) 1,629 751 

Other assets (note 12) 1,597 2,100 

Total non-current assets 88,297 88,674 

Total assets 133,625 133,088 

Liabilities and equity 

Current liabilities: 


Short-term debt and current portion of long-term debt (note 14) 8,542 8,409 

Trade accounts payable and other 13,991 10,501 

Short-term provisions (note 20) 1,144 3,292 

Liabilities held for sale (note 4) 266 370 

Accrued expenses and other liabilities (note 21) 7,275 7,413 

Income tax liabilities (note 19) 991 775 

Total current liabilities 

Non-current liabilities: 

32,209 30,760 

Long-term debt, net of current portion (note 15) 22,085 25,667 

Deferred tax liabilities (note 19) 7,927 6,395 

Deferred employee benefits (note 23) 6,244 7,111 

Long-term provisions (note 20) 2,456 2,343 

Other long-term obligations 1,169 1,582 

Total non-current liabilities 39,881 43,098 

Total liabilities 72,090 73,858 

Commitments and contingencies (note 22 and note 24) 

Equity (note 17): 

Common shares 9,269 9,269 

(no par value, 1,470,000,000 and 1,617,000,000 shares authorized, 1,448,826,347 and 1,448,826,347 

shares issued, 1,421,570,646 and 1,366,002,278 shares outstanding at December 31, 2007 and 2008, respectively) 

Treasury stock (27,255,701 and 82,824,069 common shares at December 31, 2007 and 2008, respectively, at cost) (1,552) (5,800) 

Additional paid-in capital 20,309 20,575 

Retained earnings 23,552 30,403 

Reserves 5,107 751 

Equity attributable to the equity holders of the parent 56,685 55,198 

Minority interest 4,850 4,032 

Total equity 61,535 59,230 

Total liabilities and equity 133,625 133,088 

The accompanying notes are an integral part of these consolidated financial statements. 

74 

December 31, December 31,

Consolidated Statements of Income 






Sales 105,216 124,936 

(Including 4,767 and 6,411 of sales to related parties for 2007 and 2008, respectively) 

Cost of sales 84,953 106,110 

(Including 4,570 and 6,100 of depreciation and impairment and 2,408 and 2,391 of purchases 

from related parties for 2007 and 2008, respectively) 

Gross margin 20,263 18,826 

Selling, general and administrative 5,433 6,590 

Operating income 14,830 12,236 

Other income - net — — 

Income from investments in associates and joint ventures 985 1,653 

Financing costs - net (note 18) (927) (2,352) 

Income before taxes 14,888 11,537 

Income tax expense (note 19) 3,038 1,098 

Net income (including minority interest) 11,850 10,439 

Net income attributable to: 

Equity holders of the parent 10,368 9,399 


Net income (including minority interest) 11,850 10,439 

Earnings per common share (in U.S. dollars) 

Basic: Common shares 7.41 6.80 

Diluted: Common shares 7.40 6.78 

Weighted average common shares outstanding (in millions) (note 17) 

Basic: Common shares 1,399 1,383 

Total 1,399 1,383 

Diluted: Common shares * 1,401 1,386 

Total 1,401 1,386 

* Diluted common shares relate to the effect of stock options (see note 17). 





75 



Consolidated Statements of Changes in Equity 



Balance at December 31, 2006 1,385 17 (84) 25,566 14,995 1,436 (20) 238 42,148 8,080 50,228 

Items recognized directly in equity — — — — 3,220 (336) 569 3,453 1,046 4,499 

Net income — — — 10,368 — — — 10,368 1,482 11,850 

Recognized income and expenses — — — 10,368 3,220 (336) 569 13,821 2,528 16,349 

Recognition of share-based payments 2 — 111 52 — — — — 163 2 165 

Treasury Stock (note 17) (36) — (2,553) — — — — — (2,553) — (2,553) 

Dividend (1.30 per share) — — — (1,826) — — — (1,826) (443) (2,269) 

Issuance of shares in connection with 

the acquisition of ArcelorMittal 

Brasil minority interest 27 — — 1,713 — — — — 1,713 (2,760) (1,047) 

Issuance of shares in connection 

with the acquisition of Arcelor SA 

minority interest 44 2 9,252 974 (7,022) — — — — 3,204 (2,592) 612 

Other movements — — — 15 — — — 15 35 50 

Balance at December 31, 2007 1,422 9,269 (1,552) 20,309 23,552 4,656 (356) 807 56,685 4,850 61,535 

Items recognized directly in equity — — — — (6,122) 1,844 (78) (4,356) (627) (4,983) 

Net income — — — 9,399 — — — 9,399 1,040 10,439 

Recognized income and expenses — — — 9,399 (6,122) 1,844 (78) 5,043 413 5,456 

Recognition of share-based payments 2 — 62 337 — — — — 399 — 399 

Treasury Stock (note 17) (58) — (4,310) (71) — — — — (4,381) — (4,381) 

Dividend (1.50 per share) — — — (2,068) — — — (2,068) (508) (2,576) 

Acquisition of minority interest (note 3) — — — — — — — — (1,297) (1,297) 

Dilution of interest in consolidated 

subsidiary and others — — — (480) — — — (480) 574 94 

Balance at December 31, 2008 1,366 9,269 (5,800) 20,575 30,403 (1,466) 1,488 729 55,198 4,032 59,230 

1 Excludes treasury shares . 

2 Includes 12 million treasury shares . 


76 

Reserves 

Unrealized Unrealized Equity 

Gains Gains attributable 

Foreign (Losses) On (Losses) On to the 

Additional Currency Derivative Available equity 

Shares 1 Share Treasury Paid-in Retained Translation Financial for Sale holders of Minority Total 

Capital Stock Capital Earnings Adjustments Instruments Securities the parent Interest Equity

Consolidated Statements of Cash Flows 



Operating activities: 

Net income 11,850 10,439 

Adjustments to reconcile net income to net cash provided by operations and payments: 

Depreciation and impairment 4,570 6,100 

Interest expense 1,839 2,044 

Income tax expense 3,038 1,098 

Net realizable value and onerous supply contract 45 3,451 

Labor agreement and separation plans — 2,577 

Litigation provisions 135 595 

Unrealized foreign exchange effects, provisions and other non-cash operating expenses (net) (1,681) (478) 

Changes in operating assets and liabilities, net of effects from acquisitions: 

Trade accounts receivable 548 2,139 

Inventories (690) (7,724) 

Trade accounts payable 565 (2,485) 

Other working capital movements 370 (946) 

Interest paid and received (1,494) (1,943) 

Taxes paid (2,563) (2,724) 

Cash received from settlement of hedges not recognized in the statement of income — 2,509 

Net cash provided by operating activities 16,532 14,652 

Investing activities: 

Purchase of property, plant and equipment (5,448) (5,531) 

Acquisition of net assets of subsidiaries and minorities, net of cash acquired of 24 and 103 respectively (6,052) (6,201) 

Investments in associates and joint ventures accounted for under equity method (1,196) (3,114) 

Disposals of financial fixed assets 979 2,226 

Other investing activities (net) (192) 192 

Net cash used in investing activities (11,909) (12,428) 

Financing activities: 

Proceeds from short-term debt 5,848 7,121 

Proceeds from long-term debt, net of debt issuance costs 3,034 14,599 

Payments of short-term debt (1,126) (11,720) 

Payments of long-term debt (6,321) (5,127) 

Purchase of treasury stock (2,553) (4,440) 

Sale of treasury stock for stock option exercises 55 68 

Dividends paid (includes 443 and 508 of dividends paid to minority shareholders in 2007 and 2008, respectively) (2,269) (2,576) 

Other financing activities (net) (85) (57) 

Net cash provided by (used in) financing activities (3,417) (2,132) 

Effect of exchange rate changes on cash 634 (376) 

Net increase (decrease) in cash and cash equivalents 1,840 (284) 

Cash and cash equivalents: 

At the beginning of the year 6,020 7,860 

At the end of the year 7,860 7,576 





77 



Notes to the Consolidated Financial Statements 



Note 1: Nature of Business, 

Basis of Presentation and Consolidation 

Nature of business 

ArcelorMittal (“ArcelorMittal”, or “Mittal 

Steel”, or the “Company”), together with 

its subsidiaries, is a manufacturer of steel 

and steel related products. ArcelorMittal 

owns and operates manufacturing facilities 

in Europe, North and South America, Asia 

and Africa. These manufacturing facilities, 

each of which includes its respective 

subsidiaries, are referred to in these 

consolidated financial statements as 

the “Operating Subsidiaries”. 

Basis of presentation 

The consolidated financial statements have 

been prepared on a historical cost basis, 

except for available-for-sale financial 

assets and derivative financial instruments, 

which are measured at fair value, 

and inventories which are measured at 

the lower of net realizable value or cost. 

The consolidated financial statements 

have been prepared in accordance with 

International Financial Reporting Standards 

(“IFRS”) as adopted in the European 

Union and as issued by the International 

Accounting Standards Board (“IASB”). 

They are presented in U.S. dollars with all 

amounts rounded to the nearest million, 

except for share and per share data. 

78 

Adoption of new IFRS standards and 

interpretations applicable in 2008 

The following new standards, amendments 

to standards or interpretations were 

adopted by the Company on January 1, 

2008: 

• IFRIC 11 “IFRS 2 – Group and Treasury 

Shares Transactions” 

• IFRIC 12 “Service Concession 

Arrangements” 

• IFRIC 14 “IAS 19 – the Limit on a Defined 

Benefit Asset, Minimum Funding 

Requirements and their interaction” 

The effects from the adoption of these 

standards for the year ended December 31, 

2008 were not material to the consolidated 

financial statements. IFRIC 12 has not 

yet been endorsed by the European Union 

(“the EU”). 

New IFRS standards and interpretations 

applicable from 2009 onward 

IFRS 1 (revised) - First Time Adoption of 

International Financial Reporting Standards 

and IAS 27 (revised) - Consolidated and 

Separate Financial Statements 

In May 2008, the IASB issued revisions 

to IFRS 1, “First Time Adoption of 

International Financial Reporting 

Standards”, and International Accounting 

Standard (“IAS”) 27, “Consolidated and 

Separate Financial Statements”. 

The revisions allow first-time adopters 

to use a deemed cost of either fair value 

or the carrying amount under a previous 

accounting practice to measure the initial 

cost of investments in subsidiaries, 

jointly controlled entities and associates 

in the separate financial statements. 

The amendments also remove the definition 

of the cost method from IAS 27 and 

replace it with a requirement to present 

dividends as income in the separate 

financial statements of the investor. 

The revisions of IFRS 1 are effective 

for annual periods beginning on or after 

July 1, 2009 and the revisions of IAS 27 

are effective for annual periods beginning 

on or after July 1, 2009. The Company 

does not expect that the revisions to the 

standards will have a significant impact 

on its financial statements. 

IFRS 2 - Share-based Payment 

In January 2008, the IASB issued revisions 

to IFRS 2, “Share-based Payment”. 

The amended standard clarified the terms 

“vesting conditions” and “cancellations”. 

It clarifies that vesting conditions are 

service conditions and performance 

conditions only. Other features of a 

share-based payment are not vesting 

conditions. These features would need 

to be included in the grant date fair value 

for transactions with employees and others 

providing similar services; they would not 

impact the number of awards expected 

to vest or valuation thereof subsequent 

to grant date. All cancellations, either by 

the entity or by other parties, should 

receive the same accounting treatment. 

The amendment is effective for annual 

periods beginning on or after January 1, 

2009, with earlier application permitted. 

As the Company was already applying IFRS 2 

as amended, it believes that adoption will 

not impact its financial statements.

IFRS 3 (revised) - Business Combinations 

and IAS 27 (revised) - Consolidated and 


In January 2008, the IASB issued 

revisions to IFRS 3, “Business 

Combinations” and IAS 27, “Consolidated 

and Separate Financial Statements” 

which are effective for any transactions 

with acquisition dates that are on or after 

the beginning of the first annual reporting 

period beginning on or after July 1, 2009. 

Among other changes, the revisions will 

require the acquirer to expense direct 

acquisition costs as incurred; to revalue to 

fair value any pre-existing ownership in an 

acquired company at the date on which the 

Company takes control, and record the 

resulting gain or loss in net income; 

to record in net income adjustments to 

contingent consideration which occur after 

completion of the purchase price allocation; 

to record directly in equity the effect 

of transactions after taking control of the 

acquiree which increase or decrease the 

Company’s interest but do not affect 

control; to revalue upon divesting control 

any retained shareholding in the divested 

company at fair value and record the 

resulting gain or loss in net income; 

and to attribute to non-controlling 

shareholders their share of any deficit in 

the equity of a non wholly-owned 

subsidiary. Earlier application is permitted. 

The Company is in the process of assessing 

whether there will be any material changes 

to its financial statements upon their 

adoption. These revisions have not yet been 

endorsed by the EU. 

IFRS 8 - Operating Segments 

In November 2006, the IASB issued IFRS 8, 

“Operating Segments”, which specifies how 

an entity should report information about 

its operating segments in annual financial 

statements, and amends IAS 34, “Interim 

Financial Reporting”, to require an entity 

to report selected information about its 

operating segments in interim financial 

reports. This statement defines operating 

segments as components of an entity 

about which separate financial information 

is available and is evaluated regularly by the 

chief operating decision-maker in deciding 

how to allocate resources and assessing 

performance. This statement also outlines 

the requirements for related disclosures 

about products and services, geographical 

areas, and major customers and is effective 


January 1, 2009. The Company believes 

that the adoption of IFRS 8 will not have 

a significant impact on its financial 

statements disclosures. 

IAS 1 (revised) - Presentation 

of Financial Statements 

In September 2007, the IASB issued 

a revised IAS 1 “Presentation of Financial 

Statements”. The revised standard will 

prohibit the presentation of items of 

income and expenses (that is, ‘non-owner 

changes in equity’) in the statement of 

changes in equity, requiring non-owner 

changes in equity to be presented 

separately from owner changes in equity. 

All non-owner changes in equity will be 

required to be shown in a performance 

statement, but entities can choose 

whether to present one performance 

statement (the statement of 

comprehensive income) or two 

statements (the statement of income 

and statement of comprehensive income). 

Where entities restate or reclassify 

comparative information, they will be 

required to present a restated balance 

sheet as of the beginning comparative 

period in addition to the current 

requirement to present balance sheets 

at the end of the current period and 

comparative period. The Company will 

apply the revised standard on its effective 

date which is for annual periods beginning 

on or after January 1, 2009. 

IAS 23 - Borrowing Costs 

In March 2007, the IASB issued a number 

of amendments to IAS 23 “Borrowing 

Costs”. The amendments require that 

borrowing costs relating to the acquisition, 

construction or production of a qualifying 

asset be capitalized as part of the cost of 

the asset. All other borrowing costs should 

be expensed as incurred. The revised 

standard is effective for annual periods 

beginning on or after January 1, 2009, with 

early application permitted. Retrospective 

application is not required. As the Company 

is already in compliance with the revised 

standard, it believes that its adoption will 

have no impact on its financial statements. 

The definition of borrowing costs has also 

been amended during the IASB’s annual 

improvements project published in May 

2008. The amended definition states that 

interest expense must be calculated using 

the effective interest method defined in 

IAS 39, “Financial Instruments: Recognition 

and Measurement”. This eliminates the 

inconsistency of terms between IAS 39 

and IAS 23. The Company will apply the 

amended IAS 23 prospectively to the 

capitalization of borrowing costs on 

qualifying assets from January 1, 2009. 

79 



Notes to the Consolidated Financial Statements continued 



IAS 27 (revised) - Consolidated and 


In January 2008, the IASB issued revisions 

to IAS 27, “Consolidated and Separate 

Financial Statements”. The revised standard 

requires the effects of all transactions with 

non-controlling interests to be recorded 

in equity if there is no change in control 

and these transactions will no longer 

result in goodwill or gains and losses. 

The standard also specifies the accounting 

when control is lost. Any remaining interest 

in the entity is remeasured to fair value, and 

a gain or loss is recognized in profit or loss. 

The revised standard is effective for annual 

periods beginning on or after July 1, 2009 

and should not be applied before that date 

unless it also applies IFRS 3 (revised) as 

discussed previously. The Company is in 

the process of assessing whether there will 

be any significant changes to its financial 

statements upon the adoption of the 

revised standard. This revised standard 

has not yet been endorsed by the EU. 

IAS 32 (revised) - Financial Instruments: 

Presentation and IAS 1 (revised) 

Presentation of Financial Statements 

In February 2008, the IASB issued 

amendments to IAS 32, “Financial 

Instruments: Presentation” and IAS 1, 

“Presentation of Financial Statements”. 

The amendments are relevant to entities 

that have issued financial instruments 

that are (i) puttable financial instruments, 

or (ii) instruments, or components of 

instruments, which impose on the entity 

an obligation to deliver to another party 

a pro rata share of the net assets of the 

entity only upon liquidation. 

80 

Under the revised IAS 32, subject to 

specified criteria being met, these 

instruments will be classified as equity 

whereas, prior to these amendments, the 

instruments would have been classified as 

financial liabilities. The amendments are 

effective for annual periods beginning on or 

after January 1, 2009. The Company 

believes that the adoption of these 

amendments will not have a significant 

impact on its financial statements. 

IAS 39 (revised) - Financial Instruments: 

Recognition and Measurement 

On July 30, 2008, the IASB published 

amendments to IAS 39, “Financial 

Instruments: Recognition and 

Measurement”, to clarify two hedge 

accounting issues: 

Inflation in a financial hedged item - 

Inflation may only be hedged if changes 

in inflation are a contractually specified 

portion of cash flows of a recognized 

financial instrument. However, the 

amendment clarifies that an entity may 

not designate an inflation component of 

issued or acquired fixed rate debt in a fair 

value hedge because such a component 

is not separately identifiable and reliably 

measurable. The amendments also clarify 

that a risk-free or benchmark interest 

rate portion of the fair value of a fixed 

rate financial instrument will normally 

be separately identifiable and reliably 

measurable and, therefore, may be hedged. 

A one-sided risk in a hedged item - IAS 39 

permits an entity to designate purchased 

options as a hedging instrument in a hedge 

of a financial or non-financial item. 

The amendments make clear that the 

intrinsic value, not the time value, of an 

option reflects a one-sided risk and, 

therefore, an option designated in its 

entirety cannot be perfectly effective. 

The time value of a purchased option 

is not a component of the forecast 

transaction that impacts profit or loss. 

Therefore, if an entity designates an option 

in its entirety as a hedge of a one-sided 

risk arising from a forecast transaction, 

hedge ineffectiveness will arise. 

Alternatively, an entity may choose 

to exclude time value as permitted by 

IAS 39 to improve hedge effectiveness. 

This amendment to IAS 39 is effective for 

annual periods beginning on or after July 1, 

2009, with earlier application permitted, 

and must be applied retrospectively. 

IAS 39 has also been amended during 

the IASB’s annual improvements project 

published in May 2008. This amendment 

clarifies that it is possible for there to be 

movements into and out of the fair value 

through net income when a derivative 

financial instrument commences or ceases 

to qualify as a hedging instrument in cash 

flow or a net investment hedge. 

The definition of financial asset or financial 

liability at fair value through profit or loss 

as it relates to items that are held for 

trading was also amended. This clarifies 

that a financial asset or liability that is part 

of a portfolio of financial instruments 

managed together with evidence of an 

actual recent pattern of short-term profit 

taking, is included in such a portfolio on 

initial recognition.

The current guidance on designating and 

documenting hedges states that a hedging 

instrument must involve a party external 

to the reporting entity and cites a segment 

as an example of a reporting entity. 

This means that in order for hedge 

accounting to be applied at segment level, 

the requirements for hedge accounting 

are currently required to be met by the 

applicable segment. The amendment 

removes the example of a segment so that 

the guidance is consistent with IFRS 8, 

“Operating Segments”, which requires 

disclosure for segments to be based 

on information reported to the chief 

operating decision-maker. After the 

amendment is effective, the hedge will 

continue to be reflected in the segment 

to which the hedged items relate 

(and information provided to the chief 

operating decision-maker), but the 

Company will not formally document 

and test this relationship. 

When remeasuring the carrying amount 

of a debt instrument on cessation of fair 

value hedge accounting, the amendment 

clarifies that a revised effective interest 

rate (calculated at the date fair value hedge 

accounting ceases) should be used. 

These amendments to IAS 39 are effective 


January 1, 2009. The Company does not 

expect that the revised standard will have 


statements. This revised standard has 

not yet been endorsed by the EU. 

Amendments to IFRS standards and 

interpretations as a result of the IASB’s 

annual improvement project applicable 

from 2009 onward 

The following amendments are part of 

the IASB’s annual improvements project 

published in May 2008. Unless otherwise 

indicated below, the Company is still in the 

process of assessing whether there will 

be any significant changes to its financial 

statements upon adoption of these 

amendments. 

IFRS 5 (revised) - Non-current Assets Held 

for Sale and Discontinued Operations 

The amendment clarifies that all of 

a subsidiary’s assets and liabilities are 

classified as held for sale if a partial 

disposal sale plan results in loss of control. 

Relevant disclosure should be made for this 

subsidiary if the definition of a discontinued 

operation is met. A consequential 

amendment to IFRS 1 states that these 

amendments are applied prospectively 

from the date of transition to IFRSs. 


periods beginning on or after July 1, 2009. 

IAS 16 (revised) - Property, Plant and 

Equipment and IAS 7 (revised) - Statement 

of Cash Flows 

The amendment requires entities whose 

ordinary activities comprise renting and 

subsequently selling assets to present 

proceeds from the sale of those assets 

as revenue and to transfer the carrying 

amount of the asset to inventories 

when the asset becomes held for sale. 

A consequential amendment to IAS 7 states 

that cash flows arising from purchase, 

rental and sale of those assets are to be 

classified as cash flows from operating 

activities. The amendment is effective 


January 1, 2009. The Company does not 

expect that the revised standard will have 


statements. 

IAS 19 (revised) - Employee Benefits 

The amendment clarifies that a plan 

amendment that reduces benefits affected 

by future salary increases is 

a curtailment, while an amendment that 

changes benefits attributable to past 

service results in negative past service cost 

if it results in a reduction in the present 

value of the defined benefit obligation. 

The definition of return on plan assets 

was amended to state that plan 

administration costs are deducted in 

the calculation of return on plan assets 

only to the extent that such costs have 

been excluded from measurement of the 

defined benefit obligation. 

The revised standard is effective for 

annual periods beginning on or after 

January 1, 2009. The Company will apply 

the IAS 19 amendments prospectively 

from January 1, 2009. 

IAS 20 (revised) - Accounting for 

Government Grants and Disclosure 

of Government Assistance 

The benefit of a below market rate 

government loan is measured as the 

difference between the carrying 

amount in accordance with IAS 39, 

“Financial Instruments: Recognition 

and Measurement”, and the proceeds 

received with the benefit accounted for 

in accordance with IAS 20. The amendment 

is effective for annual periods beginning 

on or after January 1, 2009. The Company 

does not expect that the revised standard 

will have a significant impact on its 

financial statements. 

81 

2008 Consolidated Financial Statements continued 





IAS 28 (revised) - Investments 

in Associates 

The amendment states that an investment 

in associate is treated as a single asset 

for the purposes of impairment testing. 

Any impairment loss should not be allocated 

to specific assets included within the 

investment, for example, goodwill. 

Reversals of impairment are recorded 

as an adjustment to the investment 

balance to the extent that the recoverable 

amount of the associate increases. 

Where an investment in associate is 

accounted for in accordance with IAS 39, 

“Financial Instruments: Recognition and 

Measurement”, only certain disclosure 

requirements of IAS 28 need to be made 

in addition to disclosures required by 

IAS 32, “Financial Instruments: 

Presentation” and IFRS 7, “Financial 

Instruments: Disclosures”. The amendment 






IAS 31 (revised) - Interests in Joint 

Ventures, IAS 32 (revised) - Financial 

Instruments: Presentation and 

IFRS 7(revised) - Financial Instruments: 

Disclosures 

Where an investment in a joint venture 

is accounted for in accordance with IAS 39, 

“Financial Instruments: Recognition and 

Measurement”, only certain disclosure 

requirements of IAS 31 need to be made 

in addition to disclosures required by 

IAS 32, “Financial instruments: 

Presentation”, and IFRS 7, “Financial 

Instruments: Disclosures”. The amendment 






82 

IAS 36 (revised) - Impairment of Assets 

The amendment states that where fair 

value less costs to sell is calculated on the 

basis of discounted cash flows, disclosures 

equivalent to those for value in use 

calculation should be made. The revised 

standard is effective for annual periods 

beginning on or after January 1, 2009. 

The Company does not expect that the 

revised standard will have a significant 


IAS 38 (revised) - Intangible Assets 

The amendment states that a prepayment 

may only be recognized in the event that 

payment has been made in advance of 

obtaining right of access to goods or 

receipt of services. The amendment also 

deletes the wording that states that there 

is ‘rarely, if ever’ support for use of a 

method that results in a lower rate of 

amortization than the straight-line method. 



2009. The Company does not expect that 

the revised standard will have a significant 


IAS 40 (revised) - Investment Property 

and IAS 16 (revised) - Property, 

Plant and Equipment 

Property that is under construction or 

development for future use as investment 

property is within the scope of IAS 40, 

“Investment Property”. Where the fair 

value model is applied, such property is, 

therefore, measured at fair value. 

However, where fair value of investment 

property under construction is not 

reliably measurable, the property 

is measured at cost until the earlier of 

the date construction is completed and 

the date at which fair value becomes 

reliably measurable. The amendment is 

effective for annual periods beginning on 

or after January 1, 2009. The Company 

does not expect that the revised standards 



IFRIC 15 - Agreements for the Construction 

of Real Estate 

On July 3, 2008, the International Financial 

Reporting Interpretations Committee, 

(the “IFRIC”) issued IFRIC 15, “Agreements 

for the Construction of Real Estate”. 

The interpretation addresses the 

accounting for revenue and associated 

expenses by units that undertake the 

construction of real estate directly or 

through subcontractors. The Company 

does not expect that this interpretation 

will have a significant impact on its financial 

statements. IFRIC 15 is effective for annual 


2009. This interpretation has not yet 

been endorsed by the EU. 

IFRIC 16 - Hedges of a Net Investment 

in a Foreign Operation 

On July 3, 2008, the IFRIC issued IFRIC 16, 

“Hedges of a Net Investment in a Foreign 

Operation”. The interpretation provides 

guidance on net investment hedging, 

including which foreign currency risks 

qualify for hedge accounting and what 

amount can be designated, where within 

the group the hedging instrument can 

be held and what amount should be 

reclassified to net income when the 

hedged foreign operation is disposed. 

IFRIC 16 is effective for annual periods 

beginning on or after October 1, 2008. 

The Company does not expect that the 

revised standard will have a significant 


This interpretation has not yet been 

endorsed by the EU.

IFRIC 17 - Distributions of Non-cash 

Assets to Owners 

In November 2008, the IFRIC issued 

IFRIC 17, “Distributions of Non-cash Assets 

to Owners”, that clarifies that a dividend 

payable should be recognized when the 

dividend is appropriately authorized and 

is no longer at the discretion of the entity. 

The dividend payable should be measured 

at the fair value of the net assets to be 

distributed. The entity should recognize 

the difference between the dividend paid 

and the carrying amount of the net assets 

distributed in profit or loss and the entity 

needs to provide additional disclosures 

if the net assets that are being held 

for distribution to owners meet the 

definition of a discontinued operation. 

This interpretation applies prospectively 

to pro rata distributions of non-cash 

assets except for common control 

transactions and is effective for annual 

periods beginning on or after July 1, 2009. 

Earlier application is permitted. 

The Company is in the process of assessing 

whether there will be any material changes 

to its financial statements upon the 

adoption of IFRIC 17. This interpretation 

has not yet been endorsed by the EU. 

IFRIC 18 - Transfers of Assets 

from Customers 

In January 2009, the IFRIC issued IFRIC 18, 

“Transfers of Assets from Customers”, 

that provides guidance on the accounting 

for transfers of cash or items of property, 

plant and equipment by entities that 

receive such transfers from their 

customers. Agreements within the scope 

of this interpretation are agreements 

in which an entity receives from a customer 

an item of property, plant and equipment 

that the entity must then use either to 

connect the customer to a network or 

to provide the customer with ongoing 

access to a supply of goods or services, 

or to do both. 

If the transferred item of property, plant 

and equipment meets the definition of an 

asset, the entity shall measure the cost of 

the asset received on initial recognition at 

its fair value and consequently the entity 

shall recognize revenue in accordance with 

IAS 18, “Revenue”. This interpretation 

applies prospectively to transfers of assets 

or cash from customers received on 

or after July 1, 2009. Earlier application 

is permitted provided the valuations and 

other information needed to apply the 

Interpretation to past transfers were 

obtained at the time those transfers 

occurred. The Company is in the process 

of assessing whether there will be any 

material changes to its financial statements 

upon the adoption of IFRIC 18. 

This interpretation has not yet been 

endorsed by the EU. 

Basis of consolidation 

The consolidated financial statements 

include the accounts of the Company, 

its Operating Subsidiaries, and its 

respective interest in associated companies 

and jointly controlled entities. Subsidiaries 

are consolidated from the date of 

acquisition which is considered to be 

the date the Company obtains control until 

the date control ceases. Control is defined 

as the power to govern the financial and 

operating policies of an entity, so as to 

obtain benefits derived from its activities. 

Control is presumed to exist when 

the Company holds more than half 

of the voting rights. 

Associated companies are those companies 

over which the Company has the ability 

to exercise significant influence on the 

financial and operating policy decisions 

which are not Operating Subsidiaries. 

Generally, significant influence is presumed 

to exist when the Company holds more 

than 20% of the voting rights. 

In addition, jointly controlled entities 

are companies over whose activities 

the Company has joint control under 

a contractual agreement. The consolidated 

financial statements include the Company’s 

share of the total recognized gains and 

losses of associates and jointly controlled 

entities on an equity accounted basis from 

the date that significant influence 

commences until the date significant 

influence ceases, adjusted for any 

impairment loss. Adjustments to the 

carrying amount may also be necessary for 

changes in the Company’s proportionate 

interest in the investee arising from 

changes in the investee’s equity that have 

not been recognized in the investee’s profit 

or loss. The Company’s share of those 

changes is recognized directly in equity. 

Other investments are classified as 

available-for-sale and are stated at fair 

value when their fair value can be reliably 

measured. When fair value cannot be 

measured reliably, the investments are 

carried at cost less impairment. 

Intra-company balances and transactions, 

including income, expenses and dividends, 

are eliminated in the preparation of the 

consolidated financial statements. 

Gains and losses resulting from 

intra-company transactions that are 

recognized in assets are eliminated in full. 

Minority interests represent the portion 

of profit or loss and net assets not held 

by the Company and are presented 

separately in the statement of income 

and within equity in the consolidated 

balance sheet. 

83 






Note 2: Summary of Significant 

Accounting Policies 

Translation of financial statements 

denominated in foreign currency 

The functional currency of each of the 

major Operating Subsidiaries is the local 

currency, except for ArcelorMittal SA, 

OJSC ArcelorMittal Kryviy Rih, 

ArcelorMittal Lázaro Cárdenas S.A. 

de C.V., ArcelorMittal Brasil, ArcelorMittal 

Galati S.A., and ArcelorMittal Temirtau, 

whose functional currency is the U.S. dollar. 

Following the merger of the flat and long 

operations in Brazil, the Company reviewed 

various indicators and concluded that 

the U.S. dollar represents most faithfully 

the economic effects of the merged 

entity operations. 

Transactions in currencies other than 

the functional currency of a subsidiary 

are recorded at the rates of exchange 

prevailing at the date of the transaction. 

Monetary assets and liabilities in currencies 

other than the functional currency are 

remeasured at the rates of exchange 

prevailing at the balance sheet date 

and the related transaction gains and 

losses are reported in the consolidated 

statement of income. 

Upon consolidation, the results of 

operations of ArcelorMittal’s subsidiaries 

and associates whose functional currency 

is other than the U.S. dollar are translated 

into U.S. dollars at the monthly average 

exchange rates and assets and liabilities are 

translated at the year-end exchange rates. 

Translation adjustments are recognized 

directly in equity and are included in net 

earnings only upon sale or liquidation of the 

underlying foreign subsidiary or associate. 

84 

Business combinations 

Acquisitions of subsidiaries and businesses 

are accounted for using the purchase 

accounting method. The cost of the 

acquisition is measured at the aggregate 

of the fair values (at the date of exchange) 

of assets given, liabilities incurred or 

assumed, and equity instruments issued 

by ArcelorMittal in exchange for control 

of the acquiree, plus any costs directly 

attributable to the business combination. 

The acquiree’s identifiable assets (including 

previously unrecognized intangible assets), 

liabilities and contingent liabilities are 

recognized at their fair values at the 

acquisition date. The interest of minority 

shareholders in the acquiree is initially 

measured at the minority’s proportion of 

the net fair value of the assets, liabilities 

and contingent liabilities recognized. 

When an acquisition is completed by 

a series of successive transactions, 

each significant transaction is considered 

individually for the purpose of the 

determination of the fair value of the 

identifiable assets, liabilities and contingent 

liabilities acquired and hence for the 

goodwill associated with the acquisition. 

The fair values of the identifiable assets 

and liabilities acquired can vary at the date 

of each transaction. Interests previously 

held in that entity are revalued on the basis 

of the fair values of the identifiable assets 

and liabilities at the date control is obtained. 

The excess of the cost over the fair value 

of the net assets acquired is recorded as 

goodwill or as a gain in the statement 

of income when the fair value of the asset 

acquired exceeds the cost. 

Subsequent purchases, after the Company 

has obtained control, are treated as the 

acquisitions of shares from minority 

shareholders: the identifiable assets and 

liabilities of the entity are not subject to a 

further revaluation and the positive or 

negative difference between the cost of 

such subsequent acquisitions and the net 

value of the additional proportion of the 

company acquired is recorded as goodwill 

or immediately as a gain in the statement 

of income when the difference is negative. 

Cash and cash equivalents 

Cash and cash equivalents consist of cash 

and short-term highly liquid investments 

that are readily convertible to cash with 

original maturities of three months or less 

at the time of purchase and are carried 

at cost plus accrued interest, which 

approximates fair value. 

Restricted cash 

Restricted cash represents cash and cash 

equivalents not readily available to the 

Company, mainly related to insurance 

deposits, various other deposits or required 

balance obligations related to letters of 

credit and credit arrangements, and escrow 

accounts created as a result of acquisitions. 

Trade accounts receivable 

Trade accounts receivable are initially 

recorded at their fair value and do not carry 

any interest. ArcelorMittal maintains an 

allowance for doubtful accounts at an 

amount that it considers to be a sufficient 

estimate of losses resulting from the 

inability of its customers to make required 

payments. An allowance is recorded and 

charged to expense when an account is 

deemed to be uncollectible. In judging the 

adequacy of the allowance for doubtful 

accounts, ArcelorMittal considers multiple 

factors including historical bad debt 

experience, the current economic 

environment and the aging of the 

receivables. Recoveries of trade receivables 

previously reserved in the allowance for 

doubtful accounts are recorded as gains 

in the statement of income.

ArcelorMittal has provided for all 

receivables over 180 days because 

historical experience is such that 

receivables that are past due beyond 

180 days are generally not recoverable. 

Trade receivables between 60 days and 

180 days are provided for based on 

estimated irrecoverable amounts from the 

sale of goods and/or services, determined 

by reference to past default experience. 

Inventories 

Inventories are carried at the lower of 

cost and net realizable value. Cost is 

determined using the first-in, first-out 

(“FIFO”) method or average cost method, 

which approximates FIFO. Costs of 

production in process and finished goods 

include the purchase costs of raw materials 

and conversion costs such as direct labor 

and an allocation of fixed and variable 

production overheads. Raw materials and 

spare parts are valued at cost inclusive 

of freight and shipping and handling costs. 

Net realizable value represents the 

estimated selling price at which the 

inventories can be realized in the normal 

course of business after allowing for the 

cost of conversion from their existing state 

to a finished condition and for the cost 

of marketing, selling, and distribution. 

Goodwill and negative goodwill 

Goodwill arising on an acquisition 

is recognized as an asset and initially 

measured at cost, being the excess of 

the cost of the business combination 

over ArcelorMittal’s interest in the net fair 

value of the identifiable assets, liabilities 

and contingent liabilities recognized. 

Goodwill is allocated to the 

cash-generating units expected to 

benefit from the synergies of the 

combination for the purpose of impairment 

testing. The allocation is made to those 

cash-generating units or groups of 

cash-generating units that are expected 

to benefit from the business combination 

in which the goodwill arose. 

Goodwill is reviewed at the 

cash-generating unit level for 

impairment annually or whenever 

changes in circumstances indicate that the 

carrying amount may not be recoverable. 

The recoverable amounts of the 

cash-generating units are determined 

from the higher of fair value less cost 

to sell or value in use calculations, 

as described in the impairment of tangible 

and intangible assets. The key assumptions 

for the value in use calculations are those 

regarding the discount rates, growth rates 

and expected changes to selling prices 

and direct costs during the period. 

Management estimates discount rates 

using pre-tax rates that reflect current 

market rates for investments of similar risk. 

The growth rates are based on the 

Company’s growth forecasts which are 

in line with industry trends. Changes in 

selling prices and direct costs are based 

on historical experience and expectations 

of future changes in the market. 

Cash flow forecasts are derived from the 

most recent financial forecasts for the 

next five years. Beyond the specifically 

forecasted period, the Company 

extrapolates cash flows for the remaining 

years based on an estimated growth rate. 

This rate does not exceed the average 

long-term growth rate for the relevant 

markets. Once recognized, impairment 

losses recognized for goodwill are not 

reversed. On disposal of a subsidiary, 

any residual amount of goodwill is included 

in the determination of the profit or loss 

on disposal. 

ArcelorMittal has historically purchased 

certain steel assets involved in various 

privatization programs in former 

government controlled economies. 

Businesses with these characteristics 

typically have been purchased for 

an amount that does not exceed net asset 

fair value, thus producing negative goodwill 

for accounting purposes. 

In a business combination in which 

the fair value of the identifiable net 

assets acquired exceeds the cost of the 

acquired business, the Company reassesses 

the fair value of the assets acquired. 

If, after reassessment, ArcelorMittal’s 

interest in the net fair value of the 

acquiree’s identifiable assets, liabilities 

and contingent liabilities exceeds the 

cost of the business combination, 

the excess (negative goodwill) is 

recognized immediately in the 


Intangible assets 

Intangible assets are recognized only 

when it is probable that the expected 

future economic benefits attributable 

to the assets will accrue to the Company 

and the cost can be reliably measured. 

Intangible assets acquired separately 

by ArcelorMittal are initially recorded 

at cost and those acquired in a business 

combination are recorded at fair value. 

These primarily include the cost of 

technology and licenses purchased 

from third parties. Intangible assets are 

amortized on a straight-line basis over 

their estimated economic useful lives 

which typically are not to exceed five years. 

Costs incurred on internally developed 

products are recognized as intangible 

assets from the date that all of the 

following conditions are met: (i) completion 

of the development is considered 

technically feasible and commercially viable; 

(ii) it is the intention and ability of the 

Company to complete the intangible asset 

and use or sell it; (iii) it is probable that the 

intangible asset will generate future 

economic benefits; (iv) adequate technical, 

financial, and other resources to complete 

the development and to use or sell the 

intangible asset are available; and (v) it is 

possible to reliably measure the expenditure 

attributable to the intangible asset during 

its development. 

85 






The intangible asset capitalized includes 

the cost of materials, direct labor costs 

and an appropriate proportion of overheads 

incurred during its development. 

Capitalized development expenditures 

are stated at cost less accumulated 

amortization and impairment losses. 

Other development expenditures 

that do not meet the conditions for 

recognition as an asset are recognized 

as an expense as part of operating income 

in the statement of income in the period 

in which it is incurred. 

Property, plant and equipment 

Property, plant and equipment is recorded 

at cost less accumulated depreciation 

and impairment. Cost includes professional 

fees and, for assets constructed by the 

Company, any related works to the extent 

that these are directly attributable to the 

acquisition or construction of the asset. 

Property, plant and equipment except land 

are depreciated using the straight-line 

method over the useful lives of the 

related assets which are presented in 

the table below. 

Asset Category Useful Life Range 

Land Not depreciated 

Buildings 10 to 50 years 

Steel plant equipment 15 to 30 years 

Auxiliary facilities 15 to 30 years 

Other facilities 5 to 20 years 

Major improvements, which add to 

productive capacity or extend the life 

of an asset, are capitalized, while repairs 

and maintenance are charged to expense 

as incurred. Where a tangible fixed asset 

comprises major components having 

different useful lives, these components 

are accounted for as separate items. 

86 

Property, plant and equipment used 

in mining activities is depreciated over its 

useful life or over the remaining life of the 

mine if shorter and if there is no alternative 

use possible. For the majority of assets used 

in mining activities, the economic benefits 

from the asset are consumed in a pattern 

which is linked to the production level and 

accordingly, assets used in mining activities 

are depreciated on a unit of production basis. 

Property, plant and equipment under 

construction are recorded as construction 

in progress until they are ready for their 

intended use; thereafter they are 

transferred to the related category of 

property, plant and equipment and 

depreciated over their estimated useful 

lives. Interest incurred during construction 

is capitalized. Gains and losses on 

retirement or disposal of assets are 

reflected in the statement of income. 

Property, plant and equipment acquired 

by way of finance leases are stated at an 

amount equal to the lower of the fair value 

and the present value of the minimum lease 

payments at the inception of the lease. 

Each lease payment is allocated between 

the finance charges and a reduction of the 

lease liability. The interest element of the 

finance cost is charged to the statement 

of income over the lease period so as 

to achieve a constant rate of interest 

on the remaining balance of the liability. 

Investment in associates, joint ventures 

and other entities 

Investments in associates and joint 

ventures, in which ArcelorMittal has the 

ability to exercise significant influence, 

are accounted for under the equity method. 

The investment is carried at the cost at 

the date of acquisition, adjusted for 

ArcelorMittal’s equity in undistributed 

earnings or losses since acquisition, 

less dividends received and impairment. 

Any excess of the cost of the acquisition 

over the Company’s share of the net fair 

value of the identifiable assets, liabilities, 

and contingent liabilities of the associate 

or joint venture recognized at the date 

of acquisition is recognized as goodwill. 

The goodwill is included in the carrying 

amount of the investment and is evaluated 

for impairment as part of the investment. 

ArcelorMittal reviews all of its investments 

in associates and joint ventures at each 

reporting date to determine whether there 

is any evidence that the investment may 

be impaired. If objective evidence indicates 

that the investment is impaired, 

ArcelorMittal calculates the amount 

of the impairment as being the difference 

between the value in use of the investment 

and its carrying value. The amount of 

any write-down is included in the overall 

income from investments in associated 

companies in the statement of income. 

Investments in other entities, over which 

the Company and/or its Operating 

Subsidiaries do not have the ability 

to exercise significant influence and 

have a readily determinable fair value, 

are accounted for at fair value with any 

resulting gain or loss included in equity. 

To the extent that these investments 

do not have a readily determinable fair 

value, they are accounted for under the 

cost method.

Assets held for sale 

Non-current assets, and disposal groups, 

are classified as held for sale and are 

measured at the lower of carrying 

amount and fair value less costs to sell. 

Assets and disposal groups are classified 

as held for sale if their carrying amount 

will be recovered through a sale transaction 

rather than through continuing use. 

This condition is regarded as met only 

when the sale is highly probable and the 

asset, or disposal group, is available for 

immediate sale in its present condition 

and is marketed for sale at a price that 

is reasonable in relation to its current fair 

value. Assets held for sale are presented 

separately on the balance sheet and are 

not depreciated. 

Deferred employee benefits 

Defined contribution plans are those 

plans where ArcelorMittal pays fixed 

contributions to an external life insurance 

or pension fund for certain categories of 

employees. Contributions are paid in return 

for services rendered by the employees 

during the period. They are expensed as 

they are incurred in line with the treatment 

of wages and salaries. No provisions 

are established in respect of defined 

contribution plans, as they do not generate 

future commitments for ArcelorMittal. 

Defined benefit plans are those plans that 

provide guaranteed benefits to certain 

categories of employees, either by way 

of contractual obligations or through 

a collective agreement. For defined benefit 

plans, the cost of providing benefits is 

determined using the Projected Unit Credit 

Method, with actuarial valuations being 

carried out at each balance sheet date. 

Actuarial gains and losses that exceed 

10% of the greater of the present value 

of the Company’s defined benefit obligation 

and the fair value of plan assets at the 

end of the prior year are amortized over 

the expected average remaining working 

lives of the participating employees. 

Past service cost is recognized immediately 

to the extent that the benefits are already 

vested, and otherwise is amortized on 

a straight-line basis over the average 

period until the benefits become vested. 

The retirement benefit obligation 

recognized in the balance sheet represents 

the present value of the defined benefit 

obligation as adjusted for unrecognized 

actuarial gains and losses and unrecognized 

past service cost, and as reduced by 

the fair value of plan assets. Any asset 

resulting from this calculation is limited 

to unrecognized actuarial losses and past 

service cost, plus the present value 

of available refunds and reductions in 

future contributions to the plan. 

Voluntary retirement plans primarily 

correspond to the practical implementation 

of social plans or are linked to collective 

agreements signed with certain categories 

of employees. Early retirement plans are 

those plans that primarily correspond 

to terminating an employee’s contract 

before the normal retirement date. 

Early retirement plans are considered 

effective when the affected employees 

have formally been informed and when 

liabilities have been determined using 

an appropriate actuarial calculation. 

Liabilities relating to the early retirement 

plans are calculated annually on the basis 

of the effective number of employees likely 

to take early retirement and are discounted 

using an interest rate which corresponds 

to that of highly-rated bonds that have 

maturity dates similar to the terms of the 

Company’s early retirement obligations. 

Termination benefits are provided in 

connection with voluntary separation plans. 

The Company recognizes a liability and 

expense when it has a detailed formal 

plan which is without realistic possibility 

of withdrawal and the plan has been 

communicated to employees or their 

representatives. 

Other long-term employee benefits include 

various plans that depend on the length 

of service, such as long service and 

sabbatical awards, disability benefits and 

long-term compensated absences such 

as sick leave. The amount recognized 

as a liability is the present value of benefit 

obligations at the balance sheet date, 

and all changes in the provision (including 

actuarial gains and losses or past service 

costs) are recognized in the statement 

of income. 

Provisions and accruals 

ArcelorMittal recognizes provisions for 

liabilities and probable losses that have 

been incurred when it has a present legal 

or constructive obligation as a result of 

past events and it is probable that the 

Company will be required to settle the 

obligation and a reliable estimate of the 

amount of the obligation can be made. 

If the effect of the time value of money 

is material, provisions are discounted 

using a current pre-tax rate that reflects, 

where appropriate, the risks specific to 

the liability. Where discounting is used, 

the increase in the provision due to the 

passage of time is recognized as 

a financing cost. 

87 






Provisions for restructuring relate to the 

estimated costs of initiated reorganizations 

that have been approved by the Group 

Management Board, and which involve 

the realignment of certain parts of the 

industrial and commercial organization. 

When such reorganizations require 

discontinuance and/or closure of lines 

or activities, the anticipated costs of 

closure or discontinuance are included 

in restructuring provisions. A liability 

is recognized for those costs only when 

the Company has a detailed formal plan 

for the restructuring and has raised a valid 

expectation with those affected that it will 

carry out the restructuring by starting 

to implement that plan or announcing 

its main features to those affected by it. 

Environmental costs 

Environmental costs that relate to current 

operations are expensed or capitalized 

as appropriate. Environmental costs that 

relate to an existing condition caused by 

past operations, and which do not 

contribute to current or future revenue 

generation or cost reduction, are expensed. 

Liabilities are recorded when environmental 

assessments and or remedial efforts are 

probable and the cost can be reasonably 

estimated based on ongoing engineering 

studies, discussions with the environmental 

authorities and other assumptions relevant 

to the nature and extent of the remediation 

that may be required. The ultimate cost 

to ArcelorMittal is dependent upon factors 

beyond its control such as the scope and 

methodology of the remedial action 

requirements to be established by 

environmental and public health authorities, 

new laws or government regulations, 

rapidly changing technology and the 

outcome of any potential related litigation. 

Environmental liabilities are discounted 

if the aggregate amount of the obligation 

and the amount and timing of the cash 

payments are fixed or reliably determinable. 

88 

Asset retirement obligations 

ArcelorMittal records asset retirement 

obligations (“ARO”) initially at the fair 

value of the legal liability in the period 

in which it is incurred and capitalizes 

the ARO by increasing the carrying 

amount of the related non-current asset. 

The fair value of the obligation is 

determined as the discounted value 

of the expected future cash flows. 

The liability is accreted to its present 

value each period and the capitalized 

cost is depreciated in accordance with 

the Company’s depreciation policies for 

property, plant and equipment. 

Income taxes 

The tax currently payable is based on 

taxable profit for the year. Taxable profit 

differs from profit as reported in the 

consolidated statement of income because 

it excludes items of income or expense 

that are taxable or deductible in other 

years and it further excludes items that 

are never taxable or deductible. 

The Company’s liability for current tax 

is calculated using tax rates that have 

been enacted or substantively enacted 

by the balance sheet date. 

Deferred tax is recognized on differences 

between the carrying amounts of assets 

and liabilities in the financial statements 

and the corresponding tax basis used 

in the computation of taxable profit, 

and is accounted for using the balance 

sheet liability method. Deferred tax 

liabilities are generally recognized for 

all taxable temporary differences, 

and deferred tax assets are generally 

recognized for all deductible temporary 

differences to the extent that it is probable 

that taxable profits will be available against 

which those deductible temporary 

differences can be utilized. 

Such assets and liabilities are not 

recognized if the taxable temporary 

difference arises from the initial recognition 

of goodwill or if the differences arise from 

the initial recognition (other than in a 

business combination) of other assets and 

liabilities in a transaction that affects 

neither the taxable profit nor the 

accounting profit. 

Deferred tax liabilities are recognized for 

taxable temporary differences associated 

with investments in subsidiaries and 

associates, and interests in joint ventures, 

except where the Company is able to 

control the reversal of the temporary 

difference and it is probable that the 

temporary difference will not reverse 

in the foreseeable future. Deferred tax 

assets arising from deductible temporary 

differences associated with such 

investments and interests are only 

recognized to the extent that it is 

probable that there will be sufficient 

taxable profits against which to utilize 

the benefits of the temporary differences 

and they are expected to reverse in the 

foreseeable future. 

Deferred tax assets and liabilities 

are measured at the tax rates that are 

expected to apply in the period in which 

the liability is settled or the asset realized, 

based on tax rates (and tax laws) that have 

been enacted or substantively enacted by 

the balance sheet date. The measurement 

of deferred tax liabilities and assets reflects 

the tax consequences that would follow 

from the manner in which the Company 

expects, at the reporting date, to recover 

or settle the carrying amount of its assets 

and liabilities. The carrying amount of 

deferred tax assets is reviewed at each 

balance sheet date and reduced to the 

extent that it is no longer probable that 

sufficient taxable profits will be available 

to allow all or part of the asset to be 

recovered.

Deferred tax assets and liabilities are 

offset when there is a legally enforceable 

right to set off current tax assets against 

current tax liabilities and when they relate 

to income taxes levied by the same taxation 

authority and the Company intends to 

settle its current tax assets and liabilities 

on a net basis. 

Financial instruments 

Derivative financial instruments 

The Company enters into derivative 

financial instruments principally to manage 

its exposure to fluctuation in interest rates, 

exchange rates, prices of raw materials, 

energy and emission rights allowances. 

Derivative financial instruments are 

classified as current assets or liabilities 

based on their maturity dates and are 

accounted for at trade date. Embedded 

derivatives are separated from the host 

contract and accounted for separately if 

required by IAS 39, “Financial Instruments: 

Recognition and Measurement”. 

The Company measures all derivative 

financial instruments based on fair values 

derived from market prices of the 

instruments or from option pricing models, 

as appropriate. Gains or losses arising from 

changes in fair value of derivatives are 

recognized in the statement of income, 

except for derivatives that are highly 

effective and qualify for cash flow or 

net investment hedge accounting. 

Changes in the fair value of a derivative 

that is highly effective and that is 

designated and qualifies as a fair value 

hedge, along with the gain or loss on the 

hedged asset, liability, or unrecognized 

firm commitment of the hedged item 

that is attributable to the hedged risk, 

are recorded in the statement of income. 

Changes in the fair value of a derivative 

that is highly effective and that 

is designated and qualifies as a cash 

flow hedge are recorded in equity. 

Amounts deferred in equity are recorded 

in the statement of income in the periods 

when the hedged item is recognized 

in the statement of income and within 

the same line item. 

The Company formally assesses, both at 

the hedge’s inception and on an ongoing 

basis, whether the derivatives that are used 

in hedging transactions are highly effective 

in offsetting changes in fair values or cash 

flows of hedged items. When a hedging 

instrument is sold, terminated, expires or 

is exercised, the cumulated unrealized gain 

or loss on the hedging instrument is 

maintained in equity until the forecasted 

transaction occurs. If the hedged 

transaction is no longer probable, the 

cumulative unrealized gain or loss, which 

had been recognized in equity, is reported 

immediately in the statement of income. 

Foreign currency differences arising 

on the retranslation of a financial liability 

designated as a hedge of a net investment 

in a foreign operation are recognized 

directly as a separate component of equity, 

to the extent that the hedge is effective. 

To the extent that the hedge is ineffective, 

such differences are recognized in the 


Non-derivative financial instruments 

Non-derivative financial instruments 

include cash and cash equivalents, 

trade and other receivables, investments 

in equity securities, trade and other 

payables and debt and other liabilities. 

These instruments are recognized initially 

at fair value when the Company becomes 

a party to the contractual provisions of the 

instrument. They are derecognized if the 

Company’s contractual rights to the cash 

flows from the financial instruments expire 

or if the Company transfers the financial 

instruments to another party without 

retaining control or substantially all risks 

and rewards of the instruments. 

The Company classifies its investments 

in equity securities that have readily 

determinable fair values as 

available-for-sale which are recorded 

at fair value. Unrealized holding gains 

and losses, net of the related tax effect, 

on available-for-sale equity securities are 

reported as a separate component of 

equity until realized. Realized gains and 

losses from the sale of available-for-sale 

securities are determined on a first-in, 

first-out basis. 

Investments in privately held companies 

that are not considered equity method 

investments are carried at cost. 

Debt and liabilities, other than provisions, 

are stated at amortized cost. However, 

loans that are hedged under a fair value 

hedge are remeasured for the changes 

in the fair value that are attributable 

to the risk that is being hedged. 

Impairment of financial assets 

A financial asset is considered to be 

impaired if objective evidence indicates 

that one or more events have had 

a negative effect on the estimated future 

cash flows of that asset. Estimated future 

cash flows are determined using various 

assumptions and techniques, including 

comparisons to published prices in an 

active market and discounted cash flow 

projections using projected growth rates, 

weighted average cost of capital, 

and inflation rates. In the case of 

available-for-sale securities, a significant 

or prolonged decline in the fair value of the 

security below its cost is considered an 

indicator that the securities are impaired. 

If any such evidence exists for 

available-for-sale financial assets, 

the cumulative loss - measured as the 

difference between the acquisition cost 

and the current fair value, less any 

impairment loss on that financial asset 

previously recognized in the statement 

of income - is removed from equity 

and recognized in the statement of income. 

89 






If objective evidence indicates that cost 

method investments need to be tested 

for impairment, calculations are based 

on information derived from business 

plans and other information available 

for estimating their value in use. 

Any impairment loss is charged to the 


An impairment loss related to financial 

assets is reversed if and to the extent there 

has been a change in the estimates used 

to determine the recoverable amount. 

The loss is reversed only to the extent that 

the asset’s carrying amount does not 

exceed the carrying amount that would 

have been determined, if no impairment 

loss had been recognized. Reversals of 

impairment are recognized in net income 

except for reversals of impairment of 

available-for-sale equity securities, 

which are recognized in equity. 

Emission rights 

ArcelorMittal’s industrial sites which are 

regulated by the European Directive 

2003/87/EC of October 13, 2003 on 

carbon dioxide (“CO2”) emission rights, 

effective as of January 1, 2005 and 

amended by European Directive 

2004/101/EC of October 27, 2004, 

are located primarily in Germany, Belgium, 

Spain, France, Poland, Romania, Czech 

Republic and Luxembourg. The emission 

rights allocated to the Company on a 

no-charge basis pursuant to the annual 

national allocation plan are recorded on the 

balance sheet at nil value and purchased 

emission rights are recorded at cost. 

Gains and losses from the sale of excess 

allowances are recognized in the statement 

of income. If at the balance sheet date 

the Company is short of emission rights, 

it will record a provision through the 


90 

Revenue recognition 

Revenue is measured at the fair value 

of the consideration received or receivable. 

Revenue is reduced for estimated customer 

returns and other similar allowances. 

Revenue from the sale of goods is 

recognized when the Company has 

transferred to the buyer the significant risks 

and rewards of ownership of the goods, no 

longer retains control over the goods sold, 

the amount of revenue can be measured 

reliably, it is probable that the customer 

has accepted the ownership and risk and 

rewards of ownership of the goods, and the 

costs incurred or to be incurred in respect 

of the transaction can be measured reliably. 

Shipping and handling costs 

ArcelorMittal records amounts billed 

to a customer in a sale transaction for 

shipping and handling costs as sales and 

the related shipping and handling costs 

incurred as cost of sales. 

Financing costs 

Financing costs include interest income 

and expense, amortization of discounts 

or premiums on borrowings, amortization 

of costs incurred in connection with the 

arrangement of borrowings and net gain 

or loss from foreign exchange on translation 

of long-term debt, net of unrealized gains 

and losses on foreign exchange contracts. 

Earnings per common share 

Basic earnings per common share is 

computed by dividing net income by the 

weighted average number of common 

shares outstanding. Diluted earnings per 

share is computed by dividing income 

available to shareholders and assumed 

conversion by the weighted average 

number of common shares and potential 

common shares from outstanding stock 

options. Potential common shares are 

calculated using the treasury stock 

method and represent incremental 

shares issuable upon exercise of the 

Company’s outstanding stock options. 

Stock option plan/share-based 

payments 

ArcelorMittal issues equity-settled 

share-based payments to certain 

employees. Equity-settled share-based 

payments are measured at fair value 

(excluding the effect of non market-based 

vesting conditions) at the date of grant. 

The fair value determined at the grant 

date of the equity-settled share-based 

payments is expensed on a graded vesting 

basis over the vesting period, based on 

the Company’s estimate of the shares 

that will eventually vest and adjusted for 

the effect of non market-based vesting 

conditions. Fair value is measured using the 

Black-Scholes pricing model. The expected 

life used in the model has been adjusted, 

based on management’s best estimate, for 

the effects of non-transferability, exercise 

restrictions and behavioral considerations. 

Segment reporting 

ArcelorMittal reports its operations in 

six operating segments: Flat Carbon 


Americas and Europe, Africa, Asia and 

Commonwealth of Independent States 

(“AACIS”), Stainless Steel and ArcelorMittal 

Steel Solutions and Services. 

These business segments are used as the 

primary format for segmental reporting. 

They include attributable goodwill, 

intangible assets, property, plant and 

equipment, and equity method 

investments. They do not include cash 

and short-term deposits, short-term 

investments, tax assets, and other current 

financial assets. Segment liabilities are also 

those resulting from the normal activities 

of the segment, excluding tax liabilities and 

indebtedness but including post retirement 

obligations where directly attributable to 

the segment. Financing items are managed 

centrally for the Company as a whole and 

so are not directly attributable to individual 

business segments.

Geographical sectors are used as the 

secondary format for segmental reporting. 

Those areas separately disclosed represent 

ArcelorMittal’s most significant regional 

markets. Segment assets are operational 

assets employed in each region and include 

items such as tax and pension balances 

that are specific to a country. They do not 

include goodwill, deferred tax assets, 

other investments or receivables and 

other non-current financial assets. 

Segment liabilities are those arising 

within each region, excluding indebtedness. 

Financing items are managed centrally for 

the Company as a whole and so are not 

directly attributable to individual 

geographical segments. 

Critical accounting judgments 

The critical accounting judgments 

and significant assumptions made by 

management in the preparation of these 

financial statements are provided below. 

Purchase accounting 

Accounting for acquisitions requires 

ArcelorMittal to allocate the cost of the 

enterprise to the specific assets acquired 

and liabilities assumed based on their 

estimated fair values at the date of the 

acquisition. In connection with each of 

its acquisitions, the Company undertakes 

a process to identify all assets and liabilities 

acquired, including acquired intangible 

assets. The judgments made in identifying 

all acquired assets, determining the 

estimated fair value assigned to each class 

of assets acquired and liabilities assumed, 

as well as asset lives, can materially impact 

results of operations. Estimated fair values 

are based on information available near the 

acquisition date and on expectations and 

assumptions that have been deemed 

reasonable by management. 

There are several methods that can 

be used to determine the fair value of 

assets acquired and liabilities assumed. 

For intangible assets, the Company typically 

uses the “income method”. This method 

is based on the forecast of the expected 

future cash flows adjusted to present value 

by applying an appropriate discount rate 

that reflects the risk factors associated 

with the cash flow streams. Some of the 

more significant estimates and assumptions 

inherent in the income method or other 

methods include: the amount and timing 

of projected future cash flows; the discount 

rate selected to measure the risks inherent 

in the future cash flows (weighted average 

cost of capital); the assessment of the 

asset’s life cycle and the competitive trends 

impacting the asset, including consideration 

of any technical, legal, regulatory, 

or economic barriers to entry. 

The most common purchase accounting 

adjustments relate to the following assets 

and liabilities: 

• The fair value of identifiable intangible 

assets (generally patents, customer 

relationships and favorable and 

unfavorable contracts) is estimated 

as described above. 

• Property, plant and equipment is recorded 

at depreciated replacement cost. 

• The fair value of pension and other 

post-employment benefits is determined 

separately for each plan using actuarial 

assumptions valid as of the acquisition 

date relating to the population 

of employees involved and the fair 

value of plan assets. 

• Inventories are estimated based 

on expected selling prices at the date 

of acquisition reduced by an estimate 

of selling expenses and a normal 

profit margin. 

• Adjustments to deferred tax assets 

and liabilities of the acquiree are recorded 

to reflect purchase price adjustments, 

other than goodwill. 

Determining the estimated useful lives 

of tangible and intangible assets acquired 

requires judgment, as different types 

of assets will have different useful lives 

and certain intangible assets may be 

considered to have indefinite useful lives. 

If the fair value of the net assets acquired 

exceeds their acquisition cost, the excess 

is recognized immediately as a gain 

in the statement of income. 

Deferred tax assets 

ArcelorMittal records deferred tax assets 

and liabilities based on the differences 

between the carrying amount of assets 

and liabilities in the financial statements and 

the corresponding tax bases. Deferred tax 

assets are also recognized for the estimated 

future effects of tax losses carried forward. 

ArcelorMittal reviews the deferred tax 

assets in the different jurisdictions in which 

it operates periodically to assess the 

possibility of realizing such assets based 

on projected taxable profit, the expected 

timing of the reversals of existing 

temporary differences, the carry forward 

period of temporary differences and 

tax losses carried forward and the 

implementation of tax-planning strategies. 

Note 19 describes the total deferred 

tax assets recognized in the consolidated 

balance sheets and the estimated future 

taxable income required to utilize the 

recognized deferred tax assets. 

91 






Provisions for pensions and other 

post-employment benefits 

ArcelorMittal’s Operating Subsidiaries 

have employee benefits such as pension 

plans and post-employment benefit plans 

(primarily post-employment health care). 

The expense associated with these pension 

plans and post-employment benefits, 

as well as the carrying amount of the 

related liability/asset on the balance sheet 

is based on a number of assumptions and 

factors such as discount rates, expected 

rate of compensation increase, expected 

return on plan assets, health care cost trend 

rates, mortality rates, and retirement rates. 

• Discount rates. The discount rate is based 

on several high-quality corporate bond 

indexes in the appropriate jurisdictions 

(rated AA or higher by a recognized rating 

agency). Nominal interest rates vary 

worldwide due to exchange rates 

and local inflation rates. 

• Rate of compensation increase. The rate 

of compensation increase reflects actual 

experience and the Company’s long-term 

outlook, including contractually agreed 

upon wage rate increases for represented 

hourly employees. 

• Expected return on plan assets. 

The expected return on plan assets is 

derived from detailed periodic studies, 

which include a review of asset allocation 

strategies, anticipated long-term 

performance of individual asset classes, 

risks (standard deviations), and 

correlations of returns among the 

asset classes that comprise the plans’ 

asset mix. 

92 

• Healthcare cost trend rate. The healthcare 

cost trend rate is based on historical 

retiree cost data, near-term health care 

outlook, including appropriate cost 

control measures implemented by the 

Company, and industry benchmarks 

and surveys. 

• Mortality and retirement rates. Mortality 

and retirement rates are based on actual 

and projected plan experience. 

In accordance with IFRS, actuarial gains 

or losses resulting from experience and 

changes in assumptions are recognized in 

ArcelorMittal’s statement of income only 

if the net cumulative unrecognized actuarial 

gains and losses at the end of the previous 

reporting period exceeded the greater of 

10% of the present value of the defined 

benefit obligation at that date and 10% of 

the fair value of any plan asset at that date. 

The fraction exceeding 10% is then 

recognized over the expected average 

remaining working lives of the employees 

participating in the plans. 

Note 23 details the net liabilities of pension 

plans and other post-employment benefits 

including a sensitivity analysis illustrating 

the effects of changes in assumptions. 

Environmental and other contingencies 

ArcelorMittal is subject to changing 

and increasingly stringent environmental 

laws and regulations concerning air 

emissions, water discharges and waste 

disposal, as well as certain remediation 

activities that involve the clean-up of soil 

and groundwater. ArcelorMittal is currently 

engaged in the investigation and 

remediation of environmental 

contamination at a number of its facilities. 

Most of these are legacy obligations arising 

from acquisitions. ArcelorMittal recognizes 

a liability for environmental remediation 

when it is more likely than not that such 

remediation will be required and the 

amount can be estimated. 

The estimates of loss contingencies 

for environmental matters and other 

contingencies are based on various 

judgments and assumptions including 

the likelihood, nature, magnitude and 

timing of assessment, remediation and/or 

monitoring activities and the probable cost 

of these activities. In some cases, 

judgments and assumptions are made 

relating to the obligation or willingness 

and ability of third parties to bear 

a proportionate or allocated share of cost 

of these activities, including third parties 

who sold assets to ArcelorMittal 

or purchased assets from it subject to 

environmental liabilities. ArcelorMittal also 

considers, among other things, the activity 

to date at particular sites, information 

obtained through consultation with 

applicable regulatory authorities and third 

party consultants and contractors and its 

historical experience with other 

circumstances judged to be comparable. 

Due to the numerous variables associated 

with these judgments and assumptions, 

and the effects of changes in governmental 

regulation and environmental technologies, 

both the precision and reliability of the 

resulting estimates of the related 

contingencies are subject to substantial 

uncertainties. As estimated costs to 

remediate change, the Company will reduce 

or increase the recorded liabilities through 

credits or charges in the statement of 

income. ArcelorMittal does not expect 

these environmental issues to affect the 

utilization of its plants, now or in the future.

Impairment of tangible and intangible 

assets including goodwill 

At each reporting date, ArcelorMittal 

reviews the carrying amounts of its tangible 

and intangible assets (excluding goodwill) 

to determine whether there is any 

indication that the carrying amount 

of those assets may not be recoverable 

through continuing use. If any such 

indication exists, the recoverable amount 

of the asset is reviewed in order to 

determine the amount of the impairment, 

if any. The recoverable amount is the higher 

of its net selling price (fair value reduced 

by selling costs) and its value in use. 

In assessing its value in use, the estimated 

future cash flows are discounted to their 

present value using a pre-tax discount rate 

that reflects current market assessments 

of the time value of money and the risks 

specific to the asset. For an asset that does 

not generate cash inflows largely 

independent of those from other assets, 

the recoverable amount is determined 

for the cash-generating unit to which the 

asset belongs. The cash-generating unit 

is the smallest identifiable group of assets 

corresponding to operating units that 

generate cash inflows. If the recoverable 

amount of an asset (or cash-generating 

unit) is estimated to be less than 

its carrying amount, an impairment loss 

is recognized. An impairment loss is 

recognized as an expense immediately 

as part of operating income in the 


An impairment loss recognized in prior 

years is reversed if, and only if, there 

has been a change in the estimates 

used to determine the asset’s recoverable 

amount since the last impairment loss 

was recognized. However, the increased 

carrying amount of an asset due to 

a reversal of an impairment loss will 

not exceed the carrying amount that 

would have been determined (net of 

amortization or depreciation) had no 

impairment loss been recognized for the 

asset in prior years. A reversal of an 

impairment loss is recognized immediately 

as part of operating income in the 


Goodwill is reviewed at the 

cash-generating unit level for impairment 

annually or whenever changes in 

circumstances indicate that the carrying 

amount may not be recoverable. 

The recoverable amounts of the cash 

generating units are determined from the 

higher of its net selling price (fair value 

reduced by selling costs) or its value 

in use calculations, as described above. 

The key assumptions for the value in use 

calculations are those regarding the 

discount rates, growth rates and expected 

changes to selling prices and direct costs 

during the period. Management estimates 

discount rates using pre-tax rates that 

reflect current market rates for 

investments of similar risk. The growth 

rates are based on industry growth 

forecasts. Changes in selling prices 

and direct costs are based on historical 

experience and expectations of future 

changes in the market. 

Cash flow forecasts are derived from the 

most recent financial budgets for the next 

five years. Beyond the specifically 

forecasted period, the Company 

extrapolates cash flows for the remaining 

years based on an estimated growth rate. 

This rate does not exceed the average 

long-term growth rate for the relevant 

markets. Once recognized, impairment 

losses recognized for goodwill are 

not reversed. 

Use of estimates 

The preparation of financial statements 

in conformity with IFRS recognition and 

measurement principles and, in particular, 

making the aforementioned critical 

accounting judgments require the use 

of estimates and assumptions that affect 

the reported amounts of assets, liabilities, 

revenues and expenses. Management 

reviews its estimates on an ongoing basis 

using currently available information. 

Changes in facts and circumstances may 

result in revised estimates, and actual 

results could differ from those estimates. 

93 






Note 3: Acquisitions 

Acquisitions have been accounted for using 

the purchase method of accounting and, 

accordingly, the assets acquired and 

liabilities assumed have been recorded 

at their estimated fair values as of the 

date of acquisition. 

Significant acquisitions made during 

the years ended December 31, 2007 

and 2008 include: 

Sicartsa 

On April 20, 2007, ArcelorMittal acquired 

100% of the outstanding common shares 

of Siderúrgica Lázaro Cárdenas Las Truchas, 

S.A. de C.V. (“Sicartsa”) from Grupo 

Villacero. Sicartsa is a Mexican fully 

integrated producer of long steel. 

The acquisition also includes Metave, 

a mini-mill, Sibasa and Camsa, two 

rolling-mills located in Mexico, as well 

as Border Steel, a mini-mill in the US. 

Finally, through the acquisition of Sicartsa, 

Sersiinsa, a 50% joint-venture between 

Sicartsa and ArcelorMittal Lázaro Cárdenas 

S.A. de C.V., is fully consolidated. 

Sicartsa was acquired for a total cash 

consideration of 1,436 (1,427 net of 

9 of cash acquired) consisting of 526 for 

its shares and 910 related to a debt 

assumption. The allocation of the total 

purchase price was preliminary at 

December 31, 2007. Iron ore mines were 

revalued by 138 and property, plant and 

equipment was stepped down by 138. 

Following the finalization of the allocation 

of the purchase price of Sicartsa and 

Sersiinsa in 2008, total goodwill decreased 

from 274 to 153. Regarding Sicartsa, 

consideration paid was reduced by 75 

and net assets acquired increased by 56. 

94 

With respect to Sersiinsa, the acquisition 

of the 50% held by ArcelorMittal Lázaro 

Cárdenas S.A. de C.V. in Sersiinsa led 

to the recognition of goodwill of 10 and 

an increase of 72 in retained earnings 

corresponding to the revaluation of 

previously held interests. The acquisition 

of Sicartsa and Sersiinsa resulted in the 

consolidation of total assets of 2,086 and 

total liabilities of 1,630. 

Unicon 

On April 4, 2008, the Company completed 

the acquisition of Unicon, Venezuela’s 

leading manufacturer of welded steel pipes 

for a total consideration of 350 (336 net 

of 14 of cash acquired). The allocation 

of the total purchase price is preliminary 

at December 31, 2008. Intangible assets 

were recognized for a total amount of 

130 with respect to the valuation of 

trade mark and customer relationships. 

The acquisition of Unicon resulted in the 

consolidation of total assets of 591 and 

total liabilities of 413. The preliminary 

goodwill amounts to 158. The net result 

consolidated since acquisition date 

amounts to 16. 

Russian coal mines 

On April 10, 2008, the Company 

completed the acquisition from Severstal 

of three coal mines (Berezovskaya, 

Pervomayskaya and Anzherskoye) and 

associated assets located in the Kemerovo 

region in Russia for a total consideration 

of 720 (715 net of 5 of cash acquired) 

consisting of 272 for the shares and 

448 related to a debt assumption. 

The allocation of the total purchase price 

is preliminary at December 31, 2008. 

The fair value of the mining reserves 

was stated at 365. The preliminary 

goodwill amounts to 143. The net result 


amounts to (14). 

Bayou Steel 

On July 31, 2008, ArcelorMittal completed 

the acquisition of Bayou Steel, LLC, 

a producer of structural steel products with 

facilities in LaPlace, Louisiana and Harriman, 

Tennessee (USA) for a total consideration 

of 509 (504 net of 5 of cash acquired). 



The net result consolidated since acquisition 

date amounts to (14). 

Mid Vol and Concept 

On June 30, 2008, the Company completed 

the acquisition of Mid Vol Coal Group for 

a total consideration of 491 (453 net of 

38 of cash acquired). On August 18, 2008, 

ArcelorMittal finalized the acquisition of 

Concept Group for a total consideration 

of 166 (152 net of 14 of cash acquired). 

These acquisitions operate coal mines in the 

states of West Virginia and Virginia (USA). 



The acquisition of Mid Vol and Concept 

resulted in the consolidation of total assets 

of 1,217 and total liabilities of 718. 

The fair value of the mining reserves was 

638 for Mid Vol and 185 for Concept. 

The acquired liabilities include 617 assigned 

to unfavorable selling contracts that are 

being amortized over the term of the 

associated contracts ranging from four 

months to two years. The preliminary 

goodwill is 54 for Mid Vol and 52 for 

Concept. The net result consolidated 

since acquisition date amounts to 41. 

London Mining 

On August 20, 2008, the Company 

acquired London Mining South America 

Limited, an iron ore mine located in the 

Serra Azul region in Brazil for a total 

consideration of 818 (813 net of 5 of cash 

acquired) consisting of 772 for the shares 

and 46 related to a debt assumption. 



The net result consolidated since acquisition 

date amounts to (9).

Koppers’ Monessen 

On October 1, 2008, the Company 

completed the acquisition of the Koppers’ 

Monessen Coke Plant, located in Monessen, 

Pennsylvania (USA) and owned by Koppers 

Inc., for a total consideration of 170 (169 

net of 1 of cash acquired). The allocation 

of the total purchase price is preliminary 

at December 31, 2008. The net result 


amounts to (16). 

Acquisitions of minority interests 

The Company acquired significant minority 

interests in 2007 and 2008. 

Arcelor Brasil S.A. 

As a result of the acquisition of Arcelor, 

the Company made a mandatory tender 

offer to acquire all of the outstanding shares 

in Arcelor Brasil S.A. (“Arcelor Brasil”), 

subsequently renamed ArcelorMittal Brasil, 

not previously owned by Arcelor or any 

other affiliate of ArcelorMittal. 

On June 5, 2007, the Company publicly 

announced the results of its mandatory 

tender offer for the shares it did not hold 

in Arcelor Brasil. In the aggregate, 

the Company acquired 29.5% of the total 

share capital and 89.7% of the free float 

of Arcelor Brasil as of June 5, 2007, 

thereby increasing its current 67.1% 

shareholding in Arcelor Brasil to 96.6%. 

The Company paid for the shares with 

3,694 in cash and approximately 27 million 

Mittal Steel Class A common shares, 

representing a total consideration of 5,407. 

Following the auction and after a general 

Arcelor Brasil shareholders’ meeting held 

on August 8, 2007 approving the 

redemption of the remaining shares, 

the Company acquired the remaining 

3.4% for a total cash consideration of 497. 

On September 12, 2007, the Company 

announced that it held 100% of Arcelor 

Brasil. Total consideration for the transaction 

was 5,879, of which 4,191 paid in cash. 

The goodwill related to this acquisition 

amounts to 3,119 and the reduction in 

minority interests to 2,760. 

Arcelor 

On November 13, 2007, as a result 

of the legal merger between the former 

ArcelorMittal and Arcelor, the 5.76% 

remaining minority interests in Arcelor were 

cancelled. The transaction was recorded 

as if ArcelorMittal had been the acquirer. 

Total consideration was 3,204 (44 million, 

including 12 million treasury shares, with 

shares of the former ArcelorMittal valued 

at $72.65 per share) and resulting goodwill 

was 612. 

ArcelorMittal Poland 

On July 20, 2007, ArcelorMittal 

announced that it had reached an agreement 

with the Polish government to acquire 

an additional 25.2% of the outstanding 

shares in ArcelorMittal Poland, which were 

previously held by the Polish state and 

treasury ministry. The additional 

consideration was 181. These shares were 

accounted for as an acquisition in 2004 

in conjunction with the acquisition of 

a controlling interest in ArcelorMittal Poland 

as there was an irrevocable commitment to 

transfer operational and economic control 

of these remaining shares to the Company. 

ArcelorMittal Kryviy Rih 

The Company’s ownership in ArcelorMittal 

Kryviy Rih increased from 93.77% in 2006 

to 94.66% in 2007 and 95.02% in 2008. 

In 2008, the reduction in minority interest 

is 18 and the resulting goodwill amounts 

to 38. In 2007, the reduction in minority 

interest was 49 and the resulting goodwill 

amounted to 5. 

ArcelorMittal Inox Brasil 

On April 4, 2008, the Company 

completed the delisting offer to acquire 

all of the remaining outstanding shares 

of ArcelorMittal Inox Brasil. Following the 

squeeze out, the Company’s stake increased 

from 57.4% to 100% for a total 

consideration of 1,757. The transaction 

resulted in a reduction in minority interest 

of 863 and goodwill of 894. 

Acindar 

On November 20, 2008, the Company 

completed the delisting offer to acquire all 

of the remaining outstanding shares of 

Acindar Industria Argentina de Aceros S.A. 

Following the squeeze out, the Company 

acquired a 35% stake for a total 

consideration of 564. The transaction 

resulted in a reduction in minority interest 

of 321 and goodwill of 243. 

95 






Summary of significant acquisitions 

The table below summarizes the estimated fair value of the assets acquired and liabilities assumed for significant acquisitions and the 

acquisition of minority interests: 

Current assets 558 — 612 

Property, plant and equipment 1,411 — 134 

Other assets 117 — 2 

Total assets acquired 2,086 — 748 

Current liabilities 914 — 561 

Long-term loan 548 — 37 

Other long-term liabilities 20 — 8 

Deferred tax liabilities 148 — 6 

Minority interest — 2,809 — 

Total liabilities assumed 1,630 2,809 612 

Total net assets 456 2,809 136 

Minority interest — 2,591 20 

Net assets acquired 456 5,400 116 

Fair value of shares issued — 4,917 — 

Cash paid, net 1,352 4,401 224 

Debt repayment (910) — — 

Equity investment 95 — — 

Purchase price, net 537 9,318 224 

Revaluation of interests previously held 72 — — 

Goodwill 153 3,918 108 

Current assets 145 44 280 27 25 202 — 287 

Property, plant and equipment 716 908 181 818 109 211 — 240 

Other assets 26 265 130 — 47 84 — 47 

Total assets acquired 887 1,217 591 845 181 497 — 574 

Current liabilities 179 349 255 54 8 45 — 184 

Long-term loan 449 — 78 15 — 2 — 138 

Other long-term liabilities 91 312 6 2 4 10 — 8 

Deferred tax liabilities 44 57 68 7 — 93 — 1 

Minority interest — — 6 — — — 1,365 — 

Total liabilities assumed 763 718 413 78 12 150 1,365 331 

Total net assets 124 499 178 767 169 347 1,365 243 

Minority interest — — — — — — — 38 

Net assets acquired 124 499 178 767 169 347 1,365 205 

Fair value of shares issued — — — — — — — — 

Cash paid, net 715 605 336 813 169 504 2,648 411 

Debt repayment (448) — — (46) — — — (117) 

Debt outstanding on acquisition — — — — — — — 105 

Purchase price, net 267 605 336 767 169 504 2,648 399 

Goodwill 143 106 158 — — 157 1,283 4 194 

1 Historical IFRS information as of the date of acquisition was not available for the acquired entities. 

2 During 2008, the Company finalized the purchase price allocation for Sicartsa. 

3 Based on a preliminary purchase price allocation, which is subject to change. 

4 Includes negative goodwill of 17. 

96 

2007 

Sicartsa 

Acquisition of 

2 minority interests Others 1,3 

2008 

Russian Mid Vol & London Koppers‘ Bayou 

Acquisition 

of minority 

coal mines 3 Concept 3 Unicon 3 Mining 3 Monessen 3 Steel 3 interests Others 3

The total purchase price for the significant acquisitions consists of the following: 

Cash paid to stockholders, gross 1,359 719 655 349 814 170 509 

Transaction related fees 2 1 2 1 4 — — 

Shares issued — — — — — — — 

Total purchase price 1,361 720 657 350 818 170 509 

Debt assumed (910) (448) — — (46) — — 

Cash acquired (9) (5) (52) (14) (5) (1) (5) 

Equity investments acquired 95 — — — — — — 

Total purchase price, net 537 267 605 336 767 169 504 

The preliminary fair value adjustments for acquisitions made in 2008 are as follows: 


Russian Mid Vol & London Koppers’ Bayou 

Sicartsa coal mines Concept Unicon Mining Monessen Steel 

Historical Preliminary Preliminary 

IFRS fair value allocation of 

information adjustments purchase price 

Current assets 996 14 1,010 

Property, plant and equipment 988 2,195 3,183 

Other assets 68 531 599 

Total assets acquired 2,052 2,740 4,792 

Current liabilities 809 265 1,074 

Long-term loan 712 (30) 682 

Other long-term liabilities 34 399 433 

Deferred tax liabilities 43 227 270 

Minority interest 6 — 6 

Total liabilities assumed 1,604 861 2,465 

Total net assets 448 1,879 2,327 

Pro forma results 

The following pro forma financial information presents the results of operations of ArcelorMittal for 2008 as if all acquisitions had 

occurred as of the beginning of the periods presented. The 2007 pro forma information includes the results of operations of Sicartsa on 

the same basis. The pro forma financial information is not necessarily indicative of what consolidated results of operations would have 

been had the acquisitions been completed at the dates indicated. In addition, the pro forma financial information does not purport to 

project the future results of operations of the combined company. 

Unaudited pro forma Unaudited pro forma 

for the year ended for the year ended 

December 31, 2007 December 31, 2008 

Sales 105,456 125,614 

Net income 10,372 9,500 

Per share amounts: 

Basic earnings per common share 7.14 6.87 

Diluted earnings per common share 7.13 6.85 

97 






Note 4: Assets and Liabilities Held for Sale 

On February 20, 2007, the U.S. Department of Justice (“the DOJ”) informed the Company that the DOJ had selected the Sparrows 

Point (Flat Carbon Americas) steel mill located near Baltimore, Maryland for divestiture under a consent decree filed by the DOJ in 

August 2006. As a consequence, the assets and liabilities of Sparrows Point were classified as held for sale as of December 31, 2007. 

The DOJ appointed a trustee to handle the sale process. On March 26, 2008, ArcelorMittal confirmed that the Court-appointed 

divestiture trustee had entered into an agreement to sell Sparrows Point to OAO Severstal for total consideration of 810. The disposal 

was completed during the second quarter of 2008 and resulted in a loss of 207 (of which 200 was recorded as impairment loss). 

On August 30, 2007 the Company acquired a 76.9% stake in the German gas distribution company Saar Ferngas AG for total 

consideration of 542. As the result of a business combination in January 2009 under which the Company lost control of Saar Ferngas 

AG, the assets of this subsidiary were classified as held for sale. 

Assets classified as held for sale: 

Property, plant and equipment 670 417 

Trade and other receivables 127 201 

Inventories 470 — 

Other assets 29 292 

Total 1,296 910 

Liabilities classified as held for sale: 

Trade and other payables 173 271 

Other liabilities 93 99 

Total 266 370 

Note 5: Trade Accounts Receivable and Other 

98 





Total trade receivables (net of allowances) held by ArcelorMittal amounted to 9,533 and 6,737 at December 31, 2007 

and 2008, respectively. 

Before accepting any new customer, ArcelorMittal uses an internally developed credit scoring system to assess the potential 

customer’s credit quality and to define credit limits. For all significant customers the credit terms must be approved by the credit 

committees of each individual segment. Limits and scoring attributed to customers are reviewed periodically. There are no customers 

who represent more than 5% of the total balance of trade receivables. 

Included in ArcelorMittal’s trade receivable balance are debtors with a carrying amount of 6,866 and 5,125 as of December 31, 

2007 and 2008, respectively, which were not past due at the reporting date. 

The trade receivables balances are as follows as of December 31, 2007 and 2008: 


Gross amount 9,950 7,108 

Allowance for doubtful accounts (417) (371) 

Total 9,533 6,737

Exposure to credit risk by business segment 

The maximum exposure to credit risk for trade receivables at the reporting date by segment is: 

Flat Carbon Americas 1,018 543 

Flat Carbon Europe 1,866 1,330 

Long Carbon Americas and Europe 2,210 1,777 

ArcelorMittal Steel Solutions and Services 2,378 1,914 

AACIS and Stainless Steel 964 959 

Others activities 1,097 214 

Total 9,533 6,737 

Exposure to credit risk by geography 

The maximum exposure to credit risk for trade receivables at the reporting date by geographical area is: 

Europe 5,876 4,280 

North America 1,562 909 

South America 1,151 884 

Africa, Asia and CIS 563 542 

Middle East 381 122 

Total 9,533 6,737 

Aging of trade receivables 

The aging of trade receivables is as follows: 

The movement in the allowance for doubtful accounts in respect of trade receivables during the year is as follows: 




Gross Allowance Gross Allowance 

Not past due 6,866 (98) 5,125 (50) 

Past due 0-30 days 1,995 (55) 1,159 (50) 

Past due 31-120 days 695 (37) 552 (181) 

More than 120 days 394 (227) 272 (90) 

Total 9,950 (417) 7,108 (371) 

Balance at Deductions/ Balance at 

December 31, 2006 Additions Releases Others December 31, 2007 

428 14 (75) 50 417 


December 31, 2007 Additions Releases Others December 31, 2008 

417 68 (81) (33) 371 

99 






Note 6: Inventories 

Inventory, net of allowance for slow-moving, excess of cost over net realizable value or obsolete inventory, of 799 and 3,519 as of 

December 31, 2007 and 2008, respectively, is comprised of the following: 

Finished products 8,108 7,788 

Production in process 4,582 4,501 

Raw materials 6,739 9,771 

Manufacturing supplies, spare parts and other 2,321 2,681 

Total 21,750 24,741 

The amount of inventory pledged as collateral was 217 and 352 as of December 31, 2007 and 2008 respectively. 

The movement in the allowance for slow-moving, excess of cost over net realizable value or obsolete inventory is as follows: 

The cost of inventories recognized as an expense during the period was 43,455 and 42,433 in 2007 and 2008, respectively. 

The amount of write-down of inventories to net realizable value recognized as an expense within cost of sales in the statement 

of income is 483 and 3,049 in 2007 and 2008, respectively, and has been reduced by 407 and 303 for the reversal of such 

write-downs in 2007 and 2008, respectively. 

Note 7: Prepaid Expenses and Other Current Assets 

The other current assets consist of advance payments to taxing and other public authorities (including value-added tax (“VAT”)), 

positive fair values of derivative financial instruments, advances to employees, prepayments, accrued interest, dividends receivable 

and other miscellaneous receivables. 

100 




December 31, 2006 Additions Releases Others December 31, 2007 

602 483 (407) 121 799 


December 31, 2007 Additions Releases Others December 31, 2008 

799 3,049 (303) (26) 3,519 



VAT recoverable short-term 1,312 1,758 

Income tax receivable 504 837 

Other 2,828 1,844 

Total 4,644 4,439

Note 8: Goodwill and Intangible Assets 

Goodwill and intangible assets are summarized as follows: 

Cost: 

At December 31, 2006 7,574 488 983 2,508 11,553 

Acquisitions 4,300 26 — 17 4,343 

Disposals — (23) — (1) (24) 

Foreign exchange differences 1,092 51 44 174 1,361 

Transfers and other movements — 127 (4) (815) (692) 

At December 31, 2007 12,966 669 1,023 1,883 16,541 

Acquisitions 2,058 147 76 17 2,298 

Disposals — (66) — (270) (336) 

Adjustment on allocation of purchase price (194) — — 65 (129) 

Foreign exchange differences (482) (85) (35) (143) (745) 

Transfers and other movements 118 289 64 267 738 

At December 31, 2008 14,466 954 1,128 1,819 18,367 

Accumulated amortization and impairment losses: 

At December 31, 2006 — 120 280 113 513 

Disposals — (17) — — (17) 

Impairment and reduction of goodwill 303 — — — 303 

Amortization charge — 82 332 184 598 

Foreign exchange differences — 35 22 56 113 

At December 31, 2007 303 220 634 353 1,510 

Disposals — (63) — (268) (331) 

Impairment and reduction of goodwill 560 — — — 560 

Amortization charge — 100 260 223 583 

Foreign exchange differences (26) (62) (30) (27) (145) 

Transfers and other movements — 33 44 (6) 71 

At December 31, 2008 837 228 908 275 2,248 

Carrying amount: 

At December 31, 2007 12,663 449 389 1,530 15,031 

At December 31, 2008 13,629 726 220 1,544 16,119 

Goodwill acquired in business combinations and acquisitions of minority interests are as follows: 

Concessions, 

Goodwill on patents Favorable 

acquisition and licenses contracts Other Total 

Acquisitions Exchange rate 

Net value (including differences Impairment Adjustment on Net value 

December 31, minority and other and other allocation of December 31, 

2006 interests) movements reductions purchase price 2007 

Flat Carbon Europe 2,240 400 319 (34) — 2,925 

Flat Carbon Americas 1,048 2,372 336 (220) — 3,536 

Long Carbon Europe 1,030 102 120 — — 1,252 

Long Carbon Americas 426 1,163 128 (43) — 1,674 

AACIS 1,384 10 6 — — 1,400 

Stainless 1 740 92 96 (2) — 926 

Steel Solutions and Services 694 161 82 (4) — 933 

Others 12 — 5 — — 17 

Total 7,574 4,300 1,092 (303) — 12,663 

101 






102 

Acquisitions Exchange rate 

Net value (including differences Impairment Adjustment on Net value 

December 31, minority and other and other allocation of December 31, 

2007 interests) movements reductions purchase price 2008 

Flat Carbon Europe 2 2,925 70 (51) (248) — 2,696 

Flat Carbon Americas 2 3,536 122 189 (17) — 3,830 

Long Carbon Europe 1,252 — (13) (2) — 1,237 

Long Carbon Americas 2 1,674 417 78 (292) (131) 1,746 

Pipes & Tubes 2 — 158 — — — 158 

AACIS 2 1,400 181 (90) — — 1,491 

Stainless 1 926 902 (280) — (63) 1,485 

Steel Solutions and Services 2 933 205 (151) (1) — 986 

Others 17 3 (20) — — — 

Total 12,663 2,058 (338) (560) (194) 13,629 

1 Includes Acesita, with a net value of 257 as of December 31, 2007 and December 31, 2008. 

2 Subject to change upon finalization of purchase price allocation. 

The allocation by segment and operating unit has been aligned with the cash-generating unit (“CGU”) defined for impairment 

testing purposes. 

Goodwill is reviewed at the cash-generating unit level for impairment annually or whenever changes in circumstances indicate that 

the carrying amount may not be recoverable. The recoverable amounts of the cash-generating units are determined from the higher 

of fair value less cost to sell or value in use calculations. The key assumptions for the value in use calculations are those regarding the 

discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount 

rates using pre-tax rates that reflect current market rates for investments of similar risk. The growth rates are based on industry growth 

forecasts. Changes in selling prices and direct costs are based on historical experience and expectations of future changes in the market. 

Cash flow forecasts are derived from the most recent financial plans approved by management for the next five years. Beyond the 

specifically forecasted period, the Company extrapolates cash flows for the remaining years based on an estimated growth rate. 

This rate does not exceed the average long-term growth rate for the relevant markets. Once recognized, impairment losses recognized 

for goodwill are not reversed. 

During 2007 and 2008, the Company recorded an impairment of goodwill of 43 and 131 and reduction of goodwill of 260 and 429, 

respectively. The reduction of goodwill is due to the recognition of deferred tax assets on acquired net operating losses not previously 

recognized in purchase accounting because they did not satisfy the criteria for separate recognition when the business combination 

was initially accounted for. These amounts have been included within cost of sales in the statement of income. 

The Company’s weighted average discount rate used for the valuation of the main cash-generating units (“CGU”) was 14.1% and 

15.0% for the years ended December 31, 2007 and 2008, respectively. 

As a part of its annual impairment test procedures, the Company did not record an impairment expense for the CGUs above. 

In addition, the Company assessed the sensitivity of the estimated recoverable amounts to an independent change of one point 

in either the discount rate or the perpetual growth rate as of December 31, 2008. An increase in one percentage point in discount 

rate as well as a decrease in one percentage point in the perpetual growth assumption would have not resulted in any material 

additional goodwill impairment. 

Research and development costs are expensed and included in selling, general and administrative expenses within the statement 

of income. These costs amounted to 214 and 295 for the years ended December 31, 2007 and 2008, respectively.

Note 9: Property, Plant and Equipment 

Property, plant and equipment are summarized as follows: 

Land, buildings Machinery Construction 

and improvements and equipment in progress Total 

Cost: 

At December 31, 2006 14,344 44,169 4,460 62,973 

Additions 440 1,964 3,044 5,448 

Acquisitions through business combinations 499 896 88 1,483 

Foreign exchange differences 2,403 7,096 245 9,744 

Disposals (174) (1,030) (22) (1,226) 

Other movements 1,658 2,005 (4,036) (373) 

At December 31, 2007 19,170 55,100 3,779 78,049 

Additions 350 1,771 3,410 5,531 

Acquisitions through business combinations 2,385 719 79 3,183 

Foreign exchange differences (2,451) (6,381) (321) (9,153) 

Disposals (150) (873) (39) (1,062) 

Other movements 412 3,158 (2,875) 695 

At December 31, 2008 19,716 53,494 4,033 77,243 

Accumulated depreciation and impairment: 

At December 31, 2006 1,878 6,514 8 8,400 

Depreciation charge for the year 567 3,235 5 3,807 

Impairment 3 178 12 193 

Disposals (42) (819) — (861) 

Foreign exchange differences 884 3,919 43 4,846 

Other movements (38) (272) (20) (330) 

At December 31, 2007 3,252 12,755 48 16,055 

Depreciation charge for the year 702 4,015 3 4,720 

Impairment 101 387 11 499 

Disposals (73) (773) — (846) 

Foreign exchange differences (854) (3,598) (12) (4,464) 

Other movements 46 484 (6) 524 

At December 31, 2008 3,174 13,270 44 16,488 

Carrying amount: 

At December 31, 2007 15,918 42,345 3,731 61,994 

At December 31, 2008 16,542 40,224 3,989 60,755 

Other movements represent mostly transfers between the categories. 

During the period, the Company analyzed the recoverable amount of its manufacturing property, plant and equipment. 

The recoverable amount of the relevant assets was determined on the basis of their value in use. As a result, the Company 

determined that the recoverable amount for certain of its property, plant and equipment was less than its carrying amount. 

Accordingly, impairment loss of 193 and 499 for the year ended December 31, 2007 and 2008, respectively, was recognized 

immediately as an expense as part of operating income in the statement of income. 

The Company has pledged 671 and 580 in land and buildings as of December 31, 2007 and 2008, respectively, to secure banking 

facilities granted to the Company. These facilities are further disclosed in note 15. 

103 






Note 10: Investments in Associates and Joint Ventures 

The Company had the following investments in associates and joint ventures: 

Net asset Net asset 

value attributable value attributable 

Ownership % at to the Company at to the Company at 

Investee Location December 31, 2008 December 31, 2007 December 31, 2008 

DHS Group 1 Germany 33.43% 1,598 1,262 

China Oriental Group Company Ltd 2 China 47.03% 644 1,187 

Gestamp Spain 35% 361 404 

Gonvarri Industrial Consolidated Spain 35% 423 376 

Eregli Demir Ve Celik Fab.T.AS 3 Turkey 24.99% — 1,633 

Macarthur Coal 4 Australia 19.9% — 515 

Hunan Valin 5 China 33.02% 442 780 

Kalagadi Manganese (Propriety) Limited 6 South Africa 50% — 360 

Other 2,419 1,995 

Total 5,887 8,512 

1 On December 15, 2008, the Company reduced its voting interest from 51.25% to 33.43%, corresponding to an economic interest of 30.08% for total consideration of 936 through 

the sale of shares to Struktur-Holding-Stahl GmbH & Co. (“SHS”) and Dillinger Hütte Saarstahl AG (“DHS”). 

2 On November 8, 2007, ArcelorMittal purchased approximately 820,000,000 China Oriental shares for a total consideration of 644 (HK$ 5.02 billion), or a 28.02% equity interest. 

On December 13, 2007, the Company entered into a shareholder’s agreement which enabled it to become the majority shareholder of China Oriental and to raise eventually 

its equity stake in China Oriental to 73.13%. At the time of the close of its tender offer on February 4, 2008, ArcelorMittal had reached a 47% shareholding in China Oriental. 

Given the 45.4% shareholding by the founding shareholders, this left a free float of 7.6% against a minimum Hong Kong Stock Exchange (“HKSE”) listing requirement of 25%. 

The measures to restore the minimum free float have been achieved by means of sale of 17.4% stake to ING Bank and Deutsche Bank together with put option agreements. 

The Company has not derecognized the 17.4% stake as it retained the significant risks and rewards. As of December 31, 2008, the investment had a market value of 228. 

3 On June 13, 2008, ArcelorMittal acquired 11.31% of Eregli Demir Ve Celik Fab.T.AS (“Erdemir”) shares for a total consideration of 869, increasing its stake to 24.99%. 

As of December 31, 2008, the investment had a market value of 766. In 2007 and the first five months of 2008, this investment had been classified as available-for-sale. 

4 On May 21, 2008, ArcelorMittal acquired a 14.9% stake in Macarthur Coal Limited. On July 10, 2008, the Company increased its stake from 14.9% to 19.9%, following the acquisition 

of 10,607,830 shares from Talbot Group Holdings. The total acquisition price for Macarthur Coal is 812. As of December 31, 2008, the investment had a market value of 87. 

5 Following additional purchases of shares in January 2008, the stake of the Company increased to 33.02%. As of December 31, 2008, the investment had a market value 

of 604 (1,058 in 2007). 

6 On August 19, 2008, ArcelorMittal set up a joint venture partnership with Kalagadi Manganese and acquired a 50% stake for 432. 

Summarized financial information, in the aggregate, for the associates and joint ventures is as follows: 

Condensed statement of income data: 

Gross revenue 28,696 45,101 

Net income 1,806 3,319 

Condensed balance sheet data: 

Total assets 27,518 40,671 


The Company assessed the recoverability of its investments accounted for using the equity method. In determining the value 

in use of its investments, the Company estimated its share in the present value of the projected future cash flows expected 

to be generated by operations of associates. Based on this analysis, the Company concluded that no impairment was required. 

104 


2007 2008

Note 11: Other Investments 

The Company holds the following other investments: 

The change in fair value of available-for-sale securities for the period was recorded directly in equity as an unrealized result 

of 569 and (78) for the years ended December 31, 2007 and 2008, respectively, net of income tax and minority interests. 

No impairment loss for available-for-sale securities was recognized in 2007. An impairment expense of 109 was recognized 

in 2008 because the Company determined that the market value decline for certain of its available-for-sale securities was either 

significant or prolonged. 

The decrease in available-for-sale securities is mainly related to the reclassification of Erdemir shares to investments in associates 

on July 1, 2008 and to the disposal of certain of these available-for-sale securities. 

Note 12: Other Assets 



Available-for-sale securities (at fair value) 1,839 56 

Erdemir 1,019 — 

Others 820 56 

Investments accounted for at cost 320 381 

Total 2,159 437 

Other long-term receivables consist mainly of assets related to derivative financial instruments, value-added tax (“VAT”) receivable, 

loans, cash guarantees and deposits. 

On April 30, 2008, in order to restore the public float of China Oriental on the HKSE, the Company entered into a sale and purchase 

agreement with ING Bank N.V. and Deutsche Bank Aktiengesellschaft for the sale of 509,780,740 shares representing approximately 

17.40% of the issued share capital of China Oriental. The transaction also includes put option agreements entered into with both banks. 

The consideration for the disposal of the shares has been paid to Deutsche Bank and ING as collateral to secure the obligations of the 

Company under the put agreements. 



Revaluation of derivative financial instruments 105 240 

Assets in pension funds 419 491 

Long-term VAT receivables 298 215 

Collateral related to the put agreements on China Oriental — 381 

Other financial assets 775 773 

Total 1,597 2,100 

105 






Note 13: Balances and Transactions with Related Parties 

Transactions with related parties, all of which are associates or joint ventures of the Company, were as follows: 

Sales Trade receivables 

Year ended Year ended Year ended Year ended 

Transactions December 31, 2007 December 31, 2008 December 31, 2007 December 31, 2008 

Macsteel Int’l Holding & Subsidiaries 941 729 45 25 

I/N Kote 408 347 6 — 

Polski Koks 445 632 81 31 

Coils Lamiere Nastri (“CLN”) SPA 645 797 107 51 

Gonvarri Industrial SA 275 553 1 25 

WDI 175 106 3 — 

Zaklad Przetworstwa 169 240 21 5 

Stalprofil S.A. 111 111 13 9 

Lamines Marchands Europeens SA 168 165 37 5 

Borcelik Celik Sanayii Ticaret AS 214 315 39 — 

Florin Centrum 47 64 7 6 

Gouvauto SA 145 239 12 22 

GTC — 167 — 34 

Berg Steel Pipe Corp 110 113 — — 

ArcelorMittal Gonvarri SSC Slovakia 92 121 12 1 

Gestamp Servicios 71 70 7 3 

Gonvarri Productos Siderurgicos SA 67 82 11 3 

Bamesa Celik Servis Sanayii Ticaret AS 66 92 19 9 

Hierras Aplanaciones SA 65 93 9 11 

Gonvarri Brasil SA 62 314 22 13 

Noury SA 50 62 5 3 

Alcat SP 36 71 12 6 

Consolidated Wire Industries Limited 36 52 4 1 

Condesa Favril Sa — 136 — 4 

Noble 1 — 113 — 21 

Westfälische Drahtindustrie — 94 — 1 

Arcelor SSC Sverige AB — 63 — 6 

Glacier Trading Centre FZE — 55 — 13 

Other 369 415 94 65 

Total 4,767 6,411 567 373 

1 During 2008, the Company granted a long-term loan to Noble International Ltd. (“Noble”) of 85. The outstanding balance payable by Noble as of December 31, 2008 is 86, 

for the principal and accrued interest. 

106

Purchases of raw materials & others Trade payables 

Year ended Year ended Year ended Year ended 

Transactions December 31, 2007 December 31, 2008 December 31, 2007 December 31, 2008 

Polski Koks 623 490 72 21 

E.I.M.P 282 274 — — 

Forges et Acieries de Dillingen 330 129 56 41 

I/N Tek (Tolling charges) 136 57 31 — 

Peña Colorada 70 85 41 39 

PCI Associates (Tolling Fees) 45 — — — 

Eko Recycling GmbH — 50 — 1 

Borcelik Celik Sanyaii Ticaret AS 198 188 40 20 

ArcelorMittal Gonvarri SSC Slovakia 64 1 8 4 

ATIC Services 164 79 22 2 

Dillinger Hütte Saarstahl AG 103 8 24 1 

Cia Hispano Brasileira de Pelotizaçao SA 60 98 12 18 

Macarthur Coal LTD — 132 — 30 

SOTEG — 107 — 24 

Noble — 78 — 17 

SOMEF — 59 — 9 

ArcelorMittal Insurance Consultants SA — 51 — 9 

Other 333 505 140 106 

Total 2,408 2,391 446 342 

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated 

in consolidation and are not disclosed in this note. Refer to note 26 for disclosure of transactions with key management personnel. 

107 






The principal subsidiaries of the Company in 2008 were as follows: 

Name of Subsidiary 


Abbreviation Country 

ArcelorMittal Dofasco Inc. Dofasco Canada 

ArcelorMittal Lázaro Cárdenas S.A. de C.V. ArcelorMittal Lázaro Cárdenas Mexico 

ArcelorMittal USA Inc. ArcelorMittal USA USA 

ArcelorMittal Mines Canada Inc 


ArcelorMittal Mines Canada Canada 

ArcelorMittal Atlantique et Lorraine SAS ArcelorMittal Atlantique et Lorraine France 

ArcelorMittal Belgium N.V. Arcelor Steel Belgium Belgium 

ArcelorMittal España S.A. ArcelorMittal España Spain 

ArcelorMittal Flat Carbon Europe SA AMFCE Luxembourg 

ArcelorMittal Galati S.A. ArcelorMittal Galati Romania 

Industeel Belgium S.A. Industeel Belgium Belgium 

Industeel France S.A. 


Industeel France France 

Acindar Industria Argentina de Aceros S.A. Acindar Argentina 

ArcelorMittal Belval & Differdange SA ArcelorMittal Belval & Differdange Luxembourg 

ArcelorMittal Brasil S.A. ArcelorMittal Brasil Brazil 

ArcelorMittal Hamburg GmbH ArcelorMittal Hamburg Germany 

ArcelorMittal Hochfeld GmbH ArcelorMittal Hochfeld Germany 

ArcelorMittal las Truchas, S.A. de C.V. Sicartsa Mexico 

ArcelorMittal Madrid S.L. ArcelorMittal Madrid Spain 

ArcelorMittal Montreal Inc ArcelorMittal Montreal Canada 

ArcelorMittal Olaberría S.L. ArcelorMittal Olaberría Spain 

ArcelorMittal Ostrava a.s. ArcelorMittal Ostrava Czech Republic 

ArcelorMittal Point Lisas Ltd. ArcelorMittal Point Lisas Trinidad and Tobago 

ArcelorMittal Poland S.A. ArcelorMittal Poland Poland 

ArcelorMittal Ruhrort GmbH ArcelorMittal Ruhrort Germany 

Société Nationale de Sidérurgie S.A. 

AACIS 

Sonasid Morocco 

ArcelorMittal South Africa Ltd. ArcelorMittal South Africa South Africa 

JSC ArcelorMittal Temirtau ArcelorMittal Temirtau Kazakhstan 

OJSC ArcelorMittal Kryviy Rih 


ArcelorMittal Kryviy Rih Ukraine 

ArcelorMittal Inox Brasil S.A. Acesita or ArcelorMittal Inox Brasil Brazil 

ArcelorMittal Stainless Belgium 


AMSB Belgium 

ArcelorMittal International Luxembourg SA ArcelorMittal Luxembourg Luxembourg 

108

Note 14: Short-Term Debt 

Short-term debt, including the current portion of long-term debt, consisted of the following: 

Short-term bank loans and other credit facilities 3,653 4,564 

Current portion of long-term debt (note 15) 4,832 3,777 

Revaluation of interest rate hedge instruments (note 16) — 3 

Current portion of lease obligations (note 15) 57 65 

Total 8,542 8,409 

Short-term debt includes short-term loans, overdrafts and commercial paper. 

Commercial paper 

The Company has a commercial paper program that was increased by €1 billion on March 26, 2008, enabling borrowings 

of up to €3 billion (4,175). 

Note 15: Long-Term Debt 

Long-term debt is comprised of the following as of December 31: 



Year of maturity Type of interest Interest rate 1 2007 2008 

Corporate 

$3.2 billion Credit Facility 2010 Floating 2.5%-3.2% 2,700 3,181 

€17 billion Credit Facility 2011 – 2012 Floating 2.5%-5.7% 16,357 16,289 

EBRD loans 2009 – 2015 Floating 3.3%-4.7% 216 304 

Debenture loans 2009 – 2018 Fixed 3.4%-6.1% 2,917 4,809 

Other loans 2009 – 2035 Floating 1%-5.5% 1,583 1,385 

Other loans 2009 – 2015 Fixed 3.7%-6.4% 372 724 

Total Corporate 24,145 26,692 

Americas 

Senior secured notes 2014 Fixed 9.75% 420 420 

Senior unsecured notes 2014 Fixed 6.5% 500 500 

Asset acquisition loans 2009 – 2018 Fixed/Floating 4.5%-11.4% 813 836 

Other loans 2009 – 2014 Fixed 5.75%-10% 101 376 

Other loans 2009 – 2018 Floating 2%-21% 380 249 

Total Americas 2,214 2,381 

Europe, Asia & Africa 

Other loans 2009 – 2010 Fixed 3.2%-16% 259 67 

Other loans 2009 – 2010 Floating 3%-23% 16 88 

Total Europe, Asia & Africa 275 155 

Total 26,634 29,228 

Less current portion of long-term debt 4,832 3,777 

Total long-term debt (excluding lease obligations) 21,802 25,451 

Revaluation of interest rate hedge instruments (note 16) 18 — 

Lease obligations 2 265 216 

Total long-term debt, net of current portion 22,085 25,667 

1 Rates applicable to balances outstanding at December 31, 2008. The effective rate of the €17 billion Credit Facility amounts to 4.60% in 2008. 

2 Net of current portion of 57 in 2007 and 65 in 2008. 

109 






Corporate 

€17 billion credit facility 

On January 30, 2006, the Company 

entered into a €5 billion credit agreement 

with a group of lenders to finance the 

cash portion of the offer for Arcelor 

along with related transaction costs 

(the “Initial Acquisition Facility”) and 

a €3.0 billion credit agreement to refinance 

the previous credit facility entered into 

during 2005 (the “Refinancing Facility”). 

On May 23, 2006, the Company entered 

into a €2.8 billion agreement with a group 

of lenders to finance the cash portion of 

the increased offer for Arcelor along with 

related transaction costs (the “Revised 

Acquisition Facility”). 

On November 30, 2006, the Company 

entered into a €17 billion credit agreement, 

which is comprised of a €12 billion term 

loan facility and a €5 billion revolving credit 

facility, with a group of lenders to refinance 

the Company’s Refinancing Facility and 

Initial and Revised Acquisition Facilities 

and Arcelor’s €4.0 billion term loan facility 

and €3.0 billion revolving credit facility. 

All of these refinanced facilities were 

repaid and cancelled in December 2006. 

On October 30, 2007, the maturity 

of the €5 billion revolving credit facility 

was extended for one additional year, to 

November 30, 2012. On December 10, 

2007, ArcelorMittal transferred the total 

credit facility to ArcelorMittal Finance. 

ArcelorMittal provided an unconditional 

guarantee securing the debt. On October 

31, 2008, the total outstanding amount 

under this credit facility was transferred 

to ArcelorMittal. 

$3.2 billion credit facility 

On April 7, 2005, the Company and certain 

subsidiaries signed a five-year $3.2 billion 

credit facility, which is comprised of a 

$1.7 billion term loan and a $1.5 billion 

revolving credit facility, with a consortium 

of banks. 

110 

On February 6, 2007, an amendment deed 

was signed to align the agreement with 

the €17 billion credit facility agreement 

discussed above. On December 10, 2007, 

this credit facility was transferred to 

ArcelorMittal Finance and on September 5, 

2008 the total outstanding amount 

under this credit facility was transferred 

to ArcelorMittal. 

European Bank for Reconstruction 

and Development (“EBRD”) Loans 

The Company has entered into three 

separate agreements with the EBRD for 

on-lending to its subsidiaries as follows: 

On November 18, 2002, as part of 

the acquisition of ArcelorMittal Galati, 

the Company entered into an agreement 

with the EBRD for capital expenditures 

and working capital requirements. The loan 

is guaranteed by the Company and certain 

of its subsidiaries. The outstanding amount 

as of December 31, 2007 and 2008 was 

33 and 15, respectively. 

On April 4, 2006, the Company signed 

a 200 loan agreement with the EBRD for 

on-lending to ArcelorMittal Kryviy Rih. 

The outstanding amount of the loan was 

183 and 150 as of December 31, 2007 


On June 15, 2007, the Company signed 

a 100 loan agreement with the EBRD for 

on-lending to ArcelorMittal Temirtau in 

order to finance the overall modernization 

of the coal mines operated by ArcelorMittal 

Temirtau in the region of Karaganda 

with the aim to bring them in line with 

international best practice in terms of 

productivity and health and safety. 

The outstanding amount under this 

agreement at December 31, 2007 and 

2008 was nil and 100, respectively. 

Debenture loans 

During 2001, the former Usinor (renamed 

ArcelorMittal France) issued €600 million 

of loans in two tranches of €500 million 

on April 10 and €100 million on July 31. 

The loans are unsecured and 

unsubordinated and bear interest at 

6.125% per annum due April 10, 2008. 

On April 10, 2008 the bond was repaid. 

During 2003, ArcelorMittal Finance issued 

€600 million of loans in two tranches 

of €500 million on September 24 and 

€100 million on December 4. The loans 

are unsecured and unsubordinated and bear 

interest at 5.125% per annum due 

September 24, 2010. 

On July 15, 2004, ArcelorMittal Finance 

issued €100 million principal amount of 

unsecured and unsubordinated fixed rated 

notes bearing interest at 5.50% per annum 

(issued at 101.97%) due July 15, 2014. 

On November 7, 2004, ArcelorMittal 

Finance issued €500 million principal 

amount of unsecured and unsubordinated 

fixed rated bonds bearing interest at 

4.625% per annum (issued at 99.195%) 

due November 7, 2014. 

On December 10, 2004, ArcelorMittal 

Finance issued €100 million principal 

amount of unsecured and unsubordinated 

fixed rated bonds bearing interest at 

3.395% per annum (issued at 100.00%) 

due December 10, 2009. 

On May 27, 2008, the Company issued 

3,000 principal amount of unsecured and 

unsubordinated fixed rated bonds in two 

tranches. The first tranche of 1,500 bears 

interest at 5.375% (issued at 99.722%) 

due June 2013 and the second tranche of 

1,500 bears interest at 6.125% (issued at 

99.571%) due June 2018. 

Debenture loans denominated in euro 

represent a total amount of €1,300 million. 

Other debenture loans are denominated 

in U.S. dollars.

Other facilities 

Americas 

Asset Acquisition Loans 

On July 24, 2007, ArcelorMittal 

Senior Secured Notes 

In May 2005, ArcelorMittal USA acquired 

Finance, together with a subsidiary, 

signed a five-year €500 million bilateral 

facility due 2012. 

In 2007 and 2008, ArcelorMittal Finance 

entered into bilateral credit facilities 

totaling €950 million. Their proceeds may 

be used for general corporate purposes. 

During 2008, all these credit facilities 

were transferred to ArcelorMittal. All credit 

facilities remained unutilized at December 

31, 2008. 

On May 13, 2008, ArcelorMittal Finance 

entered into a liquidity facility through 

a loan that was pre-marketed to a group 

of relationship lenders totaling 4,000. 

This credit facility has remained unutilized 

and is fully available to ArcelorMittal. 

Their proceeds may be used for general 

corporate purposes. 

On February 11, 2009, ArcelorMittal 

announced that it had secured 

commitments from banks for two 

forward start facilities totaling 4,800 

(the “Forward Start Facilities”), subject to 

certain conditions. A 3,250 revolving credit 

facility in respect of these commitments 

was entered into on February 13, 2009. 

A forward start facility provides a borrower 

with a committed facility to refinance 

an existing facility (which is not amended 

and continues in force), and therefore 

certainty as to the availability of funds 

for that refinancing. If drawn, the Forward 

Start Facilities would effectively extend the 

maturities of the 4,800 principal amount 

of indebtedness to 2012 (from original 

On March 25, 2004, Ispat Inland ULC 

issued Senior Secured Notes with an 

aggregate principal amount of 800 of 

which 150 were floating rate notes bearing 

interest at LIBOR plus 6.75% due April 1, 

2010 and 650 were fixed rate notes 

bearing interest at 9.75% (issued at 

99.212% to yield 9.875%) due April 1, 

2014 (the “Senior Secured Notes”). 

The Senior Secured Notes are secured by 

First Mortgage Bonds (relating to certain 

assets of the former Ispat Inland Inc.) 

originally totaling 800 and by a second 

position lien on the inventory of Mittal 

Steel USA (renamed ArcelorMittal USA). 

As further credit enhancement, the Senior 

Secured Notes are fully and unconditionally 

guaranteed by ArcelorMittal USA, certain 

of its subsidiaries as well as by ArcelorMittal 

and certain other subsidiaries. The terms 

of the Senior Secured Notes place certain 

limitations on the ability of ArcelorMittal 

USA and its subsidiaries to incur additional 

indebtedness, pay dividends or make other 

distributions and various other activities. 

The indenture also contains limited 

covenants that are applicable to 

ArcelorMittal. These limitations are 

subject to a number of exceptions and 

qualifications. The Senior Secured Notes 

became investment grade rated as of 

January 19, 2006. As a result, many 

of the above limitations were suspended, 

including restrictions on paying dividends or 

making other distributions to shareholders. 

Senior Unsecured Notes 

a coke oven battery at one of its steel 

plants that was previously leased under 

a capital lease. The related loan amounted 

to 118 and 101 as of December 31, 

2007 and 2008, respectively. Certain 

Operating Subsidiaries in Brazil entered 

into loans mainly with Banco Nacional de 

Desenvolvimento and Banco Bradesco S.A. 

for a total amount of 695 in order 

to finance expansion of capacity. 

Together the outstanding loan amount 

was 813 and 836 including accrued 

interest as of December 31, 2007 and 

2008, respectively. 

Other loans 

The other loans relate mainly to loans 

contracted by ArcelorMittal Inox Brasil SA, 

ArcelorMittal Brasil and Vega do Sul with 

different counterparties. On April 24, 

2008, ArcelorMittal Brasil entered into 

a BRL 600 million loan agreement due 

2010 and bearing a floating interest rate. 

In 2008, the acquisition of Industrias 

Unicon included the assumption of 

a 232 principal amount of loan maturing 

between 2009 and 2012 of which 

17% bearing fixed rates and 83% bearing 

floating interest rates. 

Europe, Asia & Africa 

ArcelorMittal Annaba had a 150 ten-year 

term loan agreement with the government 

of Algeria. The loan is guaranteed by 

ArcelorMittal and was repaid in full during 

the first quarter of 2007. 

In 2007, the acquisition of Rongcheng 

maturity dates in 2009-2011). 

On April 14, 2004, ArcelorMittal USA included the assumption of 66 principal 

issued 600 of senior, unsecured debt amount of borrowings maturing between 

securities due in 2014 (the “Senior 2008 and 2010 of which 40% bears 

Unsecured Notes”). The debt securities fixed interest rates and 60% bears variable 

bear interest at a rate of 6.5% per annum interest at rates based on 6 months LIBOR. 

and were issued at a discount of 5, which is 

amortized as interest expense over the life 

of the Senior Unsecured Notes. On July 22, 

2005, ArcelorMittal USA repurchased 

100 of unsecured notes leaving an 

outstanding balance of 500. These bonds 

are fully and unconditionally guaranteed 

by certain wholly-owned subsidiaries 

of ArcelorMittal USA and, as of March 9, 

2007, by ArcelorMittal. 

In 2007, the acquisition of Rozak included 

the assumption of 267 principal amount 

of borrowings maturing between 2008 

and 2010 and bears interest at fixed 

interest rates. 

111 






Other 

Certain debt agreements of the Company or its subsidiaries contain certain restrictive covenants. Among other things, 

these covenants limit encumbrances on the assets of ArcelorMittal and its subsidiaries, the ability of ArcelorMittal’s subsidiaries 

to incur debt and ArcelorMittal’s ability to dispose of assets in certain circumstances. Certain of these agreements also require 

compliance with financial maintenance tests, including financial ratios and minimum levels of net worth. The Company is in compliance 

with the financial covenants contained within the (amended) agreements related to all of its borrowings. 

Scheduled maturities of long-term debt including lease obligations at December 31, 2008 are as follows (without taking 

into consideration the Forward Start Facilities announced on February 11, 2009): 

2009 3,842 

2010 8,119 

2011 3,928 

2012 7,712 

2013 1,871 

Subsequent years 4,037 

Total 29,509 

The following table presents the structure of the Company’s short-term debt, long-term debt and cash in original currencies: 

Short-term debt and current portion of long-term debt 8,409 4,311 1,666 315 44 572 

Long-term debt 25,667 9,332 11,673 1,428 66 360 

Cash 7,587 3,173 1,546 460 6 1,424 

As a part of the Company’s overall risk and cash management strategies, several loan agreements have been swapped from 

their original currencies to other currencies. 

At the reporting date the interest rate profile of the Company’s interest-bearing financial instruments is: 

Instruments payable bearing interest at fixed rates 4,596 4,683 6,914 5,150 

Instruments payable bearing interest at variable rates 22,360 22,315 22,595 17,709 

112 

In original currency as of December 31, 2008 

Total USD EUR USD BRL CAD Other (in $) 


Carrying amount Fair value Carrying amount Fair value

Note 16: Financial Instruments and Credit Risk 

The Company enters into derivative financial instruments to manage its exposure to fluctuations in interest rates, exchange rates 

and the price of raw materials, energy and emission rights allowances arising from operating, financing and investment activities. 

Fair values versus carrying amounts 

The estimated fair values of certain financial instruments have been determined using available market information or other valuation 

methodologies that require considerable judgment in interpreting market data and developing estimates. 

Cash and cash equivalents, restricted cash, short-term investments and trade receivables are included in the “Loans and receivables” 

category, which is measured at amortized cost. Other current assets include derivative instruments of 303 and 560 as of December 

31, 2007 and 2008, respectively, which are classified as “Financial assets at fair value through profit or loss”. Other investments 

are classified as “Available-for-sale” with gains or losses arising from changes in fair value recognized in equity. Other assets are 

classified as “Financial assets at fair value through profit or loss”. 

Except for derivative financial instruments, amounting to 674 and 1,473 as of December 31, 2007 and 2008, respectively, 

which are classified as “Financial liabilities at fair value through profit or loss”, financial liabilities are classified as “Financial liabilities 

measured at amortized cost”. 

The Company’s short and long-term debt consists of debt instruments which bear interest at fixed rates and variable rates tied 

to market indicators. The fair value of fixed rate debt is based on estimated future cash flows, which are discounted using current 

market rates for debt with similar remaining maturities and credit spreads. 

Portfolio of derivatives 

The Company manages the counter-party risk associated with its instruments by centralizing its commitments and by applying 

procedures which specify, for each type of transaction and underlying, risk limits and/or the characteristics of the counter-party. 

The Company does not generally grant to or require from its counter-parties guarantees over the risks incurred. 

Allowing for exceptions, the Company’s counter-parties are part of its financial partners and the related market transactions 

are governed by framework agreements (mainly of the International Swaps and Derivatives Association agreements which 

allow netting in case of counter-party default). 

The portfolio associated with derivative financial instruments as of December 31, 2007 is as follows: 

Assets Liabilities 

Notional amount Fair value Average rate* Notional amount Fair value Average rate* 

Interest rate swaps - fixed rate borrowings / loans 1,311 4 4.31% 1,108 (16) 3.83% 

Interest rate swaps - fixed rate variable / variable — — 143 (2) 

Total interest rate instruments 4 (18) 

Exchange rate instruments: 

Forward purchase of contracts 304 32 9,672 (218) 

Forward sale of contracts 3,246 45 1,409 (16) 

Exchange option purchases 8,720 111 — — 

Exchange options sales — — 5,682 (258) 

Total exchange rate instruments 188 (492) 

Raw materials (base metal), freight, energy, 

emission rights: 

Term contracts sales 199 20 82 (4) 

Term contracts purchases 554 89 1,229 (151) 

Options sale / purchase 69 2 121 (9) 

Total raw materials (base metal), freight, energy, 

emission rights 111 (164) 

Total 303 (674) 

* The average rate is determined for fixed rate instruments on the basis of the U.S. dollar and foreign currency rates and for the variable rate instruments generally 

on the basis of Euribor or Libor. 

113 






The portfolio associated with derivative financial instruments as of December 31, 2008 is as follows: 

Interest rate swaps - fixed rate borrowings / loans 1,320 42 4.11% 264 (3) 5.37% 

Other interest rate instrument 135 — — — 

Total interest rate instruments 42 (3) 

Exchange rate instruments: 

Forward purchase of contracts 954 95 649 (131) 

Forward sale of contracts 6 1 1,168 (106) 

Currency swap purchases 2,888 36 7,468 (399) 

Currency swap sales 6,672 243 6,239 (80) 

Exchange option purchases 1,818 37 — — 

Exchange options sales — — 1,941 (33) 

Total exchange rate instruments 412 (749) 

Raw materials (base metal), freight, energy, 

emission rights: 

Term contracts sales 81 9 174 (79) 

Term contracts purchases 197 50 1,342 (540) 

Swaps using raw materials pricing index 10 — 35 (15) 

Options sale / purchase 144 47 282 (87) 

Total raw materials (base metal), freight, energy, 

emission rights 106 (721) 

Total 560 (1,473) 

* The average rate is determined for fixed rate instruments on the basis of the U.S. dollar and foreign currency rates and for the variable rate instruments generally 

on the basis of Euribor or Libor. 

Interest rate risk 

The Company utilizes certain instruments to manage interest rate risks in order to optimize its financial results. Interest rate instruments 

allow the Company to borrow long-term at fixed or variable rates, and to swap the rate of this debt either from the start or during 

the period of the loan. The Company and its counter party exchange, at predefined intervals, the difference between the agreed fixed 

rate and the variable rate, calculated on the basis of the notional amount of the swap. Similarly, swaps may be used for the exchange 

of variable rates against other variable rates. 

Interest rate derivatives used by the Company to manage changes in the value of fixed rate loans qualify as fair value hedges. 

Exchange rate risk 

The Company is mainly exposed to changes in values arising from foreign exchange rate fluctuations of raw materials, 

energy and freight. Normally, the Company invoices its customers in the functional currency of its Operating Subsidiaries. 

The Company uses forward purchases and sales of foreign currency, “plain vanilla” options, and foreign currency swaps to hedge 

foreign currency transactions at the majority of its subsidiaries. The Company also uses these instruments at the corporate level 

to hedge debt recorded in foreign currency other than the functional currency or the balance sheet risk incurred on certain monetary 

assets denominated in a foreign currency other than the functional currency. 

The general policy of the Company is to hedge its exposure to exchange rate risk transactions. However, as an exception 

to this general policy, for certain currencies and for risks and amounts that are clearly identified and authorized by management, 

the Company may either hedge in anticipation of future transactions or not hedge transactional risks. To hedge the above exposure 

to exchange rate risk, the Company had 2.5 billion of short positions in forward contracts and option arrangements against other 

currencies as of December 31, 2008. 

114 

Assets Liabilities 

Notional amount Fair value Average rate* Notional amount Fair value Average rate*

Liquidity risk 

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding 

the impact of netting agreements: 

Cash flow hedges 

The following table presents the periods in which cash flows hedges are expected to mature: 


Carrying Contractual 

amount cash flows Less than 1 year 1-2 years 2-5 years More than 5 years 

Non-derivative financial liabilities 

Bonds / notes over 100 (3,839) (4,875) (1,111) (169) (1,299) (2,296) 

Loans over 100 (20,216) (22,476) (6,454) (4,158) (11,864) — 

Trade and other payables (13,991) (13,991) (13,991) — — — 

Other non-derivative financial liabilities (7,903) (9,074) (2,890) (923) (3,923) (1,338) 

Total (45,949) (50,416) (24,446) (5,250) (17,086) (3,634) 

Derivative financial liabilities 

Interest rate instruments (18) (18) (5) (5) (8) — 

Foreign exchange contracts (492) (492) (426) (35) (31) — 

Other commodities contracts (164) (164) (156) (6) (2) — 

Total (674) (674) (587) (46) (41) — 

December 31, 2008 

Carrying Contractual 

amount cash flows Less than 1 year 1-2 years 2-5 years More than 5 years 

Non-derivative financial liabilities 

Bonds / notes over 100 (5,730) (7,722) (477) (1,458) (3,966) (1,821) 

Loans over 100 (25,011) (29,391) (9,675) (11,318) (8,060) (338) 

Trade and other payables (10,501) (10,501) (10,501) — — — 

Other non-derivative financial liabilities (3,335) (3,582) (1,866) (876) (651) (189) 

Total (44,577) (51,196) (22,519) (13,652) (12,677) (2,348) 

Derivative financial liabilities 

Interest rate instruments (3) (3) (3) — — — 

Foreign exchange contracts (750) (750) (461) (97) (192) — 

Other commodities contracts (720) (720) (653) (36) (31) — 

Total (1,473) (1,473) (1,117) (133) (223) — 


(liabilities) (outflows)/inflows (outflows)/inflows (outflows)/inflows (outflows)/inflows 

Carrying amount 3 months and less 3-6 months 6-12 months 1-2 Years 

Forward exchange contracts (420) (305) (53) (27) (35) 

Commodities and emission rights (86) (50) (21) (16) 1 

Total (506) (355) (74) (43) (34) 


(liabilities) (outflows)/inflows (outflows)/inflows (outflows)/inflows (outflows)/inflows (outflows)/inflows 

Carrying amount 3 months and less 3-6 months 6-12 months 1-2 Years More than 2 years 

Forward exchange contracts 16 15 — 1 — — 

Commodities (310) (156) (24) (83) (47) — 

Emission rights (127) (33) (1) (20) (20) (53) 

Total (421) (174) (25) (102) (67) (53) 

115 






The following table presents the periods in which cash flows hedges are expected to impact the statement of income: 

Forward exchange contracts (420) (102) (79) (74) (165) 

Commodities and emission rights (86) (38) (30) (21) 3 

Total (506) (140) (109) (95) (162) 

Forward exchange contracts 16 14 1 1 — — 

Commodities (310) (15) (160) (113) (22) — 

Emission rights (127) (33) (1) (20) (20) (53) 

Total (421) (34) (160) (132) (42) (53) 

Several forward exchange and options contracts have been unwound during 2008. The effective portion recorded in equity 

and amounting to 2,678 (at the year-end balance sheet rate) is expected to be recycled in the statement of income along 

with the recording of the hedged items as follows: 

2009 778 

2010 716 

2011 647 

2012 537 

Total 2,678 

The ineffective portion amounted to 349 and has been recorded as operating income. 

Raw materials, freight, energy risks and emission rights 

The Company uses financial instruments such as forward purchases, options and swaps for certain commodities in order to manage 

the volatility of prices of certain raw materials and energy. The Company is exposed to risks in fluctuations in prices of raw materials 

(including base metals such as zinc, nickel, aluminum, pewter and copper) and energy, both through the purchase of raw materials 

and through sales contracts. 

Fair values of raw material instruments are as follows: 

Emission rights 

Pursuant to the application of the European Directive 2003/87/EC of October 13, 2003, establishing a scheme for emission allowance 

trading, the Company enters into certain types of derivatives (cash purchase and sale, forward transactions and options) in order to 

implement its management policy for associated risks. As of December 31, 2007 and 2008, the Company had a net notional position 

of 29 with a net fair value of 14 and a net notional position of 171 with a net fair value of (32), respectively. 

116 


(liabilities) (expenses)/income (expenses)/income (expenses)/income (expenses)/income 

Carrying amount 3 months and less 3-6 months 6-12 months 1-2 Years 


(liabilities) (expenses)/income (expenses)/income (expenses)/income (expenses)/income (expenses)/income 

Carrying amount 3 months and less 3-6 months 6-12 months 1-2 Years More than 2 years 

Year Amount 



Base metals, freight (79) (216) 

Energy (oil, gas, electricity), emission rights 12 (399) 

(67) (615) 

Assets associated with raw materials, energy, freight and emission rights 91 106 

Liabilities associated with raw materials, energy, freight and emission rights (158) (721) 

Total (67) (615)

Counterparty risk 

The Company’s treasury department monitors various market data regarding the credit standings and overall reliability of the financial 

institutions for all countries where the Company’s subsidiaries operate. The choice of the financial institution for the cash pooling 

transaction must be approved by the treasury department. Counterparty risk related to customers, customer credit terms and 

receivables is discussed in note 5. 

Sensitivity analysis 

Foreign currency sensitivity 

The following table details the Company’s sensitivity as it relates to derivative financial instruments to a 10% strengthening and 

a 10% weakening in the U.S. dollar against the other currencies to which the Company is exposed. The sensitivity analysis does 

not include non-derivative foreign currency-denominated monetary items. A positive number indicates an increase in profit 

or loss and other equity where a negative number indicates a decrease in profit or loss and other equity. 


Income Other equity Income Other equity 

10% strengthening in U.S. dollar 129 933 288 (120) 

10% weakening in U.S. dollar (40) (995) (288) 120 

Cash flow sensitivity analysis for variable rate instruments 

A change of 100 basis points (“bp”) in interest rates during the period would have increased (decreased) profit or loss by the amounts 

shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. 


Variable rate 

Interest rate 

swaps/Forward Cash flow 

instrument rate agreements sensitivity (net) 

100 bp increase (179) 1 (178) 

100 bp decrease 179 (1) 178 


Variable rate 

Interest rate 

swaps/Forward Cash flow 

instrument rate agreements sensitivity (net) 

100 bp increase (153) (19) (172) 

100 bp decrease 153 20 173 

Base metals, energy, freight, emissions rights 

The following table details the Company’s sensitivity to a 10% increase and decrease in the price of the relevant base metals, 

energy, freight, and emissions rights. The sensitivity analysis includes only outstanding, un-matured base metal derivative 

instruments both held for trading as fair value through statement of income and those designated in hedge accounting relationships. 


Other equity cash Other equity cash 

flow hedging flow hedging 

Income reserves Income reserves 

+10% in prices 41 112 31 42 

-10% in prices (41) (112) (31) (42) 

117 






Note 17: Equity 

On August 28, 2007, at the extraordinary 

general meeting of Mittal Steel the 

shareholders approved the merger of 

Mittal Steel into the former ArcelorMittal, 

a wholly-owned subsidiary of Mittal Steel. 

This merger was effective on September 3, 

2007 and was the first step in the 

two-step merger process between Mittal 

Steel and Arcelor. Holders of Mittal Steel 

shares automatically received one newly 

issued share of the former ArcelorMittal 

for every one Mittal Steel share on the 

basis of their respective holdings. 

The Mittal Steel Class A common shares 

and the Mittal Steel Class B common 

shares have disappeared in this merger. 

On November 5, 2007, at the 

extraordinary general meeting of 

ArcelorMittal and Arcelor shareholders 

approved the merger of former 

ArcelorMittal into Arcelor effective 

on November 13, 2007. In this second 

step in the two-step merger process, 

a holder of the former ArcelorMittal shares 

received one newly issued Arcelor share 

for every one former ArcelorMittal share 

(the “Exchange Ratio”). This Exchange Ratio 

followed the completion of a share capital 

restructuring of Arcelor pursuant to which 

each seven pre-capital restructuring shares 

of Arcelor were exchanged for eight 

post-capital restructuring shares of Arcelor. 

After the second step merger Arcelor 

was renamed ArcelorMittal. 

In addition, new share capital was 

approved of €6.4 billion represented by 

1,470 million shares without nominal value 

for a period ending on November 5, 2012. 

At the extraordinary general meeting held 

on May 13, 2008, the shareholders 

approved an increase of the authorized 

share capital of ArcelorMittal by 

€644 million represented by 147 million 

shares, or approximately 10% of 

ArcelorMittal’s outstanding capital. 

The new total authorized share capital is 

€7.1 billion represented by 1,617 million 

shares without nominal value. 

118 

The issued corporate share capital is 

€6.3 billion (9,269) represented by 

approximately 1,449 million shares without 

nominal value of which approximately 

1,422 million and 1,366 million shares 

were outstanding as of December 31, 

2007 and 2008, respectively. 

Employee Share Purchase Plan 

In May 2008, the Company adopted an 

Employee Share Purchase Plan (“ESPP”) 

as part of a global employee engagement 

and participation policy. The plan aims 

to strengthen the link between the 

Company and its employees and to align 

the interests of the Company employees 

and shareholders. The main features of 

the plan, which was approved by the annual 

general shareholders’ meeting held on 

May 13, 2008, are the following: 

• The plan was offered to 216,311 

employees in 22 jurisdictions. 

The Company offered a maximum total 

number of 2,500,000 treasury shares 

(0.2% of issued shares). A total of 

955,820 shares were subscribed, which 

are held in treasury for the employees. 

The implementation of the plan was split 

into two tranches (in September and 

November 2008). The subscription price 

for the first tranche was $57.05 and 

$21.71 for the second tranche, 

before discounts; 

• Pursuant to the plan, eligible employees 

could apply to purchase a number of 

shares not exceeding that number of 

whole shares equal to the lower of (1) 

200 shares and (2) the number of whole 

shares that may be purchased for fifteen 

thousand U.S. dollars (rounded down 

to eliminate fractional shares). 

The purchase price is equal to the average 

of the opening and the closing prices of the 

Company shares trading on the New York 

Stock Exchange on the exchange day 

immediately preceding the opening of 

the relevant subscription period, which 

is referred to as the “reference price,” 

less a discount equal to: 

a) 15% of the reference price for a 

purchase order not exceeding the lower 

of (1) 100 shares, and (2) the 

immediately lower whole number of 

shares corresponding to an investment 

of seven thousand five hundred U.S. 

dollars; and thereafter; 

b) 10% of the reference price for any 

additional acquisition of shares up to 

a number of shares (including those in 

the first cap) not exceeding the lower 

of (x) 200 shares, and (y) the 

immediately lower whole number of 

shares corresponding to an investment 

of fifteen thousand U.S. dollars. 

Shares purchased under the plan are 

subject to a three-year lock-up period, 

except for the following exceptions: 

permanent disability of the employee, 

termination of the employee’s employment 

with the Company or death of the 

employee. At the end of this lock-up 

period, the employees will have a choice 

either to sell their shares (subject to 

compliance with the Company’s insider 

dealing regulations) or keep their shares 

and have them delivered to their personal 

securities account or make no election, 

in which case shares will be automatically 

sold. Shares may be sold or released within 

the lock-up period in the case of early exit 

events. During this period, and subject 

to the early exit events, dividends paid on 

shares are held for the employee’s account 

and accrue interest. Employee shareholders 

are entitled to any dividends paid by the 

Company after the settlement date and 

they are entitled to vote their shares.

Dividends 

Calculations to determine the amounts 

available for dividends are based on 

ArcelorMittal’s Luxembourg statutory 

accounts, which are different from its 

consolidated accounts. ArcelorMittal has 

no significant manufacturing operations 

of its own. Accordingly, it can only pay 

dividends or distributions to the extent 

it is entitled to receive cash dividend 

distributions from its subsidiaries’ 

recognized gains, from the sale of its 

assets or records share premium from 

the issuance of (new) common shares. 

Dividends are declared in U.S. dollars and 

are payable in either U.S. dollars or in euros. 

On September 27, 2006, Mittal Steel 

announced that its Board of Directors 

had agreed upon, and the shareholders 

subsequently approved, a new dividend 

and cash distribution policy. The new policy 

aimed to return 30% of Mittal Steel’s prior 

year annual net income to shareholders 

annually through an annual base dividend, 

supplemented by share buy-backs. The 

annual base dividend was $1.30 per share. 

The dividend for 2007 amounted to 1,826 

($1.30 per share) and was paid quarterly 

($0.325 cents per share) on March 15, 

2007, June 15, 2007, September 17, 

2007 and December 17, 2007. 


announced its Board of Directors had 

recommended increasing the Company’s 

base dividend by 20 cents from $1.30 to 

$1.50 per share. The policy reconfirms 

a mechanism that will allow ArcelorMittal 

to honor its commitment of returning 

30% of net income to shareholders 

through an annual base dividend, 

supplemented by additional share 

buy-backs. Based on the annual net income 

attributable to equity holders of the parent 

for the year ended December 31, 2007 

of 10,368, ArcelorMittal would return 

a total of 3,068 to shareholders by 

paying a cash dividend of 2,068 and 

implementing a 1,000 share buy-back. 

This distribution policy was implemented 

as of January 1, 2008. 

The dividend for 2008 amounted to 2,068 

($1.50 per share) and was paid quarterly 

($0.375 cents per share) on March 17, 

2008, June 16, 2008, September 15, 

2008 and December 15, 2008. 

On February 10, 2009, ArcelorMittal’s 

Board of Directors recommended reducing 

the quarterly dividend payment to 

$0.1875 in 2009. The new quarterly 

dividend payments will take place on March 

16, 2009, June 15, 2009, September 14, 

2009 and December 14, 2009. 

Treasury stock 

On April 2, 2007, ArcelorMittal announced 

the start of a share buy-back program 

designed to achieve the 30% distribution 

pay-out commitment described above. 

This share buy-back program was 

completed on September 4, 2007 as the 

590 was reached. ArcelorMittal purchased 

an aggregate of 9,513,960 Mittal Steel 

Class A common shares and ArcelorMittal 

shares under the program. 

On June 12, 2007, ArcelorMittal 

announced the start of a share buy-back 

program for up to 27 million shares, 

for cancellation in due course. This share 

buy-back program was designed to offset 

the issuance of 27 million shares in 

connection with ArcelorMittal’s mandatory 

offer for ArcelorMittal Brasil. This share 

buy-back program was completed on 

December 13, 2007. The shares were 

repurchased at an average price of 

€50.15 ($72.39) per share and for 

a total amount of €1.4 billion (1,955). 


announced the start of a 1.0 billion share 

buy-back program valid for a period of 

18 months or until the date of its renewal 

by a resolution of the general meeting of 

shareholders if such renewal date is prior 

to such period. 

This program was completed on 

February 19, 2008 with the acquisition 

of 14.6 million shares from Carlo Tassara 

International S.A. (“Carlo Tassara”) at 

a price of €46.60 ($68.70) per share for 

a total amount of €680 million (1,003). 

Carlo Tassara is controlled by the 

Zygmunt Lubicz-Zaleski Foundation. 

Mr Romain Zaleski was a member of 

the ArcelorMittal Board of Directors 

at the time of this transaction. 

On December 12, 2007, ArcelorMittal 

announced the start of a share buy-back 

program for up to 44 million shares. 

This program has a two-year term, and 

shares bought under this program may 

be used in potential future corporate 

opportunities or for cancellation. 

The Company acquired approximately 

130,000 shares under this program 

through December 31, 2007, for a total 

amount of 9 at an average price of 

$70.38 per share. 

During the year 2008, ArcelorMittal 

acquired approximately 43.8 million shares 

under the 44 million shares program for 

a total amount of 3,440 at an average price 

of $78.58 per share. Of this amount, 

10.4 million shares were acquired on 

February 19, 2008 from Carlo Tassara 

at a price of €46.40 ($68.70) per share. 

In total, 25 million shares were acquired 

from Carlo Tassara. 

As of December 31, 2008, ArcelorMittal 

had acquired approximately 43.9 million 

shares under the 44 million share buy-back 

program for a total amount of 3,449 

at an average price of $78.56 per share. 


owned 82,824,069 treasury shares. 

119 






Share Retention Agreements 

ArcelorMittal Temirtau has entered into 

share retention agreements with the 

EBRD and the International Finance 

Corporation (“IFC”). Until the date on 

which the EBRD and IFC loans have been 

repaid in full, ArcelorMittal Temirtau’s 

holding company or its nominee shall not, 

unless EBRD and IFC otherwise agree in 

writing, transfer, assign, pledge, dispose 

or encumber 67% of its share holding in 

ArcelorMittal Temirtau. 

The Company has pledged 40% of the 

outstanding shares of ArcelorMittal Galati 

to AVAS (the governmental body in 

Romania responsible for privatization) in 

relation to the Company’s ten-year capital 

expenditure commitment at ArcelorMittal 

Galati which commenced November 2001. 

The Company has entered into a share 

pledge agreement with AVAS for 100% 

of its shareholding in ArcelorMittal Tubular 

Products Roman’s share capital with respect 

to its investment commitment from 2003 

to February 1, 2014. 

The Company has entered into a share 

pledge agreement with APAPS for 1.4% 

of its share holding in ArcelorMittal 

Hunedoara’s share capital with respect 

to its commitment to pay the purchase 

price for ArcelorMittal Hunedoara. 

The Company has also entered into 

a share pledge agreement with APAPS for 

58% of its share holding in ArcelorMittal 

Hunedoara’s share capital towards its capital 

expenditure commitments for five years 

commencing April 2004. 

120 

The Company is required to establish 

a registered pledge in favor of the State 

Treasury of Poland for the number of the 

Company’s shares of ArcelorMittal Poland, 

which is 100% owned by ArcelorMittal 

Holdings AG, which is in turn 100% owned 

by the Company, equal to the difference 

between: (i) the number of shares 

of ArcelorMittal Poland held by the 

Company and (ii) 50% of the shares 

of ArcelorMittal Poland plus one share. 

As a result, the number of the shares 

pledged equals to 124,828,159 shares, 

which constitutes about 46.8% of the 

shares of ArcelorMittal Poland. 

Stock Option Plan 

In 1999, the Company established the 

ArcelorMittal Global Stock Option Plan 

(“ArcelorMittalShares”). Under the terms 

of ArcelorMittalShares, ArcelorMittal may 

grant options to purchase common stock 

to senior management of ArcelorMittal and 

its associates for up to 20,000,000 shares 

of common stock (increased from 

6,000,000 shares to 10,000,000 shares 

of common stock after shareholder 

approval in 2003 and increased from 

10,000,000 shares to 20,000,000 shares 

of common stock after shareholder 

approval in 2006). The exercise price 

of each option equals not less than the 

fair market value of ArcelorMittal stock 

on the grant date, with a maximum term 

of 10 years. Options are granted at the 

discretion of the ArcelorMittal’s 

Appointments, Remuneration and 

Corporate Governance Committee or its 

delegate. The options vest either ratably 

upon each of the first three anniversaries of 

the grant date, or, in total, upon the death, 

disability or retirement of the participant. 

On September 1, 2006, ArcelorMittal 

granted 3,999,223 options to a group 

of key employees at an exercise price 

of $33.755. The options expire on 

September 1, 2016. 

On August 2 and December 11, 2007, 

ArcelorMittal granted 5,965,200 and 

13,000 options, respectively, to a group 

of key employees at an exercise price 

of $64.30 and $74.535, respectively. 

The options expire on August 2, 2017, 

and on December 11, 2017, respectively. 

On August 5, November 10 and December 

15, 2008, ArcelorMittal granted 

7,255,950, 20,585 and 48,000 options, 

respectively, to a group of key employees 

at an exercise price of $82.57, $22.245 

and $23.745, respectively. The options 

expire on August 5, November 10 

and December 15, 2018, respectively. 

In addition, Arcelor had stock option plans 

(grants for 2003, 2004, 2005, 2006) 

with 1,346,160 options outstanding prior 

to step-two of the two-step merger. 

In connection with the merger of Arcelor 

and Mittal Steel, each Arcelor stock option 

was provided the right to purchase or 

subscribe, as applicable, a number of shares 

equal to seven pre-capital restructuring 

options to purchase underlying shares 

in exchange for eight post-capital 

restructuring options to purchase 

underlying shares. No other modifications 

to the initial Arcelor stock option grants 

were made. This resulted in the issuance 

of 1,538,469 options to purchase common 

stock of ArcelorMittal, with an exercise 

price ranging from €8.46 ($11.78) to 

€30.13 ($41.93) per option. 

The Company determines the fair value 

of the options at the date of grant using 

the Black-Scholes model. The fair values 

for options and other share-based 

compensation is recorded as an expense 

in the consolidated statement of income 

over the relevant vesting or service 

periods, adjusted to reflect actual and 

expected levels of vesting.

The fair value of each option grant to purchase ArcelorMittal common shares is estimated on the date of grant using 

the Black-Scholes option pricing model with the following weighted average assumptions (based on year of grant): 

Year of grant - 2007 Year of grant - 2008 

Exercise price per share $64.30 – 74.535 $82.57 – 22.245 – 23.745 

Dividend yield 2.03% 1.82% – 6.74% – 6.32% 

Expected annualized volatility 142% 111% – 131% – 139% 

Discount rate – bond equivalent yield 4.91% 4.02% – 3.76% – 2.52% 

Weighted average share price $64.30 – 74.535 $82.57 – 22.245 – 23.745 

Expected life in years 6 6 

Fair value of options (per share) $52 $62 – 13 – 15 

The expected life of the options is estimated by observing general option holder behavior and actual historical lives of ArcelorMittal 

stock option plans. In addition, the expected annualized volatility has been set by reference to the implied volatility of options 

available on ArcelorMittal shares in the open market, as well as, historical patterns of volatility. 

The compensation expense recognized for stock option plans was 108 and 362 for each of the years ended December 31, 2007 


Option activity with respect to ArcelorMittalShares is summarized below as of and for each of the years ended December 31, 2007 

and 2008: 

Range of Weighted average 

exercise prices Exercise price 

Number of options (per options) (per option) 

Outstanding, December 31, 2006 8,450,968 2.26 – 33.76 28.27 

Granted 5,978,200 64.30 – 74.535 64.32 

Exercised (2,129,255) 2.26 – 33.76 25.94 

Cancelled (222,566) 28.75 – 33.76 32.20 

Forfeitures (36,378) 11.94 – 33.76 30.61 

Effect of legal merger 1,538,469 12.46 – 44.35 43.28 

Outstanding, December 31, 2007 13,579,438 2.26 – 74.535 46.15 

Granted 7,324,535 22.245 – 82.57 82.01 

Exercised (954,844) 2.26 – 64.30 31.88 

Cancelled (347,034) 2.26 – 82.57 51.28 

Forfeitures (43,629) 28.75 – 64.30 43.35 

Outstanding, December 31, 2008 19,558,466 2.26 – 82.57 60.01 

Exercisable, December 31, 2008 6,011,214 2.26 – 82.57 39.75 

Exercisable, December 31, 2007 2,595,164 2.26 – 64.30 24.49 

121 






The following table summarizes information about total stock options of the Company outstanding as of December 31, 2008: 

Options Outstanding 

Weighted average Options exercisable 

Exercise prices (per option) Number of options contractual life (in years) (number of options) 

82.57 7,201,250 9.59 13,500 

74.535 13,000 8.95 4,333 

64.30 5,729,402 8.59 1,960,913 

41.93 1,445,757 4.50 — 

33.76 2,739,507 7.68 1,671,503 

28.75 1,737,997 6.65 1,737,997 

23.745 48,000 9.96 — 

22.245 20,585 9.87 — 

19.69 11,429 3.50 11,429 

15.96 29,373 2.50 29,373 

11.78 17,622 1.50 17,622 

11.94 186,099 0.71 186,099 

8.57 165,100 1.42 165,100 

2.26 213,345 3.27 213,345 

$2.26 – 82.57 19,558,466 8.15 6,011,214 

For the purpose of calculating earnings per share, diluted weighted average common shares outstanding excludes 5 million 

and 9 million potential common shares from stock options outstanding for the years ended December 31, 2007 and 2008, 

respectively, because such stock options are anti-dilutive. 

Note 18: Financial Income and Expense 

Financial income and expense recognized in the years ended December 31, 2007 and 2008 is as follows: 


Recognized in profit and loss 

Interest expense (2,174) (2,516) 

Interest income 577 497 

Net gain (loss) on derivative instruments 431 (177) 

Net foreign exchange result and others 239 (156) 

Total (927) (2,352) 

Recognized in equity (Company share) 

Net change in fair value of available-for-sale financial assets 569 (78) 

Effective portion of changes in fair value of cash flow hedge (336) 1,844 

Foreign currency translation differences for foreign operations 3,220 (6,122) 

Total 3,453 (4,356) 

Interest expense includes interest on borrowings, interest cost on defined benefit obligations and bank fees. 

Interest on borrowings amounted to 1,839 and 2,044 for the year ended December 31, 2007 and 2008, respectively. 

122

Note 19: Income Tax 

Income tax expense 

The breakdown of the income tax expense (benefit) for each of the years ended December 31, 2007 and 2008, 

respectively, is summarized as follows: 

The following table reconciles the income tax expense (benefit) to the statutory tax expense as calculated: 




Total current income tax expense 2,544 2,494 

Total deferred tax expense (benefit) 494 (1,396) 

Total income tax expense 3,038 1,098 




Net income: 10,368 9,399 


Income from investments in associates and joint ventures (985) (1,653) 


Income before tax and income from investments in associates and joint ventures 13,903 9,884 

Tax at the domestic rates applicable to profits in the countries 3,926 1,392 

Permanent items (318) (540) 

Benefit arising from interest in partnership (51) (21) 

Rate changes (209) (151) 

Net change in measurement of deferred tax assets 103 (410) 

Re-characterization of capital loss to ordinary loss — — 

Benefit of tax holiday (27) (7) 

Effects of foreign currency translation (297) 728 

Tax deduction (105) — 

Tax credits (14) (95) 

Other taxes 67 177 

Others (37) 25 


The 2008 permanent items of (540) result from deemed deductions on taxable income of (979), tax expense relating to interest 

recaptures of 184, tax expense of 177 relating to non-deductible provisions and tax expense of 78 relating to other permanent items. 

The 2007 permanent items of (318) result from deemed deductions on taxable income of (347), income tax expense of 

98 on inter-company dividends and share transfers, and other taxable income of (69) relating to other permanent items. 

The 2008 tax benefit from rate changes of (151) mainly results from the decrease of corporate income tax rates in Kazakhstan, 

Luxembourg, South Africa and Russia. The 2007 tax benefit from rate changes of (209) results from the decrease of corporate 

income tax rates in Canada, Czech Republic, Germany and Morocco. 

The 2008 net change in measurement of deferred tax assets of (410) primarily consists of a net tax benefit of 295 for recognition 

of acquired deferred tax assets and other net tax benefit of 115, mainly relating to recognized deferred tax assets for not acquired 

deferred tax assets, partly offset by non-recognition of deferred tax assets for losses of the year. 

The 2007 net change in measurement of deferred tax assets of 103 primarily consists of a tax benefit of 260 for acquired deferred 

tax assets, a tax expense of 192 for unrecognized net operating losses relating to the legal merger of Arcelor and Mittal Steel 

and other net tax expense of 171, mainly relating to deferred tax assets not recognized for losses of the year. 

123 






The effects of foreign currency translation of 297 and 728 at December 31, 2007 and 2008, respectively, pertain to certain 

entities with the U.S. dollar as functional currency and the local currency for tax purposes. 

The tax deduction of 105 in 2007 relates to federal governmental incentives granted to CST in Brazil as part of a program 

to promote the development of the Brazilian northeast region. 

The 2008 tax credits of 95 are mainly attributable to our Operating Subsidiaries in Spain. They relate to credits claimed on research 

and development, credits on investment and to tax sparing credits. 

Other taxes include withholding taxes on dividends including Secondary Taxation on Companies (“STC”), which is a tax levied 

on dividends declared by South African companies. STC is not included in the computation of current or deferred tax as these 

amounts are calculated at the statutory company tax rate on undistributed earnings. On declaration of a dividend, the South African 

Operating Subsidiary includes the STC tax in its computation of the income tax expense. If the South African Operating Subsidiary 

distributed all of its undistributed retained earnings of 2,978 million and 3,015 million in 2008 and 2007, respectively, it would 

be subject to additional taxes of 271 million and 274 million, respectively. STC on dividends declared in 2008 and 2007 were 

31 million and 67 million, respectively. 

Others of (37) in 2007 consists of a tax expense of 110, due to a change in Mexican tax law, a tax expense of 92 for deferred 

tax liabilities recorded on investments, a tax benefit of 193 due to a release of tax liabilities following the finalization of tax audits, 

and other tax benefits of 46. 

Tax agreements 

Certain agreements relating to acquisitions and capital investments undertaken by the Company, provides reduced tax rates, 

or, in some cases exemption from income tax. Such arrangements expire over various fiscal years through 2014. 

The net deferred tax benefit (expense) recorded directly to equity was 286 and (789) as of December 31, 2007 and 2008, 

respectively. The net current tax benefit (expense) recorded directly to equity was 119 and (67) as of December 31, 2007 


The origin of deferred tax assets and liabilities is as follows: 

Intangible assets 45 175 (665) (1,211) (620) (1,036) 

Property, plant and equipment 493 237 (10,027) (9,775) (9,534) (9,538) 

Inventories 287 554 (364) (470) (77) 84 

Available-for-sale financial assets — — (52) (14) (52) (14) 

Financial instruments 222 77 (62) (67) 160 10 

Other assets 172 98 (151) (1,530) 21 (1,432) 

Provisions 1,828 2,748 (446) (574) 1,382 2,174 

Other liabilities 651 884 (60) (323) 591 561 

Tax losses carried forward 1,659 3,164 — — 1,659 3,164 

Tax credits 214 424 — — 214 424 

Untaxed reserves — — (42) (41) (42) (41) 

Deferred tax assets / (liabilities) 5,571 8,361 (11,869) (14,005) (6,298) (5,644) 

Deferred tax assets 1,629 751 

Deferred tax liabilities (7,927) (6,395) 

Deferred tax assets not recognized by the Company as of December 31, 2007 were as follows: 

Tax losses carried forward 7,179 2,373 1,659 714 

Tax credits 292 292 214 78 

Other temporary differences 12,853 4,022 3,698 324 

Total 6,687 5,571 1,116 

124 

Assets Liabilities Net 

2007 2008 2007 2008 2007 2008 

Recognized Unrecognized 

Total deferred deferred deferred 

Gross amount tax assets tax assets tax assets

Deferred tax assets not recognized by the Company as of December 31, 2008 were as follows: 

Recognized Unrecognized 

Total deferred deferred deferred 

Gross amount tax assets tax assets tax assets 

Tax losses carried forward 11,370 3,557 3,164 393 

Tax credits 719 719 424 295 

Other temporary differences 15,915 5,018 4,773 245 

Total 9,294 8,361 933 

ArcelorMittal had unrecognized deferred tax assets relating to tax loss carry forwards and other temporary differences, amounting 

to 933 as of December 31, 2008 (1,116 as of December 31, 2007). As of December 31, 2008, most of these temporary differences 

relate to tax loss carry forwards attributable to our Operating Subsidiaries in Belgium, Brazil, Luxembourg, Mexico and the United States. 

The majority of unrecognized tax losses have no expiration date. The utilization of tax loss carry forwards is, however, restricted to the 

taxable income of the subsidiary or tax consolidated group to which it belongs. 

At December 31, 2008, based upon the level of historical taxable income and projections for future taxable income over the periods 

in which the deductible temporary differences are anticipated to reverse, management believes it is probable that ArcelorMittal 

will realize the benefits of the total deferred tax assets of 751 recognized. The amount of future taxable income required to be 

generated by ArcelorMittal’s Operating Subsidiaries to utilize the total deferred tax assets is approximately 2,540. For each of the 

years ended December 31, 2007 and 2008, these Operating Subsidiaries generated approximately 29% and 62%, respectively, 

of the Company’s income before tax of 14,888 and 11,537, respectively. Historically, the Company has been able to generate taxable 

income in sufficient amounts to permit it to utilize tax benefits associated with net operating loss carry forwards and other deferred 

tax assets that have been recognized in its consolidated financial statements. However, the amount of the deferred tax asset considered 

realizable could be adjusted in the future if estimates of taxable income are revised. 

In 2007, ArcelorMittal has recorded approximately 35 of deferred income tax liabilities on the undistributed earnings of its foreign 

subsidiaries for income taxes due if these earnings would be distributed. There was no material change to these liabilities as of 

December 31, 2008. Investments in our subsidiaries are not expected to reverse in the foreseeable future and therefore capital gains 

are not anticipated. The aggregate amount of deferred tax liabilities relating to investments in subsidiaries, branches and associates 

and investments that is not recognized is approximately 892. 

Tax loss carry forward 

At December 31, 2008, the Company had total estimated net tax loss carry forwards of 11,370. 

Such amount includes net operating losses of 2,527 primarily related to Operating Subsidiaries in Canada, Mexico, Romania, Spain and 

the United States, which expire as follows: 

Year expiring Amount 

2009 17 

2010 40 

2011 85 

2012 35 

2013 17 

Thereafter 2,333 

Total 2,527 

The remaining tax loss carry forwards of 8,843 are indefinite and primarily attributable to the Company’s operations in Belgium, 

Brazil, France, Luxembourg and Trinidad and Tobago. 

Tax loss carry forwards are denominated in the currency of the countries in which the respective subsidiaries are located and operate. 

Fluctuations in currency exchange rates could reduce the U.S. dollar equivalent value of these tax loss carry forwards in future years. 

125 






Note 20: Provisions 

The movements by provision were as follows: 

Environmental (see note 24) 827 134 (62) 4 (14) 889 

Asset retirement obligations 169 19 (26) 6 8 176 

Restructuring 209 394 (123) 80 5 565 

Litigation (see note 24) 711 317 (182) — 177 1,023 

Commercial agreements and onerous contracts 56 96 (36) — 18 134 

Other 1 637 450 (328) 28 26 813 

2,609 1,410 (757) 118 220 3,600 

Short-term provisions 569 1,144 

Long-term provisions 2,040 2,456 

2,609 3,600 

Environmental (see note 24) 889 125 (146) — (99) 769 

Asset retirement obligations 176 22 (3) 71 12 278 

Restructuring 565 215 (117) 8 (105) 566 

Voluntary separation plans — 945 — — (10) 935 

Litigation (see note 24) 1,023 847 (252) 66 (83) 1,601 

Commercial agreements and onerous contracts 134 743 (29) 12 (5) 855 

Other 1 813 317 (519) 16 4 631 

3,600 3,214 (1,066) 173 (286) 5,635 

Short-term provisions 1,144 3,292 

Long-term provisions 2,456 2,343 

3,600 5,635 

1 Other includes provisions for technical warranties, guarantees as well as other disputes and staff related provisions. 

The provisions will be used in a period of one to four years except for the environmental provisions which will be used for up to 20 years. 

Note 21: Accrued Expenses and Other Liabilities 

Accrued expenses were comprised of the following at December 31: 

Accrued expenses and other liabilities as at December 31, 2008 were higher than as at December 31, 2007 on account 

of the increase in mark-to-market of the derivative instruments held by the company. 

126 

Effects of foreign 

Balance at Deductions exchange and Balance at 

December 31, 2006 Additions / Releases Acquisitions other movements December 31, 2007 

Effects of foreign 

Balance at Deductions exchange and Balance at 

December 31, 2007 Additions / Releases Acquisitions other movements December 31, 2008 



Accrued payroll and employee related expenses 2,008 1,949 

Other payables 1,703 1,942 

Other creditors 1,535 1,320 

Revaluation of derivative instruments 549 1,094 

Other amounts due to public authorities 909 791 

Unearned revenue and accrued payables 571 317 

Total 7,275 7,413

Note 22: Commitments 

The Company’s commitments consist of three main categories: 

• non-cancellable operating leases, 

• various purchase and capital expenditure commitments, 

• pledges, guarantees and other collateral instruments given to secure financial debt and credit lines. 

Operating leases 

The Company leases various facilities, land and equipment under non-cancellable lease arrangements. Future minimum lease 

payments required under operating leases that have initial or remaining non-cancellable terms are presented according to maturity 

periods as follows: 

Less than 1 year 86 

1-3 years 143 

4-5 years 105 

More than 5 years 155 

Total 489 

Commitments given 

Purchase commitments 

Purchase commitments consist of the major agreements for procuring iron ore, coking coal, coke and hot metal. 

The Company also entered into a number of agreements for electricity, industrial and natural gas, as well as freight contracts. 

Guarantees, property and other collateral 

Property pledges and guarantees mainly relate to mortgages entered into by the Company’s Operating Subsidiaries and guarantees 

issued in respect of external debt financing. 

Guarantees consist of guarantees of financial loans and credit lines granted to non-consolidated subsidiaries and investments 

accounted for under the equity method, first demand and documentary guarantees, as well as guarantees provided to state 

authorities such as customs. 

Other collateral and guarantees include documentary credits, letters of credit and sureties. 

Other commitments given 

Other commitments given comprise commitments incurred for the long-term use of goods belonging to a third party, commitments 

incurred under operating leases and credit lines confirmed to customers but not drawn, and commitments relating to grants. 

Commitments received 

Other commitments received 

Other commitments received include commitments deriving from bills, sureties and guarantees provided by third parties. 



Purchase commitments 31,539 29,724 

Capital expenditure commitments 414 2,233 

Guarantees, pledges and other collateral 6,413 4,796 

Other commitments 3,358 5,759 

Total 41,724 42,512 



Endorsements and guarantees received from non-consolidated companies 1,218 921 

Other commitments received 10,674 7,037 

Total 11,892 7,958 

127 






Note 23: Deferred Employee Benefits 

ArcelorMittal’s Operating Subsidiaries 

have different types of pension plans 

for their employees. Also, some of 

the Operating Subsidiaries offer other 

post-employment benefits, principally 

health care. The expense associated with 

these pension plans and employee benefits, 

as well as the carrying amount of the 

related liability/asset on the balance sheets 

are based on a number of assumptions 

and factors such as the discount rate, 

expected compensation increases, 

expected return on plan assets, future 

health care cost trends and market value 

of the underlying assets. Actual results 

that differ from these assumptions are 

accumulated and amortized over future 

periods and, therefore, will affect the 

statement of income and the recorded 

obligation in future periods. The total 

accumulated unrecognized actuarial loss 

amounted to 1,969 for pensions and 

454 for other post retirement benefits 

as of December 31, 2008. 

On August 30, 2008 ArcelorMittal USA 

reached a labor agreement with the United 

Steelworkers of America (the “USW”) 

for most of our steel plants and iron ore 

operations in the US. The USW ratified 

this agreement on October 21, 2008. 

The agreement increased wages, provided 

a signing bonus of six thousand dollars per 

employee, increased the pension multiplier 

for certain employees, increased payments 

into Steelworkers pension trust, provided 

for a lump sum payment upon retirement 

for certain employees, and reduced the 

premium retirees must pay for healthcare. 

The most significant change to this 

agreement is the change in the funding 

principles of a Voluntary Employee Benefit 

Association (“VEBA”) for retiree healthcare. 

Previously this fund was accounted for 

as a profit-sharing arrangement. 

The change in the contractual obligation 

led to the recognition of a liability and 

other post-employment expense of 

1,424 for those obligations that had 

previously vested. 

128 

The cash outflow related to these benefits 

is a requirement to fund 25 per quarter 

into the VEBA for the first four years plus 

an initial cash payment of 90 upon the 

signing of the contract. The impact of 

those changes is discussed further in 

the post-employment benefits section 

of this note. 

The Company agreed to transfer to 

ArcelorMittal USA a number of shares held 

in treasury equal to 130, subject to certain 

adjustments, in several tranches until the 

end of 2009 to provide a means for 

ArcelorMittal USA to meet its cash funding 

requirements to the ArcelorMittal USA 

Pension Trust. The first tranche, consisting 

of 1,121,995 treasury shares, was 

transferred on December 29, 2008 for 

consideration of $23.72 per share, the 

NYSE opening price on December 23, 2008. 

A summary of the significant defined 

benefit pension plans is as follows: 

Americas 

U.S. 

ArcelorMittal USA’s Pension Plan and 

Pension Trust is a non-contributory defined 

benefit plan covering approximately 

24% of its employees. Benefits for most 

non-represented employees who receive 

pension benefits are determined under 

a “Cash Balance” formula as an account 

balance which grows as a result of interest 

credits and of allocations based on 

a percentage of pay. Benefits for other 

non-represented salaried employees who 

receive pension benefits are determined 

as a monthly benefit at retirement 

depending on final pay and service. 

Benefits for wage and salaried employees 

represented by a union are determined 

as a monthly benefit at retirement based 

on fixed rate and service. 

Canada 

The primary pension plans are those of 

ArcelorMittal Dofasco and ArcelorMittal 

Mining Canada. The ArcelorMittal 

Dofasco (Hamilton) pension plan is 

a hybrid plan providing the benefits 

of both a defined benefit and defined 

contribution pension plan. 

The defined contribution component 

is financed by both employer and employee 

contributions. The employer also 

contributes a percentage of profits in the 

defined contribution plan. The ArcelorMittal 

Mining Canada (QCM) defined benefit 

plan provides salary related benefit for 

non-union employees and a flat dollar 

pension depending on employee length 

of service. 

Brazil 

The primary defined benefit plans, financed 

through trust funds, have been closed to 

new entrants. Brazilian entities have all 

established defined contribution plans that 

are financed by employer and employee 

contributions. 

Europe 

Certain European Operating Subsidiaries 

maintain primarily unfunded defined benefit 

pension plans for a certain number of 

employees. Benefits are based on such 

employees’ length of service and applicable 

pension table under the terms of individual 

agreements. Some of these unfunded plans 

have been closed to new entrants and 

replaced by defined contributions pension 

plans for active members financed by 

employer and employee contributions. 

South Africa 

There are two primary defined benefit 

pension plans. These plans are closed to 

new entrants. The assets are held in 

pension funds under the control of the 

trustees and both funds are wholly funded 

for qualifying employees. South African 

entities have also implemented defined 

contributions pension plans that are 

financed by employers’ and employees’ 

contributions. 

Other 

A limited number of funded defined 

benefit plans are in place in countries 

where funding of multi-employer pension 

plans is mandatory.

Plan assets 

The weighted-average asset allocations for the funded defined benefit pension plans by asset category were as follows: 


U.S. CANADA BRAZIL EUROPE SOUTH AFRICA OTHERS 

Equity Securities 63% 54% 10% 17% 34% 45% 

Fixed Income (including cash) 23% 38% 88% 64% 52% 48% 

Real Estate 5% — — — — — 

Other 9% 8% 2% 19% 14% 7% 

Total 100% 100% 100% 100% 100% 100% 





Real Estate 7% — — — — — 

Other 13% 5% 2% 18% 14% 5% 

Total 100% 100% 100% 100% 100% 100% 

These assets do not include any direct investment in ArcelorMittal or in property or other assets occupied or used 

by ArcelorMittal except for the transaction explained previously. This does not exclude ArcelorMittal shares being included 

in mutual fund investments. The invested assets produced an actual return of 379 and (1,128) in 2007 and 2008, respectively. 

The respective Finance and Retirement Committees of the Board of Directors have general supervisory authority over the respective 

trust funds. These committees have established the following asset allocation targets. These targets are considered benchmarks 

and are not mandatory. 





Real Estate 7% — — 2% — — 

Other 20% — 3% 6% 12% — 

Total 100% 100% 100% 100% 100% 100% 

129 






The following tables detail the reconciliation of defined benefit obligation, plan assets and balance sheet liability. 

Change in benefit obligation 

Benefit obligation at beginning of the period 9,609 3,075 2,730 481 2,228 1,017 78 

Service cost 176 39 73 10 45 — 9 

Interest cost 574 167 152 60 107 73 15 

Plan amendments 13 — 3 — 10 — — 

Plan participants’ contribution 5 — 1 2 1 — 1 

Curtailments and settlements 96 — 48 — — — 48 

Actuarial (gain) loss (501) (201) (311) 10 (62) 51 12 

Benefits paid (560) (2) (141) (34) (209) (105) (69) 

Foreign currency exchange rate differences 

and other movements 1,100 — 479 110 366 33 112 

Benefit obligation at end of the period 10,512 3,078 3,034 639 2,486 1,069 206 

Change in plan assets 

Fair value of plan assets at beginning of the period 6,985 2,335 2,193 551 551 1,256 99 

Expected return on plan assets 580 221 176 76 24 73 10 

Actuarial gain (loss) (201) (184) (54) — 5 28 4 

Employer contribution 419 257 106 13 42 — 1 


Benefits paid (347) (2) (141) (34) (63) (105) (2) 


and other movements 650 — 426 123 63 38 — 

Fair value of plan assets at end of the period 8,091 2,627 2,707 731 623 1,290 113 

(Unfunded) funded status of the plans (2,421) (451) (327) 92 (1,863) 221 (93) 

Unrecognized net actuarial loss (gain) 578 808 (195) 9 (45) (19) 20 

Unrecognized past service cost (2) — (1) — — — (1) 

Prepaid due to unrecoverable surpluses (305) — — (103) — (202) — 

Net amount recognized (2,150) 357 (523) (2) (1,908) — (74) 

Net assets related to funded obligations 419 357 29 4 3 — 26 

Balance sheet liabilities (2,569) — (552) (6) (1,911) — (100) 

130 


TOTAL U.S. CANADA BRAZIL EUROPE SOUTH AFRICA OTHERS


TOTAL U.S. CANADA BRAZIL EUROPE SOUTH AFRICA OTHERS 

Change in benefit obligation 

Benefit obligation at beginning of the period 10,512 3,078 3,034 639 2,486 1,069 206 

Service cost 163 42 61 11 38 — 11 

Interest cost 625 181 161 69 127 69 18 

Plan amendments 180 155 11 — 10 — 4 


Acquisition 20 — — — — — 20 

Curtailments and settlements 12 — (1) (1) (12) — 26 

Actuarial (gain) loss (141) 50 (248) 37 42 (15) (7) 

Benefits paid (760) (225) (167) (37) (194) (92) (45) 


and other movements (1,258) — (577) (171) (182) (288) (40) 

Benefit obligation at end of the period 9,359 3,281 2,275 550 2,316 743 194 

Change in plan assets 

Fair value of plan assets at beginning of the period 8,091 2,627 2,707 731 623 1,290 113 

Expected return on plan assets 584 215 182 82 25 69 11 

Actuarial gain (loss) (1,712) (915) (631) (24) (24) (103) (15) 

Employer contribution 458 213 170 18 56 — 1 


Settlements (11) — — — (11) — — 

Benefits paid (589) (224) (166) (37) (64) (92) (6) 


and other movements (1,039) — (477) (184) (40) (338) — 

Fair value of plan assets at end of the period 5,788 1,916 1,786 589 566 826 105 

(Unfunded) funded status of the plans (3,571) (1,365) (489) 39 (1,750) 83 (89) 

Unrecognized net actuarial loss (gain) 1,969 1,700 179 44 22 — 24 

Unrecognized past service cost 29 28 — — 1 — — 

Prepaid due to unrecoverable surpluses (155) — — (69) (3) (83) — 

Net amount recognized (1,728) 363 (310) 14 (1,730) — (65) 

Net assets related to funded obligations 491 406 49 17 — — 19 

Balance sheet liabilities (2,219) (43) (359) (3) (1,730) — (84) 

Asset ceiling 

The amount not recognized in the fair value of plan assets due to the asset ceiling was 305 and 155 at December 31, 2007 


131 






The following tables detail the components of net periodic pension cost: 

Net periodic cost (benefit) 

Service cost 176 39 73 10 45 — 9 

Interest cost 574 167 152 60 107 73 15 

Expected return on plan assets (580) (221) (176) (76) (24) (73) (10) 

Charges due to unrecoverable surpluses 16 — — 16 — — — 

Curtailments and settlements 118 — 72 — (2) — 48 

Amortization of unrecognized past service cost 13 — 3 — 10 — — 

Amortization of unrecognized actuarial (gain) loss 71 68 4 — (1) — — 

Total 388 53 128 10 135 — 62 

Other post-employment benefits 

ArcelorMittal’s principal Operating Subsidiaries in the U.S., Canada and Europe, among certain others, provide post-employment 

benefits, including medical benefits and life insurance benefits, to retirees. Substantially all union-represented ArcelorMittal USA 

employees are covered under post-employment life insurance and medical benefit plans that require deductible and co-insurance 

payments from retirees. The post-employment life insurance benefit formula used in the determination of post-employment benefit 

cost is primarily based on applicable annual earnings at retirement for salaried employees and specific amounts for hourly employees. 

ArcelorMittal USA does not pre-fund most of these post-employment benefits. 

In connection with the new labor agreement between ArcelorMittal USA and the USW, the Company agreed to changes to an existing 

Voluntary Employee Benefit Association (“VEBA”). The VEBA provided limited healthcare benefits to the retirees of certain companies 

whose assets were acquired (referred to as Legacy Retirees). Contributions into the trust were calculated based on quarterly operating 

income and on certain overtime hours worked. Benefits paid were based on the availability of funds in the VEBA. 

Under the new agreement the Company agreed to contribute a fixed amount of 25 per quarter and to develop a program 

of benefits for the Legacy Retirees. Agreements with the USW capped the Company’s share of healthcare costs for ArcelorMittal 

retirees at 2008 levels for years 2010 and beyond. The VEBA will be responsible for reimbursing the Company for any costs 

in excess of the cap for retirees of ArcelorMittal USA. Because the current labor agreement specifies the level of benefits 

to be provided and ArcelorMittal is the only source of funding, the obligation meets the definition of a defined benefit plan. 

Accordingly, the Company recognized a liability of 571 for the actuarial determined amount of benefits expected to be paid 

to the Legacy Retirees net of the existing assets in the VEBA trust. Since these individuals have all retired, the expense was recognized 

immediately. The Company also determined that removing the cap on future healthcare costs increased the defined benefit obligation 

by 1,061 of which 853 was vested and recognized immediately. The remaining balance will be recognized evenly over the average 

period of estimated future service life until the benefits become vested. 

132 





Net periodic cost (benefit) 

Service cost 163 42 61 11 38 — 11 

Interest cost 625 181 161 69 127 69 18 

Expected return on plan assets (584) (215) (182) (82) (25) (69) (11) 

Charges due to unrecoverable surpluses (8) — — (11) 3 — — 

Curtailments and settlements 25 — (1) — — — 26 

Amortization of unrecognized past service cost 152 127 11 — 10 — 4 

Amortization of unrecognized actuarial (gain) loss 78 69 (6) 12 2 — 1 

Total 451 204 44 (1) 155 — 49

Summary of changes in the other post employment benefit obligation and the change in plan assets: 

Change in post-employment benefit obligation 

Benefit obligation at beginning of period 2,614 1,169 935 6 474 30 

Service cost 62 9 19 — 16 18 

Interest cost 139 64 52 1 22 — 

Plan amendment 47 44 — — 3 — 

Actuarial loss (gain) (181) (12) (158) (1) (10) — 

Benefits paid (195) (70) (34) (1) (51) (39) 

Curtailments and settlements 18 11 10 — (3) — 

Acquisition (divestitures) 15 — — — (4) 19 

Foreign currency exchange rate changes 

and other movements 286 — 159 1 75 51 

Benefits obligation at end of period 2,805 1,215 983 6 522 79 

Fair value of assets 49 34 — — 15 — 

Funded (unfunded) status of the plans (2,756) (1,181) (983) (6) (507) (79) 

Unrecognized net actuarial loss (gain) 165 322 (144) — (13) — 

Unrecognized past service cost (benefit) 8 13 (2) — (3) — 

Net amount recognized (2,583) (846) (1,129) (6) (523) (79) 

Change in post-employment benefit obligation 

Benefit obligation at beginning of period 2,805 1,215 983 6 522 79 

Service cost 54 12 14 — 23 5 

Interest cost 212 121 48 1 34 8 

Plan amendment 1,695 1,642 2 — 8 43 

Actuarial loss (gain) 224 379 (155) — (18) 18 

Benefits paid (250) (135) (36) (1) (78) — 

Curtailments and settlements 4 4 — — — — 

Acquisition (divestitures) (47) (47) — — — — 

Foreign currency exchange rate changes 

and other movements 557 670 1 (189) (1) 112 (35) 

Benefits obligation at end of period 5,254 3,861 667 5 603 118 

Fair value of assets 635 623 — — 12 — 

Funded (unfunded) status of the plans (4,619) (3,238) (667) (5) (591) (118) 

Unrecognized net actuarial loss (gain) 454 695 (223) — (35) 17 

Unrecognized past service cost (benefit) 199 197 (1) — 3 — 

Net amount recognized (3,966) (2,346) (891) (5) (623) (101) 

1 This amount includes the existing asset VEBA trust. 


TOTAL U.S. CANADA BRAZIL EUROPE OTHERS 



133 






The following tables detail the components of net periodic other post-employment cost: 

Components of net periodic cost (benefit) 

Service cost 62 9 19 — 16 18 

Interest cost 139 64 52 1 22 — 

Expected return on plan assets (3) (2) — — (1) — 

Curtailments and settlements 20 11 13 — (4) — 

Amortization of unrecognized past service cost 4 — — — 4 — 

Amortization of unrecognized actuarial (gain) loss 23 27 — (1) (3) — 

Total 245 109 84 — 34 18 

Components of net periodic cost (benefit) 

Service cost 54 12 14 — 23 5 

Interest cost 212 121 48 1 34 8 

Expected return on plan assets (16) (15) — — (1) — 

Curtailments and settlements 6 6 — — — — 

Amortization of unrecognized past service cost 1,504 1,458 1 — 2 43 

Amortization of unrecognized actuarial (gain) loss 6 12 (15) — 9 — 

Total 1,766 1,594 48 1 67 56 

Weighted-average assumptions used to determine benefit obligations at December 31, 

Health care cost trend 

Cash flows 

In 2009, the Company expects its cash contributions to amount to 543 for pension plans, 289 for other post employment 

benefits plans (including 100 related to USW agreement in USA) and 134 for the defined contribution plans. Cash contributions 

to the defined contribution plans, sponsored by the company, amounted to 115 in 2008. 

Balance sheet 

134 





Pension Plans Other Post-employment Benefits 

2007 2008 2007 2008 

Discount rate 5.17% – 10.77% 5.42% – 10.77% 2.94% – 10.77% 4.25% – 10.77% 

Rate of compensation increase 2% – 8% 2.50% – 9.2% 1% – 8% 1.5% – 7.12% 

Expected long-term rate of return on plan assets 3.54% – 11.25% 3.47% – 11.72% 4.5% – 5% 4.5% – 6.11% 



Health care cost trend rate assumed 2.5% – 6.31% 3% – 5.71% 

At December 31, At December 31, 


Pension plan benefit 2,569 2,219 

Other post-employment benefit 2,583 3,966 

Early retirement benefit 780 669 

Other long-term employee benefits 312 257 

Total 6,244 7,111

Sensitivity analysis 

The following information illustrates the sensitivity to a change in certain assumptions for ArcelorMittal’s pension plans 

(as of December 31, 2008, the defined benefit obligation (“DBO”) for pension plans was 9,359): 

Effect on 2009 Pre-Tax Pension Expense Effect of December 31, 

Change in assumption (sum of service cost and interest cost) 2008 DBO 

100 basis point decrease in discount rate 1 973 

100 basis point increase in discount rate (3) (818) 

100 basis point decrease in rate of compensation (31) (240) 

100 basis point increase in rate of compensation 36 264 

100 basis point decrease in expected return on plan assets 56 — 

100 basis point increase in expected return on plan assets (56) — 

The following table illustrates the sensitivity to a change in the discount rate assumption related to ArcelorMittal’s OPEB plans 

(as of December 31, 2008 the DBO for post-employment benefit plans was 5,254): 

Effect on 2009 Pre-Tax OPEB Expense Effect of December 31, 

Change in assumption (sum of service cost and interest cost) 2008 DBO 

100 basis point decrease in discount rate (7) 580 

100 basis point increase in discount rate 6 (464) 

100 basis point decrease in healthcare cost trend (36) (441) 

100 basis point increase in healthcare cost trend 40 498 

The above sensitivities reflect the effect of changing one assumption at a time. Actual economic factors and conditions 

often affect multiple assumptions simultaneously, and the effects of changes in key assumptions are not necessarily linear. 

Experience adjustments 

The two-year history of the present value of the defined benefit obligations, the fair value of the plan assets and the surplus 

or the deficit in the pension plans is as follows: 


(in millions of U.S. dollars) 2007 2008 

Present value of the defined benefit obligations (10,512) (9,359) 

Fair value of the plan assets 8,091 5,788 

Deficit (2,421) (3,571) 

Experience adjustments: (increase)/decrease plan liabilities (195) (122) 

Experience adjustments: increase/(decrease) plan assets (201) (1,712) 

This table illustrates the present value of the defined benefit obligations, the fair value of the plan assets and the surplus 

or the deficit for the OPEB plans is as follows: 


(in millions of U.S. dollars) 2007 2008 

Present value of the defined benefit obligations (2,805) (5,254) 

Fair value of the plan assets 49 635 

Deficit (2,756) (4,619) 

Experience adjustments: (increase)/decrease plan liabilities (33) (142) 

Experience adjustments: increase/(decrease) plan assets — (19) 

135 






Note 24: Contingencies 

ArcelorMittal may be involved in litigation, 

arbitration or other legal proceedings. 

Provisions related to legal and arbitral 

proceedings are recorded in accordance 

with the principles described in note 2. 

Most of these claims involve highly 

complex issues, actual damages and other 

matters. Often these issues are subject 

to substantial uncertainties and, therefore, 

the probability of loss and an estimation 

of damages are difficult to ascertain. 

Consequently, for a large number of these 

claims, we are unable to make a reasonable 

estimate of the expected financial effect 

that will result from ultimate resolution 

of the proceeding. In those cases, we have 

disclosed information with respect to the 

nature of the contingency. We have not 

accrued a reserve for the potential 

outcome of these cases. 

In the cases in which quantifiable fines 

and penalties have been assessed, we have 

indicated the amount of such fine or 

penalty or the amount of provision accrued 

that is the estimate of the probable loss. 

In a limited number of ongoing cases, 

we are able to make a reasonable estimate 

of the expected loss or range of possible 

loss and have accrued a provision for such 

loss, but believe that publication of this 

information on a case-by-case basis 

would seriously prejudice the Company’s 

position in the ongoing legal proceedings 

or in any related settlement discussions. 

Accordingly, in these cases, we have 

disclosed information with respect to 

the nature of the contingency, but have 

not disclosed our estimate of the range 

of potential loss. 

These assessments can involve a series 

of complex judgments about future events 

and can rely heavily on estimates and 

assumptions. Our assessments are based 

on estimates and assumptions that have 

been deemed reasonable by management. 

We believe that the aggregate provisions 

recorded for the above matters are 

adequate based upon currently available 

information. 

136 

However, given the inherent uncertainties 

related to these cases and in estimating 

contingent liabilities, we could, in the 

future, incur judgments that could have 

a material adverse effect on our results 

of operations in any particular period. 

Environmental liabilities 

ArcelorMittal’s operations are subject to a 

broad range of laws and regulations relating 

to the protection of human health and the 

environment at its multiple locations and 

Operating Subsidiaries. As of December 31, 

2008, ArcelorMittal had established 

reserves of 769 for environmental remedial 

activities and liabilities, including 385 

in provisions relating to Europe, 222 in 

provisions relating to the United States, 

143 in provisions relating to South Africa 

and 7 in provisions relating to Canada. 

Previous owners of ArcelorMittal’s facilities 

expended in the past, and ArcelorMittal 

expects to expend in the future, substantial 

amounts to achieve or maintain ongoing 

compliance with applicable environmental 

laws and regulations. 

United States 

ArcelorMittal USA’s environmental 

provisions of 222 are mainly related 

to investigation, monitoring and 

remediation of soil and groundwater 

investigation at its current and former 

facilities and to removal and disposal of 

PCBs and asbestos-containing material. 

The environmental provisions include 

4 to address ArcelorMittal USA’s potential 

liability at two Superfund sites. 

ArcelorMittal USA’s largest environmental 

provisions relate to investigation and 

remediation at Indiana Harbor (East), 

Lackawanna, and its closed mining 

operations in southwestern Pennsylvania. 

In 1990, ArcelorMittal USA’s Indiana Harbor 

(East) facility was party to a lawsuit filed 

by the U.S. Environmental Protection 

Agency (the “EPA”) under the U.S. Resource 

Conservation and Recovery Act (“RCRA”). 

In 1993, ArcelorMittal Indiana Harbor 

(East) entered into a Consent Decree, 

which, among other things, requires 

facility-wide RCRA Corrective Action and 

sediment assessment and remediation in 

the adjacent Indiana Harbor Ship Canal. 

ArcelorMittal USA’s provisions for 

environmental liabilities include 

approximately 12 for RCRA Corrective 

Action, and 25 for sediment assessment 

and remediation at this site. Remediation 

ultimately may be necessary for other 

contamination that may be present at 

Indiana Harbor (East), but the potential 

costs of any such remediation cannot 

yet be reasonably estimated. 

ArcelorMittal USA’s properties in 

Lackawanna, New York are subject to an 

Administrative Order on Consent with the 

EPA requiring facility-wide RCRA Corrective 

Action. The Administrative Order, entered 

into in 1990 by the former owner, 

Bethlehem Steel, requires the Company to 

perform a Remedial Facilities Investigation 

(“RFI”) and a Corrective Measures Study, 

to implement appropriate interim and final 

remedial measures, and to perform required 

post-remedial closure activities. In 2006, 

the New York State Department of 

Environmental Conservation and the 

EPA conditionally approved the RFI. 

ArcelorMittal USA has executed Orders 

on Consent to perform certain interim 

corrective measures while advancing the 

Corrective Measures Study. These include 

installation and operation of ground water 

treatments system and dredging of a local 

waterway known as Smokes Creek. 

The Company expects to execute 

a Corrective Measure Order on Consent 

in 2009 for other site remediation 

activities. ArcelorMittal USA’s provisions 

for environmental liabilities include 

approximately 47 for anticipated 

remediation and post remediation activities. 

The reserved amount is based on the 

extent of soil and groundwater 

contamination identified by the RFI and the 

remedial measures likely to be required, 

including excavation and consolidation 

of containments in an on-site landfill 

and continuation of groundwater pump 

and treat systems. 

ArcelorMittal USA is required to prevent 

acid mine drainage from discharging 

to surface waters at closed mining 

operations in southwestern Pennsylvania.

In 2003, ArcelorMittal USA entered into 

a Consent Order and Agreement with the 

Pennsylvania Department of Environmental 

Protection (the “PaDEP”) requiring 

submission of an operational improvement 

plan to improve treatment facility 

operations and lower long-term 

wastewater treatment costs. The Consent 

Order and Agreement also required 

ArcelorMittal USA to propose a long-term 

financial assurance mechanism. In 2004, 

ArcelorMittal USA entered into a revised 

Consent Order and Agreement outlining 

a schedule for implementation of capital 

improvements and requiring the 

establishment of a treatment trust that 

the PaDEP has estimated to be the net 

present value of all future treatment cost. 

ArcelorMittal USA has been funding the 

treatment trust and has a period of up to 

ten years to reach the current target value 

of approximately 20. After the treatment 

trust is fully funded, the treatment trust 

will then be used to fund the continuing 

cost of treatment of acid mine drainage. 

Although remote, ArcelorMittal USA 

could be required to make up any deficiency 

in the treatment trust in the future. 

ArcelorMittal USA’s provisions for 

environmental liabilities include 

approximately 29 for this matter. 

On August 8, 2006, the U.S. EPA Region 

V issued ArcelorMittal USA’s Burns Harbor, 

Indiana facility a Notice of Violation (“NOV”) 

alleging that in early 1994 the facility (then 

owned by Bethlehem Steel, from whom the 

assets were acquired out of bankruptcy) 

commenced a major modification of its 

#2 Coke Battery without obtaining 

a Prevention of Significant Deterioration 

(“PSD”) permit and has continued 

to operate without the appropriate PSD 

permit. ArcelorMittal USA has discussed the 

allegations with the EPA, but to date there 

have been no further formal proceedings. 

The U.S. EPA Region V also has conducted 

a series of inspections and submitted 

information request under the U.S. Clean 

Air Act relating to the Burns Harbor facility 

and several other ArcelorMittal facilities 

located in Indiana and Ohio. ArcelorMittal 

has held discussions with the EPA and 

state environmental agencies regarding 

their concerns. 

During such discussions, in addition to the 

matters raised in the NOV, EPA alleged that 

ArcelorMittal’s Burns Harbor, Indiana Harbor 

and Cleveland facilities were non-compliant 

with certain requirements of the U.S. Clean 

Air Act. Some of EPA’s allegations relate 

to recent compliance performance and 

some relate to acts by former facility 

owners that occurred 15-25 years ago. 

Preliminary analysis by counsel indicates 

that the allegations related to the acts of 

former owners appear to be unsound and 

that the current operations at the Burns 

Harbor, Indiana Harbor and Cleveland 

facilities achieve high rates of compliance 

with existing or, where applicable, 

anticipated permits and regulations under 

the U.S. Clean Air Act. Further discussions 

with EPA and affected state environmental 

agencies are planned with regard to EPA’s 

expressed concerns. 

Europe 

Provisions total 385 and are mainly 

related to investigation and remediation of 

environmental contamination at current 

and former operating sites in France (169), 

Luxembourg (105) and Belgium (85). 

This remediation work relates to various 

elements such as decontamination of water 

discharges, waste disposal, cleaning water 

ponds as well as certain remediation 

activities that involve the clean-up of soil 

and groundwater. These reserves are also 

related to human health protection 

measures such as fire prevention and 

additional contamination prevention 

measures to comply with local health and 

safety regulations. 

In Belgium, Cockerill Sambre SA has an 

environmental provision of 50, of which 

the most significant elements are legal 

obligations linked to the dismantling 

of steelmaking installations and soil 

treatment of sites. 

In France, ArcelorMittal France has 

environmental provisions of 74, principally 

relating to the remediation of former coke 

plant sites and the capping and monitoring 

of landfills or basins previously used for 

residues and secondary materials. 

ArcelorMittal Atlantique et Lorraine has 

an environmental provision that principally 

relates to the remediation and the 

improvement of storage of secondary 

materials and disposal of waste at different 

ponds and landfills and an action plan for 

removing asbestos from the installations. 

In Luxembourg, the provisions are 

essentially associated with post-closure 

monitoring and remediation of former 

landfill and mining sites. 

Additionally, ArcelorMittal Belval and 

Differdange has a provision of 12 to clean 

pond water in Differdange in order to meet 

the requirements of the Luxembourg 

Environment Administration (Administration 

de l’Environnement) regarding discharge 

in the Chiers River and maintain sufficient 

cold water reserves to permit the 

production of degassed steel in warmer 

months. The cleaning started in 2006 and 

is expected to continue for five years. 

South Africa 

ArcelorMittal South Africa has 

environmental provisions of 143, mainly 

relating to environmental remediation 

obligations that represent the present value 

of the costs of remedial action to clean and 

secure a site. These actions are primarily 

attributable to historical, or legacy, waste 

disposal activities. With subsequent 

changes in national environmental 

legislation, the unit has a legal obligation 

to remediate these facilities. 

Asset Retirement Obligations (“AROs”) 

AROs arise from legal requirements and 

represent management’s best estimate 

of the present value of the costs that will 

be required to retire plant and equipment. 


had established reserves for asset 

retirement obligations of 29 in provisions 

relating to Canada and 26 in provisions 

relating to South Africa. Most of the 

AROs relate to ancillary plants and 

equipment that will be retired as part 

of the closure of the facilities subject 

to remediation obligations. 

137 






Environmental Remediation Obligations 

(“EROs”) 

EROs arise from legal requirements and 

represent management’s best estimate 

of the present value of the costs that will 

be required to restore a site at the end of 

its useful life. As of December 31, 2008, 

ArcelorMittal had established reserves 

for environmental remediation obligations 

of 120 in provisions relating to Ukraine 

and 61 in provisions relating to Russia. 

Legal claims 

ArcelorMittal is a party to various legal 

actions. The principal legal actions are 

disclosed below. 

Environmental claims 

ArcelorMittal is a party to various legacy 

environmental claims. As of December 31, 

2008, ArcelorMittal had not established 

reserves for the claims disclosed below. 

United States 

In July 2004, the Illinois Environmental 

Protection Agency (the “IEPA”) notified 

Indiana Harbor (East) that it had identified 

that facility as a potentially responsible 

party in connection with alleged 

contamination relating to Hillside Mining 

Co. (“Hillside”), a company that Indiana 

Harbor (East) acquired in 1943, operated 

until the late 1940s and whose assets 

it sold in the early 1950s, in conjunction 

with the corporate dissolution of that 

company. The IEPA is requesting that 

ArcelorMittal USA and other potentially 

responsible parties conduct an investigation 

of certain areas of potential contamination. 

ArcelorMittal USA intends to defend itself 

fully in this matter. As of December 31, 

2008, ArcelorMittal is not able to 

reasonably estimate the amount of 

liabilities relating to this matter, if any. 

Europe 

On December 16, 2008, the European 

Court of Justice ruled that certain European 

Union air pollution legislation does not 

discriminate against ArcelorMittal and 

other steelmakers by exempting from 

its requirements other industries with 

similar levels of carbon dioxide emissions. 

138 

ArcelorMittal had argued that the European 

Union had breached the principle of equal 

treatment by excluding the aluminum and 

chemical industries from legislation that 

imposed caps on carbon dioxide emissions. 

Tax claims 

ArcelorMittal is a party to various tax 

claims. As of December 31, 2008, 

ArcelorMittal has established reserves 

in the aggregate of approximately 

128 for the claims disclosed below. 

Brazil 

The Brazilian Federal Revenue Service 

has claimed that ArcelorMittal Brasil owes 

100 for IPI (Manufactured Goods Tax) 

concerning its use of tax credits on the 

purchase of raw materials that were 

non-taxable, exempt from tax or subject 

to a 0% tax rate and the disallowance of 

IPI credits recorded five to ten years after 

the relevant acquisition. Recent Brazilian 

Supreme Court jurisprudence would tend 

to support the Brazilian Federal Revenue 

Service’s position. 

In 2003, the Brazilian Federal Revenue 

Service granted ArcelorMittal Brasil 

(through its predecessor company, 

then known as CST) a tax benefit for 

certain investments. ArcelorMittal Brasil 

had received certificates from SUDENE, 

the former Agency for the Development 

of the Northeast Region of Brazil, 

confirming ArcelorMittal Brasil’s entitlement 

to this benefit. In September 2004, 

ArcelorMittal Brasil was notified of the 

annulment of these certificates. 

ArcelorMittal Brasil has pursued its right 

to this tax benefit through the courts 

against both ADENE, the successor to 

SUDENE, and against the Brazilian Federal 

Revenue Service. The Brazilian Federal 

Revenue Service issued a tax assessment 

in this regard for 451 in December 2007. 

In December 2008, the administrative 

tribunal of first instance upheld the amount 

of the assessment. ArcelorMittal Brasil 

is appealing to the administrative tribunal 

of second instance. 

In May 2007, the Brazilian Federal Revenue 

Service issued a 614 tax assessment 

to ArcelorMittal Brasil to recover taxes 

primarily related to credit settlements 

in the context of the 2003 financial 

reorganization and acquisition of Mendes 

Júnior Siderurgia S.A. In September 2007, 

ArcelorMittal Brasil received an 

administrative decision on the tax 

assessment pursuant to which it was 

determined that the amount of tax payable 

under the assessment should be 12. 

In December 2008, the administrative 

court held that ArcelorMittal Brasil was 

not liable to pay any tax. The decision 

is subject to further appeal by the Federal 

Revenue Service. 

The Brazilian Social Security Administration 

has claimed that ArcelorMittal Brasil owes 

certain amounts for social contributions in 

respect of amounts paid by ArcelorMittal 

Brasil to employees under its profit sharing 

scheme for the 1998-2005 period. 

In December 2007, it issued a further 

11 tax assessments to ArcelorMittal Brasil 

in respect of the same subject matter, 

bringing the total amount claimed to 79. 

The various claims are at different stages 

in the administrative and judicial 

procedures. ArcelorMittal Brasil is unable 

reasonably to estimate when any or all of 

the cases may reach a definitive conclusion. 

Spain 

Spanish tax authorities have claimed 

that amortization recorded by the 

former Siderúrgica del Mediterraneo, S.A. 

(currently ArcelorMittal Segunto S.L.) 

in 1995, 1996 and 1997 is non-deductible 

for corporation tax purposes. Spanish tax 

authorities seek payment of 55, including 

the amount of tax, interest and penalties. 

The case is pending before the court 

(the Audiencia Nacional), administrative 

procedures having been exhausted. 

Kazakhstan 

In May and June 2007, the Tax Committee 

of the Kazakh Ministry of Finance issued 

two tax assessments against ArcelorMittal 

Temirtau for (1) adjustment of sales 

income for related and non-related party 

sales under transfer pricing law in the 

sum of 1,042 and (2) the inclusion of

income of a subsidiary company domiciled 

in the United Arab Emirates tax-free zone 

in the sum of 840, in both cases plus 

administrative charges. ArcelorMittal 

Temirtau appealed both tax assessments 

to the courts. In November 2007, 

the Astana Court held that the assessment 

levied by the Tax Committee for 1,042 was 

not justified and cancelled it, along with 

related administrative charges of 363. 

This decision was upheld on appeal to the 

Kazakh Supreme Court in January 2008. 

The time for the Tax Committee to appeal 

this decision (one year) has expired. 

In respect of the tax demand for 840, 

in February 2008, the Karaganda Court 

found in favor of the Tax Committee, 

quantifying the amount due as 840 plus 

administrative charges of 261. In April 

2008, the Karaganda Regional Court 

reversed this decision, and this reversal 

upheld by its highest body. The Tax 

Committee has one year to appeal this 

decision, but has not done so to date. 

The Company believes that it has no liability 

in respect of either tax assessment, since 

its obligation to pay income tax is capped 

under the share purchase agreement and 

related agreements pursuant to which 

it acquired ArcelorMittal Temirtau from the 

government of Kazakhstan. ArcelorMittal 

Temirtau has paid its income tax in 

accordance with these agreements. 

Competition/Antitrust claims 

ArcelorMittal is a party to various 

competition/antitrust claims. As of 

December 31, 2008, ArcelorMittal has 

established reserves of approximately 

595 in the aggregate for the claims 

disclosed below: 

United States 

On September 12, 2008, Standard Iron 

Works filed a purported class action 

complaint in U.S. District Court in the 

Northern District of Illinois against 

ArcelorMittal, ArcelorMittal USA Inc., 

and other steel manufacturers, alleging 

that the defendants had conspired since 

2005 to restrict the output of steel 

products in order to fix, raise, stabilize 

and maintain prices at artificially high 

levels in violation of U.S. antitrust law. 

Since the filing of the Standard Iron Works 

lawsuit, other similar lawsuits have been 

filed in the same court and have been 

consolidated with Standard Iron Works. 

In January 2009, ArcelorMittal and the 

other defendants filed a motion to dismiss 

the claims. It is too early in the proceedings 

for ArcelorMittal to determine the amount 

of its potential liability, if any. ArcelorMittal 

considers the allegations in the complaint 

to be entirely unfounded. 

Brazil 

In September 2000, two construction 

companies filed a complaint with the 

Brazilian Economic Law Department against 

three long steel producers, including 

ArcelorMittal Brasil. The complaint alleged 

that these producers colluded to raise 

prices in the Brazilian rebar market, 

thereby violating applicable antitrust laws. 

In September 2005, the Brazilian Antitrust 

Council (CADE) issued a decision against 

ArcelorMittal Brasil that resulted in 

ArcelorMittal Brasil’s having to pay 

a penalty of 42. ArcelorMittal Brasil 

has appealed the decision to the Brazilian 

Federal Court. In September 2006, 

ArcelorMittal Brasil offered a letter 

guarantee and obtained an injunction 

to suspend enforcement of this decision 

pending the court’s judgment. 

There is also a related class action 

commenced by the Federal Public 

Prosecutor of the state of Minas Gerais 

against ArcelorMittal Brasil for damages 

based on the alleged violations investigated 

by CADE. 

Europe 

In late 2002, three subsidiaries 

of ArcelorMittal (Tréfileurope, Tréfileurope 

Italia S.r.l. and Fontainunion S.A.) – 

now known as ArcelorMittal Wire France, 

ArcelorMittal Verderio and ArcelorMittal 

Fontaine – and two former subsidiaries 

of ArcelorMittal España (Emesa and 

Galycas), along with other European 

manufacturers of pre-stressed wire 

and strands steel products, received 

notice that the European Commission 

was conducting an investigation into 

possible anti-competitive practices by 

these companies. 

In 2004, Emesa and Galycas were sold. 

ArcelorMittal and its subsidiaries are 

cooperating fully with the European 

Commission in this investigation. 

On October 2, 2008, the European 

Commission sent a Statement of 

Objections to (1) ArcelorMittal Wire France, 

ArcelorMittal Verderio and ArcelorMittal 

Fontaine for their involvement in the 

alleged practices under investigation; 

and (2) ArcelorMittal France (as successor 

of Usinor), ArcelorMittal España and 

ArcelorMittal (as legal successor to Mittal 

Steel) in their capacity as former or current 

parent companies of the current and 

former subsidiaries involved in the 

investigation. The Statement of Objections 

does not indicate the amount of the fine 

that the European Commission intends 

to impose on any of the companies. 

A response to the Statement of Objections 

was submitted in December 2008. 

The European Commission can impose 

fines for breaches of EU competition law 

of up to a maximum of 10% of the 

worldwide annual revenues of the relevant 

entity in the business year preceding the 

Commission’s decision. The amount of the 

fine is influenced by, inter alia, the relevant 

entity’s direct or indirect involvement. 

ArcelorMittal is currently unable to assess 

the amount of any fines that will result. 

ArcelorMittal is contractually required 

to indemnify the present owner of 

Emesa and Galycas if a fine is imposed 

on it relating to any matters that occurred 

while these entities were owned by Arcelor. 

On April 23, 2007, ArcelorMittal received 

a decision of the Financial Directorate 

in Ostrava, Czech Republic, which ordered 

ArcelorMittal Ostrava to pay approximately 

106 for allegedly abusing its economic 

position and, as a result, acquiring 

unjustified profits in respect of prices 

of blast furnace coke produced by 

ArcelorMittal Ostrava and delivered 

in 2004. The Financial Directorate 

subsequently ordered ArcelorMittal 

Ostrava to pay an additional fine of 25 for 

the period from January to March 2005. 

139 






After its previous decision in October 2006 

was cancelled by the Czech Ministry 

of Finance, the matter was returned 

to the Financial Directorate in Ostrava 

for reexamination. ArcelorMittal Ostrava 

received notice on June 14, 2007 that 

the Ministry of Finance had upheld the 

Financial Directorate of Ostrava’s decision. 

ArcelorMittal Ostrava filed a petition against 

the decision with the Municipal Court of 

Prague on June 29, 2007. Filing the 

petition had the effect of suspending 

payment of the fines. 

In 2004, the French competition 

authorities (La Direction Générale de la 

Consommation et de la Repression des 

Fraudes) commenced an investigation into 

alleged anti-competitive practices in the 

steel distribution sector in France, including 

Arcelor Négoce Distribution, a subsidiary 

of Arcelor. The case was then referred 

to the French Competition Council 

(Conseil de la Concurrence), which 

conducted an investigation. On March 5, 

2008, a Statement of Objections was 

issued to three subsidiaries of ArcelorMittal 

(PUM Service d’Acier, Arcelor Profil and 

AMD Sud/Ouest). On December 16, 2008, 

the French Competition Council imposed 

fines of €575 million, of which €302 million 

was apportioned to subsidiaries of 

ArcelorMittal. In its decision, the French 

Competition Council concluded that these 

companies had agreed to fix prices and 

allocate markets and customers from the 

period of 1999 to 2004 through regular 

meetings and exchanges of information. 

On January 19, 2009, ArcelorMittal 

appealed the amount of the fine. 

South Africa 

ArcelorMittal South Africa is involved 

in a dispute with Harmony Gold Mining 

Company Limited and Durban Roodeport 

Deep Limited in which the latter companies 

allege that ArcelorMittal South Africa 

is in violation of the Competition Act. 

On March 27, 2007, the Competition 

Tribunal decided that ArcelorMittal South 

Africa had contravened Section 8(a) of the 

Competition Act by charging an excessive 

price. On September 6, 2007, the 

Competition Tribunal imposed a penalty 

on ArcelorMittal South Africa of 

140 

approximately 97, other behavioral remedies 

designed to prevent ArcelorMittal South 

Africa imposing or agreeing with customers 

any conditions on the resale of flat steel 

products and ordered that ArcelorMittal 

South Africa pay the costs of the case. 

ArcelorMittal South Africa has appealed the 

decision of the Competition Tribunal on the 

merits and its decision on the remedies. 

In November 2007, the Competition Appeal 

Court ordered the suspension of the 

Tribunal’s decision on the remedies pending 

the appeal. On October 23 and 24, 2008, 

the hearing before the Competition Appeal 

Court took place. ArcelorMittal is unable 

at present to determine the outcome of 

the appeal. A decision is expected during 

the first quarter of 2009. 

In February 2007, the complaint previously 

filed with the South African Competition 

Commission by Barnes Fencing, a South 

African producer of galvanized wire, alleging 

that ArcelorMittal South Africa, as a 

“dominant firm”, discriminated in pricing its 

low carbon wire rod, was referred to the 

Competition Tribunal. The claimant seeks, 

among other sanctions, a penalty of 

10% of ArcelorMittal South Africa’s sales 

for 2006 in respect of low carbon wire 

rod and an order that ArcelorMittal South 

Africa cease its pricing discrimination. 

The complaint is under review by the 

Competition Tribunal. In March 2008, 

the Competition Tribunal accepted the 

claimants’ application for leave to intervene, 

prohibiting, however, the claimant from 

seeking as relief the imposition of an 

administrative penalty. ArcelorMittal is 

unable to assess the outcome of this 

proceeding or the amount of ArcelorMittal 

South Africa’s potential liability, if any. 

Other legal claims 

ArcelorMittal is a party to various other 

legal claims. As of December 31, 2008, 

ArcelorMittal has established reserves 

of approximately 54 in the aggregate for 

the claims disclosed below. 

Canada 

In 2008, two complaints were filed by 

Canadian Natural Resources Limited 

(“CNRL”) in Calgary, Alberta against 

ArcelorMittal, ArcelorMittal USA Inc., 

Mittal Steel North America Inc. and 

ArcelorMittal Tubular Products Roman S.A. 

CNRL alleges negligence in both complaints, 

seeking damages of 50 and 22, respectively. 

The plaintiff alleges that it purchased 

a defective pipe manufactured by 

ArcelorMittal Tubular Products Roman 

and sold by ArcelorMittal Tubular Products 

Roman and Mittal Steel North America Inc. 

ArcelorMittal is unable to reasonably 

estimate the amount of ArcelorMittal’s, 

ArcelorMittal USA Inc.’s, Mittal Steel North 

America Inc.’s and ArcelorMittal Tubular 

Products Roman’s liabilities relating to 

this matter, if any. 

Mexico 

Sicartsa is involved in a dispute with Ejido 

Santa Maria of the Municipality of La Union 

Guerrero over the payment of materials 

and related damages under a joint venture 

agreement between the parties. In October 

2006, the Agrarian Unity Tribunal entered 

a judgment ordering Sicartsa to pay the 

plaintiff damages of 54. In April 2007, 

upon appeal by Sicartsa, a higher court 

set aside the judgment and ordered further 

expert evidence relating to the matters 

in dispute. The accounting expert appointed 

by the Agrarian Unity Tribunal filed its 

report on September 5, 2008 stating that 

the amount to be paid to Ejido Santa Maria 

is approximately seven thousand five 

hundred dollars. However, the report 

is still subject to dispute by the claimant. 

France 

In May 2008, the liquidator of SAFET 

brought an action in the Commercial 

Court of Nanterre against the Directors 

of SAFET, including ArcelorMittal Packaging, 

alleging that the Directors are liable for 

all of SAFET’s debts amounting to 52 due 

to their default in the management of 

SAFET’s business. ArcelorMittal and the 

other directors are vigorously defending 

the action. It is too early in the proceedings 

for ArcelorMittal to determine the amount 

of its liability, if any. However, ArcelorMittal 

considers the allegations against it to be 

entirely unfounded.

Various retired or present employees of certain French subsidiaries of the former Arcelor have initiated lawsuits to obtain compensation 

for asbestos exposure in excess of the amounts paid by French social security (“Social Security”). Asbestos claims in France initially are 

made by way of a declaration of a work-related illness by the claimant to the Social Security authorities resulting in an investigation and 

a level of compensation paid by Social Security. Once the Social Security authorities recognize the work-related illness, the claimant, 

depending on the circumstances, can also file an action for inexcusable negligence (faute inexcusable) to obtain additional compensation 

from the company before a special tribunal. Where procedural errors are made by Social Security, the company is required 

to assume full payment of damages awarded to the claimants. This has generally been the case to date. 

The number of claims outstanding for asbestos exposure at December 31, 2008 was 431, as compared to 449 at December 31, 2007. 

The range of amounts claimed for the year ended December 31, 2008 was €7,500 to €865,000 (approximately ten thousand dollars 

to one million one hundred fifty thousand dollars). The aggregate costs and settlements for the year ended December 31, 2008 were 

€383,825 (approximately five hundred ten thousand dollars) and zero respectively. The aggregate costs and settlements for the year 

ended December 31, 2007 were €350,141 (approximately five hundred fifteen thousand dollars) and zero respectively. 

Claims unresolved at beginning of period 421 449 

Claims filed 191 63 

Claims settled, dismissed or otherwise resolved (163) 1 (81) 

Claims unresolved at December 31, 449 431 

1 After purchase of a new company, sale of a subsidiary and further verification. 

Minority shareholder claims regarding the exchange ratio in the second-step merger of ArcelorMittal into Arcelor 

Several former minority shareholders of Arcelor or their representatives have brought legal proceedings relating to the exchange 

ratio in the second-step merger between ArcelorMittal and Arcelor. In proceedings that remain ongoing following the completion 

of the merger process that are summarized below, the claimants make the following principal allegations: 

• The exchange ratio in the second-step merger should have been the same as that of the secondary exchange offer component 

of Mittal Steel’s June 2006 tender offer for Arcelor (i.e., 11 Mittal Steel shares for seven Arcelor shares), and investors had 

a legitimate expectation that this would be the case based on Mittal Steel’s and Arcelor’s disclosure and public statements; 

• The exchange ratio applied in the second step merger was unfair to minority shareholders of Arcelor, particularly in light 

of developments between the June 2006 tender offer and the merger of Mittal Steel into Arcelor; 

• Mittal Steel’s disclosure regarding the merger of Mittal Steel into Arcelor and specifically the exchange ratio (in the second-step 

merger) was late, insufficient and misleading; 

• The two-step process was detrimental to interests of Arcelor minority shareholders; and 

• The second step merger did not comply with certain provisions of Luxembourg company law. 

In number of cases 


ArcelorMittal believes that the allegations made and claims brought by the minority shareholders regarding the exchange ratio applied 

in the second step merger and the merger process as a whole are without merit and that such exchange ratio and process complied 

with the requirements of applicable law, were consistent with previous guidance on the principles that would be used to determine 

the exchange ratio in the second step merger and that the merger exchange ratio was relevant and reasonable to shareholders 

of both merged entities. 

The following summarizes the current status of proceedings brought by minority shareholders in this regard; 

In June and July 2007, two hedge funds that were shareholders of Arcelor wrote to the Netherlands Authority for the Financial Markets 

(the Stichting Autoriteit Financiële Markten, or the “AFM”), the Dutch securities regulator, requesting it to take various measures against 

Mittal Steel relating in particular to disclosure regarding the proposed exchange ratio, and making in substance the allegations 

summarized above. On August 17, 2007 the AFM rejected the claimants’ demands. 

141 






On September 20, 2007, the claimants 

filed formal objections with the AFM 

against the decision of August 17, 2007, 

asking the AFM to overturn its decision on 

the same grounds as those presented in 

support of their initial request. On February 

4, 2008, the AFM confirmed its decision of 

August 17, 2007. On March 13, 2008, the 

claimants lodged an appeal against the 

AFM’s decision with the Rotterdam 

Administrative Court. By judgment dated 

December 10, 2008, the Court nullified the 

AFM’s decision of February 4, 2008, on the 

grounds that the AFM’s limited 

investigation was an insufficient basis for its 

decision, and requiring it to conduct a 

further investigation and issue a new 

decision. AFM and ArcelorMittal are both 

appealing the court’s ruling. 

On October 18, 2007 and November 19, 

2007, ArcelorMittal (the entity resulting 

from the first step merger) and Arcelor 

were notified of an appeal by three former 

hedge fund shareholders of Arcelor before 

the administrative court of Luxembourg 

against the March 2, 2007 decision of the 

CSSF exempting the Significant shareholder 

from the obligation (under the Luxembourg 

law implementing the European Takeover 

Directive) under specified circumstances 

to launch a tender offer for all Arcelor 

shares outstanding after the merger. 

The CSSF had based its grant of an 

exemption on the fact that the merger 

would not result either in an acquisition 

of shares or in a change of the ultimate 

control of the company. The hearing took 

place on July 7, 2008. 

On January 8, 2008, ArcelorMittal received 

a writ of summons on behalf of four hedge 

fund shareholders of Arcelor to appear 

before the civil court of Luxembourg. 

The summons was also served on all natural 

persons sitting on the Board of Directors 

of ArcelorMittal at the time of the merger 

and on the significant shareholder. 

142 

The claimants’ request, among other things 

(1) the cancellation and the amendment 

of the corporate decisions relating to the 

second-step merger in order to reflect 

an exchange ratio of 11 ArcelorMittal 

(the entity resulting from the first step 

merger) shares for seven Arcelor shares 

(ignoring the impact of the share capital 

restructuring of Arcelor) accompanied by 

the allocation by the Significant shareholder 

or the company of additional shares to 

the claimants to reflect this revised ratio, 

and alternatively, (2) the payment of 

damages by the defendants (jointly and 

severally or severally, at the court’s 

discretion), in an amount of €180 million. 

ArcelorMittal submitted its brief in 

response on October 16, 2008, challenging 

the validity, the admissibility and the merits 

of the claims. Hearing and judgment in the 

first instance are not expected before the 

end of 2009 or early 2010. 

Note 25: Segment and Geographic 

Information 

ArcelorMittal has a high degree of 

geographic diversification relative to 

other steel companies. During 2008, 

ArcelorMittal shipped its products to 

customers in approximately 180 countries, 

with its largest markets in the Flat Carbon 

Europe, Flat Carbon Americas and Long 

Carbon America and Europe segments. 

ArcelorMittal conducts its business through 

its Operating Subsidiaries. Many of these 

operations are strategically located with 

access to on-site deep water port facilities, 

which allow for cost-efficient import of raw 

materials and export of steel products. 


employed approximately 316,000 persons. 

A segment is a distinguishable component 

of the Company that is engaged either 

in providing particular products or services 

(business segment), or in providing products 

or services within a particular economic 

environment (geographical segment), which 

is subject to risks and rewards that are 

different from those of other segments. 

The Company’s primary segment is defined 

as the “business segment”, while its 

secondary segment is the “geographical 

segment”. 

Business segmentation 

ArcelorMittal reports its operations in 

six operating segments: Flat Carbon 


Americas and Europe, Asia, Africa and 

Commonwealth of Independent States 

(“AACIS”), Stainless Steel and Steel 

Solutions and Services. 

• Flat Carbon Americas represents the flat 

facilities of the Company located in the 

American Continent (Canada, Brazil, 

Mexico, United States). Flat Carbon 

Americas produces slabs, hot rolled coil, 

cold rolled coil, coated steel and plate. 

These products are sold primarily to 

customers in the following industries: 

distribution and processing, automotive, 

pipe and tubes, construction, packaging, 

and appliances; 

• Flat Carbon Europe is the largest flat 

steel producer in Europe, with operations 

that range from West (Spain) to East 

(Romania), and covering the flat carbon 

steel product portfolio in all major 

countries and markets. Flat Carbon 

Europe produces hot rolled coil, cold 

rolled coil, coated products, tinplate, 

plate and slab. These products are sold 

primarily to customers in the automotive, 

general industry and packaging industries; 

• Long Carbon Americas and Europe 

operates in Europe and America. 

Production consists of sections, wire rod, 

rebar, billets, blooms and wire drawing; 

• AACIS produces a combination of flat 

and long products and pipes and tubes. 

Its facilities are located in Asia, Africa 

and Commonwealth of Independent 

States (“CIS”); 

• Stainless Steel produces flat and long 

stainless steel and alloy products from its 

plants in Europe and South America; and 

• ArcelorMittal Steel Solutions and 

Services is primarily an in-house trading 

and distribution arm of ArcelorMittal. 

It also provides value-added and 

customized steel solutions through 

further steel processing to meet specific 

customer requirements.

The following table summarizes certain financial data relating to our operations in different reportable business segments. 

The December 31, 2007 information has been adjusted retrospectively following the redefinition of operating responsibilities 

of all members of the Board of Management announced on April 21, 2008 and made effective January 1, 2008 in light of the 

new Group Management Board (“GMB”) structure also announced on April 21, 2008. 

Geographical segmentation 

Sales (by destination) 

Long Carbon 

Flat Carbon Flat Carbon Americas Asia & Stainless Steel Solutions Others/ 

Americas Europe and Europe Africa CIS Steel and Services elimination* Total 

Year ended December 31, 2007 

Sales 21,839 34,924 27,035 14,971 9,349 16,988 (19,890) 105,216 

Operating income 3,163 4,148 4,083 2,843 876 559 (842) 14,830 

Depreciation and impairment 940 1,415 993 489 275 154 304 4,570 

Capital expenditures 1,272 1,752 1,077 764 263 243 77 5,448 

Total assets 19,192 32,932 24,992 10,275 5,564 6,188 34,482 133,625 

Total liabilities 6,248 12,392 9,192 4,104 2,278 4,278 33,598 72,090 

Year ended December 31, 2008 

Sales 27,031 38,300 32,268 13,133 8,341 23,126 (17,263) 124,936 

Operating income 2,524 2,773 4,154 3,145 383 206 (949) 12,236 

Depreciation and impairment 1,228 1,924 1,725 549 343 201 130 6,100 

Capital expenditures 1,082 1,443 1,195 891 262 280 378 5,531 

Total assets 22,507 35,083 19,830 8,512 7,447 6,524 33,185 133,088 

Total liabilities 7,438 11,853 6,571 2,195 1,738 3,825 40,238 73,858 

* Others / Elimination includes all other operations than mentioned above, together with inter-segment elimination, and/or non-operational items which are not segmented. 



Americas 

United States 19,560 20,200 

Canada 4,139 4,505 

Brazil 6,628 9,759 

Argentina 1,101 1,485 

Others 3,241 4,989 

Total Americas 34,669 40,938 

Europe 

France 8,989 9,578 

Spain 7,843 8,441 

Germany 11,629 14,185 

Romania 1,330 1,347 

Poland 4,355 5,113 

Belgium 2,181 2,574 

Italy 5,584 5,782 

United Kingdom 2,731 2,605 

Turkey 2,057 3,001 

Czech Republic 1,953 2,492 

Others 9,973 12,247 

Total Europe 58,625 67,365 

Asia & Africa 

South Africa 4,396 5,163 

Others 7,526 11,470 

Total Asia & Africa 11,922 16,633 

Total 105,216 124,936 

143 






Capital expenditures and segment assets* per significant country 

Americas 

Brazil 775 621 12,782 12,609 

United States 461 530 10,333 11,197 

Canada 298 267 7,915 5,598 

Mexico 154 195 3,019 2,561 

Others 150 66 1,942 2,412 

Total Americas 1,838 1,679 35,991 34,377 

Europe 

France 744 680 15,508 17,506 

Luxembourg 192 212 6,899 4,822 

Belgium 315 345 8,858 8,700 

Spain 285 219 7,423 6,874 

Ukraine 295 309 5,427 5,446 

Poland 603 265 5,974 4,801 

Germany 237 282 5,744 6,685 

Czech Republic 119 227 2,963 2,518 

Romania 155 148 1,961 1,940 

Italy 42 36 1,298 1,192 

Others 107 164 2,543 3,675 

Total Europe 3,094 2,887 64,598 64,159 

Asia & Africa 

South Africa 275 203 3,931 3,753 

Kazakhstan 159 305 1,945 2,493 

Liberia 13 275 15 299 

Others 69 182 3,217 2,578 

Total Africa & Asia 516 965 9,108 9,123 

Unallocated — — 23,928 25,429 

Total 5,448 5,531 133,625 133,088 

* Segment assets are operational assets, which include intangible assets and property, plant and equipment, as well as current assets used in the operating activities. 

They do not include goodwill, deferred tax assets, other investments or receivables and other non-current financial assets. Such assets are shown under the caption 

“Unallocated assets”. 

144 

Capital expenditures Segment assets 

For the year ended For the year ended As of As of 

December 31, 2007 December 31, 2008 December 31, 2007 December 31, 2008

Note 26: Employees and Key Management Personnel 

The total annual compensation of ArcelorMittal’s employees paid in 2007 and 2008 was as follows: 

The total annual compensation of ArcelorMittal’s key management personnel, including its Board of Directors, 

paid in 2007 and 2008 was as follows: 

The fair value of the stock options granted to ArcelorMittal’s key management personnel is recorded as an expense in the 

consolidated statement of income over the relevant vesting periods. The Company determines the fair value of the options 

at the date of the grant using the Black-Scholes model. 

As of December 31, 2007 and 2008, ArcelorMittal did not have outstanding any loans or advances to members of its Board 

of Directors or key management personnel, and, as of December 31, 2007 and 2008, ArcelorMittal had not given any guarantees 

for the benefit of any member of its Board of Directors or key management personnel. 

Note 27: Subsequent Events 



Employee Information 

Wages and salaries 11,221 12,593 

Pension cost 611 2,080 

Total 11,832 14,673 



Base salary and/or directors fees 20 24 

Short-term performance-related bonus 24 21 

Post-employment benefits 2 1 

Share based compensation 21 30 

On January 23, 2009, the Company contributed its 76.9% stake in Saar Ferngas AG to an associated company, Soteg. 

Following this transaction, ArcelorMittal’s stake in Soteg increased from 20% to 26.15%. 

On January 31, 2009, ArcelorMittal completed the acquisition of 60% of DSTC FZCO, a newly incorporated company 

located in the Dubai free zone which will acquire the main business of Dubai Steel Trading Company LLC, a steel distributor 

in the United Arab Emirates. 

145 



Auditors’ Report on the Consolidated Financial Statements 

Report of the Réviseur d’Entreprises 

To the shareholders of 

ArcelorMittal, Société Anonyme 

19, avenue de la Liberté 

L-2930 Luxembourg 

Report on the consolidated financial statements 

Following our appointment by the General Meeting of the Shareholders dated May 13, 2008, we have audited the accompanying 

consolidated financial statements of ArcelorMittal, which comprise the consolidated balance sheet as at December 31, 2008, 

and the consolidated statement of income, consolidated statement of cash flows, and consolidated statement of changes 

in equity for the year then ended, and a summary of significant accounting policies and other explanatory notes. 

Board of directors’ responsibility for the consolidated financial statements 

The board of directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance 

with International Financial Reporting Standards as adopted in the European Union. This responsibility includes: designing, implementing 

and maintaining internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from 

material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting 

estimates that are reasonable in the circumstances. 

Responsibility of the réviseur d’entreprises 

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in 

accordance with International Standards on Auditing as adopted by the Institut des réviseurs d’entreprises. Those standards require that 

we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial 

statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial 

statements. The procedures selected depend on the judgment of the réviseur d’entreprises, including the assessment of the risks 

of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, 

the réviseur d’entreprises considers internal control relevant to the entity’s preparation and fair presentation of the consolidated 

financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose 

of expressing an opinion on the effectiveness of the entity’s internal control. 

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made 

by the board of directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the 

audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 

Opinion 

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of ArcelorMittal 

as of December 31, 2008, and of its consolidated financial performance and its consolidated cash flows for the year then ended 

in accordance with International Financial Reporting Standards as adopted in the European Union. 

Report on other legal and regulatory requirements 

The management report, which is the responsibility of the board of directors, is consistent with the consolidated financial statements. 

Deloitte S.A. 

Réviseur d’entreprises 

Eric van de Kerkhove 

Partner 


560, rue de Neudorf 


146

Balance Sheet 


(expressed in millions of U.S. dollars) 

Assets 

C. Fixed assets 72,347 68,168 

I. Intangible assets Note 3 63 2 

2. Concessions, patents, licenses, trademarks and similar rights and assets 63 2 

II. Tangible assets Note 4 43 11 

1. Land and buildings 23 5 

3. Other fixtures and fittings, tools and equipment 5 5 

4. Payment on account and tangible assets in course of construction 15 1 

III. Financial assets Note 5 72,241 68,155 

1. Shares in affiliated undertakings 68,645 51,454 

2. Loans to affiliated undertakings 2,528 16,112 

3. Participating interests 1,015 535 

5. Securities held as fixed assets 47 47 

6. Other loans 6 7 

D. Current assets 10,954 3,168 

II. Debtors becoming due in one year or less 9,641 2,055 

1. Trade debtors 5 7 

2. Amounts owed by affiliated undertakings Note 6 9,626 2,021 

4. Other debtors 10 27 

III. Transferable securities Note 7 1,298 902 

2. Own shares (54,290,240 shares with an accounting par value of USD 6.40 per share) 1,298 902 

IV. Cash at bank, cash in postal check accounts, checks and cash in hand 15 211 

E. Prepayments and accrued income 49 5 

Total assets 83,350 71,341 

Liabilities 

A. Capital and reserves Note 8 56,939 39,960 

I. Subscribed capital 9,269 9,269 

II. Share premium account 17,811 17,811 

IV. Reserves 2,120 1,343 

1. Legal reserve 822 441 

2. Reserve for own shares 1,298 902 

V. Profit brought forward 8,645 3,926 

VI. Profit for the financial year 19,094 7,611 

B. Provisions for liabilities and charges 39 21 

1. Provisions for pensions and similar obligations 6 2 

3. Other provisions Note 9 33 19 

C. Creditors Note 10 26,372 31,360 

1b. Non convertible debenture loans becoming due in more than one year Note 11 3,089 89 

2. Amounts owed to credit institutions Note 12 20,944 239 

Becoming due in one year or less 6,144 50 

Becoming due in more than one year 14,800 189 

4. Trade creditors becoming due in one year or less 54 — 

6. Amounts owed to affiliated undertakings 2,087 30,923 

Becoming due in one year or less 2,057 11,538 

Becoming due in more than one year 30 19,385 

8. Tax and social security debts becoming due in one year or less 124 47 

9. Other creditors becoming due in one year or less 74 62 


The accompanying notes are an integral part of these annual accounts. 

December 31, 2008 December 31, 2007 


147 

2008 Consolidated Financial Statements and Annual Accounts 


Profit and Loss Account 


(expressed in millions of U.S. dollars) 

A. Charges 

3. Staff costs 137 92 

a) Wages and salaries 86 72 

b) Social security costs attributable to wages and salaries 8 9 

c) Supplementary pensions 14 8 

d) Other social security costs 29 3 

4. a) Value adjustments in respect of formation expenses and tangible and intangible fixed assets 4 4 

5. Other operating charges 284 318 

6. Value adjustments in respect of financial assets and of transferable securities held as current assets Note 5, 7 2,655 — 

7. Interest payable and similar charges Note 13 1,078 2,188 

a) In respect of affiliated undertakings 653 432 

b) Other interest payable and charges 425 1,756 

13. Profit for the financial year 19,094 7,611 

Total charges 23,252 10,213 

B. Income 

4. Other operating income 437 461 

5. Income from participating interests Note 14 18,701 9,043 

a) Derived from affiliated undertakings 18,701 9,043 

6. Income from other transferable securities and from loans forming part of fixed assets 662 586 

a) Derived from affiliated undertakings 662 586 

7. Other interest receivable and similar income Note 13 3,452 123 

a) Derived from affiliated undertakings 76 121 

b) Other interest receivable and similar income 3,376 2 

Total income 23,252 10,213 

The accompanying notes are an integral part of these annual accounts. 

148 




December 31, 2008 December 31, 2007

Notes to the Annual Accounts 


(expressed in millions of U.S. dollars, unless otherwise stated) 

Note 1: General 

ArcelorMittal (“the Company”) was 

incorporated as a “Société Anonyme” 

under Luxembourg law on June 8, 2001 

for an unlimited period. 

The registered office of the Company 

is established in Luxembourg City and the 

Company is registered at the Register 

of Trade and Commerce of Luxembourg 

under the number B82.454. 

The financial year of the Company starts 

on January 1 and ends on December 31 

each year. 

The Company’s corporate goal is the 

manufacturing, processing and marketing 

of steel products and all other metallurgical 

products; and any other activity directly 

or indirectly related thereto. The company 

realizes its corporate goal either directly 

or through the creation of companies 

or the acquisition and holding of interests 

in companies, partnership, associations, 

consortia and joint-ventures. 

In conformity with the requirements of 

Luxembourg laws and regulations; the 

Company publishes consolidated financial 

statements in accordance with International 

Financial Reporting Standards as adopted 

in the European Union. 

Note 2: Summary of Significant 

Accounting Principles 

General principles 

These annual accounts have been prepared 

in accordance with generally accepted 

accounting principles and in accordance 

with the laws and regulations in force in the 

Grand-Duchy of Luxembourg. 

Main valuation rules 

Translation of currencies 

The Company maintains its accounting 

records in United States Dollars (“USD”) 

and the annual accounts are prepared 

in this currency. Unless otherwise stated, 

all amounts in the annual accounts are 

stated in millions of USD. 

The following principles are applied to 

items denominated in a currency other 

than the USD: 

• Fixed assets, creditors due after more 

than one year and off-balance sheet 

commitments are translated at historical 

exchange rates. Differences in the 

exchange rates leading to an unrealized 

loss are recorded in the profit and loss 

for the year. 

• Other balance sheet items are translated 

at the year-end exchange rate and 

related exchange differences are recorded 

in the profit and loss for the year. 

• Profit and loss items are translated at 

the exchange rate prevailing at 

transaction date. 

Financial assets 

Shares in affiliated undertakings are 

recorded at acquisition cost including 

related acquisition costs. At the end of 

each accounting period, shares in affiliated 

undertakings are subject to an impairment 

review. Where a permanent diminution 

in value is identified, this diminution is 

recorded in the profit and loss account 

as a value adjustment. A reversal of the 

value adjustment is recorded to the extent 

the factors, which caused its initial 

recording, have ceased to exist. 

Loans to affiliated undertakings and other 

loans are recorded in the balance sheet 

at their nominal value. At the end of each 

accounting period value adjustments are 

recorded on loans which appear to be partly 

or wholly irrecoverable. 

Debtors 

Debtors are recorded in the balance sheet 

at their nominal value. At the end of each 

accounting period value adjustments are 

recorded on debtors, which appear to be 

partly or wholly irrecoverable. 

Transferable securities 

Transferable securities are valued at the 

lower of cost or market value. A value 

adjustment is recorded when the market 

price is lower than the acquisition price. 

A reversal of the value adjustment is 

recorded to the extent the factors, 

which caused its initial recording, 

have ceased to exist. 

Provisions for liabilities and charges 

Provisions for liabilities and charges are 

recorded to cover all foreseeable liabilities 

and charges for which there is a legal 

or constructive obligation as a result of 

past events as of the balance sheet date. 

Provisions relating to previous periods 

are regularly reviewed and released if the 

reasons for which the provisions were 

recorded have ceased to apply. 

Creditors 

Creditors are recorded in the balance sheet 

at their nominal value. 

149 

2008 Annual Accounts 


Notes to the Annual Accounts continued 



Note 3: Intangible Assets 

Acquisition cost 

Opening balance 2 

Additions 62 

Closing balance 64 

Value adjustment 

Opening balance — 

Charge for the year (1) 

Closing balance (1) 

Net book value 


Closing balance 63 

Note 4: Tangible Assets 

Note 5: Financial Assets 

150 

Concessions, patents, licenses, 

trademarks and similar rights and assets 

Other fixtures, Payment on account 

fittings tools and tangible assets 

Land and buildings and equipment under construction Total 


Opening balance 9 13 1 23 

Additions 20 1 14 35 

Closing balance 29 14 15 58 

Value adjustment 

Opening balance (4) (8) — (12) 

Charge for the year (2) (1) — (3) 

Closing balance (6) (9) — (15) 


Opening balance 5 5 1 11 

Closing balance 23 5 15 43 

Shares in affiliated Loans to affiliated Participating Securities held 

undertakings undertakings interests as fixed assets Other loans Total 


Opening balance 51,811 16,112 535 47 7 68,512 

Additions 50,289 967 674 — — 51,930 

Disposals (33,455) (14,551) — — (1) (48,007) 

Closing balance 68,645 2,528 1,209 47 6 72,435 

Value adjustments 

Opening balance (357) — — — — (357) 

Reversals 357 — — — — 357 

Charge for the year — — (194) — — (194) 

Closing balance — — (194) — — (194) 


Opening balance 51,454 16,112 535 47 7 68,155 

Closing balance 68,645 2,528 1,015 47 6 72,241

Description of main movements 

Upon completion of the legal merger process of the Company and Mittal Steel Company N.V. in 2007, the Company embarked 

on a significant reorganization with a view to optimize ArcelorMittal Group (“the Group”) legal and organizational structure. 

This reorganization resulted in the alignment of the key ArcelorMittal functions within the Group’s corporate structure through 

a series of contributions in kind and sales within the Group. 

In accordance with the prudence principle and Luxembourg Company law, the Company has not recognized any profits on contributions 

in kind within the Group. Profits on the sale of holdings by the Company to other Group entities and dividends received in kind from 

other Group entities are recognized in the profit and loss account (see note 14). The decrease in loans receivable, and the increase 

in shares in affiliated undertakings are consequences of the contribution-in-kind of loans receivable to other Group entities and other 

transactions carried out within the Group in the context of the reorganization. 

Upon completion of the reorganization in 2008, the Company has reclassified a non certificate evidenced investment in a subsidiary 

of 1,955; that was previously carried as a discrete investment in that subsidiary; to the Company’s investment in the subsidiary’s 

legal shareholder. This reclassification has no impact on the Company’s capital and reserves or profit for the year. 

The main holdings at December 31, 2008 are listed below: 

Capital and reserves 

Percentage of (including result 

Name and registered office Carrying amount Capital held % Result for 2008* for 2008)* 

AMO Holding Switzerland A.G. 

Zug (Switzerland) 26,387 100.00 — 54,325 

ArcelorMittal Cyprus Holding Limited 

Nicosia (Cyprus) 18,332 100.00 — 16,388 

AM Global Holding S.à r.l. 

Luxembourg (Luxembourg) 6,705 100.00 966 5,900 

ArcelorMittal Investment S.A. 

Luxembourg (Luxembourg) 3,057 100.00 (783) 9,626 

ArcelorMittal Finance and Services Belgium S.A. 

Brussels (Belgium) 12,024 26.74 2,156 46,599 

4313267 Canada Inc, 

Montréal / Québec (Canada) 

900 Depositary receipts 2,054 10.89 701 2,248 

* In accordance with unaudited IFRS reporting packages. 

151 

2008 Annual Accounts continued 





Note 6: Amounts Owed by Affiliated Undertakings 

Amounts owed by affiliated undertakings have increased by 7,605 over the year under review. This movement is primarily 

a consequence of the inclusion of the following elements within this amount: 

i) The cash-pooling accounts held with ArcelorMittal Treasury SNC which have increased over the year as a consequence 

of the new external financing (notes 11 & 12). 

ii) The amounts receivable from other Group companies as a consequence of the tax consolidation (notes 13 & 15). 

Note 7: Transferable Securities 

Own shares 



Additions 3,102 

Disposals (245) 

Closing balance 

Value adjustments 

3,759 

Opening balance — 

Charge for the year (2,461) 

Closing balance 


(2,461) 


Closing balance 1,298 

As of December 31, 2008, the Company holds 54,290,240 (2007: 17,173,201) of its own shares. The value adjustments 

of 2,461 represent the difference between the aggregate cost of the own shares and the market value determined on the basis 

of the Euronext market price as of December 31, 2008. 

Additions for the year relate to own shares acquired in connection with the share buy-back program announced by the Company 

on December 12, 2007. 

Disposals for the year comprise the transfer of shares to Corea S.A. (part of the Group) and the sale of shares to ArcelorMittal USA Inc 

(“AMUSA” – part of the Group) as described below. 

On December 15, 2008, the Company entered into an agreement in virtue of which a total of 833,143 own shares with 

a carrying value of 20 have been transferred to Corea S.A. for a period that ends on December 31, 2009. The agreement may 

be tacitly extended for successive periods of one year unless terminated by either party. At the end of the agreement, Corea S.A. 

shall reimburse the Company with either the same number and type of ArcelorMittal shares or the equivalent in cash subject 

to the Company’s prior approval. 

On December 19, 2008, the Company entered into an agreement with AMUSA in virtue of which it agrees to sell to AMUSA; 

on specific dates in the period ranging from December 19, 2008 to September 30, 2009 a number of own shares for an aggregate 

market value of 130. This agreement has been concluded in order to fund AMUSA’s pension trust. Pursuant to this agreement, 

1,121,995 shares have been sold to AMUSA on December 19, 2008 for 27. 

152

Note 8: Capital and Reserves 

Balance as at January 1, 2008 1,448,826,347 9,269 17,811 441 902 3,926 7,611 39,960 

Allocation of net result — — — 381 — 7,230 (7,611) — 

Profit for the year — — — — — — 19,094 19,094 

Directors’ fees — — — — — (3) — (3) 

Dividends paid * — — — — — (2,112) — (2,112) 

Reserve for own shares — — — — 396 (396) — — 

Balance as at December 31, 2008 1,448,826,347 9,269 17,811 822 1,298 8,645 19,094 56,939 

* Equivalent to the 2007 dividend of 2,173; net of dividends on own shares. 

Number Subscribed Share premium Reserve for Profit brought Profit for 

of shares capital amount Legal reserve own shares forward the year Total 

8.1: Share capital and share premium account 

At December 31, 2008 and 2007 the subscribed capital comprises 1,448,826,347 ordinary shares, fully paid up and amounting 

to EUR 6,345,859,400 (9,269). During an extraordinary general meeting of the shareholders held on May 13, 2008, it was resolved 

to increase the authorized share capital from EUR 6,438,600,000 (represented by 1,470,000,000 shares without nominal value) 

to EUR 7,082,460,000 (represented by 1,617,000,000 shares without nominal value). 

To the knowledge of the Board, the shareholding may be specified as follows: 

Mittal Investments S.à r.l. 36.24% 

Ispat International Investment S.L. 6.78% 

Other shareholders * 56.98% 

Total 100.00% 

* Including own shares and shares held by affiliated undertakings. 

8.2: Legal reserve 

In accordance with Luxembourg Company law, the Company is required to transfer a minimum of 5% of its net profits for 

each financial year to a legal reserve. This requirement ceases to be necessary once the balance of the legal reserve reaches 

10% of the issued share capital. The legal reserve is not available for distribution to the shareholders. 

8.3: Reserve for own shares 

The Board of Directors shall request the upcoming General Meeting of Shareholders to approve the allocation of 396 from 

the profit brought forward in order to establish a non distributable reserve equivalent to the carrying value (note 7) of its own 

shares in accordance with Luxembourg Company Law. 


153 






Note 9: Other Provisions 

The Company is jointly and severally liable for the following entities: 

• ArcelorMittal Finance S.C.A. (Luxembourg) 

• ArcelorMittal Treasury S.N.C. (France) 

The Company has recognized a provision equivalent to 22 in connection with ArcelorMittal Finance S.C.A. 

Note 10: Maturity of Creditors 

Non convertible debenture loans — 1,500 1,589 3,089 — — 89 89 

Amounts owed to credit institutions 6,144 14,800 — 20,944 50 189 — 239 

Trade creditors 54 — — 54 — — — — 

Amounts owed to affiliated 

undertakings 2,057 30 — 2,087 11,538 19,385 — 30,923 

Tax and social security debts 124 — — 124 47 — — 47 

a) Tax 121 — — 121 45 — — 45 

b) Social security 3 — — 3 2 — — 2 

Other creditors 74 — — 74 62 — — 62 

Total 8,453 16,330 1,589 26,372 11,697 19,574 89 31,360 

Note 11: Non Convertible Debenture Loans 

On May 27, 2008, ArcelorMittal issued secured, redeemable and non convertible debentures in the form of 5 year and 

10 year bonds, with an aggregate principal amount of USD 3 billion split equally between the 5 year and the 10 year issue. 

The bonds will bear interest at a rate of 5.375% for the 5 year issue and 6.125% for the 10 year issue and will mature 

on June 1, 2013 and June 1, 2018, respectively. 

154 


From 1 5 years From 1 5 years 

Up to 1 year to 5 years or more Total Up to 1 year to 5 years or more Total

Note 12: Amounts Owed to Credit Institutions 

On April 7, 2005, Mittal Steel (predecessor to the Company) and certain subsidiaries signed a five-year USD 3.2 billion credit facility 

with a consortium of banks. This facility bears interest at a variable rate. On September 5, 2008, the total outstanding amount under 

this credit facility was transferred from ArcelorMittal Finance to the Company. The balance outstanding under this facility as of 

December 31, 2008 amounts to USD 1.5 billion. 

On November 30, 2006, the Company and ArcelorMittal Finance S.C.A. entered into a EUR 17 billion credit agreement (comprising 

a EUR 12 billion term loan facility and a EUR 5 billion revolving credit facility) with a group of lenders. On October 30, 2007, 

the maturity of the EUR 5 billion revolving credit facility was extended in agreement with the lenders for one additional year, 

to November 30, 2012. These facilities bear interest at a variable rate. On October 31, 2008, the total outstanding amount under 

this credit facility was transferred from ArcelorMittal Finance to the Company. The balance outstanding under this facility as of 

December 31, 2008 amounts to USD 16.3 billion. 

The Company runs a commercial paper program enabling borrowing of up to EUR 3 billion. The balance outstanding under this 

program as of December 31, 2008 amounts to USD 2.4 billion. 

Note 13: Net Interest and Similar Income/(Charges) 

Net interest * (1,004) (1,363) 

Effects of changes foreign exchange rates 1,469 (704) 

Amounts received in connection with the Group tax consolidation 1,772 46 

Others 137 (44) 

Total 2,374 (2,065) 

* Net interest includes: 

receivable from affiliates 76 121 

payable to affiliates (653) (432) 

payable to credit institutions (427) (1,052) 

Total (1,004) (1,363) 

Note 14: Income from Participating Interests 





Dividends received 1 3,639 2,650 

Profit on disposal of financial assets 2 15,062 6,382 

Others — 11 

Total 18,701 9,043 

1 This amount includes a dividend-in-kind of 3,563 received from ArcelorMittal Investment S.A. in connection with the legal reorganization described in note 5. 

2 This amount includes profits of 14,692 (2007: 6,382) recognized further to the disposal of the Company’s investment in ArcelorMittal Belgium Holdings S.A. in connection 

with the legal reorganization described in note 5. 

155 






Note 15: Income Tax 

The Company is the head of a tax consolidation and is fully liable for the overall tax liability. Each of the entities included 

in the tax consolidation is charged with the amount of tax that relates to its individual taxable profit. 

As a consequence of the net tax losses within the tax consolidation, no income tax is payable in respect of 2008 (2007: nil). 

The amount charged to affiliated undertakings amounts to 1,772 (2007: 46). 

Note 16: Commitments and Contingencies 

Commitments given 

Guarantees on debts 1 939 19,800 

Other commitments 2 1,134 — 

Foreign exchange derivative instruments 3 4,989 — 

Total 7,062 19,800 

1 The decrease in the guarantees on Group debts is a consequence of the transfer of debt from ArcelorMittal Finance S.C.A. (note 12) 

2 Other commitments comprise amounts committed with regard to credit lines and guarantees given on behalf of Group companies. 

3 Foreign exchange derivative instruments mainly consist of EUR/USD currency swaps that have matured on January 2, 2009. As of December 31, 2008, 

a loss amounting to 87 has been recognized on these instruments. 

156 



Available lines of credit 

The Company has available lines of credit for an aggregate amount of 5,829 as of December 31, 2008 (2007: nil). 

Contingencies 

On January 8, 2008, the Company received a writ of summons on behalf of four of its hedge fund shareholders to appear before 

the civil court of Luxembourg. The summons was also served on all natural persons sitting on the Board of Directors of the Company 

at the time of the merger and on the significant shareholder. The claimants request, among other things (1) the cancellation and the 

amendment of the corporate decisions relating to the second-step merger in order to reflect an exchange ratio of eleven ArcelorMittal 

(the entity resulting from the first step merger) shares for seven Arcelor shares (ignoring the impact of the share capital restructuring 

of Arcelor), accompanied by the allocation by the Significant shareholder or the company of additional shares to the claimants to reflect 

this revised ratio, and alternatively, (2) the payment of damages by the defendants (jointly and severally or severally, at the court’s 

discretion), in an amount of EUR 180 million. ArcelorMittal submitted its brief in response on October 16, 2008, challenging the validity, 

the admissibility and the merits of the claims. Hearing and judgment in the first instance are not expected before the end of 2009 

or early 2010. 

Note 17: Staff 

Average number of staff 



Employees 411 318 

Workers 28 31 

Total 439 349

Note 18: Directors’ Remuneration 

Members of the Board of Directors are entitled to a total remuneration of 7.8 for the year 2008 (2007: 6.5) 

Note 19: Stock Option Plan 

On August 5, November 10 and December 15, 2008 ArcelorMittal granted respectively 7,255,950, 20,585 and 48,000 options 

to a group of key employees at an exercise price of USD 82.57, USD 22.25 and USD 23.75, respectively. The options expire 

on August 5, November 10 and December 15, 2018, respectively. 

Allocated share options at December 31, 2008 are as follows: 

Number of shares Exercise price Maturity 

Plan 1999 (legacy Mittal Steel) 186,099 11.94 September 14, 2009 

Plan 2000 (legacy Mittal Steel) 165,100 8.57 June 1, 2010 

Plan 2002 (legacy Mittal Steel) 213,345 2.26 April 5, 2012 

Plan 2003 17,622 11.78 June 30, 2010 

Plan 2004 29,373 15.96 June 30, 2011 

Plan 2005 (legacy Mittal Steel) 1,737,997 28.75 August 23, 2015 

Plan 2005 11,429 19.69 June 30, 2012 

Plan 2006 (legacy Mittal Steel) 2,739,507 33.76 September 1, 2016 

Plan 2006 1,445,757 41.93 June 30, 2013 

Plan August 2007 5,729,402 64.30 August 2, 2017 

Plan December 2007 13,000 74.53 December 11, 2017 

Plan August 2008 7,201,250 82.57 August 5, 2018 

Plan November 2008 20,585 22.25 November 10, 2018 

Plan December 2008 48,000 23.75 December 15, 2018 

The movements in the number of outstanding share options during the year are as follows: 

Number of shares options 2008 2007 

Options outstanding at the beginning of the year 13,579,438 1,447,793 

Effect of legal merger — 8,541,644 

Options granted during the year 7,324,535 5,978,200 

Options forfeited during the year (43,629) (36,378) 

Options exercised during the year (954,844) (2,129,255) 

Options expired during the year (347,034) (222,566) 

Options outstanding at the end of the year 19,558,466 13,579,438 

Note 20: Subsequent Events 

On February 11, 2009 ArcelorMittal announced that it had secured commitments from banks for two Forward Start facilities 

totaling 4,800 (“the Forward Start facilities”), subject to certain conditions. A 3,250 revolving credit facility in respect of these 

commitments was entered into on February 13, 2009. A Forward Start facility provides a committed facility to refinance an existing 

facility (which is not amended and continues in force), and therefore certainty as to the availability of funds for that refinancing. 

If drawn, the Forward Start facilities would effectively extend the maturities of 4,800 principal amount of indebtedness to 2012 

(from original maturity dates in 2009-2011). 

157 



Auditors’ Report on the Annual Accounts 

Report of the Réviseur d’Entreprises 

To the shareholders of 


19, avenue de la Liberté 


Report on the annual accounts 

Following our appointment by the General Meeting of the Shareholders dated May 13, 2008, we have audited the accompanying 

annual accounts of ArcelorMittal, which comprise the balance sheet as at December 31, 2008 and the profit and loss account 

for the year then ended, and a summary of significant accounting policies and other explanatory notes. 

Board of directors’ responsibility for the annual accounts 

The board of directors is responsible for the preparation and fair presentation of these annual accounts in accordance with the 

Luxembourg legal and regulatory requirements relating to the preparation of the annual accounts. This responsibility includes: 

designing, implementing and maintaining internal control relevant to the preparation and fair presentation of annual accounts 

that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; 

and making accounting estimates that are reasonable in the circumstances. 

Responsibility of the réviseur d’entreprises 

Our responsibility is to express an opinion on these annual accounts based on our audit. We conducted our audit in accordance 

with International Standards on Auditing as adopted by the Institut des réviseurs d’entreprises. Those standards require that 

we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual accounts 

are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts. 

The procedures selected depend on the judgment of the réviseur d’entreprises, including the assessment of the risks of material 

misstatement of the annual accounts, whether due to fraud or error. In making those risk assessments, the réviseur d’entreprises 

considers internal control relevant to the entity’s preparation and fair presentation of the annual accounts in order to design audit 

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 

entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness 

of accounting estimates made by the board of directors, as well as evaluating the overall presentation of the annual accounts. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 

Opinion 

In our opinion, the annual accounts give a true and fair view of the financial position of ArcelorMittal as of December 31, 2008 

and of the results of its operations for the year then ended in accordance with the Luxembourg legal and regulatory requirements 

relating to the preparation of the annual accounts. 

Report on other legal and regulatory requirements 

The management report, which is the responsibility of the board of directors, is consistent with the annual accounts. 

Deloitte S.A. 

Réviseur d’entreprises 

Eric van de Kerkhove 

Partner 


560, rue de Neudorf 


158

Proposed Allocation of Results for 2008 

Proposed Allocation of Results and Determination of Dividend 

Profit for the year 19,093,961,939 

Profit brought forward (Report à nouveau) 9,040,282,780 

Results to be allocated and distributed 28,134,244,719 

Transfer to the reserve for own shares 395,657,429 

Allocation to the legal reserve 105,278,200 

Directors’ fees, compensation and attendance fees 2,870,634 

Dividend of $0.75 (gross) per share for the 2008 financial year * 1,086,619,760 

Profit carried forward 26,543,818,696 

* On the basis of 1,448,826,347 shares in issue at December 31, 2008. Dividends are paid quarterly, resulting in a total annualized cash dividend per share of $0.75. 

In U.S. dollars 

159 

2008 Annual Accounts and Proposed Allocation of Results for 2008 


Notes 

160

161 

Notes 


Notes 

162

Published in April 2009. 

To receive a copy of the Annual Report, 

please contact: 


Luxembourg: 

19, Avenue de la Liberté 


Grand-Duchy of Luxembourg 

T: +352 4792 1 

London: 

7th Floor, Berkeley Square House 

Berkeley Square 

London W1J 6DA 

United Kingdom 

T: +44 20 7629 7988 

www.arcelormittal.com

Photography: ArcelorMittal Photo Library; Wolfgang von Brauchitsch; Daniel Delguste; 

Carlos Gutiérrez; istockphoto; A. Kradisch; Himanshu Pahad; Thoburns; wide.lu. 

Designed and produced by www.thoburns.com (United Kingdom). 

Printed by Royle Print, London. 

Copyright 2009 ArcelorMittal.

ArcelorMittal Annual Report 2008

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