Overview

2016 was a year of important progress for ArcelorMittal.

Action 2020

Action 2020 is ArcelorMittal's commitment to structurally improving profitability and cash flow generation.

Governance

Good corporate governance is about compliance, continuous stakeholder dialogue and being a good corporate citizen.

Fact book

Details of our steel and mining operations, financials, production facilities and shareholder information.

Reserves and resources

ArcelorMittal has both iron ore and metallurgical coal reserves. The Company’s iron ore mining operations are located in the United States, Canada, Mexico, Brazil, Liberia, Bosnia, Ukraine and Kazakhstan. In Canada, the Company commenced mining the greenfield operation on Baffin Island through a joint venture. The Company’s metallurgical coal mining operations are located in the United States and Kazakhstan.

The estimates of proven and probable ore reserves at the Company’s mines and projects and the estimates of the mine life included in this annual report have been prepared by ArcelorMittal experienced engineers and geologists. Marshall Miller & Associates, Inc. (formerly, Cardno) prepared the 2014 estimates of coal reserves for underground and open pit operations at ArcelorMittal Princeton which have been depleted for the 2016 reserve estimate. The reserves for Las Truchas (Mexico, excluding Peña) were estimated by Gustavson Associates. The reserve estimates were prepared in compliance with the requirements of SEC Industry Guide 7.

In Eastern Europe (Bosnia) and the CIS, ArcelorMittal has conducted in-house and independent reconciliations of ore reserve estimate classifications based on SEC Industry Guide 7 and standards used by the State Committee on Reserves, known as the GKZ in the former Soviet Union countries. The GKZ, or its national equivalent, constitutes the legal framework for ore reserve reporting in several former Soviet Union countries where ArcelorMittal operates mines. On the basis of these reconciliations, ArcelorMittal’s ore reserves have been estimated by applying mine planning, technical and economic assessments defined as categories A, B and C1 according to the GKZ standards. In general, provided Guide 7’s economic criteria are met (which is the case here), A+B is equivalent to “proven” and C1 is equivalent to “probable”.

  • Reserves are the part of a mineral deposit that could be economically and legally extracted or produced at the time of the reserve determination.
  • Proven reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, working or drill holes; grade and/or quality are computed from the results of detailed sampling; and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
  • Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.

The demonstration of economic viability is established through the application of a life of mine plan for each operation or project providing a positive net present value on a cash-forward looking basis. Economic viability is demonstrated using forecasts of operating and capital costs based on historical performance, with forward adjustments based on planned process improvements, changes in production volumes and in fixed and variable proportions of costs, and forecasted fluctuations in costs of raw material, supplies, energy and wages. Ore reserve estimates are updated annually in order to reflect new geological information and current mine plan and business strategies. The Company’s reserve estimates are of in-place material after adjustments for mining depletion and mining losses and recoveries, with no adjustments made for metal losses due to processing. For a description of risks relating to reserves and reserve estimates, see “Item 3.D—Key information—Risk factors—Risks related to ArcelorMittal—ArcelorMittal’s reserve estimates may materially differ from mineral quantities that it may be able to actually recover; ArcelorMittal’s estimates of mine life may prove inaccurate; and market price fluctuations and changes in operating and capital costs may render certain ore reserves uneconomical to mine” of the Company's annual report on Form 20-F.

Detailed independent verifications of the methods and procedures used are conducted on a regular basis by external consultants and sites are reviewed on a rotating basis; in 2014, the year-end 2013 ore reserve estimates were independently audited and validated by Roscoe Postle Associates for the Company’s mines in Liberia and in Canada including the joint venture Baffinland and no material changes to the 2013 year-end iron ore reserve estimates were recommended by them. In 2016, the 2015 year end iron ore reserve estimates were independently audited and validated by Roscoe Postle Associates for the Company’s Las Truchas and Peña mines in Mexico, and no material changes to the 2015 year-end iron ore reserve estimates were recommended. The 2016 year end reserve estimates for the Kazakhstan coal operations were independently audited by SRK Consulting (UK) Limited. The final report has still not been issued by SRK but a preliminary draft confirmed the estimated coal quantities within planned areas of extraction.

ArcelorMittal owns less than 100% of certain mining operations; reserve estimates have not been adjusted to reflect ownership interests and therefore reflect 100% of reserves of each mine. Please see the table below for ArcelorMittal’s ownership interest in each mine. All of the reserves presented are estimates at December 31, 2016 (unless otherwise stated).

Mine life is derived from the life of mine plans and corresponds to the duration of the mine production scheduled from ore reserve estimates only.

The Company’s mineral leases are of sufficient duration (or convey a legal right to renew for sufficient duration) to enable all ore reserves on the leased properties to be mined in accordance with current production schedules. The Company’s ore reserves may include areas where some additional approvals remain outstanding but where, based on the technical investigations the Company carries out as part of its mine planning process and its knowledge and experience of the approvals process, the Company expects that such approvals will be obtained as part of the normal course of business and within the timeframe required by the current life of mine schedule.

The reported iron ore and coal reserves contained in this annual report do not exceed the quantities that the Company estimates could be extracted economically if future prices were at similar levels to the average contracted price for the three years ended December 31, 2016. The average iron ore spot reference price for the last three years (2014–2016) was $70.29/dmt CFR China, 62% Fe, (PLATTS Index) duly adjusted for quality, Fe content, logistics and other considerations. For the same period, the average coal spot reference price was $114.60/tonne FOB Australia, Hard Coking Coal (FOB Australia HCC Peak Downs, PLATTS Index). The Company establishes optimum design and future operating cut-off grade based on its forecast of commodity prices and operating and sustaining capital costs. The cut-off grade varies from operation to operation and during the life of each operation in order to optimize cash flow, return on investments and the sustainability of the mining operations. Sustainability in turn depends on expected future operating and capital costs. The reserve base can vary from year to year due to the revision of mine plans in response to market and operational conditions, in particular market price. See “Item 3.D—Key information—Risk factors—Risks related to ArcelorMittal—ArcelorMittal’s reserve estimates may materially differ from mineral quantities that it may be able to actually recover; ArcelorMittal’s estimates of mine life may prove inaccurate; and market price fluctuations and changes in operating and capital costs may render certain ore reserves uneconomical to mine” of the Company's annual report on Form 20-F.

Tonnage and grade estimates are reported as ‘Run of Mine’. Tonnage is reported on a wet metric basis.

Iron ore reserve estimates

The table below details ArcelorMittal’s estimated iron ore reserves as of December 31, 2016. The classification of the iron ore reserve estimates as proven or probable reflects the variability in the mineralization at the selected cut-off grade, the mining selectivity and the production rate and ability of the operation to blend the different ore types that may occur within each deposit. Proven iron ore reserve estimates are based on drill hole spacing ranging from 25m x 25m to 100m x 100m, and probable iron ore reserve estimates are based on drill hole spacing ranging from 50m x 50m to 300m x 300m.

As of December 31, 2016 As of December 31, 2015
Proven Ore Reserves   Probable Ore Reserves   Total Ore Reserves Total Ore Reserves
  Millions of Tonnes   % Fe Millions of Tonnes   % Fe Millions of Tonnes   % Fe Millions of Tonnes   % Fe
Canada (Excluding Baffinland) 1,989   28.2   67   26.2   2,056   28.1   2,140   28.6
Baffinland - Canada 272 66.0 102 65.3 374 65.8 377 65.8
Minorca - USA 113   23.7   5   22.7   118   23.7   126   23.5
Hibbing - USA 209 19.5 26 19.6 235 19.6 267 19.6
Mexico (Excluding Peña Colorada) 12   38.1   116   32.1   128   32.7   79   30.7
Peña Colorada - Mexico 125 21.7 119 20.8 244 21.3 229 21.7
Brazil 57   64.7   21   51.5   78   61.2   81   60.9
Liberia 5 52.0 486 48.0 491 48.1 494 48.2
Bosnia 5   45.5   14   46.2   19   46.0   21   45.8
Ukraine Open Pit 106 33.2 48 33.5 154 33.3 174 33.4
Ukraine Underground 22   53.7   -   -   22   53.7   23   55.7
Kazakhstan Open Pit 30 37.3 238 39.5 268 39.2 271 39.3
Kazakhstan Underground -   -   26   45.4   26   45.4   27   45.1
Total 4,213 34.8 4,309 34.9

Supplemental information on iron ore operations

The table below provides supplemental information on the producing mines.

Operations/Projects % Ownership In Operation Since 2016 Run of Mine Production 2016 Saleable Production Estimated Mine Life (Years)2
(Million Tonnes)* (Million Tonnes)1 *
Canada (Excluding Baffinland) 85   1976   68.6   25.0   29
Baffinland - Canada 44.5 2014 3.3 3.2 16
Minorca - USA 100   1977   8.8   2.8   14
Hibbing - USA 62.3 1976 30.7 8.3 9
Mexico (Excluding Peña Colorada) 100   1976   4.4   1.4   19
Pena Colorada - Mexico 50 1974 10.8 2.9 16
Brazil   100   1944   4.2   3.1   43
Liberia 85 2011 2.0 2.1 20
Bosnia   51   2008   2.3   1.8   7
Ukraine Open Pit 95 1959 20.8 9.0 7
Ukraine Underground 95   1933   0.9   0.9   19
Kazakhstan Open Pit 100 1976 3.0 1.7 53
Kazakhstan Underground 100   1956   1.7   0.8   12

1 Saleable production is constituted of a mix of direct shipping ore, concentrate, pellet feed and pellet products which have an iron content of approximately 65% to 66%. Exceptions in 2016 included the direct shipping ore produced in Bosnia, Ukraine underground and the Kazakhstan mines which have an iron content ranging between 55% to 60% and are solely for internal use at ArcelorMittal’s regional steel plants. The direct shipping ore produced from Liberia had an average iron content of approximately 59% in 2016 while the sinter fines produced for external customers in Brazil from the Serra Azul operations averaged approximately 62% and the lumps averaged 58%.

2 The estimated mine life reported in this table corresponds to the duration of the production file of each operation based on the 2016 year-end iron ore reserve estimates only. The production varies for each operation during the mine life and as a result the mine life is not the total reserve tonnage divided by the 2016 production.

* Represents 100% of production.

The Company’s iron ore reserve estimates have had a net decrease of 96 million metric tonnes of Run of Mine between December 31, 2015 and 2016. This decrease in reserves was mainly due to 162 million tonnes of mining depletion during 2016, the down grading of 15 million tonnes at the Company’s mine at ArcelorMittal Mines and Infrastructure Canada and a net upgrading of 26 million tonnes across the Peña Colorada operation. There was also a net increase of 53 million tonnes in reserves at Las Truchas due to the inclusion of certain new areas and new drilling results. There were other minor re-evaluations of the Company’s ore reserves. The average Fe grade decreased by 0.1% on an absolute basis.

Metallurgical coal reserve estimates

The table below details ArcelorMittal’s estimated metallurgical coal reserves as of December 31, 2016. The classification of coal reserve estimates as proven or probable reflects the variability in the coal seams thickness and quality, the mining selectivity and the planned production rate for each deposit. Proven coal reserve estimates are based on drill hole spacing ranging from 50m x 50m to 500m x 500m, and probable coal reserve estimates are based on drill hole spacing ranging from 100m x100m to 1,000m x 1,000m.

  As of December 31, 2016 As of December 31, 2015
  Proven Coal Reserves Probable Coal Reserves Total Coal Reserves Total Coal Reserves
  ROM Millions of Tonnes Wet Recoverable Million Tonnes Millions of Tonnes Wet Recoverable Million Tonnes Millions of Tonnes Wet Recoverable Million Tonnes Ash (%) Sulfur (%) Volatile (%) Millions of Tonnes Wet Recoverable Million Tonnes
Princeton - USA 93 58 15 8 108 66 6.5 0.7 17.0 108 66
Karaganda - Kazakhstan 14 7 132 55 146 62 34.1 0.6 28.5 157 67
Total 254 128 19.9 0.6 22.6 265 133

Supplemental information on Metallurgical Coal operations

The table below provides supplemental information on the producing mines.

Operations/Projects % Ownership In Operation Since 2016 Run of Mine Production (Million Tonnes) 2016 Wet Recoverable production (Million Tonnes) Estimated Mine Life (Years)1
Princeton - USA 100   1995   3   2   32
Karaganda - Kazakhstan 100 1934 10 5 10

1 The estimated mine life reported in this table corresponds to the duration of the production file of each operation based on the 2016 year-end metallurgical coal reserve estimates only. The production varies for each operation during the mine life and as a result the mine life is not the total reserve tonnage divided by the 2016 production.

Changes in Metallurgical Coal Reserve Estimates: 2016 versus 2015

The Company’s metallurgical coal reserve estimates have decreased by 11 million tonnes of Run of Mine coal and 5 million tonnes of recoverable coal between December 31, 2015 and 2016 mainly due to the annual mining depletion of 11 million tonnes. The reporting of recoverable coal reserves from Kazakhstan excludes the recoverable coal which in theory could be used for metallurgical applications but which is sold and used as thermal coal in practice by ArcelorMittal at its steel plant facilities.