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ArcelorMittal to maintain NAFTA presence following Cliffs deal: company

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ArcelorMittal to maintain NAFTA presence following Cliffs deal: company

Highlights

AM moving forward with Calvert EAF

Will retain Canada, Mexico mills

Pittsburgh — ArcelorMittal's decision to sell nearly all its US integrated steelmaking operations to Cleveland-Cliffs is a repositioning of the company's assets, not a strategic repositioning of the company's market presence, ArcelorMittal president and CFO Aditya Mittal said Sept 28.

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"I think the NAFTA market remains very important," Mittal said in a call with industry analysts. "We have divested a big chunk of our NAFTA business, but we still retain a significant presence."

With the closing of the deal, expected in the fourth quarter upon government approval, Cliffs will become the largest flat-rolled steel producer in the US. Cliffs agreed to purchase nearly all of ArcelorMittal's US integrated operations for $1.4 billion in cash and shares, the two companies announced on Sept. 28 in separate releases.

The acquisition does not include ArcelorMittal's Dofasco integrated facility in Canada, the Calvert processing facility in Alabama, a 50:50 joint venture between ArcelorMittal and Japan's Nippon Steel, or ArcelorMittal Mexico.

Roughly half of ArcelorMittal's NAFTA shipments will be reduced through the sale, however in terms of automotive shipments it will be slightly less than half, Mittal said.

"We remain a strong regional player with the ability to grow in Calvert," he said.

ArcelorMittal announced plans Aug. 12 to construct a new electric arc furnace (EAF) at the Calvert facility in Alabama. Once completed the planned facility will be capable of producing 1.5 million st of/year steel slabs for the hot strip mill, with the company saying at the time it expects construction to take 24 months.

"The existing assets are growing in terms of both value-add capability as well as melt capability," Mittal said. " In terms of slab supplies to Calvert, we have an agreement with Cliffs, where the slab supplies that exist today between Indiana Harbor and our Calvert facility are maintained for a period of five years. So in the medium term, there's no disruption to our slab supply into Calvert."

In addition to retaining Calvert and the operations in Canada and Mexico, Mittal noted that ArcelorMittal will retain its research and development program and innovation centers.

The deal with Cliffs also brings to a close ArcelorMittal's ongoing $2 billion optimization plan, Mittal said.

"Going forward, look, we'll always review our portfolio and see the opportunities to optimize but there is no plan to announce any program in the near term," Mittal said.

The companies have identified an estimated $150 million in cost synergies, they said in separate statements.