ArcelorMittal Nippon Steel India clocks 16.62% increase in EBITDA

ArcelorMittal Nippon Steel India (AM/NS India), a joint venture between ArcelorMittal and Nippon Steel, reported a 16.62 per cent year-on-year (YoY) increase in EBITDA at $470 million in the March quarter, backed by sale of pellets from the newly commissioned pellet plant.

The YoY EBITDA was higher even as crude steel production decreased by 5.2 per cent to 1.7 million tonne (mt) compared to 1.8 million tonne mt in the year-ago period. The company said that the contribution from external sale of pellets from the newly commissioned Odisha plant offset in part a negative price cost impact.

The AM/NS figures were disclosed as part of ArcelorMittal’s Q12022 financial results; the global steel major follows a January-December fiscal year. In AM/NS India, ArcelorMittal has a 60 per cent equity interest.

ArcelorMittal mentioned that plans to debottleneck AM/NS India’s existing operations (steel shop & rolling parts) and achieve 8.8 mt capacity by end 2023 were underway.

It also said that AM/NS India’s Hazira facility expansion to at least 14.4 mt was in “advance preparation” – advanced discussions with vendors would close and engineering and design work was expected to start soon. The company, however, was awaiting environmental clearance.

In March, ArcelorMittal had announced a strategic partnership with Greenko Group for a $600 million 975MW solar and wind power project. In its earnings release, the company mentioned that it was studying the option to develop a second phase which would double the installed capacity.

The project commissioning is expected by mid-2024 and is estimated to add $100 million to ArcelorMittal EBITDA upon completion with additional benefits accruing to ArcelorMittal through its 60 per cent ownership of AMNS India.

The deal is structured like this: the project and land is owned and funded by ArcelorMittal; Greenko will design, construct and operate facilities in Andhra Pradesh and AM/NS India has a 25-year off-take agreement to purchase 250MW of renewable electricity annually.

Globally, ArcelorMittal delivered a strong set of numbers despite inflationary pressures and the Ukraine war.

The company said that it had announced suspension of operations to protect its people and assets at the onset of the war in Ukraine. “Since then we have slowly restarted operations, and are currently operating one of three blast furnaces,” it mentioned in the earnings release.

ArcelorMittal reported a net income of $4.1 billion in the quarter compared to $2.3 billion a year back. The net income figure for the quarter included share of joint venture and associates' net income of $0.6 billion.

However, the world’s second largest steel maker is expecting contraction in steel consumption.

“Market conditions are currently strong but we are now anticipating apparent steel consumption to contract slightly this year compared with 2021,” Aditya Mittal, ArcelorMittal CEO, said.