The world's largest steelmaker ArcelorMittal has said it expects capex to rise by USD 1 billion to USD 3.8 billion in 2018, mainly on account of Mexican operations as well as proposed turnaround plans for Italy's Ilva.
ArcelorMittal has already announced a major USD 1 billion investment programme for its Mexican operations, which are focussed on building ArcelorMittal Mexico's downstream capabilities, sustaining the competitiveness of its mining operations and modernising its existing asset base.
"The company expects the cash needs of the business (capex, interest, cash taxes, pension and other cash costs excluding working capital investment) to increase in 2018 to approximately USD 5.6 billion from USD 4.4 billion in 2017. This includes an expected increase in capex to USD 3.8 billion in 2018 from USD 2.8 billion in 2017," ArcelorMittal said in a presentation after announcing its financial results recently.
It said the capex increase will be mainly on account of the Mexico hot strip mill project and anticipated Ilva capex as well as additional strategic projects worth USD 0.3 billion, including further investment to enhance downstream optimisation in Europe and higher added value in Canada and Europe.
The company said the programme for Mexico is designed to enable ArcelorMittal Mexico to meet the anticipated increased demand requirements from domestic customers, realise in full ArcelorMittal Mexico's productive capacity of 5.3 million tonnes (MT) and significantly enhance the proportion of higher-value added products in its product mix.
About proposed acquisition of Ilva, it said the company has received a go-ahead from the European Commission (EC) to acquire the Italian steelmaker.
The approval is a significant milestone in the transaction to acquire loss-making Ilva and represents a major step towards closing the deal, which is now expected to occur as soon as possible, the company has said.
Following the completion of the acquisition, ArcelorMittal plans to fully consolidate Ilva.
It announced on May 11 after declaring financial results that upon completion, ArcelorMittal will immediately commence the industrial turnaround plan, which includes a 2.4 billion euros investment programme.
During the first quarter of 2018, ArcelorMittal said it invested USD 1.9 billion of working capital, which follows the normal seasonal pattern and reflects the effect of higher steel shipments as well as the impact of higher selling prices and higher raw material prices.
It said the working capital requirement in 2018 will be driven by market conditions.
ArcelorMittal has presence in 60 countries and an industrial footprint in 18 countries. It is a leading supplier of steel in major global markets.
The company on May 11 reported a 19 per cent jump in its net income to USD 1.19 billion for the quarter ended March 31, 2018 and also saw its net debt decrease to USD 11.1 billion.
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