ArcelorMittal Rising Global Steel Leader

Emily Carter

Hey everyone, welcome back to Global Equity Research, the official podcast from Softgate Capital Research. I’m Emily Carter, here as always with David Mitchell. Thanks for joining us as we dig into the trends, risks, and opportunities on another company that’s shaping global markets.

David Mitchell

Absolutely, Emily. And before we dive in, quick housekeeping—if you haven’t checked out the brand new research portal at softgatecapitalresearch.com, you’re missing out. It’s a genuinely streamlined experience. You can browse our reports in multiple languages, see prices in different currencies, and, of course, download the full ArcelorMittal writeup we’ll discuss today. I’m not the best with tech, but even I managed it.

Emily Carter

And just a reminder, the link for the full report is right down in the episode description or you can head straight to softgatecapitalresearch.com. We’ll be referring to the analysis throughout, so definitely check it out if you want all the hardcore details. But let’s get into today’s story—ArcelorMittal.

David Mitchell

So, the narrative today: ArcelorMittal as, well, not the same old “steel dinosaur” people remember from the 2010s. Instead, we're talking about a structurally improved, globally leveraged steel leader that’s positioned—finally—for recovery. That’s the bet, right? And the market hasn’t really caught on yet, at least, that’s how I read it.

Emily Carter

Yeah, I mean, the story here is—look, this’s a company that’s done the hard yards on restructuring. It survived the last bust, cut debt, optimized its assets, and now sits with what analysts might call “operating torque” if the steel cycle starts turning up again. The big investment case? You’ve got this global scale, decarbonization momentum, and, honestly, a seriously cheap valuation for a leader with improved fundamentals.

David Mitchell

Right. And you see that in the numbers—ArcelorMittal trades around half book value, roughly five to six times normalized EBITDA, and a market price that’s already baking in a lot of bad news, in my view. The core argument is: they're set up to capture the upside if we get any sort of global recovery, especially in steel-intensive sectors like infrastructure. Everything else—decarbonization, capital discipline—it all flows into that bigger theme.

Emily Carter

So, that’s the setup. ArcelorMittal isn’t just a cyclical play; it’s a company that’s transformed itself to be much more resilient—without losing the upside when the cycle turns. And today we’ll walk you through exactly how they did it, where things stand, and what could shift from here.

Emily Carter

Let’s start with the basics. ArcelorMittal is the largest integrated steel and mining company outside China. They’ve got operations in about 60 countries, steelmaking in 18, 2024 crude steel output nudging 58 million tons. And unlike some U.S. or China-centric players, ArcelorMittal is genuinely global: half their steel’s from Europe, nearly 40% from the Americas, with mining and JVs spanning from India to South Africa.

David Mitchell

Yeah, and that’s not just for bragging rights. The geographic diversification matters because, you know, nobody wants all their exposure in Europe or just floating with U.S. tariffs. The company has a real mixture—so when Europe’s down, maybe Brazil picks up, or mining cushions the blow. They’re a supplier to autos, construction, infrastructure, energy—really a one-stop shop for steel everywhere outside of China, in practical terms.

Emily Carter

And what’s different now is the strategic focus. Since 2006, but especially under Aditya Mittal, they’ve moved away from “grow-at-all-costs” empire-building. Instead, they’re optimizing the portfolio—selling high-cost assets like many of the U.S. blast furnaces, investing in the most competitive plants, and pushing for higher-value, lower-carbon products. That’s the definition of learning from past pain, right?

David Mitchell

Oh yeah. And, as we saw in our Skanska and HCA Healthcare episodes, that kind of strategic shift—going from volume at all costs to quality and capital discipline—can really change the risk profile. It’s textbook—but it’s rare to see companies actually do it well. Here, you’ve got the evidence in the numbers: higher EBITDA per ton, fewer dud assets dragging things down. It’s more like a steel “platform” than an empire now.

Emily Carter

Let’s break down the main pillars that make ArcelorMittal unique. First up—scale and diversification. Their footprint is massive: from France and Germany, across North and South America, all the way to minority interests in India. What that means is not just diversity in customers, but the ability to ride through local downturns and shift production across assets as needed. The company’s always in the game somewhere, so to speak.

David Mitchell

And then vertical integration—this is a big one. Most steelmakers buy all their iron ore on the open market, but ArcelorMittal owns big iron ore mines in Canada and Liberia. So, when raw material prices swing, they’ve got a natural hedge. Sometimes the mines make more, sometimes it’s the mills, but it all evens out. In years when iron ore prices popped, mining was a huge EBITDA contributor.

Emily Carter

And they’ve really doubled down on technology. About $300 million annually in R&D, all these new steel grades for EVs, wind turbines, you name it. They’re moving up the value chain, with products like insulated steel roofs with integrated solar. That’s not your grandpa’s steel company. Plus, #1 ratings from automakers—so, they’re genuinely a premium supplier, not a commodity pusher.

David Mitchell

And that ties right into decarbonization. They’re investing heavily in green steel—Direct Reduced Iron, new Electric Arc Furnaces. I was, honestly, skeptical a couple years ago, but CO2 emissions are reportedly down 50% versus 2018, and they’ve got projects ramping in Canada and Spain. The XCarb initiative and buying stakes in low-carbon tech—it’s early, but this could become a margin and regulatory advantage, especially with Europe’s CBAM coming online. If the demand for verified “green steel” really takes off, ArcelorMittal is positioned to cash in.

David Mitchell

So, the fun part—cycles! Steel is notorious for its booms and busts, and ArcelorMittal has ridden them all. If we look back, 2019–2020 was awful—losses, asset impairments, COVID. 2021 was a rocket ship: record profits, nearly $15 billion in net income. But then, as always, the slide—2022, 2023, profits fell as prices normalized and Europe really struggled, especially with energy costs.

Emily Carter

Exactly. And what’s crucial here is, even during the 2023–2024 trough, ArcelorMittal managed to stay free cash flow positive. Margins compressed hard—2024 was about 1.8% net margin—but that’s survivable and an improvement over past cycles, where they would’ve been in the red. They pulled every lever: working capital, maintenance capex, even managed to keep up the shareholder returns.

David Mitchell

Plus, the balance sheet—net debt down to $9.1 billion in Q3 2025, lowest in a decade. No more “walking on the edge of default” like back in the old days. It gives management real flexibility. Even in bad quarters—like that Q4 2024 net loss—they’re not at risk of breaking covenants. That kind of resilience means they can actually benefit when the industry cycle turns, rather than simply avoid disaster.

Emily Carter

Latest numbers? The first nine months of 2025 show modest improvement over 2024. Shipments just nudged higher, EBITDA per ton, while down from the 2021 peak, are holding noticeably above the worst levels of the past. So, we’re talking a structurally higher base, and management’s cautiously optimistic that the cycle bottomed in 2025—as order backlogs and prices began to tick up.

Emily Carter

Let’s zoom in by segment—because ArcelorMittal’s complexity is actually a strength. Europe is the largest by volume and still the anchor, but it’s been under pressure: high costs, import competition, energy prices through the roof in 2022–2023. They were barely profitable in Europe, sometimes even losing money after impairments and underutilized assets. It’s a levered bet that when Europe recovers, margins could rebound sharply.

David Mitchell

And then there’s North America, which gets overlooked. The U.S. exposure is now focused on Dofasco in Canada and the Calvert plant in Alabama. After selling off a bunch of legacy U.S. mills, it’s a much cleaner business model—lower fixed costs, more Electric Arc Furnace production, less exposure to the old blast furnace liabilities. North America's profitability’s actually been better than Europe’s lately and could provide the ballast as Europe’s situation evolves.

Emily Carter

But don’t forget Brazil. That’s become a quiet profit engine—higher margins, strong market position, particularly after picking up Votorantim’s steel business. Even during global slumps, local demand for construction steel held up, and they benefited from efficient operations and some one-off settlement wins. The company’s mining segment is also a meaningful piece: sometimes only about 5% of revenue, but can deliver high EBITDA margins and balance out the steel volatility.

David Mitchell

Exactly. And the “Others” segment—Ukraine, South Africa—has been a drag, to put it gently. But they’re relatively small, and management’s shown a willingness to exit or restructure anything that stays unprofitable. The overall mix means the group isn’t held hostage by any one geography—a key difference from smaller, more concentrated peers.

David Mitchell

Let’s talk capital discipline, because this is arguably where ArcelorMittal has changed the most since the empire-building years. Back then, when profits collapsed, shareholders got stuck with massive dilution or dividend cuts. Now? It’s the opposite story: net debt down more than $7 billion since 2015, a true investment-grade balance sheet, and a clear, almost formulaic, capital allocation framework.

Emily Carter

Yeah, the policy’s now—base dividend of $0.55 per share, then at least 50% of post-dividend free cash flow goes to buybacks. And they’ve actually followed through: 38% of shares bought back since 2020. That’s not just financial engineering—book value per share is up $18 since 2020, sitting around $72 now. So, every time the share price dips in a tough year, they’re shrinking the share count for the long-term holders.

David Mitchell

And that capital return discipline is matched by more focused growth investment. They’re putting strategic capex into projects that add value—think new finishing lines for automotive, high-grade electrical steels, mining expansions in Liberia and Canada. Not into “trophy assets” or chasing capacity for its own sake. Management’s estimate is that these new projects and acquisitions add maybe $2 billion-plus to annual EBITDA by 2026. So, there’s genuine accountability now—you can see the numbers move as projects ramp.

Emily Carter

And I’ll add, that’s also why the stock gets compared more favorably to North American peers like Nucor these days, rather than to the over-leveraged European steelmakers. The discipline on capital use gives investors a floor on the downside—and upside torque if earnings recover and buybacks kick in harder.

Emily Carter

Alright, let’s tackle valuation—a lot of people still look at steel names and see value traps. But right now, ArcelorMittal is trading at around 0.5 times book value, roughly 5–6 times normalized EBITDA, and about ten times forward earnings on depressed numbers. Even adjusting for cyclical swings, that’s cheap relative to what you see in peers—especially given the structural improvements and lower debt.

David Mitchell

Yeah, and if you look at the sum-of-the-parts: just the mining ops, Brazil, and North America probably justify a significant chunk of today’s market cap. The European business is basically being valued at zero or even negative, which is, frankly, overly pessimistic if policies like EU CBAM or quotas kick in. There’s real rerating potential once the market sees margin recovery, especially if Europe stops being a drag.

Emily Carter

On risk, steel will always be cyclical: global recession, China exports, input inflation, you can’t escape that. But the cushion provided by a strong balance sheet, disciplined capital allocation, and mining earnings—those are real mitigants. Plus, with the dividend and buybacks, you get paid to wait. Upside scenario? A modest recovery in global demand, some pricing power in Europe, and those capital returns get magnified quickly. Downside? Even with a soft cycle, you have a much broader margin of safety than you did five years ago.

David Mitchell

And it’s worth highlighting—catalysts are in play. Europe’s trade policy, especially CBAM, could be a gamechanger. There’s also ramp-up of DRI/EAF projects, with real savings and green steel premium potential. If steel prices just revert to average, the numbers on earnings and free cash flow could surprise a lot of skeptics. Sometimes, a little patience is all it takes for that deep value to start getting unlocked.

Emily Carter

Alright, let’s wrap it up. We hit a lot today—ArcelorMittal’s scale, vertical integration with mining, R&D and tech push, decarbonization agenda, capital discipline, and why this all comes together into what’s basically a different company than a decade ago. It’s a bet on a global recovery and the transformation of old industry into, well, a more investable one.

David Mitchell

And, as we discussed throughout, it's a great way to play big themes—infrastructure, energy transition, global manufacturing. If you’re watching the catalysts, keep an eye on the EU CBAM rollout, the commissioning of new DRI and EAF projects, and those all-important steel price trends. Things could pivot pretty quickly if macro winds shift.

Emily Carter

All the assets we referenced, including the deep-dive ArcelorMittal report, are linked in the show notes or at softgatecapitalresearch.com. Quick disclaimer—this is for informational purposes, we’re not making tailored investment recommendations here, so use your own judgment and consult your advisors on the specifics.

David Mitchell

That’s right. And thanks, as always, for joining us and making finance a bit more approachable—and fun—for all of us. Emily, great discussion as usual.

Emily Carter

Thanks, David. And thanks to all our listeners—don’t forget to follow for future episodes, where we’ll continue breaking down global equities and macro themes that actually matter for your portfolio. Take care, everyone!

David Mitchell

See you next time. Goodbye!