Daniel Fairclough - Director of Investor Relations London Lakshmi Niwas Mittal - Chairman, Chief Executive Officer, President, Managing Director of Operations and Member of Group Management Board Aditya Mittal - Group Chief Financial Officer, Principal Accounting Officer and Member of Group Management Board Peter G. J. Kukielski - Chief Executive of Mining and Member of Management Board Gonzalo Pedro Urquijo Fernandez de Araoz - Member of the Group Management Board Louis L. Schorsch - Executive Vice President, Member of Group Management Board, Chief Executive Officer of Flat Products - Americas and President of Flat Products - Americas Michel Alphonse Léon Wurth - Member of the Group Management Board

Alexander Haissl - Morgan Stanley, Research Division Luc Pez - Exane BNP Paribas, Research Division Bastian Synagowitz - Deutsche Bank AG, Research Division Michael Shillaker - Crédit Suisse AG, Research Division Jeffrey R. Largey - Macquarie Research Cedar Barnes - BofA Merrill Lynch, Research Division Carsten Riek - UBS Investment Bank, Research Division Alessandro Abate - JP Morgan Chase & Co, Research Division Carly Mattson - Goldman Sachs Group Inc., Research Division Neil Sampat - Nomura Securities Co. Ltd., Research Division Alexander Hauenstein - MainFirst Bank AG, Research Division Tim Cahill - Davy, Research Division Rochus Brauneiser - Kepler Capital Markets, Research Division

Okay, good afternoon, everybody, and thank you for joining ArcelorMittal's Q3 Results Conference Call. I'd like to first inform you that this conference call is being recorded today. We will have a brief presentation, followed by a Q&A session, which in total should last about 1 hour. [Operator Instructions] So with that, I will hand over to Mr. Mittal.

Thank you. Good day to everyone, and welcome to ArcelorMittal's Third Quarter 2012 Results Call. I'm joined on this call today by all the members of the group management board. Before I begin the presentation, I would like to make a few introductory remarks. Market conditions remain challenging. The ongoing European sovereign debt situation, the threat of a fiscal cliff in the U.S. and a slower growth in China have all impacted demand. This was further impacted by the deterioration in the iron ore price in August, which came as a surprise to everyone. Nevertheless, global economic leading indicators appear to be bottoming, while I am optimistic the worst is behind us. The focus of the company remains on improving efficiency, cutting costs and reducing debt while start sacrificing the high-return growth projects we have in our portfolio. My confidence in this trends of our business and our people is of great comfort as we navigate the challenging market conditions. Moving to the agenda on Slide 2. As usual, I will begin today's presentation with a brief overview of our results for the third quarter 2012. I will then spend some time on the outlook for our markets before I hand over to Aditya to go through the results and our guidance in more detail. Turning to Slide 3, I will start with safety. ArcelorMittal's health and safety performance in the third quarter of 2012 declined with a lost time injury frequency rate of 1x, as compared to 0.8x in the second quarter of 2012. Nine months into the year, and our overall health and safety performance is in line with our target and show good improvement when compared to the rate of 1.4x of 2011. We will continue our efforts to keep our group LTIF rate below 1x. Working…

Thank you, good morning and good afternoon, everyone. I'm on Slide 16 where we can see the EBITDA bridge to explain the decrease in group EBITDA from $2.4 billion in 2Q to $1.3 billion in the third quarter. The second quarter EBITDA of $2.4 billion included a positive gain of $339 million on the divestment of Skyline and a Q3 EBITDA of $1.336 billion includes the negative $72 million one-time impact from the new U.S. labor agreement. If we strip out these effects, EBITDA decreased by 33% in the third quarter versus the second quarter. As you heard earlier, the key drivers behind this decline in EBITDA are lower steel volumes and iron ore prices. Seasonal factors in Europe, combined with destocking in major markets, as well as a deterioration in end markets led to an 8% decline in steel shipments from the second quarter to the third quarter. This represents a negative $465 million EBITDA impact for the quarter, clearly the most significant negative impact in the third quarter compared to the second quarter. Although steel prices also declined in Q3, this effect was largely offset by lower raw material costs, the price cost effect was not significant in steel. Where prices did have an effect was in the results of our Mining segment. This year, iron ore averaged less than $115 compared to $140 in Q2, which had a negative $105 million impact on EBITDA. If we turn to Slide 17, we will focus on the chart in the upper half of the slide, which shows 3Q 2012 results. Comparative figures are there for the previous quarter in the lower half. I will point out the key differences below the EBITDA line. During the third quarter, we booked impairment charges of $130 million, primarily related to the intention…

[Operator Instructions] So we will take the first question from Alex Haissl at Morgan Stanley.

This is Alex at Morgan Stanley. My first question is on asset divestments. I understand that it's very difficult to comment on the individual assets. I just want to get a sense in -- with regards to your conviction, basically that you can delever wire divestments, but you need some $5 billion to stay investment grade rating. So I'm just curious to get -- what's your conviction here, and how the dividend cut at this point played a role with regards to Moody's?

Alex, we remain confident. We believe we have a very clear and credible plan to execute in terms of divestments. We are in discussions with various parties on certain assets and we have a high level of confidence that we should succeed. As you know, in the last year, we had divested $2.7 billion in assets, and we continue to embark on that path.

I mean, maybe this $2.7 billion, and it's more a question of time line, right? I mean, basically you would need to go for core assets or sell a stake core assets, because $5 billion is quite a big amount. So you also feel confident to get to this $5 million target, basically in terms of cash?

So, Alex, as you know, we have not set out a target of net debt reduction, we intend to do that during February and March of next year, in detailing further as to where we are. What the takeaway is, or for this call should be is that number one, we believe that the bottom has been reached in terms of steel pricing, as we can see prices go up in China, as well as in the U.S. Global leading indicators assume it's still below 50 are now trending upwards. So we believe that risks remain in the system, but overall, the economic situation, assuming the risk on material actually improve in 2013, we should help our business. Number 2, we continue to make progress on Asset Optimization Programs. We have not received the full benefit of that, that should occur in 2013 as these assets close. We continue to make progress in expanding our iron ore business, and in the first half of 2013, we should have more tonnage from our operations in Canada. In terms of deleveraging, that remains a priority in considering the global economic situation, as well as our priority to delever. The board has taken a decision to reduce our dividend, which should save approximately $1 billion in cash next year. Furthermore, we continue to work on our divestment plans, which we believe are well advanced and should result in duly reducing our net debt.

The second question I have is on the global steel market. I mean I agree that the second half this year is not reflecting a normal trading conditions because of destocking in Europe, U.S. and China. However, to me it seems it's not just a cyclical slowdown, it's really more of a structural mean reversion, and we discussed in the past some kind of a normalized profitability breakdown. How do you see the situation, now? Will you agree that we are really just going back to pre-boom years and the good years have all went, we should just look at, let me say, a normalized EBITDA, between $80 and 100 per ton, which brings group, $7 billion, $8 billion? Or you still believe, just it's a cyclic slowdown and markets will recover at some point? Just want to get your thoughts here.

I think that's just, as Aditya said, that we are at the bottom of the situation, and last third quarters have been very challenging, lots of uncertainties in Europe, weakening of China's economy and leadership questions in the United States, and their fiscal policy going forward. I think as we move forward in 2013, or as we enter into 2013, I expect that things should improve, at least we will see some various marginal improvement in the demand in Europe, the margin improvement in demand in America and also in China. So I believe that 2013 will have a better economic environment with some of the uncertainty going away from the environment. We have -- as a company, we have taken -- we have started a lot of initiatives for last years and now all the programs that we launched are coming to fruition, like our mining projects in Canada, our mining projects in Liberia. Thus we have a large drawn, out of [indiscernible] cost reduction, which you have seen -- that we have achieved through our management gains. We have taken on actions to improve our cost position through our captive -- our iron ore business. All this should improve our profitability. Third, and the question is really of the economic environment, and also the question is, that how the economic environment improves and the economic environment improves based on our new footprint, based on our [indiscernible] cost estimates, and in a normal economic environment, I still believe that we should have a normal EBITDA of $150 per ton. But when the economic environment conditions are not normal, there is a pressure on the profit margins.

Okay, we'll take the next question from Luc Pez at Exane.

Quick question, if I may, on the CapEx. I know you're not willing to commit to any CapEx guidance for 2013, but just wanting you to elaborate a bit more as to where you would see maintenance CapEx going forward? And with regards to growth options, whether you would intend to push down the road, the Liberia expansion?

The second question, Liberia. So in terms of your questions, Luc, for maintenance CapEx, we expect it to be between $2.8 billion to $3 billion for the year. Going forward, we are examining what we can do in terms of our CapEx budget for next year. As we are embarking on our Asset Optimization Program, to some degree we have less assets to maintain. That needs to be more fully factored into our maintenance budgets -- our maintenance CapEx budgets for next year, and therefore, I expect our maintenance CapEx to be lower next year as well. I don't have an exact number at this point in time. You have to wait until our year-end results for that. And in terms of Liberia expansion, clearly, we will elaborate on that as well and where we are in terms of growth CapEx. But at this point in time, we remain committed to achieving our 84 million tons of ore production target by year-end 2015, and therefore I would expect that the Liberian project would continue.

And a quick follow-up question, if I may, on the U.S. inventories. I know you described them as normal, but looking at the charts you were pointing to on the, I don't remember which slide, these seems to be pretty high, actually, by [indiscernible] standards, meaning since 2010. So if you could elaborate a bit on this and actually also on where you see your inventories at the steel mills by your position with the ad distributors?

Yes, I think there's softening in demand in the U.S., part of that being seasonal, but I think there's also a lot of political uncertainty related immediately to the election and then following quickly on that, to the potential risk associated with, let's say, extreme circumstances of the so-called fiscal cliff. So I think we have seen people holding off from some purchases, and I think that's enabled the service center inventories to keep [ph] somewhat, but I don't think we view this as something that's cause for alarm and certainly nothing more severe than what we've seen in situations in the past. So I think this is a, to some extent, normal seasonal pattern, and also is affected by the kind of highly volatile price movements we've seen in the U.S. the last few weeks, and then finally this uncertainty. Obviously, if the worst happens on the political front, then that will have consequences for us. But I think, waiting and seeing on a...

We'll take the next question from Bastian at Deutsche Bank.

I've got 2 questions, and my first one is on the cash flow. Aditya, in the cash flow bridge, which you have been showing from EBITDA to free cash flow, I think it was on Slide #18, we have this large position of $1.4 billion for financing cost, taxes and others. And I felt going in net debt of financing cost, Texas DDH, and also the [indiscernible] settlements after, I think that's explaining roughly half of that amount, could you please give us a bit more detail on what's in there, and maybe then I'll follow up with my second question afterwards.

Sure. In terms of this chart, this captures everything. So interest expense, taxes, as well as other cash items. In the third quarter, other cash items, significant year results on DDH income, but the largest component was a catch up on elaborate interest. So we had various accruals and in the third quarter as we closed a contract in the U.S.,and that various employee benefit plans, and that should not occur in Q4. And as a result, in Q4, I would expect that this amount would be much less compared to what you're seeing in Q3. And as a result, we will be reducing our net debt. So this is literally accruals versus cash, more than anything. Does that answer your question?

Yes, it does. If it's possible, could you give us the number for the amount which will go out in the fourth quarter, please?

At this point in time, I don't have a specific forecast. The number would be lower directionally, significantly lower directionally, because we would not have these one-time items. But in year-end and what we are comfortable in articulating is that our net debt should come down to $22 billion, because internally we have reviewed working capital forecast and we're seeing that there is a significant working capital release that is occurring. And as a result of those factors and where we see this going directionally, we feel comfortable at $22 billion. Also recognize that in Q4, we will have the subsidiary finance, that we had done in Q2 of $300 million also reversed. That's another positive in Q4 from a net debt perspective -- cash flow perspective.

Okay, perfect. And my -- the second question would be, again on your guidance on net debt. Obviously, you had targeted to I think, flat to lower net after the second quarter, depending on further divestments and the new target of $22 billion is now after raising the $650 million for the hybrid bond, which you issued. If the higher debt guidance, which is implied by this, is it just a function of the lower earnings outlook or is there anything else, which had been factored into that?

I think primarily it's the lower earnings. I mean, as you can see, we had 3 months of what guided towards a higher level of profitability in the second half, due to the factors we discussed previously have now announced a guidance of $7 billion for 2012. And still maintained our net debt target for -- at the end of the year.

And is there any number you can already give us on what would be the sustainable debt level you would really feel comfortable with, which you mentioned earlier?

What we'd be comfortable in saying is the need to reduce it. What we have not said is how much, and by when. And I think, since we have articulated before we are in a process of divesting certain assets, we think it is not necessarily the interest of our stakeholders to articulate that target. And once we are taking those divestments. It's more beneficial for us to articulate the target. At this point in time, I do not have a specific number that I can share with you. But by our Investor Day, we should be in the position.

The next question from Mike Shillaker at Credit Suisse. Michael Shillaker - Crédit Suisse AG, Research Division: I think that the question, unfortunately, is going to be balance sheet-focused again. The conditions, I guess, have weakened since Moody's published the $5 billion debt reduction target. I think they were using a $7.8 billion EBITDA. So on their metrics, that $5 billion, should be more like $7 billion. Are you in a situation where, at the moment, you're on pause in terms of debt reduction, yet the sort of target to meet their investment grade criteria is getting away from you, so you just turned around and say, "Look, we're just simply not going to do this, and naturally, important or not, we're just not make it, and therefore forget it." And I think one of the comments you put on Reuter's this morning about investment grade being preferential, but not imperative, may sort of allude to that. On the same question, can we also infer that the fact that you've highlighted today in advance that you're cutting or proposing a cut of the dividend and CapEx for next year basically suggests that, actually this -- the major debt reduction focus will actually really come into 2013 and not 2012? And my second question would be -- on asset sales, can you give us a little bit more color, in terms of the extent to which you are prepared to sell minority stakes in various assets, including potentially steel and the mining assets?

I think you asked 4 questions, not 2. But I'll try and go through some of your questions, and hopefully we will give you enough of a response on all of them. So in terms of Moody's $7.8 billion, I don't want to get specific on exactly their ratings methodology and their calculations. But I would say that when Moody's calculate the retained cash flow, include dividends. And to the extent that we have now reduced dividends by almost $1 billion, that should help. Because that implies that cash flow is that much higher. And so to the extent that you have a lower EBITDA, but you have reduced your dividends, the cash flow is maintained. Secondly, I think from a rating agency perspective, it's important to have a very clear and credible plan. We are working on that. We expect to make progress on our asset sales. Thirdly, in terms of our statements this morning on investment grade rating, I think we remain on track to target investment grade credit rating. There is no change on that. All we said that -- is that is it is important. But also that we will not maintain it at all costs. We have to balance the interest of our -- all of our stakeholders and we will do so. The benefits of an investment rerating I think are obvious to everyone, it allows us to access different pools of capital. The cost increase of losing it is also obvious to everyone, as we said in the past, that it remains an important attribute and asset for this organization. I would not really link the CapEx and dividends to -- that the asset sales -- and I forget exactly what your remark was. I mean we're reducing CapEx because the global economic environment is more challenging, and we need to continue to delever. We're reducing dividends, both from a global macro economic perspective, as well as the deleveraging and clearly that reduction in dividend helps valuations with Moody's. In terms of asset sales, I think the focus remains to strengthen our core business. And we will continue to do that while we target a strong and credible divestment process.

We'll move on to the next question from Jeff Largey at Macquarie.

My first question is on the dynamic delta hedge. My understanding is that this rolls off at the end of the first quarter, and it is annualizing at something like $500 million a year. I'm just curious if the -- if this rolls off at the end of the first quarter, if the asset optimization plan and those cost savings associated are adequate to basically cover that change in the earnings profile?

Jeff, you're absolutely right, it rolls off by Q1. We expect that the impact of both the management gains, as well as the asset optimization program will more than offset that. As you said -- as you know and as we have said previously, we have now completed the management gains, and in terms of the asset optimization, which perhaps may be more tangible next year, we are targeting $1 billion run rate of savings. The closure of Liege has been announced, has been agreed. But we don't have the full savings yet in our EBITDA. Nor of Florange, because there, the project has been launched. We still need to wait for the French government to see if there is any buyer out there for the Florange assets. To the extent that none is found, we will embark on that process and no savings will then accrue to our bottom line. And therefore, those savings are still to come, and should offset the DDH.

Okay, great. My second question is on the mining division. Obviously, we saw a bit of a drop in sequential shipments. As I look towards the fourth quarter here in your guidance on meeting the 10% year-on-year increase in shipments. I mean, should we assume that this, even though that's a material step up in shipments for the fourth quarter, that this is all achievable? I mean, I'm assuming that you kind of built stocks at Port Cartier, and that this isn't is a reach to try and meet this 10% year-on-year shipment target?

Jeff, it's quite achievable and for 2 reasons. One, we don't of the stock necessary at Port Cartier, but there's stock at the mine. One of the two primary reasons for lower shipments in the third quarter were higher than expected rainfall in Liberia, which is now slowing down. So we'll ramp up shipments in the fourth quarter there. And also, we had expansion work on the rail network during the summer, which meant that we didn't rail as much concentrate down to Port Cartier as we would have liked to. So but those -- it just means that those shipments will be pushed out into the fourth quarter so we're quite confident that we'll meet our -- the 10% year-on-year increase.

Okay, so what that means is that in the fourth quarter, in Liberia you're running at kind of your 4 million tons of annualized shipments and what would the number be necessarily for QCM?

It would be -- just get give me a second. . .

I think, roughly it's about $16 million for external shipments in Q4.

Correct.

We will take the next question from Cedar at Bank of America.

Just a quick question on the Asset Optimization Plan. Where are we in terms of the $1 billion annual saving target with the closure of Liege and Florange? And just following up, can you just remind us what the process is going to be on the hot end with the government looking to potentially sell that to someone? Are you still required to run it and bear the costs in the interim? What are the time frames, just to remind us?

Okay, Cedar, the saving is $1 billion, and we expect -- we had announced, almost, not exactly 12 months ago, I guess, what, 14 months ago, that we should achieve that by the year end 2013 -- 2012. At that -- this point in time, we have not provided you an estimate as to where we are, we will do still at the year-end results. We are making good progress on that. Maybe there's a quarter delay in achieving the full amount of savings. But we should be close to achieving a significant majority of those savings by year end. So in terms of process, I will talk to you perhaps about the 2 major ones. The first one being Liege and then I'll address your questions on Florange. In terms of Liege, we have an agreement to close the hot ends [ph] so the hot end [ph] is closed. We're now in discussions with the unions to finalize the exit of all of the employees associated with that primary end, that should get done in the first week or second week of November. And when that is done, we should report the savings. In terms of Florange, the processes that we have provided the government with 60 days to find a buyer. They have until the end of November to come back to us with a buyer. From that date, we're not supposed to be bearing any costs associated with that prime facility, and the new buyer's supposed to be bearing those costs. We have no obligation to purchase any steel or coke or any such product from a new buyer, if a new buyer does arrive at the scene. Assuming that there is no buyer, then the process would begin in Florange, and once that process is complete, the cost of that primary would come out.

Okay, and how long does it usually take when you enter a sort of a closure process, in terms of agreeing with unions, restructuring? Laying everyone off?

Yes. So in Florange, the process has started a month ago, roughly. And normally these processes can take from the start date, a month ago, just to 8 months. Assuming that it runs smoothly.

Okay, we'll take the next question from Carsten Riek at UBS, hopefully.

Two questions from my side. First one, there was quite a bit of inventory build up in my view in FCE, AACIS and the Mining business, so it's a little bit of deja vu from last year, even though the conditions were similar. Why have we seen, especially in FCE, such a big build up in inventories, in my opinion, might be in the range of $300 million to $400 million? Did you expect some kind of huge pickup in demand? And it's -- is that the reason why you actually build it? That's the first one, the second one is on the iron ore prices. Because a big drop in mining was predominantly because of prices, even though we have the -- seen the iron ore prices actually down only from, or massively down from end of June -- mid-end of June until August. So it should have been in your balance sheet a little later, in the P&L a little later, than we have seen this. What caused actually the quick realization of lowest iron ore prices?

In terms of inventory, first, I think Peter went through the build up in terms of mining division. I don't know if you heard them, but we had issues with the rail -- we're doing our rail expansion, and so we had more stock at Port Cartier. In Liberia we were impacted by the monsoons so [indiscernible] there. In terms of FCE, clearly the increase in inventory has to do with the fact that the slowdown in the third quarter was larger than what we had anticipated. And so there's been a drop at FCE in terms of shipments of about 13% to 14%, which is very significant, if you consider that second quarter was already weak. We're seeing a European apparent steel consumption, which on an annual basis would be 9%. The numbers are more significant than what we would've forecasted. The good thing is that a lot of this is unfinished good side. It's not on the raw material side. On the raw material side we have been relatively prudent in building up inventory stocks. So there's not a cost burden going forward at FCE, which is significant of higher cost raw material. Gonzalo can expand on the AACIS buildup of inventory.

We had gone down in Q2 in some markets very much. So we did do a rebuild of stock in Kazakhstan and amongst others, and then also due to the market we didn't go on to force markets. And it was basically Kazakhstan and that's why we rebuilt some of the inventory.

And very quickly at FCE, as the first batch was online at Tubarao, the delayed ramp up, as we lost shipments, we had greater levels of raw material staying in Brazil and that's one of the reasons why inventory went down. And I think, overall your question on inventory is very valid, and that is why [indiscernible] and we will have a reversal of inventory in Q4 as the production level at FCE lowers so we will bring down the level of inventory there. Peter walked through what is happening in the mining side and same at SCA and the CIS. In terms of your second question, on pricing, if you think you can elaborate on the mining side, Peter?

Yes, so as Aditya already mentioned, the negative impact of pricing in the third quarter was $115 million, the balance of the variance between Q2 and Q3 was about $150 million. The balance was volume-related for the reasons that I described with respect to shipping.

Yes, but the pricing, at least in my opinion, kicked in quite early, the lower pricing. I thought there would be a bigger lag effect. I read a similar kind of thing we see with Vale or Rio in the iron ore, but it looks like that some of the contracts were, at least it looks like renegotiated early.

We have obviously the contractor dynamic. I mean now, and by and large, we have a -- we're not following a lag methodology any longer, although we have some lags. And so if you look at -- if you take $115 million that's spread over our marketable production for the quarter, you will see that we actually did quite well, relative to the markets.

Okay, we'll take the next question from Alessandro Abate at JP Morgan. Alessandro Abate - JP Morgan Chase & Co, Research Division: Just one question, related always on the reduction level on net debt. Considering that you are moving towards the right direction in terms of steps, even though not within 2012, but for 2013 with potentially lower CapEx and a reduction level on net debt. When you're talking about the status of your plan of asset disposal, is this plan shared realtime with Moody's, considering that's a little bit extra time could actually lead towards a higher perseveration on the value of your assets? Could that imply a potential extension of the deadline that you have for the reduction of net debt?

Yes. As you know, we are in dialogue with the rating agency. I think the discussions that we have with them are confidential on both sides. And I think earlier, perhaps, you were on the call or not, I'm not sure, but we had gone through our thought process and what we're trying to do in terms of deleveraging, as well as the importance of a rate -- investment grade credit rating, as well as our thoughts on the asset divestment or disposal program.

Okay, we'll take the next question from Carly Mattson at Goldman Sachs.

In a scenario where Arcelor were to fall to high yield, would the focus on reducing net debt turn more to reducing through organic cash flow rather than asset sales or other measures? And in this case, would this mean that the company could book to refinance the 2013 maturities in public debt markets?

I'm not sure what your question is. Is your question whether we can finance the 2013 maturities?

My question is, would Arcelor -- would the focus on debt reduction slow, if investment grade ratings was longer a question, if the company had already fallen to high-yield? And in this kind of scenario, with credit relatively cheap right now, would it make sense to term out the 2013 maturities?

Okay. So as you know, we lost an investment grade credit rating from S&P in July [ph], but our focus on maintaining an investment grade rating has not changed. And so we would remain focused on deleveraging the balance sheet appropriately, which is our focus today, and we would take actions that we can as a management, which is in the interest of all stakeholders to achieve that priority. But in terms of next year's maturities and where we are, as you may have seen, we have good credibility. Cash in excess of $2 billion, and therefore we should be able to meet those maturities easily. Whether we access the capital markets or not next year, I think at this point in time, it may not be appropriate for me to comment on.

Okay. And then as a follow-up question, have you had conversations with Moody's and Fitch regarding their willingness to potentially extend the time frame over which the company could reachieve the gross debt reduction targets that they've thrown out?

Again, as we had said earlier, the discussions we're having with the rating agencies remain confidential and they do issue their thoughts on a periodic basis, and you're free to review that when they issue it at a [indiscernible].

We'll take the next question from Neil Sampat at Nomura.

I've just got 3 questions. Firstly, could we -- on Baffinland, are we still expecting a feasibility study by the year end? I think that was the original timeline you gave, not sure if that's -- that remains the case. Secondly, Mittal's still -- I mean, you guys are still being mentioned in the press as being involved in a tiff, and Steel America's process. Clearly the shooting priority for the group's on deleveraging. But could you clarify your role in the process? And thirdly, could you give some sense of how negotiations are proceeding for asset sales, in light of the weakened earnings outlook that's emerged in recent months and the implicit increase in balance sheet pressure for the group? Have you, for example, found bidders potentially more aggressive in terms of their negotiations? And the reason I ask is because clearly asset sales are now your preferred method for deleveraging, which is fine, but I guess the price you get for the asset's are also important. So could you give us a sense, and I know it's -- I appreciate it's very difficult, but could you give some sense to how far we are away from levels where other options to reduce net debt are potentially better than asset sales from a longer-term shareholder value perspective?

Okay. Maybe I start with -- I think the Americas. I think we have made comments on that already. I don't think there's much more to add. Regarding Baffinland, maybe Louis has something to say on Tiki [ph] Americas.

I think we -- we're clearly players in the U.S. market, leading players. And I think as anybody that's active in that market, if you have a responsibility to look at an assessment, [indiscernible] but I think, look beyond that. It's probably inappropriate for us to comment.

With respect to Baffinland, yes, we remain on track for what we committed to and completion of feasibility review by the end of the year. But at the same time, a ruling by the responsible minister on the recommendations of the impact continue to impact the board is we've -- it's forthcoming very, very shortly. So as soon as we receive that ruling, then we obviously need to take a look at the requirements underpinning the ruling, and what that means to the project and then we would make a decision on how to go forward. But we remain very committed to the project.

Okay. In terms of asset sales, I think we have demonstrated that as we have sold these various assets, we have created a lot of value for ArcelorMittal. Actually, in most of the asset sales we have recorded book value gains. So we continue to be confident in our plan on continuing our divestment process and achieving the right balance for our stakeholders in terms of finding the right value for those assets [indiscernible].

Okay, we'll take the next question from Alex Hauenstein of MainFirst Bank.

I have a couple of questions. First of all, what you see in terms of order intake in October for Flat steel Europe and Flat steel Americas? Second question, also related to the steel parts, what's your view on European pricing here, and when do you expect some restocking again, at least to some extent, if any? And the next question, on the mining side, do you think the Q4 mining contribution will be significantly higher quarter-on-quarter due to reviving operators and rising volumes? Or will there still be mature negative spillover effects from lower Q3 prices?

Let me -- Alex, let me just touch on the mining side. I think that Q4, certainly the volumes will be higher. So if the volumes are higher, our shipment volumes are higher, then we'd obviously have higher earnings. But right now we, I imagine that the earnings will be, certainly be marginally higher.

The negative price effect will still have some effect or is that more or less directly -- or has that been directly gone through the P&L in Q3 only?

We expect the price to remain flat.

On the order intake issue in the Americas, I think if you're asking primarily about North America, which is probably more relevant to the case, I think, although there were some recent announced price increases, I think they were quite widespread, triggered by increases in the crisis in China. I think as Mr. Mittal described, thereby kind of closing the premium gap, if you will, between North American prices and Chinese prices. I think those are still playing out. We certainly expect those to eventually lead to an increase in order as people try to get ahead of potentially increasing prices, but we're still in a period where there are short lead times available for some of the participants in the marketplace and I think people are still waiting to see just how those prices -- those price increases play out. But so what we -- we're not seeing a big change in the order intake, currently. But I think that, that would be the normal pattern as we see those price increases take effect. Michel Alphonse Léon Wurth: In terms of the European Flat perspective, there's no noticeable change in the order intake, either. I think customers remain in a wait-and-see mode. We have seen the inventories come down in Europe and therefore, if there is a change in sentiment, it could be a rebound and a restocking that would occur. In terms of the price environment as the U.S. price increase was announced in Europe, no price increase has been announced.

Okay, the next question we'll take is from Tim Cahill at Davy, please.

My first question is in relation to the guidance. I just wanted to confirm with the $7 billion number that is essentially related to reported EBITDA, so it's implying the Q4 guidance would be around $1.2 billion, $1.3 billion of EBITDA, something like that. And then my second question is in relation to actual steel prices. Obviously, looking at, specifically the spot price but also here, the steel price in Europe and the U.S. over the last couple of quarters, things have obviously been quite weak. So I was just wondering, given the inventory comments that you've made, what you think the chance of a price increase being announced and implemented in the U.S. or Europe before year end was?

I think some of it, we covered in the earlier question, but I'll get Lou to comment again on SCA. In terms of your first question on -- of EBITDA, it's on a reported basis of $7 billion.

Yes, I think we just commented on the U.S. environment. I think the message was that the recent announcements, which we do expect to take hold, are still quite fresh. And I think it's difficult to determine would there be any reason for another round of price increases still in this quarter. I think the U.S. is a net importing region. So we're ultimately affected by international price levels, so a lot depends on what that gap is between the domestic price levels in the U.S. and what it costs to bring the imports in. So again it's difficult to project at this point.

Okay, we'll take the next question from Rose at Kepler.

It's Rochus Brauneiser from Kepler. Just a few follow-ups. The one is, maybe back on the Asset Optimization Plan, I guess you had guided previously that you are planning to book some $2 billion of charges in the context of this plan, if I've done my math properly, then I guess you have so far booked about $1.1 billion or so. So taking into consideration there is probably some delay in terms of the savings you capture. What can we expect still in terms of these charges? Are they to be booked by the end of the year or is this being deferred considerably into the first half of next year? The second question is regarding your working capital management. What can we expect in term of your accrued steel output? I think there has been a little bit of overproduction due to the market environment. Does it mean, assuming that volumes will be rather flat in Q4 that your accrued output is down and can you elaborate in this context, what is the potential you see from a working capital standpoint on your payables, receivables, which have trended quite nicely in the third quarter?

So, you're right, charges to date are about 1.0 [indiscernible], most of the other charges I -- Florange should be in Q4. And I don't expect another $1 billion, maybe the charges that we have outlined are slightly lower than previously guided to work. But that's where we are on a global basis on that issue. In terms of working capital, you're right, accrued production will be down in Q4 versus Q3, and we should a do marginally better or similar levels in terms of days for APNAR, there's not going to be a significant change. The main difference will be a reduction in inventory for all the reasons discussed earlier, i.e., mining, AACIS, SCA as well as FCE.

Okay. Then maybe a follow-up on the iron ore effects. When I look at the bridge for your EBITDA, it looks to me, on the pricing effects on the mining -- iron ore side, that this has just described half of the average price decline. Is this a fair assumption that you have a similar decline in profitability in the fourth quarter on that side?

I think that the onset that we gave earlier was that you can expect a marginal increase in profitability in the fourth quarter because of increased volume.

So we're not seeing -- and just to supplement what Peter just said, we're not seeing further erosion in prices in Q4 in the mining side. And therefore, the brunt of the price fall is captured in Q3. And Q4, the average pricing is flat versus Q3. There's also some cost saving that has occurred in Q3 and as Peter alluded to earlier, we may have done slightly better in terms of our mix on prices and spot sales to mitigate some of that. So we're not seeing any negative impact off that issue in Q4.

Okay, we'll move to the next question from Charles [indiscernible].

Yes, my question refers to the $72 million that you charged off for the U.S. labor contract. U.S. Steel yesterday gave $35 million, but their cost of the labor contract, at least the upfront payment, yet they have more employees than you have. What's the difference?

So we have a very similar contract to U.S. Steel. So there's no competitive difference between the contract that we have and the contract that U.S. Steel has, from our understanding of the situation. I would also add that, Chuck, as you know, U.S. Steel operates under U.S. GAAP, and we under -- we operate under IFRS. And there's a difference in accounting treatment. Some of the costs in U.S. GAAP can be amortized over the life of the contract. And we have to recognize these costs upfront. In terms of our cost of the signing bonus in Q3, out of the $72 million, signing bonus is $30 million. And I think you said U.S. Steel is $35 million. So I hope that fits exactly to the lower number of employees that we have.

Okay, and second question involves QCM. The trade press has been talking about you offering either a partial of or even more of the property as a sale. How does that tie in with the expiration over the next couple of years of your contracts with Cliffs?

I didn't understand the question, tie up with Cliffs? Could you repeat that? We. . .

Yes. The trade press has you selling either a part or more of QCM. But your contract with Cliffs expires over the next couple of years. Would you not need the additional iron ore to offset the loss of the Cliffs ore?

We, I mean, we are not commenting on this market speculation. I just want to highlight how we operate in North America for a clearer picture of what's going on in terms of macro ore strategy. It seems to be today 15 million tons, we intend to grow it to 24 million tons. A small portion of that is going into Dofasco. The rest of that is actually being exported either to Europe or into the Chinese market, some into Japan as well, maybe a small portion to the Middle East as well. In North America, within North America, we do source ore from Cliffs, and that contract has expired and when the contract expires, we will find an appropriate solution for that. I would not necessarily link the 2 issues.

Okay, we've got time for 2 more questions. So we'll take the first one from Tom at ROT Group [ph].

Back when we visited QCM in June, I believe the guidance was that 90% of the CapEx for the expansion would be committed or spent by the end of the year. Is that still the case? Just trying to get an idea of the CapEx flexibility that you have in 2013?

I think the word committed is probably the most accurate word to use. And we expect the progress certainly won't be at 90% yet, but we are on track to complete that in the first quarter or so of 2013.

And Peter, it's also right to say as you just highlighted, that cash out of will be less than 10% in terms of the project after year end.

Approximately, that.

Yes, committed in cash. But in terms of work, clearly the work will continue on and we expect to complete the ramp up in the first half of 2013.

Okay, so we'll take the final question from Andy Mahinta [ph] .

I just have 2 questions. Can you give us a sense of what cost -- what would have increased in funding costs if you were to go to your banks and renegotiate your covenants, so ask them to relax the covenants? There have been questions before like [indiscernible] wouldn't have done it, and they have talked about, sort of $150 million to $200 million annualized, in particular, some sort of range? Is it that big a number, is it a smaller number? And secondly, you talked about demand as being closer to bottom of the cycle and things improving from a top down perspective in a sense leading indicators are picking up. Just looking at the 2 of your bigger markets, Europe and the U.S., from a bottom up perspective, what are the things you expect to improve over the next 3 to 6-months, like, if we look at all frozen construction, where do you see pockets of strength in the next 3 to 6 months?

Andy [ph] , in terms of the covenant, I think you -- we are at 3.1 right now, I expect to be at the same ratio at year end. Next year, we intend to delever the balance sheet, that's a priority for this group and the management team. And as a result, I do not expect that to be an issue. In terms of in-demand markets, I think, in terms of Europe, the sentiment overall is quite weak. Risks remain in the system and in terms of Eurozone exit, I think the risk of that -- of a country exiting the Eurozone, I think the risks of that have reduced, but the risks remain. At this point in time, we are not forecasting in any particular segment, a dramatic recovery from a bottom up perspective in the short-term. In terms of North America?

I think in North America, clearly, auto has been the, sustained -- that's the story in that market, and I think we see that continuing with the June -- we see it now, we expect that to continue into next year, reflecting some more positive consumer sentiment. I think the energy market, which is an important one for us, particularly for more the line type business in our company's case, than the drilling activity, though both are in play. That can be hot and cold, let's say it, and move up and down quickly in a short time frame, but I think certainly the fundamentals are positive for that and we see that, I think, opening up further for us in 2013, and then I think finally the construction market, which of course was the, one of the causes of the crisis to some degree and has been really quite soft for the last 4 years in North America, at least in the States, Canada's a somewhat different story, I think we do see on the residential side, a really, kind of, the first robust indications, prices coming up, apartments going up, et cetera. I think the architectural index is also over 50 now. I think that's the largest steel market in general, and if we do see -- no one sees that sort of bouncing back robustly next year, but to see that start to climb out of the hole it's been in I think is quite a positive for that matter.

So this concludes our third quarter's conference call, and thank you for participating and looking forward to talk to you next year. Thank you.