Great. Good afternoon and good morning, everybody. This is Daniel Fairclough from the ArcelorMittal Investor Relations team. Thank you very much for joining us today on our conference call to discuss the third quarter 2016 results. In an effort to reduce the length of our call, we have this morning published our results presentation with full speaker notes, as after a brief introduction from Mr. Mittal, we will move straight to the Q&A this quarter. The intention is that the whole call should therefore last about 45 minutes [Operator Instructions] And with that, I will hand over the call to Mr. Mittal.

Thank you, Daniel. Good day to everyone and welcome to ArcelorMittal's third quarter 2016 results call. I am joined on this call today by Aditya Mittal, Group CFO and CEO of Europe as well as Simon Wandke, EVP Mining, Genuino Christino, who is our Head of Finance and Daniel. Before we move to Q&A, I would like to make some brief introductory remarks. As usual I will start by commenting on our health and safety performance. Our lost time injury frequency rate for the first nine months of the year was 0.8 times. Safety remains our number one priority and it was pleasing to be legalized last month by World Steel for our commitment and innovation in pursuit of any injury-free, illness-free and healthy workplace. Turning to results, this was a solid quarter for ArcelorMittal, EBITDA was $1.9 million, a 7% improvement over second quarter and more than 40% improvement compared with the third quarter of 2015. It is worth noting, this is our highest level of quarterly EBITDA since third quarter 2014. Encouragingly we also reported a second consecutive net income of $700 million. Overall our steel-only EBITDA improved by $5.3 billion -- to 5.3% to $1.7 million in the third quarter, primarily driven by a 7.4% improvement in average steel, the link prices offset by an 8.1% decline in shipment. Performance also improved in all mining business with EBITDA 25% higher at $204 million driven by higher seaborne iron ore prices offset in part by lower iron ore marketable shipment volumes. Despite the $600 million investment in operating working capital during the quarter, we had posted free cash flow of $300 million contributing to a further net debt reduction to US$12.2 billion. Net debt is now $4.6 billion lower than one year ago and the lowest level since…

Thank you, Mr. Mittal. [Operator Instructions] And we'll take the first question please from Mike Shillaker of Credit Suisse.

Hi. Thanks a lot. I've got three questions if I may. The first question just a clarification on the guidance because I've had a lot of questions on this, this morning and some confusion, if I look at your implied guidance it's $4.5 billion of cash neutral as per Q1, adding the $1 billion of inventory of net working capital build and then adding around $400 million just the $390 for the redemption payments, which did go into operating free cash. So am I right, is the math right in thinking that your implicit guidance is better than $5.9 billion for the year is question number one. Question number two, if I may just on volumes, I think looked a little bit weak probably then expect to weaken, expected in Q3, there doesn’t seem to be any seasonal rebound going on in Q4 either. So could you talk a little bit about volumes A, around the region because I think Europe was clearly a little bit weaker than seasonality wise in Q3, what is weak in Q4 that's not giving you a seasonal rebound? Is it a fire strike, are you suffering from or you seeing any form of real demand problem or is there any risk that you're just simply losing market share is question number two. And question number three, Mr. Mittal, you talked about steel prices rising to compensate for raw materials and absolutely we have seen this before, can you just talk a little bit more about your vision of the timing of this and would you expect Q4 as a consequence given you're seeing steel prices rising to be the trough quarter in the current -- in the current EBITDA cycle. Thanks a lot.

I think Aditya is going to answer on your guidance and volume and since the steel prices is in everybody's mind, I will take up this question. Thank you Michael first of all and always there has been a lag in the steel price size versus the cost price and this I've seen in many cycles before and that's why I said that I'm confident that steel prices will rise to pass it on to the customers and we have the cost increase. First of all, this coal price rise has been unexpected, pretty surprising and we did not expect this to move so fast. Clearly China undertook this volume capacity cut. There has been two issues, one is there was a flood issue then that we see this that they announced this capacity cut. Very quickly they moved, they reduced the operating base of the coal mines and they have shut down some of the coal mines. Clearly they want to help, they want to reduce the stress of the financial system because these mines have not been making money and this would help to the financial stress as well as they want to create a better environment for the coal mines. And we that there is a lag here and we will see the prices moving forward next quarters, and next months and next weeks, as we have seen it before. Aditya?

Okay. Great, Michael, in terms of your question, our guidance is the cash flow from operating activities will exceed CapEx. Cash flow from operating activities as you rightly point out, includes our working capital investment, which is $1 billion and includes the prepayment cost of retiring debt, which is approximately $400 million. In terms of volumes, so let's talk about Q2 to Q3 and then a bit about Q4, so in terms of Q2 to Q3, I think the biggest drop in volumes is in Europe, where we've had approximately a 13% decline Q3 to Q2. If you look in the past, roughly when we had a proper seasonal impact, that's about 11%. So the drop is just about 2% greater. I attribute this to the fuss outages that we have had and again that's a short-term issue and so production is being restored and things should look better. In terms of Q4, as a result European volumes will be better and I expect there to be a small pickup in volumes in Brazil in the CIS and the only reason why we're suggesting an overall volumes are flat Q4 to Q3 is because of a buyer strike in the United States and as you know when prices fall in the U.S., people get hesitant to buy. If you look at the underlying characteristics of the U.S. marketplace, real demand is good, the steel demand is still good and we're forecasting positive numbers into 2017. As a result that's temporary in nature I don't expect that to continue. So it's not a signal or a sign of anything more significant than that. In terms of market share, look market share is good. We're not losing market share. If you were to look at the European numbers, you may wrongly conclude that. Just to recognize that in Europe, we have reduced level of exports. So our market share in the domestic markets remain the same and domestic shipments are increasing. Also in Europe, we have changed the operating plan. So if you were to compare our European shipments, excluding the changes to the operating dynamic, shipments are actually up year-on-year even nine months, even on a nine-month basis. So what are the operating changes? As you know SASSDA which was producing 700,000 to 800,000 tons is at a level of production which is much lower, approximately 150,000 to 200,000 tons and in the long business, we have idled our wire rod plant, which was a commodity-based facility called Zumárraga. That change in operating footprint is worth about 600,000 to 700,000 tons on a nine-month basis. So just to conclude, market share remains healthy. Q4 is just a buyer's track in the U.S. and overall we're seeing good demand patterns on a global basis.

That's great. And just a quick come back on the met coal situation, what do you think the met coal shortage at the moment is doing for China because it obviously looks like the Chinese is starting to export steel. Do you think there is some degree of constraint going on in the Chinese market at the moment in terms of ability to produce profitably to export? And I think just as a follow-up again to the lag, is it fair to say that given raw materials and our relatively short term contracts that the lag will be a lot less than for example in '05 when steel industry when into destocking, but the iron ore price went up on a trailing 12-month contract, which clearly gave a pretty material squeeze for a significant amount of time, but obviously the pricing of raw materials now has changed and therefore it allows the steel industry to recoup those cost rises a lot quicker. Thanks.

Okay. So in terms of China what we've seen just in last month perhaps because of how much working coal prices have risen, exports have reduced. So clearly that dynamic is unfolding, it would be interesting to watch. We've not seen exports in the last nine months change in spite of the various trade measures that have been put in place in Europe and United States and other countries. What we're seeing is those trade flows moving towards Southeast Asia. Now suddenly in October we saw exports in China decline. In terms of the lag effect, I don't want to draw too many parallels to 2005. Today when we look at our business, roughly half of our businesses is in Europe and in North America is contract based and the rest is spot based and that's how it works in terms of the revenue side. Did you have any other questions on the lag effect or…

No, it's pretty clear, that's great. Thank you.

Thanks Mike. So we'll move on to the next question please from Alain Gabriel at Morgan Stanley.

Yes. Good afternoon, everyone. Just a quick question on the cash needs of the business beyond 2016, are you able to just qualitatively give us some color on what will be the cash needs next year in terms of CapEx, interest payments and on working capital, thank you?

Okay. Great. So the headline is we're expecting marginal changes to the cash requirements of the business. So cash requirements of this year which was announced in February of $4.5 billion that's what we expect for the full-year. So there will be marginal change into next year? We give you a specific target in February once we have completed our internal budgeting and strategic work. In terms of what could change, I expect interest expense to be down but simultaneously we would be investing a bit more in terms of growth opportunities. So CapEx would be slightly higher.

Thank you.

Thanks Alain. We'll move to next question please from Seth at Jefferies.

Good afternoon. Thanks for taking the question. A couple of different questions, first on cooking coal and then separate on the NAFTA business. On the cooking coal front, can you just quickly confirm what your contract structure is by region in terms of annual contracts quarterly or spot sales and also what the scale of inventory backlog is for coking coal and inventory by region? And then separately, in your NAFTA business, I know that you recently announced financial Indiana Harbor, can you just give us a bit more color on the logic behind this restart given the recent weakness in domestic steel prices and since the timeline to hit full capacity, exactly what incremental volume should expect that to bring on over that timeframe? Thank you.

Sure. I will get some color on the regions, but let me begin the global picture on cooking coal. So, we need about 35 million tons of cooking coal a year, out of which we produce about 6 to 7 million tons. We do about 4.5 to 5 in Kazakhstan and the rest in the United States. So that gives you a flavor of where that production is based. Then when you take the number of about 28 million, 29 million tons is about 5 million tons which is covered in the annual U.S. benchmark system. So that leaves you with about 24 million tons of coking coal. Approximately half of that is on spot or monthly spot or a bit more than just half and the rest is on quarterly basis. In addition we buy about 9 million tons of PCI. So, that gives you the complete picture of our coking coal plus PCI requirements. In terms of inventory, on average we have about two and half months of inventory. On a combined basis there will be more inventory in the European environment, less in the CIS regions, but that’s how it plays out. So in terms of your restart of Indiana Harbor, I think look the idea to restart was to produce slabs for Calvert. It was not to increase the amount of steel that we put into the marketplace. And just starting a furnace doesn’t necessarily mean that all of their production comes on to that market because we can also reduce some of the levels of production at some of the other furnaces.

Thank you. Just a follow-up on the Indiana Harbor ramp, could you give us a sense of when you would expect that plant to hit full capacity? I understand that you've just alluded to the back of other plants could be pulled down slightly. And then separately, just to go back to one of the earlier question on Q4 potentially being a bit of a trough in the cycle. Given your comments on coal inventories, would it be fair to think that Q1 actually would see significantly higher impact of the coal price increase relative to Q4? Thank you.

Yes, so we don’t want to -- we're not providing specific guidance on when Indiana Harbor will hit full capacity. It’s safe to say when the market is pulling more volumes I think all the furnaces in our facilities would be running a bit harder. In terms of your cooking coal question, you’re right, Q1 we're going to see more of an impact than in Q4. You have to recognize that the price rise movement is just starting on a global basis. We have seen significant price rises in the last 30 days and in Europe we have signaled and announced a price increase four, five weeks ago, which predominantly covers the Q1 contracting environment.

Great. Thank you very much.

Thanks Seth. So we'll move to next question please from Ioannis at RBC.

Thanks. So we move to the next question please from Ioannis at RBC.

Thank you very much. Just a couple of questions from my side, first on NAFTA, you just suggested that there is some uncertainty around volumes in Q4 but we’re seeing recent price hikes from you and some of your peers and also inventories are relatively lean, so in that environment, I would have expected some more just restocking over the short-term, could you perhaps elaborate on that? And the second question on working capital investment, the additional $500 million you suggested today, could you give a rough split between of how much come from higher steel prices and how much from higher material prices and when you think about raw material pric3es should we really look at the spot prices or let’s say pricing at the beginning of the quarter as an indication? Thank you.

Okay. Great. Thank you. So, in terms of NAFTA, you're right, things are improving in the U.S. marketplace. There have been price increases -- we've announced price increases. We see that the inventory levels are low and this points still return -- this points to return to more normal level of demand and consumption which support shipments. What we're saying is we don't see that necessary in Q4. In Q4 we’re forecasting at this point in time shipments to be lower than Q3 clearly if the market rebounds strongly the next few weeks that may change, but at this point in time we're expecting Q4 shipments in that to be lower than Q3. In terms of inventory, I would say about three forth, two thirds to three fourth of it is cooking coal. So that is sitting in inventory and the remaining is receivables and that's your steel prices impact of the $500 million. In terms of what price levels to think about, I think you're more or less on the right page because our inventory side it was about two and half months. So therefore, prices at the beginning of this quarter is what’s going to reflected in inventory. The only thing I am going to suggest is when you look at the inventory, look at Q4 over Q4 last year right that’s a delta change because actually in Q4 compared to Q3 we'll be releasing some working capital.

That's very helpful. And if I could just ask a follow-up question in terms of mining and the impact from Ukraine in terms of volumes do you expect to see better volumes from Ukraine in 2017 or should we assume a lower operating level going forward? Thank you.

Ioannis, its Simon. Yes, if go back in recent history Ukraine open cuts produced around 10 million tons per annum. This year you saw the reference in the nights today. Obviously all the mines more complex getting access to land in urban areas and it's taken us time to get that land access for the tailing. It's has been achieved in Q2. So it has impacted 2016. And we're expecting full-year production of concentrate around 9 million. So it's about a million tons less than '15 but back in '17 with the new mine plan we fully expect to be back on track around 10 million tons as per history.

Thank you very much.

Thank Ioannis. We move to next question please from Tony at Cowen.

Thanks very much Daniel and hello and thanks for taking my questions. The first one was touched on a little bit but I'd like to pursue on the demand side of the equation China it wasn’t long ago that people seem to be writing off China and now we've got iron ore at $68 and met coal at $300 and your commentary sounded more positive. I was wondering if you could provide more color as to why you think the demand recovery there is more sustainable?

I don’t we’re suggesting that demand recovery in China this is certainly more stable. Clearly it has done better than what we forecasted, slightly better and that's driven by stronger automotive growth as well as infrastructure investment in real estate all of these factors we think infrastructure real estate supported by rising credit. In terms of what’s happening in the global steel industry clearly we are seeing positive demand evolution and in some of the markets in which we operate for example in Brazil we think it was behind us. We’re seeing positive growth in Europe as well as in North America estimate for PMI globally PMIs is about 15 that's always a good sign. And so I think that that is what is underlying our confidence. Secondly normally when raw material prices are rising that’s another indicator that general demand for -- is good which is another positive indicator. In terms of China I think in the last 12 to 18 months we clearly have made a lot of progress. We still have some more folks to be done but we progress what is the progress one, we have established does in the Chinese steel industry cannot survive at a spread which is lower than $130 compared to raw materials which provides a base in terms of steel pricing compared to raw materials. Number two we’ve demonstrated that the Chinese are have been dumping their overcapacity problem on to our markets mainly the Europe, U.S and another market and have put an appropriate trade measures in all of these markets so, what aspects of the journey remain to be done the overcapacity situation in China is unresolved is to be resolved and there is a path that they are on and hopefully that right that the logical conclusion. And the last thing that remains a result is we need comprehensive trade reform we've made progress but we need to make sure that there is no backdoor entry or no loophole and an example of this as mentioned by Vietnam and just as you're aware the DOJ has opened investigation on that which is good news. In Europe we're covering certain products not all products in terms of Chinese flat steel. So we still worked on at the Europe level. So, that just provides an overview of our flavor of China's role in the global steel industry and on the positive demand outlook for the global steel industry.

Sure, very helpful. Thanks for the detail.

Sure.

Thank Tony. We move to the next question please from Jason at Bank of America.

Good afternoon gents, Thanks for the call. Just one question for me which is on the dividends, we have seen some of the groups who have been going through similar process of balance sheet repair start to talk about dividends again and I'm just wondering could you frame for us how you as a management team think about dividends and when they might be appropriate and how you might frame a policy on dividends?

As we have said before that topic of the dividend will be back on the Board's agenda once the net debt EBTIDA multiple is below two and however the Board belongs to look at the sustainability of those earnings and the structural improvement that we have made to free cash flow and also they will review where we are on the credit rating. Though and this will not be tied to our credit rating, but clearly our rating will at some point reflect the progress we’re making on this sector and we think that our near-term priority for surplus cash is for the deleveraging.

Just to push you on this a little bit Mr. Mittal, if I look at EBITDA at the moment, it does look like you're already at that two times threshold. Does that indicate then you've got some concerns on the sustainability of earnings right now?

What we have said that, we’d like to look at the sustainability of the same that now we’re now seeing the volatility in the coal price and we have to push for the price increase as soon as possible. At the same time the Board should review that how -- what is the structural changes which we’re bringing to our business, how sustainable is this, but I do not think that the dividend will be the priority for the Board, more will be the progress on action 2020 and the structural changes.

Okay, thank you very much. Very clear.

Thanks. Next question please from Roger at JPMorgan.

Good afternoon, gents. Thanks for taking my questions. I just want to go back on to the cooking coal, you mentioned this 2.5 month of inventory, is the entirety of the lag that we should assume between the price of cooking coal we see on the screen and that coming and hitting the P&L or is there than a further lag in terms of the time between producing steel and delivering it or is there a lag before you take delivery of it as well between agreeing a price flickering coal and actually taking on to your books. So could you give some more color on what the lag time is on the high cooking coal price right now on hitting your P&L? And then secondly, just could you give us some more color on the dynamics of the annual contracts for cooking coal in the U.S. If you just look at the forward curve for cooking coal, this at the moment compared to what was this time last year probably talking about $120 increase year-on-year I mean as not a good sort of starting point to consider for how much coking coal prices are likely to increase in the U.S and sort if not why not. And now also you mentioned and answer to previous question that you've reduced your level of exports from the EU, could you sort of explain what’s behind that, are you seeing more competition outside the EU and therefore focusing more on the domestic market?

Okay, great. Thank you. In term of your question on coking coal the 2.5 months is a good guide if you're extremely precise you would argue that there is some inventory in build in metal stock and finished goods so, we should just be careful because this effect is not starting in Q4 only some of coking coal prices began a month before or 45 days before so may be front for you bit more precise you can run it up to three months including the full impact and that's more or less everything, yes that's more or less everything. That’s obviously not the case throughout every region right so in ACIS that’s its shorter but they also have more exposure to spot market or fuel prices, prices are correcting or improving in that environment faster. In terms of the annual benchmark in the U.S. The annual benchmarking in the U.S is we don't talk about the price levels in that, that something that we negotiate the some of those minds have limitations and their ability to exports that were not necessarily type the pricing exactly to the export markets. In terms of level of exports for Europe I think that’s, that’s not because the export market is weaker. I think we did talk about some changes in the operating footprint and also production outages that we had in costs so, historically what we have done is we have been pushing our facilities to run full produce at their maximum output excess, we tend to export we still make good contribution margins on those exports and as the domestic market was growing and our demand patterns were improving and we didn’t have that much of metal and so we reduced our exports. That's all it is.

Okay, thanks very much.

Sure.

Thanks. We'll move to the next question please from Alessandro at Berenberg.

Good afternoon. I have three questions. First one related to Brazil that you are basically saying that the worst is behind you. If you can actually quantify in terms of expectation how stronger can be a shipment of public contribution to one average profit that you can see in 2017. The second one is related to an update on Ilva because October theoretically was the first deadline for the governments to take a look at the environmental plan presented by the bidders. Then the third one is for Mr. Mittal, you just highlighted in the beginning of the conference call that you're confident that you're going to be able to align steal rises to increase raw material cost. Usually, of course, raw material cost in terms of positive demand growth is always been the tailwind. Stripping out basically forward probably part of Q1 when the impact would be quite significant to the P&L, do you see these three alignment of steal prices relative to the level of demand and inventory as a potential tailwinds let's say from mid-Q1 or end Q1 throughout 2017. Thank you.

So let me address Brazil first so in terms of Brazil so in terms of Brazil all we're saying is the bottom is reached. We’re not necessarily, we're off to the boom time. So, soon we have been seeing year-on-year declines in Brazil. As you know roughly demand is off 30% since 2013 so that’s very significant drop in the demand of steel. So the bottom has been reached. We see it in the currency. We see it in the local sentiment. We see in the physical reforms that have been enacted and we’re forecasting positive GDP growth and positive consumption growth of steel next year. That's a big change compared to this year where we have negative 12% to 14% apparent steel consumption decline. In terms of - look at this point in time, there is not much more drag. I think where part of the process and the process is going slower than anticipated I think there is a referendum and anything in December and I don't think anything will be decided before the referendum.

Great. Thanks. We'll move to the next question please from Luc Pez.

Sorry. Thank you.

I believe that since there is such a steep price increase in the quality is affecting everyone’s cost and our cost also going up and we see that the strong -- basically the environment is positive in every market segment. We see there is a positive growth in 2017, inventory levels are not high and we see that it could be possible for us to past it on the customer. Aditya just walk through the positive environment in terms of our forecast for 2017 in all the markets, we’re seeing that the positive growth even including Brazil which was minus 12% to 14% negative this year we will in positive territory of 5% to 6%. Russia is also in the negative territory this year we are forecast flat next year. So all these markets we are seeing that the suppose to growth in demand and this is steep increase and already announcements have been made the scrap price is going up. So all these factors put together we see as a tailwind and we should be able to get it from the customer.

Thank you very much Mr. Mittal.

Great. Thank you. So we'll move to the next question please from Bastian at Deutsche Bank.

Yes, good afternoon gentlemen. I've got two questions please. My first question is again on coal. So you quantify your exposure on coal with 30 million tones but that excludes the 30 million tons of coke which converts into additional 40 million tons of coking coal. Can you please give us some additional color on the terms at which you buy the coke and how coal prices will feed through here. Is this pretty much aligned with your contracts so far -- in Europe, was there difference here or even longer-term contracts, which would give you some more caution. And then my second question is on demand, where you have cut -- where you've increased your outlook despite the reasonably weak third quarter shipment number and just flat Q4 volume outlook, which is probably a little bit weaker than the normal seasonality would suggest, when saying this, third quarter shipments, we essentially reference it to the first half of this year when global prices were rolling heavily. And while this would usually give us some restocking and probably stronger volumes in such an environment, volumes in the first half were essentially flat. So the question is our Q3 and Q4 really just temporarily weak, what do you see -- that is actually been the first half of this year which disappointed in a necessary booming price environment as it may have included some restocking in the actual underlying volume basis is much lower than what we thought it would be.

Okay, great so let me just quickly address your first question and then we move on to volumes and what that means in terms of coke we are not net short as grew globally so in some market we are buying coke. In Europe, coke so really the way to think about it is to just look at the coking coal in and 35 million number that I gave you I think accurately captures the impact on the group on a global basis. In terms of volumes look, we are not suggesting that there has been a change in the demand pattern inventory levels if you look at it from the U.S. especially the volumes has been weaker or low so just to quickly go through the point and then talk little bit about next year. The third quarter was weaker in Europe as we shipped out unless exports on production issues European volumes are up in Q4 so, our Brazilian volumes so our volumes in the CIS business. The only impact we’re facing in Q4, what is the buyers track in the U.S which has led to a temporary weakness or temporary destock of orders in the U.S. We expect that to correct, if you just look at it this year. If you analyze the first half we did about 3 million tons more in the first half of this I would expect that phenomena to also occur in the first half of 2017 or perhaps even greater amount. That significant volume will talk, that’s a positive tailwind to Q1, Q2 results where you would see how shipment levels of 1 or 2 million tons more volume per quarter which is quite significant, we are we have a $200 contribution or extract ton we ship out if were to track on the same way we track this year that 3 million tons more volume in the first half of next year's that $16 million of EBITDA just in the first half of next year. So, yes as far as we see this is a very clear to be temporary destock occurring in the U.S. The real demand picture is very constructive on a global basis.

Thank you. Just to follow up briefly on the point on coal. So essentially you say the 30 million tons of coke which you require, this is essentially what you also sell externally. So you really -- your net exposure to coal is really just flat to coke sorry.

So Coke I'm not given you a number on coke production roughly it’s million, what we do on coking coal right, the coking coal just enough confuse on the coal we need about 35 million tons of coking coal which we have less 6 to 7 million tons of our own and overall global coke consumption.

So basically the coal which you've giving us that's already what you'd be using in your coke making process?

Yes, exactly

Understood, okay. Thanks.

Thanks. So we will move to next question please from Carsten at UBS.

Thank you very much. Most of my questions have been answered. Just one, just for the understanding maybe you can help me to reconcile the third quarter results because I'm still struggling a little bit, shipments were down only 1%, production 1% to 2% therefore significantly up, but we still have only three in quarter-over-quarter, a small increase in EBITDA. What cost position actually left to the increase in your cost here because it can't be a coking coal, because you mentioned the 2.5 months of inventories?

So as I was saying this is the Calvert effect. So if you look at Calvert in the second -- the Calvert slab come in on a lag effect. So we have a higher cost slabs in the third quarter, so that should help reconcile your numbers. And then when you move into the fourth quarter we also have same cost of slabs and prices were falling in Calvert.

Okay. That helps. Thank you.

Thanks, Carsten. We will move to next question please from Rochus at Kepler.

Yes, thanks for taking the question. Just one follow-up on costs and questions on the NAFTA region. When I look at this part effect is that purely the higher cost you mentioned for the slab so let say maybe on a four months lag it's about $100 and then multiply the volumes. Do I need to consider also that the incoming slabs now, not probably being squeezed in still lower market price or is there any inventory write-down included in your third quarter result. That's first question. The second one, can you comment a little bit, why the long product side and NAFTA was so weak in the third quarters 40% down quarter-on-quarter, any color you can provide on that? Then the other question is on your net debt guidance. I guess you have come close to what you wanted to achieve by the end of the year, looking at your working capital guidance the kind of $600 million-ish negative inventory built will widely revert in the fourth quarter, so you should be able to generate minimum the same free cash flow in Q4 as you did in Q3, any color on that is also appreciated? And can you also give us a sense how did ACIS volumes were impacted by all these effects from reline in Saldhana, the issues in Vanderbijl and the other problems in the Ukraine that would be helpful.

Okay. We have to come back to your third question because I was not clear what's your question was maybe Daniel is.

It was the effect from the reline operational issues, production outages in South Africa and Ukraine how much impacted the volumes?

Okay, fine. In terms NRVs, we did not have NRVs and the U.S. business in the third quarter. So the way to think about it is exactly what you mentioned, you take the slab price and then you multiply the slab tons and you multiple the price don’t change and that's the cost -- that's not all the cost increase, but that's a significant cost increase that we have in the third quarter, because we did have some inventory. In terms of longs products in the U.S. we had weaker shipments out of Mexico and you should just be careful that you have adjusted for scope changes. In terms of South Africa I think there was a loss of about 67,000 tons -- primarily 67,000 tons was mostly the reline in Saldhana and total loss of 110,000. And in Ukraine it's also similar number, but both those facilities are doing better in Q4.

Net debt?

What was a question on net debt maybe that question I missed.

I was looking to get a bit of an update on your net debt guidance, I think you've got close to where you wanted to be in terms of net debt by the end of the year already in the third quarter. And looking at your working capital guidance for the whole year, so you'll have a positive release from working capital in the fourth quarter and you should be in a position as a higher free cash flow in Q4 than you had in Q3. Can you give us a bit of sense or how much further down you expect the debt by the end of the year?

I think that we'll be -- look we are not providing net debt guidance. So I think we've provided a lot of information which allows you to create your own framework on what that number is. I think the missing plug is really EBITDA and the provided what the factors are, which are going to impact the EBITDA into Q4. We've talked extensively about cash requirements in the business, so that actually quite clear to you.

Okay, no problem. Maybe a follow-up on Liberia, I think production operators running at that 2 million ton run rate now. I guess previously you the business down to more of a 3 million ton operation, any update what was driving that kind of lower level of output?

There are some if you'd -- the notes we've issued today we've actually taken the production down to 2 million tons, the key driver is that we're working on the final feasibility engineering work for potential expansion to a Brownsville, Yuelliton Gangra which is about 14 kilometers away from Tokadeh. It's a DSO. It's a high grade in the Tokadeh deposits. It's a lowest strip ratio. It will be very competitive, but it is in the final stages of engineering and that would not be potentially ready to come on stream until mid '17. So at this point the issues around making sure that we extend the life of the Tokadeh deposit to take us through to that inflection point. So 2 million tons is current run rate and we would expect to see we're going well and approval of the project it that goes ahead you'll see higher production from Liberia in 2017 calendar year.

Okay. Very clear. Understood.

Thanks, Rochus. We will move to next question from Luc at Exane.

Hi gentlemen. Couple of question if I may. First of all with regards to the coking coal question, maybe follow-up, if I understood right, you have the part of your contracts which are labeled on the spot monthly basis. I understood this was something bit -- could you maybe elaborate on that one? Secondly, with regard to the 2020 cost savings initiative, could you help us maybe work out which has been captured already? And last on the CapEx side, could you maybe elaborate bit on your automotive strategy, high strength steel and how much CapEx should we run going forward for the steel division growth wise, quality wise? Thank you.

In terms of coking coal, I know there has been lot of discussion on coking coal, but I wouldn’t get too nervous about it. I think the 50,50 that I spoke about also mirrors the order book that we have and that is why -- that is how we contract. It's slightly more than 50,50 as I mentioned earlier. So just to repeat net of U.S. net of our own coking coal take approximately 24 million tons of coking coal that we buy are roughly more than half is spot monthly and that's roughly how much of the steel we sell on spot monthly basis. So it's designed that way, so there is no squeeze either way. So the same way that there are some revenue lags in our business in our business, there are cost lags in coking coal. So over a period of time all that should neutralize. And as we mentioned earlier we are very focused on passing on the cost increase in terms of prices on a global basis. In terms of 23 action plan program I think we are seeing excellent progress. I can give you a lot of headlines on that, but I'll trying to be assessing which has possible. In terms of the U.S. AOP that's ongoing. We've taken down the hot strip mill. And the first half of next year will take down another steel shop. Calvert is progressing well. Output is greater this year than last year. We are making very good progress in getting auto into the order book at Calvert. So NAFTA is doing great. In terms of Brazil we talked about how the bottom has been reached, which is good news. We can now accelerate what we’re doing in terms of the value plan that we had Brazil…

Thank you.

Great. Thanks Luc. So we'll take the next question please from Charles at Bradford Research.

Good morning, good afternoon. With your iron ore contract in North America, I believe there is an adjustment clause that indexes the price somewhat to the price of hot-rolled coils, which have fully come down from over $600 or short on to under $500. What is the -- first of all, is that clause in your contracts -- what size of that is -- is it relative to the total impact on pricing and what is the time lag of the calculation.

Yes, hi that's a great question. The clause agreement is confidential so, I cannot get into any details, but this is an annual contract environment that’s the only thing I can say.

Okay, can you also say that there aren't any -- plant operating in the U.S. I thought you had two operating, are they still.

I'd believe in Burns Harbor we still have centre plant operations, but we will verify that and come back to you.

Thank you.

Thanks Charles. We move to the next question from Christian at Soc Gen.

Thank you. Mittal I've just a question to be quick, one is in Brazil, I think you have some charcoal and you get some eucalyptus left, I mean is that somewhat reducing your coking coal pricing pressure there. And the second one is on your EBITDA breakdown, this seem to be a growing amount of negative internal amount especially in this quarter, could you just explain why this amount is increasing in recent quarters?

So it's a good question charcoal eucalyptus, yes that's right, that exists in our Brazilian operations. It’s not as significant as you may think. So, it comes out rounding areas at the end of the day. It's about 260,000 tons but does provide a cost benefit to I presume operations mainly the Juiz de Fora facility. In terms of your other question on other this is because of rising our renewal costs so, as iron ore costs rise the EBITDA that we generate in the mining business is sitting in the inventory of our steel facilities that we have to net that off. And that's why you have the other impact which is greater in Q3 than other quarters.

Okay. Thank you very much.

Sure.

Last question. So we'll move to last couple of questions, first from Brett Levy at Loop Capital.

Hey guys. We've seen a good run up in both iron ore and in met coal prices. You guys are backward integrated enough to know when capacity is coming on, there's been a lot of capacity that came off this prices were heading down just give a rough sense of heard some news about capacity coming back on again, but do you think things get back to an equilibrium in iron ore or met coal at lower pricing levels anytime soon.

Brett, I think if you’re talking sea borne, at the movement we've seen a surge in additional demand in China and you could argue that somewhat offset by declining production domestically in China so there is all units were in demand. I think at the other side of it was seeing enlightened capacity mankind by number produces in the industry. Greenfields a pretty well all gone that were promised Ralph expansions a quite minimal and there is only a couple of a new players sort to speak due in the industry in any small tons, it's in the 30 or 40 million tons as you see into calendar '17 so, we don’t see a dramatic change in that supply balance and lot of this rest back on the early conversation around the health of the of the Chinese steel industry and the spreads.

All right. So you don't see a lot of restarted -- that's been coming on in iron ore or met coal in the near term.

No, if you believe in the capital cost per ton that needs to be put into Greenfield project. So, I think you're more likely to see people look at Brownfield but if you step back and if you're a person midpoint on the cost curve and you'll realistic with your view of the world, you look at who owns the light and capacity on the cost curve. It's first quartile players. So it's bright persons is going to enter significant capital entry into -- green. And similarly for Brown and so I think what you're seeing is more challenges coming from capacity utilization, productivity improvements, the small Brown Fields, we're not seeing the brave decisions that were discussed about in the last seven to 10 years.

The last one is manganese. I hear its running up a lot, what's going on there, what's going on in Africa. Is there any way of kind of keeping a cap on these places, it's obviously outlying agent that most people use and just wondering about what you're seeing in supply and demand in manganese.

Again it's not a commodity we're directly in, we are an alloy consumer company but the index price has moved up heavily, so obviously connected with other raw material influence and help us deal on the consumption end for the alloy plants. The supply is still on the heavy side i.e. there is lot of latent capacity in the sector and we're certainly seeing a fly up for rise in driven by the market dynamics. So I think if you went and looked at the supply demand numbers right now, you would find excess latent excess capacity which is not currently turned on in the industry.

Thanks very much guys.

Thanks. Last question please from Phil at KeyBanc.

Thanks very much for taking my questions. Aditya can you update us on where we are in the automotive contract discussions for at this point?

As we don’t comment specifically on pricing attributes on automotives, clearly the demand picture is favorable. We have seen good growth in the automotive environment in 2016 and are forecasting in that stable environment. Europe has been marginally stronger in 2016 and we expect to see even in 2017. Our focus with our automotive clients has been to push our advanced high strength steel. They have higher margins and we're expecting the penetration of higher themes to grow as the years past.

I appreciate. And a follow-up here would be on the Mexican automotive market and how you're currently participating in that market and how you plan on participating over the next couple years?

So that's a good question. At this point in time our participation in Mexico is primary through Calvert. So we have the advantage of bringing in slabs from Mexico, processing them at Calvert and then shipping it back into Mexico. The advantage of is under a system called [Makila] where we don't have to be a Mexican Judies. Clearly Calvert's capabilities are second to none and that helps us improve our presence in the automotive universe in Mexico.

Thanks very much.

So this concludes our earnings call today and thank you very much for participating and look forward to be talking to you soon next quarter. Thank you. Have a good day.