(a) Own iron ore and coal production not including strategic long-term contracts
(b) Iron ore and coal shipments of market-priced based materials include the Company’s own mines, and share of production at other mines, and exclude supplies under strategic long-term contracts
Own iron ore production (not including supplies under strategic long-term contracts) decreased 12.6% to 13.2 million tonnes for 1Q 2012, as compared to 15.1 million tonnes for 4Q 2011, primarily due to lower production from Canada and Serra Azul due to seasonal factors. Own iron ore production (not including supplies under strategic long-term contracts) increased 12.1% to 13.2 million tonnes for 1Q 2012, as compared to 11.8 million tonnes for 1Q 2011, primarily due to higher production from Liberia.
Own coal production (not including supplies under strategic long-term contracts) for 1Q 2012 decreased by 4.9%, to 2.1 million tonnes as compared to 2.2 million tonnes for 4Q 2011. Own coal production (not including supplies under strategic long-term contracts) for 1Q 2012 increased by 9.5% to 2.1 million tonnes as compared to 1.9 million tonnes for 1Q 2011.
EBITDA attributable to the Mining segment for 1Q 2012 was $478 million, 38.6% lower as compared to $779 million for 4Q 2011, primarily due to lower marketable shipments and lower average selling prices following the change to the seaborne benchmark pricing system impacting a substantial portion of marketable volumes. EBITDA attributable to the Mining segment was $607 million for 1Q 2011.
Liquidity and Capital Resources
For 1Q 2012, net cash provided by operating activities was $0.5 billion, compared to net cash provided by operating activities of $2.9 billion for 4Q 2011. Cash flow from operating activities for 1Q 2012 included a $0.3 billion investment in operating working capital (due to seasonal pickup ahead of a seasonally strong second quarter) as compared to a release of operating working capital of $1.8 billion in 4Q 2011. Rotation days increased to 69 days during 1Q 2012 from 67 days in 4Q 2011.
Net cash used in investing activities for 1Q 2012 was $1.0 billion, as compared to $0.5 billion for 4Q 2011. Capital expenditures decreased to $1.2 billion for 1Q 2012 as compared to $1.5 billion for 4Q 2011. The Company is focusing only on core growth capex in its mining business given attractive return profiles of projects under construction. Some planned steel investments remain suspended.
Other investing activities in 1Q 2012 of $285 million include an inflow of $264 million from the partial sale of Erdemir. Taking into account acquisition cost net of dividends received, the disposal of the 6.25% stake in Erdemir was cash positive. Other investing activities in 4Q 2011 of $941 million include an inflow of $796 million from the sale of the Company’s stake in MacArthur Coal and $129 million relating to the sale of the Company’s 12% stake in Baosteel-NSC/Arcelor (BNA) Automotive Co.
Net cash provided by financing activities for 1Q 2012 was $1.4 billion, as compared to cash used by financing activities of $1.2 billion for 4Q 2011. During 1Q 2012, the Company issued €500 million 4.500% Notes due 2018 under its €3 billion wholesale Euro Medium Term Notes Programme as well as three series of US dollar denominated notes, consisting of $ 500 million 3.750% Notes due 2015, $1.4 billion 4.500% Notes due 2017 and $1.1 billion 6.250% Notes due 2022. The proceeds from these issuances were used to refinance existing indebtedness including a repayment of the Company’s syndicated credit facility. Furthermore, as part of a cash tender offer, the Company accepted for purchase $298,608,000 principal amount of its 5.375% Notes due 2013 for a total aggregate purchase price (including accrued interest) of $ 313,823,079; the remaining outstanding principal amount of such Notes is $1,201,392,000. During 4Q 2011, the Company repaid loans for a net amount of $816 million primarily related to commercial paper and bank loans.
Additionally, during 1Q 2012, the Company paid dividends amounting to $294 million as compared to $289 million in 4Q 2011.
At March 31, 2012, the Company’s cash and cash equivalents (including restricted cash and short-term investments) amounted to $4.9 billion as compared to $3.9 billion at December 31, 2011. As of March 31, 2012, net debt increased by $1.1 billion to $23.6 billion, as compared with $22.5 billion at December 31, 2011, driven by decreased cash flow from operations, foreign exchange losses (effect of USD depreciation on euro denominated debt) and dividends paid, offset in part by inflow from the partial Erdemir divestment. The Company will continue to seek to reduce net debt through its focus on working capital management and non-core asset disposals.
The Company had liquidity of $15.2 billion at March 31, 2012, an increase of $2.8 billion as compared with liquidity of $12.5 billion at December 31, 2011, consisting of cash and cash equivalents (including restricted cash and short-term investments) of $4.9 billion and $10.3 billion of available credit lines. Also our average debt maturity has extended to 6.4 years as at March 31, 2012.
Update on management gains program and asset optimization plan
At the end of 1Q 2012, the Company’s annualized sustainable management gains increased to $4.2 billion as compared to $4.0 billion at 4Q 2011. The Company maintains its target to reach management gains of $4.8 billion from sustainable SG&A, fixed and variable cost reductions and continuous improvement by the end of 2012.
Progress has been made on the Asset Optimization Plan launched in September 2011 to generate an annualized $1 billion sustainable EBITDA improvement by the end of 2012: