(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) in 1Q 2015 decreased by 7.0% to 15.6 million metric tonnes as compared to 4Q 2014. This reflects seasonally weaker performance in Canada and Brazil offset in part by improved production in Liberia.
Own iron ore production (not including supplies under strategic long-term contracts) was 5.0% higher than 1Q 2014, primarily due to higher production at Mines Canada due to “efficiency gains” and improvement at Liberia offset in part by lower production in Ukraine and Brazil.
Market price iron ore shipments in 1Q 2015 decreased by 5.7% to 9.4 million metric tonnes as compared to 4Q 2014, primarily driven by seasonally lower shipments Mines Canada driven by weather related issues.
Market price iron ore shipments in 1Q 2015 were stable as compared to 1Q 2014 primarily due to lower shipments in Mexico and Ukraine offset by increased shipments in Mines Canada following operational efficiency gains.
Own coal production (not including supplies under strategic long-term contracts) in 1Q 2015 decreased 8.0% to 1.6 million metric tonnes as compared to 4Q 2014, primarily due to seasonally lower production at our US operations impacted by adverse weather.
Own coal production (not including supplies under strategic long-term contracts) in 1Q 2015 decreased 12.1% as compared to 1Q 2014, primarily due lower production at our US operations and scope change following the disposal of the Kuzbass coal mines in Russia during the fourth quarter of 2014.
EBITDA in 1Q 2015 decreased to $114 million as compared to $232 million in 4Q 2014. EBITDA for 4Q 2014 was positively impacted by a $79 million gain on the disposal of Kuzbass coal mines. Therefore on an underlying basis, 1Q 2015 EBITDA decreased by 25.8% primarily due to lower seaborne iron ore market prices (-16%) and lower market price shipment volumes, offset in part by improved cost performance.
EBITDA in 1Q 2015 was 73.8% lower as compared to 1Q 2014, primarily due to lower seaborne iron ore market prices (-48%), partially offset by lower unit production costs, the benefits of lower freight, foreign exchange and restructuring of our coal operations including the sale of Kuzbass.
Operating performance for 4Q 2014 was impacted by a $63 million impairment charge related to costs associated with the write-down of the Volcan iron ore mine in Mexico.
Liquidity and Capital Resources
For 1Q 2015, net cash used in operating activities was $915 million, as compared to net cash provided by operating activities of $2,292 million in 4Q 2014. Cash used in operating activities in 1Q 2015 included a $1,206 million investment of operating working capital as compared to a $994 million release of operating working capital in 4Q 2014. Despite the cash investment in working capital, due to foreign exchange movements, the amount reflected in the balance sheet remains largely unchanged. Rotation days during 1Q 2015 increased to 54 days as compared to 51 days in 4Q 2014.
Net cash provided by other operating activities in 1Q 2015 was $119 million (including several items such as, onerous contact provision, unrealised forex, employee benefits and VAT). This compares to net cash provided by other operating activities in 4Q 2014 of $889 million (including the adjustment of non-cash items related to unrealized forex losses, income tax accruals, impairment on China Oriental partially offset by adjustments of gains from disposal of Gallatin and Kuzbass). Net cash used by other operating activities in 1Q 2014 was $393 million (including adjustment of non-cash items such as income from associates and forex and changes in other payables, such as employee benefits, payment of provisions and VAT).
Net cash used in investing activities during 1Q 2015 was $456 million as compared to net cash used in investing activities during 4Q 2014 of $492 million. Capital expenditure decreased significantly to $745 million in 1Q 2015 as compared to $1,067 million in 4Q 2014. Due to the benefits of foreign exchange as well as the postponement of some investment projects, the Company has reduced the FY 2015 capital expenditure budget to approximately $3.0 billion.
Cash flow from other investing activities in 1Q 2015 of $289 million primarily included a $108 million inflow from the exercise of the fourth put option on Hunan Valin shares[5], cash received from the Kiswire divestment[6] and proceeds from the sale of tangible assets. Cash flow from other investing activities in 4Q 2014 of $575 million primarily included the cash inflow from the divesture of Gallatin for $389 million, a $108 million inflow from the exercise of the third put option on Hunan Valin shares[5] and proceeds from the sale of tangible assets. Other investing activities in 1Q 2014 of $215 million primarily includes $258 million associated with the AM/NS Calvert acquisition[7] offset in part by proceeds from the exercise of the second put option in Hunan Valin.
Net cash provided by financing activities for 1Q 2015 was $313 million as compared to net cash used in financing activities of $1,926 million for 4Q 2014. Net cash provided by financing activities for 1Q 2015 includes inflow related to issuance of $877 million (€750 million) 3.125% Notes due January 14, 2022, under the Company’s Euro Medium Term Notes Programme, $339 million of short term financing and proceeds from a 4-year €75 million term loan, offset in part by a repayment of a $1.0 billion loan.
Net cash used in financing activities for 4Q 2014 primarily included debt prepayment totalling $1.25 billion - 9.0% Notes due February 15, 2015 ($750 million) and 3.750% Notes due February 25, 2015 ($500 million) prior to their scheduled maturity and €360 million bond repayment.
Net cash provided by financing activities for 1Q 2014 was $557 million and includes inflow of $1.3 billion relating to the proceeds from the issuance of a €750 million 3.0% Notes due 25 March 2019, under the Company’s Euro Medium Term Notes Programme and proceeds from new 3-year $300 million financing provided by EDC (Export Development Canada), offset in part by the early redemption of perpetual securities of $657 million.
During 1Q 2015, the Company paid $53 million in dividends primarily to minority shareholders in Arcelormittal Mines Canada , as compared to $15 million dividends paid to minority shareholders in 4Q 2014. During 1Q 2014, the Company paid $57 million in dividends to minority shareholders including those in ArcelorMittal Mines Canada and payments to perpetual securities holders.
At March 31, 2015, the Company’s cash and cash equivalents (including restricted cash and short-term investments) amounted to $2.8 billion as compared to $4.0 billion at December 31, 2014.
Gross debt of $19.4 billion at March 31, 2015, decreased from $19.9 billion at December 31, 2014 and $23.6 billion at March 31, 2014. Gross debt was lower at March 31, 2015 following the net repayment of loans and positive impact of foreign exchange rate effects.
As of March 31, 2015, net debt was $16.6 billion as compared with $15.8 billion at December 31, 2014[8], primarily driven by the investment of operating working capital of $1.2 billion, partially offset by asset disposal proceeds ($0.3 billion)[9] and forex effects ($0.6 billion).
The Company had liquidity of $8.8 billion at March 31, 2015, consisting of cash and cash equivalents (including restricted cash and short-term investments) of $2.8 billion and $6.0 billion of available credit lines. On March 31, 2015, the average debt maturity was 6.4 years.