Company: MT
Filing Date: 2025-03-10
Form Type: 20-F
Source: 0001243429-25-000017
Chunk: 407

Company: ArcelorMittal
Filing Date: 2025-03-10
Form: 20-F
Chunk 407
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 for the transition to decarbonized

steel and required investments are considered in the Company's

future cash flow projections. ArcelorMittal acknowledges that

CGUs and GCGUs applying the BF-BOF route in other

jurisdictions than the EU and Canada will apply decarbonization

at a different pace. They may also not yet be subject to a legal

obligation of carbon neutrality, as a result of which the future

estimated decarbonization cost for such operations is reflected

through an additional risk premium embedded in discount rates

until they are able to accelerate their decarbonization strategy to

meet the 2050 carbon neutrality objective and a legal obligation

arises in the relevant jurisdiction.

ArcelorMittal's most substantial climate-related policy risk is the

EU Emissions Trading scheme ("'ETS"), which applies to all its

European plants. The risk concerns the Company's primary

steelmaking plants which are exposed to this regulation. On

April 25, 2023, the EU adopted a revision of the ETS Directive

243

| Consolidated financial statements                          |
| (millions of U.S. dollar, except share and per share data) |

including a regulation establishing a carbon border adjustment mechanism (“CBAM”) which entered into force on May 17, 2023. The ETS and CBAM regulations will impact the carbon emissions allowances from the second trading period of Phase IV (2026-2030) onwards as they will be gradually phased out ( 2.5% by 2026, 5% by 2027, 10% by 2028, 22.5% by 2029, 48.5% by 2030, 61% by 2031, 73.5% by 2032, 86% by 2033 and 100% by 2034). The Company’s assumptions for future cash flows include an estimate for costs that the Company expects to incur to acquire emission allowances, which primarily impacts the flat steel operations in the EU under the ETS scheme and in Canada. The assumption for carbon emission cost is based on historical experience, implementation of decarbonization strategies to mitigate or otherwise offset such future costs and information available of future regulatory or operational changes. With respect to the EU ETS scheme, the assumption for carbon emission cost includes also the gradual phasing out of free emission allowances and the forecast market price of emission rights, for which the Company considered in its five -year