Good afternoon, everyone. This is Daniel Fairclough from the Arsenal Mittal Investor Relations team. Thank you for joining this call today to discuss our performance and progress in the second quarter and first half of 2026. Leading today's call will be our group CFO, Mr. Germino Cristino. Before we begin, I would like to mention a few housekeeping items. As usual, we will not be going through the results presentation, which was published this morning on our website. However, I do want to draw your attention to the disclaimers on slide 21 of that presentation. And following opening remarks from Jermino, we will be moving directly to the Q&A session. If you'd like to ask a question, please do press star 11 on your keypad to join the key. And with that, I'll hand over the call to Jermino.
Thanks, Daniel. Welcome, everyone, and thanks for joining today's call. As usual, I will keep my remarks brief. Let me start with safety, which remains our highest priority. As a little safety transformation continues to deliver measurable progress. The frequent rate of lost time injuries in the first six months of the year we presented was a record low for our company. While we are encouraged by these improvements, we remain firmly focused on driving further progress. Starting now to the business, I would like to focus on three key points. First, we have seen positive near-term momentum across the business. The operating environment has improved through the first half of the year, driving improved results. and with positive momentum across all segments, there is more improved to come. EBITDA for the second quarter improved to $2.1 billion. This represents a margin of $155 per tonne, which is well above our previous two-day cycle averages. Our European segment delivered EBITDA per tonne of $98, which is a three-year hike, and demonstrates the early signs of the improved policy backdrop. Importantly, these results do not yet reflect the benefits of the new TRQ trade tool, which are becoming increasingly evident. Customer engagement is higher, our order book is getting stronger, and prices are blocking the normal seasonal trends. Reflecting these positive dynamics, we have announced production restarts in Spain, Poland, and more recently, France. As we head into August, we have our full suite of glass bonuses in operation. And as a result, we are guiding to third quarter shipments to be stable to higher than the second quarter, which would represent a powerful counter-seasonal outcome. Underlying free cash flow in the first half was strong, annualizing at $2.5 billion, excluding seasonal working capital investments and strategic growth contracts. This is a strong outcome at the stage of the cycle and provides the foundation for continued investments and returns of capital through charodes. This brings me to my second point, our differentiated portfolio of the strategic growth projects and the opportunities that we are developing into growth options. The medium and long-term outlook for our business is supported by a number of powerful megatrends. This year remains a critical enabler of electrification, renewable energy, and data center infrastructure. At the same time, growing investment in infrastructure and defense is supporting steel demand across many of our markets. India is expected to remain one of the fastest-growing major steel markets in the world, with demand expected to approximately double over the next decade. Atolomital has the products, people, capabilities, and geographical footprint to capture the opportunities these long-term trends create. For several years now, we have been consistently funding our strategic growth projects. These high-return projects are expected to contribute new incremental EBITDA of $1.8 billion from 2026 onwards, words, providing a clear pathway to structurally higher earnings and returns through the cycle. What differentiates the telemethod is not only the quality of our growth opportunities, but also the breadth of future options available to us. We have unique exposure to India where we have a long-term plan to grow capacity to 40 million tons per annum. In Brazil, we are evaluating downstream growth opportunities that leverage our low-cost asset base and long-slap position to create higher-value products. In the U.S., we are advancing studies for potential second EAS at Calvert, building on the successful execution of the first EAS. In Liberia, our extensive resource base and established infrastructure provides further a capital-efficient growth optionality. As with our capital allocation decisions, growth investments must compete for capital and ensure that we are on course to deliver increasing returns on capital employed. My final point is that we have all the elements in place to continue creating shareholders value. The steel industry continues to evolve, markets are becoming increasingly regionalized, supported by trade measures that promote domestic production. This align strongly with ArcelorMittal's business model of local production to serve local demands. We believe this regionalization trend should support higher sustainable profitability and returns across the cycle. At the same time, supportive policy momentum, the earnings contribution from our strategic growth projects, the future growth options that we are developing, and our exposure to powerful long-term demand trends are key drivers of high earnings returns on capital and free cash flow over time. Achieving our cost of capital is not a goal, but a minimum expectation for our business. We are allocating capital to projects that can generate returns well in excess of our process capital. The value we create for shareholders is then amplified via our consistent capital return policy, progressively growing the base dividend as earnings power of the business grows and consistent share buybacks. As I conclude, the message is simple. I would like everyone to take away three key points from today's call. First, we are seeing positive momentum across the business. Our results are improving, market conditions are strengthening, and the benefits of the recent policy change support the outlook. Second, we have a differentiated portfolio of strategic growth opportunities, together with future growth options that provide a clear pathway to structurally high earnings and returns through the cycle. Third, we clearly have the right elements in place to create a long-term shareholder value. We are focused on improving returns on capital, value-creating organic growth, maintaining a strong investment-grade balance sheet, and delivering strong shareholder returns. With that, Geno, I believe we can go to our Q&A.
Great. Thank you, Germino. So we have a queue of questions in front of us, and the first one we will take from Alain at Morgan Stanley.
Hi, Alain. Thank you for taking my question. Hi, Genoino. A couple of questions from my side. First, on Europe, can you talk a bit more about your outlook for that division? You've announced the restart of Foster Mayor. Your order books appear to inflect. how should we expect your pricing dynamic to evolve into Q3 and Q4 after taking into account the lags, and should we expect any incremental ramp-up costs that can hold your margins back for Europe? That's my first question. Thanks.
Yeah, thank you, Alain. First of all, I think what we are seeing in Europe is it's all very positive, right? If you look at our guidance for quarter three in terms of shipments being higher or flat or slightly higher than the second quarter, as you know, that's not the usual trend. that speaks for what we are seeing in terms of the audiobook we are booking right now already for four to four so it's all playing out very very well I would say and that's the reason why we have brought back the finances so we have three finances that are running we will be running actually all of our 116 in Europe from quarter three onwards we are also seeing which is also not what you would typically expect just before the summer breaks in Europe right so typically at this point of the year you would see prices kind of drifting a little bit lower and that's not what you see right of course I'm not going to comment comment on evolution of prices from here but looking at the The indexes right now, they are moving in the right direction, right? So that's very good to see. Imports should be lower as a result of TRQ. I would expect the company to continue to now regain market share from imports, as we talked before. And when we talk about, when we think about the margins of the production that we're going to be bringing back, I think the message is the same, Olander, as we talked about before. As you know, I mean, as we bring back this capacity, we benefit from the fixed cost absorption, right, because we don't really expect to be adding much in terms of fixed cost as we bring back the capacity. But at the same time, you're going to have more carbon costs, right? So you need to balance that. But overall, our expectation is that this fund should be even more profitable than what we have today.
That's very clear. And the second question is around Section 232, which isn't too far. So firstly, the U.S. may roll out an on-shoring investment plan for aluminium where companies become eligible to import aluminium at a reduced tariff if they are building new capacity in the U.S. Are you having similar conversations with policymakers in the U.S. to improve the economics of the potential second EAS at Calvaryts, that's one. And then sticking with Section 232, there are talks about Mexico potentially adopting a Section 232 style tariff framework as part of a revamped USMCA. Essentially, this would push Section 232 to the Mexican border. How would the setup impact your Mexican business if it were to happen?
Video, do you want to take this one?
Yes. Thanks, Jamila. So, yeah, thanks, Alain, for the question. I think starting, obviously, with North America, Section 232, interesting development with aluminium that you noted. Obviously, in the past couple of quarters, this subject has come up in our results conference calls. But I think just to take a step back, I think it's clear that Arsenal Missile is very committed to our franchise in the U.S. and North America more broadly. We have a record of innovation. We have our global R&D resources. We have our leading customer service in terms of quality and delivery. So we really have a tremendous amount to offer our customers in the U.S. And so the U.S. policy objective, I think, is very much around encouraging domestic mountain poor capacity, and that's very much aligned with the investments that we have already been making at Calvert. So, as Jim, we know, we've talked about the EAS at Calvert in his opening remarks. EAF, the first EAF, the existing project that continues to run very well. We expect full capacity to be achieved later in this second half of the year. And to remind everybody that's a state-of-the-art facility, first of its kind capable of producing the most demanding exposed automotive grades. And similarly, our new electrical steels project at Calvert, that's going to be producing the most sophisticated non-grain oriented steels, and that's progressing very much to plan. The second EAF, it's a very strong project. It would further increase our domestic U.S. melt and port capacity, it would make Calvert less dependent on imported sources of slab, so it's very consistent with that overall U.S. policy objective of producing steel domestically and having those reverse supply chains. Any potential savings from the policy would, I think, ultimately be determined by the Department of Commerce. So consideration would be given to the resources that are committed, the national security benefits of any commitment, and the commercially reasonable time period necessary. None of that we can answer at this stage. But at this stage, I'm just referencing the opening remarks in the presentation is that we are moving forward with the detailed engineering for the second EAF. We're incorporating the lessons learned from the 30-year project to optimize this, and as and when we've got any... And then just on your second question, I think it almost answers itself. I think, first of all, we have a strong business in North America. We're focused on producing locally for local demand. And I think we've long advocated for a greater policy alignment between the countries of the USMCA and very much broadening out the Section 232 border to the whole region and really creating this steel fortress, North America. So Mexico continues to have relatively high input penetration compared to many of the other markets. So further improvements really are needed. So I think obviously we can't confirm any of what you talked about in your question, but any move in that direction we would be encouraging. So we're really advocating for a greater regional alignment, helping to reduce tariff-related costs in North American business. So let's see what happens, but any progress there would clearly be a positive for our North American business.
So I think we'll move to the next question, which we'll take from Ephraim of Citi.
Hi. So two questions. Firstly, can you talk about the level of inventories you're seeing in Europe? The messaging from the steel industry was that if TRQ came on, the slightly higher level of inventories carried over from last year will mean volumes will not pick up immediately, but your guidance for Citi suggest otherwise with much better seasonal shipments in the third quarter. So is the inventory levels now significantly lower up to enable that? That should then increase. And then secondly, both related, do the extension of free allowances to 2038 by the EU tweak any of your investment or decarbonization plans in Europe? And then given the blast furnaces that you are bringing back on right now, do you have enough carbon allowances for it, or is it something that you will have to buy from the market? Thank you.
Thanks, Efren. So let me take your first question, and then you will comment on the ETS and the carbon cost. So inventories in Europe, Efren, I think what we saw during the quarter was pretty much what we were anticipating and we discussed during our first quarter. Imports were still elevated in the second quarter, right? And however, when you look at a half year against a half year of last year, you see that it's relatively stable, right? So, and as we also talked about in quarter one, we don't really see that inventories are so excessive in Europe, right? And you can see that in our guidance. And perhaps that's because we are also more exposed to south, through force, Spain. And as we know, that's the region that is going to be also replacing most of the imports, so a large part of the imports. But we feel very – so when we look at our order books and we look how the engagement from customers, it's all developing nicely, I would say. We talked also about how prices are evolving, which typically when you have high inventories, you would not see that happening, right? So that gave us confidence to provide this guidance, and we feel good about it. Danny, do you want to talk about carbon?
Yeah, sure. So on the topic of ETS, I think, you know, just to take a step back, first of all, I think it's clear that the Commission is now really finally recognizing the challenges facing industry in Europe and really taking concrete actions to support it. So for steel, we've seen the new carbon border, the CBAM that's been in place since the 1st of January, the new TRQ trade tool has been in place since the beginning of this month. And these are very important developments which are really reshaping the outlook for the steel industry in Europe. The ETS review, that's another important component of this. And the current proposals really do, I think, represent a step in the right direction. So it reflects this ongoing recognition and that decarbonisation objectives do need to be balanced with industrial competitiveness. So we see a number of positive elements, including the extension of the free allocation phase out, the changes to the ETS cap that improve long-term availability of allowances, and greater support for industrial decarbonisation through things like the decarbonisation bank. But our key concern does remain aligning rising carbon costs with the conditions needed for decarbonisation at scale. So we're going to continue to engage constructively on a framework that supports both decarbonisation and maintains industrial competitiveness. And then on your last point, just in terms of incremental carbon costs, I think I think Genwino referenced it in his earlier remark. I think it's something that we mentioned on the call last quarter as well. So as we increase our production in Europe, you should anticipate that this will increase our carbon costs in Europe. So that's something that you need to be balancing in your projections. But Genwino was very clear in saying that this will be more than outweighed by the operating leverage the fixed cost absorption so those new tenants that we're bringing on being incrementally more profitable than what we've just posted.
Thanks Ephraim. So with that we will move to the next question which we'll take from Reinhardt at Bank of America. Hi Reinhardt.
Hi there Januino and Daniel. Thanks for taking my question. First I just want to ask about your slab network in the Western Hemisphere, to what extent do you have spare capacity in Brazil, and especially now with the Calvert EAF ramping up, how much capacity do you think you have to be able to divert into Europe if the market maybe needs some extra tons?
Hi, Renat. We are running our facilities in Brazil today at full capacity. to the flat business is running, so all the finances are running. Of course, we have plenty of optionality to divert volumes where we see the opportunities, right? I mean, of course, the group will always have priority. As you know, we have high-quality slabs coming not only from the same, streaming in tons of slabs. We have also Tubarão also producing slabs. So we have something that I think is unique to Salon Metal, and we talked about it in the past that we'll see, finally, what happens and the ability of our water mills in Europe to take their market share of the lower imports. But Salon Metal remains well-positioned here to, if necessary, to bring slabs. We have more downstream capacity that we can utilize. if we see that as that opportunity. So, yeah, so the group is, I would say, in a unique position here to capitalize on its footprint.
That's very clear. Thank you, Janina. And maybe just a question on your water book comments into 3Q. Can you give us a sense of how much of that sort of stable to up or, I guess, seasonal outperformance is due to market share gains and how much of that would you estimate is just end-market activity being better than expected?
Well, clearly, I mean, the demand picture in Europe has not really changed much, right, compared to what we discussed. So the demand in Europe is fast, it's stable, right, which is good, because in the prior years, as we talked about as well, the real demand in Europe was declining, and this year our expectation is for the demand, for the real demand to stabilize, which I would say it's encouraging. It's a good start, right? So the demand picture is not really changing so much. So then it's really, I mean, it's a function of the reduced level of imports that we are expecting with the IQ. So that's how we are seeing the evolution here.
Understood. Thank you very much, Jermaine.
I'll hand it over. so I think we'll take the next question now from Tristan at BMPXM Hi Tristan Yes, hi, thank you for taking my questions maybe just a quick follow up on the order book were you able to quantify it in Europe, it's up here on Europe but by all much is it double digit?
Tristan, I think our guidance is quite clear right, so and if you look at our deck our slides, we have provided the drop in shipments in 2025 and 2024, Q3 against Q2, you can see that it's mid to high single digit in terms of drop in shipments, quote-on-quarter Q3 against Q2, and the guidance is for stable or slightly higher. I think that's quite specific guidance, I would say. And as I talked about also before, we are now really looking at Q4. So we are in a good position, in a strong position here. Again, a very good level of engagement from customers. So it's all developing, as I said, quite well.
Okay, that's fair. Another question on Europe, do you think there is a decent probability that the price setting time for HRC in Europe could be the tariff paying imports? Or do you think that there's going to be sufficient domestic capacity, especially in the near term? And also So on the supply side, do you see a risk of seeing some idle facilities in Europe getting purchased by a foreign slab producer and transformed into re-rolling centers? Is that something that you would consider as a risk?
Yeah. So maybe I will start and then we'll add, Tristan. So the first part of your question, I think what we are still missing in Europe, to be honest, is to speak up in demand, right? So as we were discussing, so demand is now relatively flat, the real demand. If you look at the World Civil Association, they have a positive forecast for next year. We have all these programs announced in various countries that should support. We talked a little bit about the megatrends as well, electrification. So I think we remain, in the medium to long term, optimistic that demand in Europe should start to move in the right direction as well. Like more recently, we have seen PMIs also moving in positive territory, which is encouraging. So I think if you get to a scenario where demand improves, why not, right? So then it might be that actually imports, the import parity will establish the European prices. But I think that we are still some time. We have to see how the competition, how the other meals also bring capacity, what they can actually do, right? So I think it's early days really to talk about this. One thing is for sure, as we bring capacity back, and competition does the same, the marginal cost of production in Europe should rise. And that should, of course, support crisis in Europe. Danny, do you want to talk a little bit about the rulers?
Yeah, sure. So I think it's clear that European policy is there to promote competitiveness of domestic capacity, domestic production. So I think it's clear that the Commission does not want to see capacity closed. They want to see capacity remain competitive. They want the industry to continue to support employment, et cetera. So in your scenario, I think it would reinforce further actions from the commission and putting slabs into the TRQ quoted tool. So I think that it's probably just a question of time before slabs become part of TRQ, just to make sure that that's not a long-term risk to steel production in Europe.
All right. That's very clear. And if I could just quiz one quick one on China. I noticed you put China restructuring as a potential upside in the presentation. I don't think that was there before. Or does that mean you've seen some positive sign or expect anything in the coming year? Or am I just reading too much out of it?
Unfortunately, yes, to be honest, I mean, we know, we know, I mean, and we have discussed that, right? So we know that it has to happen at some point in time. It's just not possible for us to say when and how. But I think it's clear that eventually it will need to happen. I mean, you still have, as we know, I mean, half of the industry in China at least burning cash. It's not something that we see as sustainable, but when and how it happens, it's difficult to precise.
Tristan
Analyst — BMO Capital Markets
But then, of course, when it does, international prices then would then normalize, that, of course, would support the industry, not only in Europe, but across the globe. for sure thank you great thanks justin as we'll move now to take the next question from andrew at ubs i am lee hey can you hear me okay yeah great um so i just want to follow up on first of all just on the catholics projects that aren't included in the 1.8 billion long-term gardens i'm curious about what the timescale is in terms of steps to implementation it sounds like Hassan is already, you know, an approved study, as you put in the presentation. So I'm kind of curious where we go from here, construction timeline, like how certain is this, and maybe just think about some of those other projects, and then have a follow-up on the decarbon Europe.
Yeah, sure, Andrew. Andrew, as you know, we have been investing in a good list of projects now for a couple of years, right? And we are starting to see the benefits, right? Already in 2025, 2026, we have 700 million out of the 1.8 that we should be capturing this year. We captured already 300 million in H1, so we have another 400 that we believe we should be capturing in H2, and there is more to come. So, and then what we are trying to do is to show the odd opportunities and unique opportunities that we have when we look at across our portfolio, right? And I think, again, it's quite unique to us in our middle, given our presence in these value regions that are very attractive from a demand point of view. So you see us looking at more investments in Brazil, downstream, which makes a lot of sense for us. We have a low-cost base in Brazil. We are long slabs. The country is short, value-added products. So it's just something that makes a lot of sense for us, and we are advancing the engineering work. The same is true for Calvert, the second EIF, so we are also progressing there with engineering work. And, of course, we have India, where our ambition is very significant, right? And thinking about the CAPEX, for sure, we're going to be completing this year a number of projects. So, like, here is a good example. The expansion of Cerro Zoo is another example. So we're going to be also completing DAS in the U.S. So we are creating space within our envelope to add some of these other projects, right? So as in when we complete the engineering work and we feel we have a good solution, then we'll take that to our board and then we will announce more details, timelines, and contributions, et cetera, et cetera. But I think you should take that this company will continue to grow. And that's something that differentiates us as well.
Tristan
Analyst — BMO Capital Markets
Okay, that's great. And on the EAS projects, and obviously you've advanced Dunkirk, I mean, given all the support you've received from the EU around the TRQ and obviously now the ETS phase out and things like that, I'm curious how you're seeing those other potential D-carb projects that we talked about a few years ago. I mean, is, you know, what comes next? Is it Ghent? Is it Germany? And in DRI, you've kind of said that, you know, that doesn't really make sense in the next few years in the past. But, you know, with all this support, is DRI potentially becoming more viable? And given the supply chain insecurity, you know, do you need to build DRI capacity in Europe? in the future rather than relying on, like, a merchant HBI market when obviously just growing EF supply in the European market?
Well, Andrew, to be honest, right now, I mean, it's not really part of our plans, right? I mean, you saw what we are doing. We have already within the group DRI capacity, right? And as we know, we still have to see the conditions for DRI in Europe to develop. I mean, we know where gas prices are. We know what is the availability of hydrogen. What is the price, right? So today is very hard to see. We don't see it yet that the conditions for DRI are present. It's challenging. I mean, we have one, the only DRI operating in Europe, in Hamburg, and we know how difficult it is. And in terms of sequencing, at this point in time, the focus is, it's done crack. And, of course, we have done it already. So, when you think about all these chains that we discussed and then you talked about, the ETS, I think we are in a strong position because we have already done a lot of work on all of these projects, right? So as we learn more from the mission, the change to VTS, I think we're going to be in a position to move. But what is important, and the message remains the same, that we will invest when it makes economic sense, when we can earn a decent return on our capital. Otherwise, we will, as I talked about in my opening remarks, there is a competition in this group for capital, right? and we will fund the projects that can deliver the highest returns and that's what we will continue to do yeah now that sounds good all right thanks thanks very much for the response great thanks Andy and so we'll move now to take a question from Boris at Kappa hi Boris hi um thank you for taking my question i will i would start with the usual bridge into q3 if you could share the the dynamics you see for Q3, not only for Europe, but the other regions?
Speaker 3
And, yeah, and that's the first question.
Daniel, do you want to walk them through the bridge?
Yeah, yeah, sure. So I think it's a very simple bridge. So Gemino talked about the positive outlook, the positive outlook for the third quarter, the positive outlook for the second half as a whole. and so it's yeah so it's a very simple bridge we expect all steel segments to improve sequentially into the third quarter and the key themes for the group as a whole being higher steel shipments and we would expect higher average selling prices to be reflected in the third quarter as well and that there will be some additional costs jimina referred to it in previous remarks particularly higher carbon costs as our European production increases. Those are the key themes for the third quarter. I think for the second half as a whole, we obviously would expect that momentum to hopefully continue into the fourth quarter. Normally fourth quarter is a better quarter from a volume standpoint than the third quarter. And in the previous questions, we've been talking about momentum on pricing and spreads right now, which would obviously come through to results with appropriate lags. And then the other thing just to highlight, I think, in terms of the outlook, not part of your question, but we have reiterated, again, the prospect of positive free cash flow this year and not just this year but beyond and I think that should be quite clear in your modeling. We've got working capital, unwind, high profitability in the second half of the year and that combination should be quite powerful from a free cash flow.
Speaker 3
Very clear. Thank you. My second question is on Europe. There are two questions in one. Where do you see the potential for margins in Europe? We are now sitting at 98, as you mentioned. It's a question from 70 in Q1. What kind of potential do you see? More generally, in Europe, now that you have a better backdrop, more supportive backdrop and trade defense. Do you see scope for consolidation? and is it now a place you would look differently in the current setup?
So let me take this one. Look, in terms of where margins should – what is the potential for margins, I think it's – I'm very encouraged when I look at – if you look at our profitability in Q2, Europe, very close to $100 already, right? And as we talked about, we have not yet seen the benefits of the TRQ. So clearly, there is potential for us to do better. I will not, of course, volunteer a number, but I think we have not yet seen the potential, right, which is very encouraging. and then to your second point in terms of consolidation in Europe I think we have always seen the benefits of consolidation as we know Europe is more fragmented than some other regions it could benefit from consolidation but just let me tell you as you know we are already very large our focus is on running our assets so we have a lot of opportunities So we have some of the best assets in Europe. So that's our focus around paying our, earn our cost of capital. That's the focus that we have set for ourselves. Excellent. Thank you very much.
Great. Thanks, Boris. So we'll move now to take a question from Bastian at Deutsche Bank. Hi, Bastian.
Hi. Good afternoon. Thanks for taking my question. I have one on the mining business. I guess you're holding on to the 18 million ton guidance for Liberia. There's a slide in your pack as well, but it doesn't have the numbers. Can you maybe help us with a shipment number for Liberia for the first half so that we can gauge roughly what you're still expecting in the second? That's my first question.
Yeah, sure, Watson. So when you look at the Liberia project, I think it's progressing well. So we have two of the lines of the concentrator that's running. We are ramping up the second, getting ready to start the third one. We continue to guide for 18 million tons, so as per plan. And the production in Liberia is up very significantly already. You can see that year and year. and in the second half we need to ship about 10 million tons to get to this 18 million so we feel that we can achieve that we have the port the rail infrastructure it's all in place and as we talked about in our mda in the earnings release because of the very heavy rainy season that we experience. We had some delays in shipments, which we expect to catch up in quarter three. So all in all, I would expect shipments to see already an improvement in shipments in Q3.
Thank you. And then just coming back briefly to, I guess, some of the earlier questions, particularly with regards to the re-rolling capacity and the implications of slabs coming and sleds are probably not yet part of these safeguards. Is there a number you have in mind how much capacity European re-rollers could potentially ramp up here? Is there a number you would put out there as to how much of the supply gap could be filled by re-rollers until potential safeguards on sleds may potentially be introduced as well?
Yeah. Bastian, to be honest, it's not something that we are overly concerned. I think in Europe today, the role is that they have been there forever, right? And they have established supply chains. They are operating today, right? So I believe they will continue to operate. So I would not worry so much about that at this point.
Okay, fair enough. But do you have a number in mind as to how much capacity these guys can ramp up?
No, I'm not going to comment on that, Sebastian.
Yeah, and I think just to complement Jeremy, or just to reiterate what you said, I think we really don't see a lot of spare rolling capacity in Europe. That can be ramped up, I think. The earlier question was very different, because that was a question about potentially closing primary capacity in Europe and replacing that with imported slabs to then be re-rolled. So that would be a very, very different scenario and clearly something that we would expect the European Commission to not want to see and to take action to prevent that from happening. That's why we're referencing slabs becoming potentially part of the tariff rate quota tool. But that's not a near-term risk or dynamic. and the near-term opportunity for additional rolling in Europe, we really just don't see that as being fundamental to the near-term supply demand outlook.
Okay, great. Very clear. Thank you.
Great. Thanks, Bastian. So I think we'll move now to take our last question, which will be from Cole at Jefferies. Hi, Cole.
Good afternoon. Thanks for taking my question. I'd just like to follow up on two of the new slides that you've got on the deck. The first is on your sustainable solutions business. You're talking about $750 million of EBITDA medium term. I'd just like a little bit more color. You know, what gives you confidence in delivering that number? Because $750 million is more than, you know, some smaller steel companies are delivering at the moment. So just some quantification of that. and then following up on that is the comment that you made about using steel on your slide 19 on effectively for the transformation. How do you see steel playing its role?
So thank you, Paul. Thank you for your question on sustainable solutions. It's something that we are very excited about and I will address this one and I will have a minute to talk about your second question. So as you can see, I mean, we are making good progress with our sustainable solution division, right? So we are already running the one rate, as you can see, it's already in excess of 500 million. And we are executing projects that will add to profitability of this division, the renewables, the investments that we are making in India. So we are developing another gigawatt of capacity there, renewable, which is very good in terms of returns, IRR. It allows us to have these very stable levels of demand and free cash flows as we are enjoying with the first project that we completed in India. Second part of the growth story there is our sustainable construction business. So that's panels, profiles that we are developing. We have already a strong base in Europe. We are now extending the footprint into India, into U.S., in Brazil. we have recently acquired a company producing the same products in Brazil we are developing green fields that we can see now a sustainable section you know onions release a green field also in u.s. they're starting this business then something that we have a lot of expertise so those are the drivers really of the increase in this division in the near term. Daniel, do you want to talk about the second part?
Thanks, Jeremy. And, yeah, thanks for the question as well, Cole, because, you know, this is obviously a very topical theme, electrification. It's one of the clear megatrends, and it's a megatrend that I think people are getting quite excited about. But within that excitement, I think the role that steel will play in this is not being recognised. And, you know, when we think about the build-out of renewables, the build-out of transmission, it just won't be achieved without. So steel is very much fundamental to this theme of electrification. So we've taken the opportunity to try and put some numbers around it. And this is page 19 of the slide deck that we published this morning. And it's simply just looking at the projections through 2035 for electricity generation in the various different regions. We've applied some standardized assumptions, external assumptions rather than our own assumptions around the steel intensity of that generation. And once you put it all together, it's a very significant number, almost 300 million tons of steel would be required to achieve these electrification goals through 2035 ex-China. So it's an important theme. We have good exposure to it. If you look at our product portfolio, we produce all of the steels that are going to be required to achieve these goals. Think about Magnelis and other products which are well suited to solar, think about heavy plate for wind, electrical steels. This is going to have a key role to play, and we're going to be producing that in the key regions, and then, of course, the overall transmission. So we believe that the demand is going to be interesting. We have the product portfolio to be applied to it and numbers around it.
Thank you. And then just the one division that wasn't mentioned on the quarter-on-quarter was the India and JVs. I'm just wondering if you could give any color on that into the third quarter and fourth quarter.
Well, thank you for everything, Carlos. So as you can see, the performance in Q2 was strong. So we had record level of shipments, run rate at about 8 million tons. So our expectation is for the division to continue to do well in quarter three, in quarter four. The focus is, of course, other than continuing to run the existing operations on our projects. As you know, we are doubling the capacity there, and it's also progressing. Yeah, so I think demand is strong. We continue to see a very strong level of demand. Prices have moved up. They have recovered from low levels that we saw at the beginning of the year. So I think we see good developments there. So we should continue to see strong performance in the second half as well.
Thanks, Carl. Jeremy, that was our last question, so I'll hand back to you for any closing remarks.
Thank you, Daniel, and thank you, everyone. Before we close, let me briefly reflect on the key message from today's discussion. First, we are seeing positive momentum across the business with results expected to improve across all segments. Early indicators in Europe are already encouraging, giving us confidence as we enter the second half of 2026, with momentum continuing to build until 2027. Second, we have a differentiated portfolio of strategic growth opportunities and future growth options. We are well positioned to benefit from some of the most important chains that are reshaping the global steel industry. This, in turn, provides a clear pathway to structurally high earnings and returns through disciples. And finally, we have all the limits in place to continue growing earnings, returns on capital, and free cash flow. Structural demand drivers in a more regionalized field industry creates opportunity. Our fellow Mittal's disciplined capital allocation and strategy institution, while maintaining a solid investment-grade balance sheet, provides a strong foundation for future value creation. With that, I will close today's call, and if you have any follow-up questions, please reach out to Daniel and his team. Thank you again for joining us, and I look forward to speaking with you soon. enjoy the summer and please stay safe and keep those around you safe as well thank you very much
