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ArcelorMittal (MT) Brazil Inks Contracts for Solar Energy Projects
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ArcelorMittal (MT - Free Report) Brazil has signed contracts for developing two solar energy projects with a combined capacity of 465MW, which is equivalent to 14% of its current electricity requirements.
The first project builds on ArcelorMittal Brazil's existing relationship with Casa dos Ventos, one of Brazil's largest developers and producers of renewable energy projects, with whom it signed a joint venture deal in April last year for the development of a 554MW wind power project that is scheduled to be commissioned by the end of next year. This latest agreement, which is again a joint venture in which ArcelorMittal Brazil will own 55% share and Casa dos Ventos will own the rest, will see the construction of a 200MW solar power plant on the same site as the wind power project in the state of Bahia, northeast Brazil, with commissioning expected before the end of 2025.
The second project is a partnership with Atlas Renewable Energy, Latin America's second-largest independent renewable energy developer, for a 265MW solar energy project in Minas Gerais, east Brazil. The arrangement is for an initial 50/50 joint venture, with ArcelorMittal obtaining 100% of the solar park after construction is completed. The project is estimated to be commissioned by the end of 2025.
The Administrative Council for Economic Defense, Brazil's antitrust body, has to approve both projects. The projects build on MT’s existing portfolio of renewable energy projects. They complement ArcelorMittal Brazil's goals of securing and decarbonizing its future electricity requirements, as they are a step ahead of the company's long-term goal of being self-sufficient in terms of electricity.
Shares of ArcelorMittal have lost 11% over the past year compared with a 16.8% decline of its industry.
Image Source: Zacks Investment Research
The company, on its second-quarter call, said that it believes that the current market conditions are not sustainable due to China's excess steel production relative to demand, which resulted in very low domestic steel spreads and aggressive exports. Both Europe and the United States are experiencing steel prices below the marginal cost. Nevertheless, the company anticipates higher apparent demand in the second half of 2024 compared with the same period in 2023, which was affected by destocking, especially in Europe.
With absolute inventory levels remaining low in Europe, the company is optimistic about the potential for restocking activity as real demand begins to recover. MT now projects 2.5-3% growth in global steel consumption, excluding China, in 2024, compared with its prior view of 3-4% growth.
The company maintains its capital expenditure forecast for 2024 within the range of $4.5-$5 billion, including $1.4-$1.5 billion allocated to strategic growth projects.
Better-ranked stocks in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Eldorado Gold Corporation (EGO - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) .
Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.9%. The company's shares have soared 148.9% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Eldorado’s current-year earnings is pegged at $1.32 per share, indicating a year-over-year rise of 131.6%. EGO, a Zacks Rank #1 stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 104.4% in the past year.
Agnico Eagle Mines currently carries a Zacks Rank #2 (Buy). AEM beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.7%. The company's shares have soared 76.6% in the past year.
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ArcelorMittal (MT) Brazil Inks Contracts for Solar Energy Projects
ArcelorMittal (MT - Free Report) Brazil has signed contracts for developing two solar energy projects with a combined capacity of 465MW, which is equivalent to 14% of its current electricity requirements.
The first project builds on ArcelorMittal Brazil's existing relationship with Casa dos Ventos, one of Brazil's largest developers and producers of renewable energy projects, with whom it signed a joint venture deal in April last year for the development of a 554MW wind power project that is scheduled to be commissioned by the end of next year. This latest agreement, which is again a joint venture in which ArcelorMittal Brazil will own 55% share and Casa dos Ventos will own the rest, will see the construction of a 200MW solar power plant on the same site as the wind power project in the state of Bahia, northeast Brazil, with commissioning expected before the end of 2025.
The second project is a partnership with Atlas Renewable Energy, Latin America's second-largest independent renewable energy developer, for a 265MW solar energy project in Minas Gerais, east Brazil. The arrangement is for an initial 50/50 joint venture, with ArcelorMittal obtaining 100% of the solar park after construction is completed. The project is estimated to be commissioned by the end of 2025.
The Administrative Council for Economic Defense, Brazil's antitrust body, has to approve both projects. The projects build on MT’s existing portfolio of renewable energy projects. They complement ArcelorMittal Brazil's goals of securing and decarbonizing its future electricity requirements, as they are a step ahead of the company's long-term goal of being self-sufficient in terms of electricity.
Shares of ArcelorMittal have lost 11% over the past year compared with a 16.8% decline of its industry.
Image Source: Zacks Investment Research
The company, on its second-quarter call, said that it believes that the current market conditions are not sustainable due to China's excess steel production relative to demand, which resulted in very low domestic steel spreads and aggressive exports. Both Europe and the United States are experiencing steel prices below the marginal cost. Nevertheless, the company anticipates higher apparent demand in the second half of 2024 compared with the same period in 2023, which was affected by destocking, especially in Europe.
With absolute inventory levels remaining low in Europe, the company is optimistic about the potential for restocking activity as real demand begins to recover. MT now projects 2.5-3% growth in global steel consumption, excluding China, in 2024, compared with its prior view of 3-4% growth.
The company maintains its capital expenditure forecast for 2024 within the range of $4.5-$5 billion, including $1.4-$1.5 billion allocated to strategic growth projects.
ArcelorMittal Price and Consensus
ArcelorMittal price-consensus-chart | ArcelorMittal Quote
Zacks Rank & Key Picks
MT currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Eldorado Gold Corporation (EGO - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) .
Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.9%. The company's shares have soared 148.9% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Eldorado’s current-year earnings is pegged at $1.32 per share, indicating a year-over-year rise of 131.6%. EGO, a Zacks Rank #1 stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 104.4% in the past year.
Agnico Eagle Mines currently carries a Zacks Rank #2 (Buy). AEM beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.7%. The company's shares have soared 76.6% in the past year.