Prospectus dated as of September 28, 2007.

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Arcelor (Arcelor) is a Luxembourg public limited liability company (socit anonyme) with its registered office at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg. Arcelor is hereby offering a maximum of 1,417,207,253 shares in the share capital of Arcelor. The Arcelor shares are being offered to holders of shares in ArcelorMittal (ArcelorMittal) in connection with the merger of ArcelorMittal into Arcelor, as contemplated by a merger proposal and an explanatory memorandum dated as of September 25, 2007. In the merger, ArcelorMittal will merge into Arcelor, by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal. Upon effectiveness of the merger, each ArcelorMittal share that you own at the effective time of the merger will be converted into one newly-issued Arcelor share. All Arcelor shares held by ArcelorMittal immediately prior to the effective time of the merger will be cancelled upon effectiveness of the merger. Upon effectiveness of the merger, holders of ArcelorMittal shares will automatically receive newlyissued Arcelor shares in accordance with the Exchange Ratio and on the basis of their respective holdings as entered in the ArcelorMittal shareholder registry (registre des actionnaires) or their respective securities accounts. Holders of ArcelorMittal shares whose shares are registered directly in the ArcelorMittal shareholder registry, will automatically receive newly-issued Arcelor shares through an entry in the shareholder registry (registre des actionnaires) of Arcelor. Holders of ArcelorMittal shares whose shares are registered indirectly, that is through a book-entry system, in the ArcelorMittal shareholder registry, will automatically receive newlyissued Arcelor shares through a credit to their respective securities accounts. Application will be made to the relevant authorities for the admission of the newly-issued Arcelor shares to trading on the Luxembourg Stock Exchanges regulated market and for the listing of these shares on the Official List of the Luxembourg Stock Exchange, and for the admission to trading and the listing of the newly-issued Arcelor shares on Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, and the New York Stock Exchange. In addition, application will be made to the relevant authorities for the admission to trading and the listing of the existing Arcelor shares on Euronext Amsterdam by NYSE Euronext and the New York Stock Exchange, which following completion of the capital restructuring (as described in this prospectus) and effectiveness of the merger, will represent an aggregate number of 44,073,672 shares. Listing and trading of these newly-issued and existing Arcelor shares on these exchanges will take place upon effectiveness of the merger. This document constitutes a prospectus (in the form of a single document) for the purposes of Article 5(3) of Directive 2003/71/EC (together with any applicable implementing measures in any EU Member State, the Prospectus Directive) and has been prepared in accordance with the Luxembourg law of July 10, 2005 relating to prospectuses for securities, as amended, and the rules promulgated thereunder. This prospectus has been filed with and approved by the Luxembourg Commission de Surveillance du Secteur Financier (the CSSF) on September 28, 2007. The CSSF will provide a notification of the approval, together with a copy of the approved prospectus, to the Belgian Banking, Finance and Insurance Commission (Commission bancaire, financire et des assurances/Commissie voor het bank-, financie- en assurantiewezen) (the CBFA), the French Autorit des marchs financiers (the AMF), the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financile Markten) (the AFM), and the Spanish Comisin Nacional del Mercado de Valores (the CNMV). Distribution of this prospectus and the offer of the Arcelor shares may, in certain jurisdictions, be subject to specific regulations or restrictions. Persons and/or entities in possession of this prospectus are urged to inform themselves of any such restrictions which may apply in their jurisdiction and to observe them. Arcelor disclaims all responsibility for any violation of such restrictions by any person.

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SUMMARY ................................................................................................................................................. 1 RISK FACTORS.......................................................................................................................................... 7 CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS................... 19 LETTER TO THE SHAREHOLDERS OF ArcelorMittal......................................................................... 21 LETTER TO THE SHAREHOLDERS OF ARCELOR............................................................................ 22 QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE ArcelorMittal EXTRAORDINARY GENERAL MEETING AND THE ARCELOR EXTRAORDINARY GENERAL MEETING .............................................................................................................................. 23 SUMMARY OF THE MERGER............................................................................................................... 29 PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION................................... 38 SELECTED HISTORICAL FINANCIAL INFORMATION FOR MITTAL STEEL .............................. 43 SELECTED HISTORICAL FINANCIAL INFORMATION FOR ARCELOR........................................ 45 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION OF ARCELOR AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2006 .......................................... 46 MARKET PRICE AND DIVIDEND DATA ............................................................................................ 66 ArcelorMittal CAPITALIZATION............................................................................................................ 71 ARCELOR CAPITALIZATION ............................................................................................................... 72 ArcelorMittal OPERATING AND FINANCIAL REVIEW...................................................................... 73 ARCELOR OPERATING AND FINANCIAL REVIEW ....................................................................... 103 BUSINESS............................................................................................................................................... 120 THE ArcelorMittal EXTRAORDINARY GENERAL MEETING ......................................................... 176 THE ARCELOR EXTRAORDINARY GENERAL MEETING............................................................. 181 THE MERGER ........................................................................................................................................ 187 THE MERGER AGREEMENT, THE MERGER PROPOSAL AND THE EXPLANATORY MEMORANDUM ................................................................................................................................... 237 MATERIAL CONTRACTS AND RELATED PARTY TRANSACTIONS........................................... 243 MANAGEMENT AND EMPLOYEES................................................................................................... 245 DESCRIPTION OF ARCELORS SHARE CAPITAL........................................................................... 268 COMPARISON OF RIGHTS OF ArcelorMittal SHAREHOLDERS AND ARCELOR SHAREHOLDERS .................................................................................................................................. 277 SHARE TRADING, CLEARING AND SETTLEMENT ....................................................................... 278 TAXATION ............................................................................................................................................. 283 AUDITORS ............................................................................................................................................. 298 DOCUMENTS ON DISPLAY ................................................................................................................ 299 INCORPORATION BY REFERENCE................................................................................................... 300 RESPONSIBILITY STATEMENT ......................................................................................................... 301

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ANNEXES ANNEX A: MERGER AGREEMENT ............................................................................................................ A-1 ANNEX B: MERGER PROPOSAL AND EXPLANATORY MEMORANDUM ....................................... B-1 ANNEX C: FAIRNESS OPINION OF GOLDMAN SACHS ........................................................................ C-1 ANNEX D: FAIRNESS OPINION OF MORGAN STANLEY & CO. ......................................................... D-1 ANNEX E: FAIRNESS OPINION OF FORTIS BANK................................................................................. E-1 ANNEX F: FAIRNESS OPINION OF SOCIETE GENERALE ................................................................... F-1 ANNEX G: FAIRNESS OPINION OF RLA ...................................................................................................G-1 ANNEX H: UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF ArcelorMittal FOR THE SIX MONTHS ENDED JUNE 30, 2007................................................................H-1 ANNEX I: INDEX TO FINANCIAL STATEMENTS .................................................................................... I-1

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SUMMARY This summary highlights certain aspects of Arcelors business and the shares, but potential investors should read this entire prospectus, including the financial statements and accompanying notes, and the merger proposal and the explanatory memorandum, copies of which are attached to this prospectus as Annex B, before making an investment decision. This summary should be read as an introduction to this prospectus. Any decision to invest in the shares should be based on this prospectus as a whole by the investor. Prospective investors should also carefully consider the information set forth in this prospectus under the heading Risk Factors. Under the relevant provisions of the Prospectus Directive, no civil liability will attach to the responsible persons in any such Member State solely on the basis of this summary, including any translation thereof, unless it is misleading, inaccurate or inconsistent when read together with the other parts of this prospectus. Where a claim relating to the information contained in this prospectus is brought before a court in a Member State of the European Economic Area, the plaintiff may, under the national legislation of the Member State where the claim is brought, be required to bear the costs of translating this prospectus before the legal proceedings are initiated. Overview ArcelorMittal ArcelorMittal is the worlds largest and most global steel producer. ArcelorMittal is the successor company to Mittal Steel Company N.V., or Mittal Steel, by virtue of a merger of Mittal Steel with and into ArcelorMittal, which became effective on September 3, 2007. In 2006, Mittal Steel conducted a tender offer for the outstanding shares, American depositary shares and convertible bonds (OCEANES) of Arcelor, which is referred to as the Offer. As a result of the Offer, ArcelorMittal (as the successor to Mittal Steel) owns approximately 94% of the share capital and the voting rights of Arcelor and on August 1, 2006 Arcelor became a subsidiary of Mittal Steel and its results of operations have been included in ArcelorMittals (as the successor to Mittal Steel) consolidated results of operations from that date. On a pro forma basis after giving effect to its acquisition of Arcelor as if the acquisition had occurred on January 1, 2006, ArcelorMittal had sales of approximately $87.5 billion, steel shipments of approximately 110.5 million tonnes and an annual production capacity of approximately 138 million tonnes of crude steel for the year ended December 31, 2006. (Tonnes or MT are metric tonnes and are used in measurements involving iron ore, iron ore pellets, direct reduced iron, hot metal, coke, coal, pig iron and scrap (a metric tonne is equal to 1,000 kilograms or 2,204.62 pounds)). ArcelorMittal is the largest steel producer in the Americas, Africa, and Europe, and it has a growing presence in Asia. ArcelorMittal has steel-making operations in 26 countries on four continents, including 64 integrated, mini-mill and integrated mini-mill steel-making facilities. As of December 31, 2006, Mittal Steel, as the predecessor entity to ArcelorMittal, had approximately 320,000 employees. ArcelorMittal produces a broad range of high-quality finished and semi-finished carbon steel products. Specifically, ArcelorMittal produces flat products, including sheet and plate, long products, including bars, rods and structural shapes, and stainless steel products. ArcelorMittal sells its products primarily in local markets and through its centralized marketing organization to a diverse range of customers in approximately 187 countries, including the automotive, appliance, engineering, construction and machinery industries. ArcelorMittal operates its business in six reportable operating segments: Flat Carbon Americas; Flat Carbon Europe; Long Carbon Americas and Europe; Asia, Africa and CIS; Stainless Steel; and Arcelor Mittal Steel Solutions and Services (trading and distribution). ArcelorMittals steel-making operations have a high degree of geographic diversification. Approximately 35% of its steel is produced in the Americas, approximately 48% is produced in Europe and approximately 17% is produced in other countries, such as Kazakhstan, Algeria and South Africa. In addition, ArcelorMittals sales are balanced both geographically and between developed and developing markets, which have different characteristics. ArcelorMittal has access to high-quality and low-cost raw materials through its captive sources and long-term contracts. In 2006, on a pro forma basis after giving effect to the acquisition of Arcelor (assuming full production of iron ore at Dofasco for captive use), approximately 45% of ArcelorMittals requirements of iron ore and approximately 9% of its coal requirements were supplied from its own mines or from long-term contracts at many of its operating units. ArcelorMittal is actively developing its raw material self-sufficiency, including through recent initiatives to gain or expand access to iron ore sources in Liberia, Ukraine and Senegal. In addition, ArcelorMittal is the worlds largest producer of direct reduced iron, or DRI, which is a scrap 1

substitute used in the mini-mill steel-making process, with total production on a pro forma basis of approximately 9.3 million tonnes in 2006. ArcelorMittals DRI production satisfies all of its mini-mill input requirements. ArcelorMittal is one of the worlds largest producers of coke, a critical raw material derived from coal, and it satisfies approximately 76% of its coke needs. ArcelorMittals facilities have good access to shipping facilities, including its eleven deep-water port facilities and its railway sidings. ArcelorMittal is a successor to a business founded in 1989 by Mr. Lakshmi N. Mittal, the Chairman of the Board of Directors and Chief Executive Officer. ArcelorMittal has experienced rapid and steady growth since then largely through the consistent and disciplined execution of a successful consolidation-based strategy. ArcelorMittal made its first acquisition in 1989, leasing the Iron & Steel Company of Trinidad & Tobago. Some of the principal acquisitions since then include Thyssen Duisburg (Germany) in 1997, Inland Steel (USA) in 1998, Unimetal (France) in 1999, Sidex (Romania) and Annaba (Algeria) in 2001, Nova Hut (Czech Republic) in 2003, BH Steel (Bosnia), Balkan Steel (Macedonia), PHS (Poland) and Iscor (South Africa) in 2004, ISG (USA), Hunan Valin (China) and Kryvorizhstal (Ukraine) in 2005 and three Stelco Inc. subsidiaries (Canada) and Arcelor in 2006. The mailing address and telephone number of ArcelorMittals principal executive offices are: ArcelorMittal 19, Avenue de la Libert L-2930 Luxembourg Grand Duchy of Luxembourg +352 4792-2414 ArcelorMittal shares are listed and traded on the NYSE (symbol MT), are admitted to trading on the Luxembourg Stock Exchanges regulated market and listed on the Official List of the Luxembourg Stock Exchange (symbol MTL), and are admitted to listing and trading on Euronext Amsterdam by NYSE Euronext (symbol MT), Euronext Brussels by NYSE Euronext (symbol MTBL), Euronext Paris by NYSE Euronext (symbol MTP) and the Spanish exchanges (symbol MTS). Arcelor As discussed above, Arcelor became a subsidiary of Mittal Steel in August 2006 and its results of operations have been included in Mittal Steels (the predecessor entity to ArcelorMittal) consolidated results of operations from that date. Arcelor was created in February 2002 by the combination of three steel-making companies, Aceralia Corporacin Siderurgica, Arbed and Usinor. Prior to its acquisition by Mittal Steel (the predecessor entity to ArcelorMittal), Arcelor operated in four market sectors: flat carbon steel, long carbon steel, stainless steel and Arcelor Steel Solutions and Services. In 2005, the last full year prior to Arcelors acquisition by Mittal Steel, it produced 46.7 million tonnes of steel and had revenues of 32.6 billion and net income of 3.8 billion. The mailing address and telephone number of Arcelors principal executive offices are: Arcelor 19, Avenue de la Libert L-2930 Luxembourg Grand Duchy of Luxembourg +352 4792-2414 Arcelor shares are admitted to trading on the Luxembourg Stock Exchanges regulated market, and listed on the Official List of the Luxembourg Stock Exchange, and are admitted to listing and traded on Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, and the Spanish exchanges of Madrid, Barcelona, Bilbao and Valencia, in each case under the symbol LOR, except for Euronext Brussels by NYSE Euronext where they are admitted to trading under the symbol LORB. The Merger Arcelor and ArcelorMittal have agreed in the merger agreement providing for the terms and conditions of the second-step merger to merge as contemplated by the merger proposal and the explanatory memorandum, as described in this prospectus. Under the terms of the merger proposal and the explanatory memorandum, 2

ArcelorMittal will merge into Arcelor, by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal. The combined company will be renamed ArcelorMittal. The merger agreement, the merger proposal and the explanatory memorandum are attached to this prospectus as Annexes A and B, respectively. Arcelor and ArcelorMittal encourage you to read these documents in their entirety. The merger will be governed by the terms and conditions following from the applicable provisions of Luxembourg law, the merger proposal and the explanatory memorandum. Shareholders of ArcelorMittal and Arcelor will be asked to vote on the decision to merge as contemplated by the merger proposal and the explanatory memorandum at the extraordinary general meeting of shareholders of ArcelorMittal and Arcelor, respectively. The merger constitutes the second step of the combination of Mittal Steel and Arcelor into a single legal entity governed by Luxembourg law. In the first step, Mittal Steel merged into ArcelorMittal, by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel. After a vote of the shareholders of Mittal Steel at an extraordinary general meeting held on August 28, 2007 and a resolution of the sole shareholder of ArcelorMittal on August 28, 2007, this merger became effective on September 3, 2007 and the combined company was named ArcelorMittal. In this second and final step, ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) will merge into Arcelor and shareholders of ArcelorMittal will become shareholders of Arcelor, which will be renamed ArcelorMittal. See The MergerTwo-Step Merger Process for further information with respect to the two-step merger process. Merger Consideration In the merger, a holder of ArcelorMittal shares will receive one newly-issued Arcelor share for every one ArcelorMittal share, which is referred to as the Exchange Ratio. This Exchange Ratio assumes the prior completion of a share capital restructuring of Arcelor pursuant to which each 7 pre-capital restructuring shares of Arcelor would be exchanged for 8 post-capital restructuring shares of Arcelor, as described in more detail below under Pre-Merger Restructuring of the Share Capital of Arcelor. No additional consideration in cash or in kind will be paid by Arcelor to the shareholders of ArcelorMittal in connection with the merger. ArcelorMittal shares held in treasury by or for the account of ArcelorMittal or Arcelor will disappear in the merger pursuant to Luxembourg law. Arcelor will not issue any shares in consideration of such ArcelorMittal shares held in treasury by or for the account of ArcelorMittal or Arcelor. The Arcelor shares to be issued in the merger will be created under Luxembourg law and will have the same rights as the post-restructuring Arcelor shares as set forth in Arcelors articles of association, which are expected to be amended effective November 13, 2007 (the day of the expected effectiveness of the merger), except for the amendments related to the capital restructuring, which are expected to be effective the day following the Arcelor extraordinary general meeting of shareholders (November 6, 2007 under the proposed calendar), and Luxembourg law, provided however that the newly-issued shares shall be entitled only to dividends declared by Arcelor after the effective date of this merger. Specifically, the newly-issued shares will not be entitled either to (i) the last installment of the dividend decided by the annual general meeting of Arcelor held on April 27, 2007 ($0.325 per share before the share capital restructuring described below; $0.284375 after such restructuring), or (ii) the additional $0.040625 per post-restructuring Arcelor share which distribution will be proposed to the general meeting of Arcelor called to approve this merger, which in the aggregate represents a dividend of $0.325 per post-restructuring Arcelor share. Conversely, as a result of this merger, Arcelor will assume ArcelorMittals obligation to pay the last installment of the quarterly dividend decided by the annual general meeting of shareholders of Mittal Steel on June 12, 2007, which, in light of the exchange ratio of the first-step merger and this merger, will represent $0.325 per Arcelor share newly issued in this merger. Therefore, on or about December 15, 2007, each Arcelor share (whether issued in this merger or previously issued) will be entitled to a dividend payment of $0.325.

Based on the number of Arcelor shares and ArcelorMittal shares issued as of the date hereof ,former ArcelorMittal shareholders will hold approximately 97% of the then-issued shares of Arcelor after the merger. Timetable for the Merger The merger proposal and the explanatory memorandum, each dated September 25, 2007, will be publicly available as of September 28, 2007. A copy of the merger proposal and a copy of the explanatory memorandum are attached to this prospectus as Annex B. In order to complete the merger, ArcelorMittal and Arcelor shareholders must adopt the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. The extraordinary general meeting of shareholders of ArcelorMittal that will vote on the proposal to merge ArcelorMittal into Arcelor will be held on November 5, 2007, at 19, Avenue de la Libert, Luxembourg, Grand Duchy of Luxembourg. The extraordinary general meeting of shareholders of Arcelor that will vote on the proposal to merge ArcelorMittal into Arcelor will be held on November 5, 2007, at 19, Avenue de la Libert, Luxembourg, Grand Duchy of Luxembourg. If the proposal to merge is adopted by the requisite majority at the extraordinary general meetings of shareholders of ArcelorMittal and Arcelor and all other conditions precedent are satisfied or waived, the merger is expected to be effective on or about November 13, 2007. Upon effectiveness of the merger, holders of ArcelorMittal shares will automatically receive newlyissued Arcelor shares in accordance with the Exchange Ratio and on the basis of their respective holdings as entered in the ArcelorMittal shareholder registry (registre des actionnaires) or their respective securities accounts. Holders of ArcelorMittal shares whose shares are registered directly in the ArcelorMittal shareholder registry, will automatically receive newly-issued Arcelor shares through an entry in the shareholder registry (registre des actionnaires) of Arcelor. Holders of ArcelorMittal shares whose shares are registered indirectly, that is through a book-entry system, in the ArcelorMittal shareholder registry, will automatically receive newlyissued Arcelor shares through a credit to their respective securities accounts. Upon the day of effectiveness of the merger, which is expected to be on or about November 13, 2007, the Arcelor shares issued in the merger will be listed and traded on Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext and the Spanish exchanges and admitted to trading on the regulated market of the Luxembourg Stock Exchange and listed on the Official List of the Luxembourg Stock Exchange. Additionally, both the existing and the newly-issued Arcelor shares will be admitted to trading and listing on Euronext Amsterdam by NYSE Euronext and the NYSE. Finally, the ArcelorMittal shares, which will automatically disappear in the merger, will no longer be listed and traded on Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the Spanish exchanges and the NYSE or traded on the regulated market of the Luxembourg Stock Exchange, or listed on the Official List of the Luxembourg Stock Exchange, as of the day of effectiveness of the merger. The last day of listing and trading of the ArcelorMittal shares at these exchanges is expected to be on or about November 12, 2007. Restructuring of the Share Capital of Arcelor At a meeting held on September 25, 2007, the ArcelorMittal and the Arcelor Board of Directors decided that it would be advisable to restructure the share capital of Arcelor prior to the effectiveness of the second-step merger so as to have a one-to-one exchange ratio in the merger. The share capital restructuring would take the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 post-restructuring Arcelor shares, thus mechanically resulting in an adjusted exchange ratio of one new Arcelor share for every one ArcelorMittal share without any economic effect on Arcelor shareholders. The sole purpose for the decision of the Boards of Directors to implement such share capital restructuring was to limit the effect of the merger on the ArcelorMittal share price and hence its comparability pre- and post-merger. The share prices of Arcelor and ArcelorMittal are currently not aligned. Given that the trading volume of ArcelorMittal shares is far greater than that of Arcelor, it is anticipated that the trading characteristics of Arcelor (to be renamed ArcelorMittal at the time of the extraordinary general meeting of Arcelor held to vote on the merger) will immediately upon effectiveness of the merger inherit the pre-merger trading characteristics of ArcelorMittal. Without the share capital restructuring, the 0.875 exchange ratio would necessarily and mechanically cause the ArcelorMittal share price immediately post-merger to be different from 4

the ArcelorMittal share price immediately pre-merger, because the application of the 0.875 ratio would affect the share price in a manner similar to a reverse stock split; effecting the Arcelor share capital restructuring premerger resulting in a one-to-one merger exchange ratio will avoid the merger from having this mechanical effect on the post-merger ArcelorMittal share price. Risk Factors ArcelorMittals business, financial condition or results of operations could be materially adversely affected by any of the risks and uncertainties described in detail in Risk Factors. These include risks relating to: the combined companys ability to manage its growth; the timing of realization of cost savings and other synergies expected to result from acquisitions; costs or difficulties related to the integration of acquisitions, including the acquisition of Arcelor by Mittal Steel, may be greater than expected; uncertainty as to the actions of the Significant shareholder; any loss or diminution in the services of Lakshmi N. Mittal, ArcelorMittals Chairman and Chief Executive Officer, and Arcelors President and Chief Executive Officer; any downgrade of the combined companys credit rating; the combined companys ability to operate within the limitations imposed by its financing arrangements; the ability to refinance existing debt and obtain new financing on acceptable terms to finance its growth; mining risks; the combined companys ability to fund under-funded pension liabilities; the increased cost of wages and the risk of labor disputes; general economic conditions, whether globally, nationally or in the markets in which the combined company will conduct business; the risk of disruption or volatility in the economic, political or social environment in the countries in which the combined company will conduct its business; fluctuations in currency exchange rates, commodity prices, energy prices and interest rates; the risk of disruptions to the combined companys operations; the risk of unfavorable changes to, or interpretations of, the tax laws and regulations in the countries in which the combined company will operate; the risk that the combined company may not be able to fully utilize its deferred tax assets; damage to the combined companys production facilities due to natural disasters; the risk that the combined companys insurance policies may provide limited coverage; the risk of product liability claims adversely affecting the combined companys operations; international trade actions or regulations; 5

expenditures and senior management time required in connection with the combined companys compliance with the Sarbanes-Oxley Act of 2002; the combined companys ability to operate successfully within a cyclical industry; the risk that demand for and supply of steel products in China and other developed / developing economies may result in falling steel prices; the risk of decreasing prices for the combined companys products and other forms of competition in the steel industry; the risk of significant supply shortages and increasing costs of raw materials, energy and transportation; the need for large capital expenditures to maintain the combined companys portfolio of assets; increased competition from substitute materials, such as aluminum; and legislative or regulatory changes, including those relating to protection of the environment and health and safety, and those resulting from international agreements and treaties related to trade, accession to the European Union (EU) or otherwise.

Additional risks not presently known to Arcelor, or that it currently deems immaterial, may also impair its business operations. Key Characteristics of Arcelor Shares As a result of the merger, ArcelorMittal shares will be automatically exchanged for Arcelor shares. Because ArcelorMittal and Arcelor are both socits anonymes organized under the laws of Luxembourg and the articles of association of Arcelor upon effectiveness of the merger will be identical to those of ArcelorMittal prior to the merger (except for the amount of issued capital, which shall be increased in the merger, the provisions relating to the authorized share capital and to share fractions, and certain other non-material items) there will be no material differences between the rights of ArcelorMittal shareholders and Arcelor shareholders upon effectiveness of the merger. As of September 3, 2007, Mr. Lakshmi N. Mittal directly and indirectly beneficially owned 623,285,000 of ArcelorMittals outstanding shares, representing 43.98% of ArcelorMittals outstanding shares. After the merger, the Significant shareholder will own approximately 42.7% of the then-issued Arcelor shares. (If before the effectiveness of the merger ArcelorMittal has completed its 27,000,000 share buy back program described above and if no other ArcelorMittal shares are held by or on behalf of Arcelor or ArcelorMittal, such shareholding would represent approximately 43.5% of then-issued Arcelor shares.) Consequently, the Significant shareholder has the ability to influence significantly the decisions adopted at ArcelorMittals shareholder meetings, including matters regarding the merger at the ArcelorMittal extraordinary general meeting. In addition, after the merger, the Significant shareholder will have the ability to significantly influence the decisions adopted at Arcelors shareholders meeting including a change of control of Arcelor. The Significant shareholder has stated that it intends to vote for the decision to merge as contemplated by the merger proposal and the explanatory memorandum.

RISK FACTORS In addition to the other information included in this prospectus, including the matters addressed under Cautionary Statement Concerning Forward-Looking Statements, you should carefully consider the following risks before deciding whether to vote to adopt the merger of ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. You should also consider the other information in this prospectus and the other documents incorporated by reference into this prospectus, including the merger proposal and the explanatory memorandum, copies of which are attached to this prospectus as Annex B. Risks Related to the Merger The Significant shareholder has the ability to exercise significant influence over the outcome of ArcelorMittals shareholder votes. As of September 3, 2007, Mr. Lakshmi N. Mittal directly and indirectly beneficially owned 623,285,000 of ArcelorMittals outstanding shares, representing 43.98% of ArcelorMittals outstanding shares. After the merger, the Significant shareholder will own approximately 42.7% of the then-issued Arcelor shares. (If before the effectiveness of the merger ArcelorMittal has completed its 27,000,000 share buy back program described above and if no other ArcelorMittal shares are held by or on behalf of Arcelor or ArcelorMittal, such shareholding would represent approximately 43.5% of then-issued Arcelor shares.) Consequently, the Significant shareholder has the ability to influence significantly the decisions adopted at ArcelorMittals shareholder meetings, including matters regarding the merger at the ArcelorMittal extraordinary general meeting. In addition, after the merger, the Significant shareholder will have the ability to significantly influence the decisions adopted at Arcelors shareholders meeting including a change of control of Arcelor. The Significant shareholder has stated that it intends to vote for the decision to merge as contemplated by the merger proposal and the explanatory memorandum. Because the market price of Arcelor shares will fluctuate, the value of Arcelor shares to be issued in the merger will fluctuate. Upon effectiveness of the merger, ArcelorMittal holders will receive one newly-issued Arcelor share for every one ArcelorMittal share. There will be no adjustment to the exchange ratio for changes in the market price of either ArcelorMittal shares or Arcelor shares, and the merger proposal and the explanatory memorandum do not provide for any price-based termination right. Accordingly, the market value of the Arcelor shares that ArcelorMittal shareholders will receive upon effectiveness of the merger is expected to depend largely on the market value of the Arcelor shares at the effective time of the merger and could vary significantly from the market value of the ArcelorMittal shares on the date of this document or the date of the ArcelorMittal extraordinary general meeting. These variations could be the result of changes in the business, operations or prospects of ArcelorMittal or Arcelor, regulatory considerations, general market and economic conditions and other factors both within and beyond the control of ArcelorMittal and Arcelor. Because the effectiveness of the merger will occur after the date of the ArcelorMittal extraordinary general meeting, ArcelorMittal shareholders will not know at the time of the ArcelorMittal extraordinary general meeting the market value of the Arcelor shares they will receive upon effectiveness of the merger. Risks Related to the Combined Company ArcelorMittal has experienced rapid growth through acquisitions in a relatively short period of time. The failure to manage this growth could significantly harm the combined companys future results and require significant expenditures to address the additional operational and control requirements of this growth. ArcelorMittal has experienced rapid growth and development through acquisitions in a relatively short period of time and may continue to pursue acquisitions in order to meet its strategic objectives. Such growth entails significant investment and increased operating costs. Overall growth in ArcelorMittals business also requires greater allocation of management resources away from daily operations. In addition, managing this growth (including managing multiple operating assets) requires, among other things, the continued development of ArcelorMittals financial and management information control systems, the ability to integrate newly acquired assets with existing operations, the ability to attract and retain sufficient numbers of qualified management and other personnel, the continued training and supervision of such personnel and the ability to manage the risks and liabilities associated with the acquired businesses. Failure to manage such growth, while at the same time 7

maintaining adequate focus on its existing assets, could have a material adverse effect on the combined companys business, financial condition, results of operations or prospects. ArcelorMittal may not achieve the expected synergies from its recent significant acquisitions, including the acquisitions of Arcelor, ISG (now Mittal Steel USA) and Sicartsa. ArcelorMittal expects to achieve synergies from its acquisitions by integrating the acquired companies with its operations. Integrating the operations of acquired businesses is a complex and ongoing process. Successful integration and the achievement of synergies require, among other things, the satisfactory coordination of business development and procurement efforts, manufacturing improvements, employee retention, hiring and training policies and the alignment of products, sales and marketing operations and information and software systems. The diversion of the attention of the combined companys management to the integration effort and any difficulties encountered in combining operations could result in higher integration costs and lower savings than expected. Mittal Steel (as the predecessor entity to ArcelorMittal) announced at the time of the acquisition of ISG that it expected to achieve cost synergies of approximately $250 million per annum by 2007 relating to purchasing, manufacturing, operating and other improvements, including inventory reduction, reduced capital expenditures and contract-related improvements in productivity. In connection with its acquisition of Sicartsa, Mittal Steel announced that it expects to achieve approximately $80 million of industrial synergies and approximately $50 million of commercial, procurement and selling, general and administrative efficiencies. If ArcelorMittal does not achieve the announced synergies from any or all of its recent acquisitions, including those from the Arcelor acquisition discussed below, to the fullest extent or within the timeframe expected, this could have a material adverse effect on the results of operations of the combined company. ArcelorMittal and Arcelor may not successfully integrate their business operations, which could result in the combined companys failure to realize anticipated cost savings, revenue enhancements and other benefits expected from the acquisition. Mittal Steel acquired Arcelor, a company of approximately equivalent size, with the expectation that, among other things, the acquisition would enable the companies to consolidate support functions, optimize their supply chain and procurement structure, and leverage their research and development services across a larger base in order to achieve cost savings and revenue synergies, as well as other synergistic benefits. In connection with its acquisition of Arcelor, Mittal Steel announced that it expected to achieve synergies of $1.6 billion by the end of 2008, primarily from purchasing, marketing and trading and manufacturing efficiencies. These synergies may not be achieved to the fullest extent or within the timeframe expected, which could have a material adverse effect on ArcelorMittals results of operations. Achieving the benefits of the acquisition will depend in part upon meeting the challenges inherent in the successful integration of global business enterprises of the size and scope of ArcelorMittal and Arcelor. ArcelorMittal and Arcelor must successfully integrate, among other things, product offerings, research and development, customer service functions, sales and marketing, administrative functions, management information systems and financial control and reporting systems. The integration of these functions could interfere with the activities of one or more of the businesses of the combined company and may divert managements attention from the daily operations of the combined companys core businesses. Among the challenges in integrating ArcelorMittals and Arcelors business operations are demonstrating to their respective customers that the acquisition will not result in an adverse change in business focus and persuading each companys personnel that the companies respective business cultures are compatible. In addition, each company currently operates in locations in which the other company does not. Therefore, to integrate successfully both companies operations, the combined company will need to retain management, key employees and business partners of both companies. If ArcelorMittal and Arcelor are unable to integrate effectively their operations, technologies and personnel in a timely and efficient manner, then they may not realize the benefits expected from the acquisition. In particular, if the integration is not successful, the combined companys operating results may be harmed, it may lose key personnel and key customers, it may not be able to retain or expand its market position, and the market price of its shares may decline.

The Chairman of the Board of Directors and Chief Executive Officer of ArcelorMittal has for over a quarter of a century contributed significantly to shaping and implementing ArcelorMittals business strategy, and the loss or diminution of his services to ArcelorMittal could have a material adverse effect on the combined companys business and prospects. The Chairman of the Board of Directors and Chief Executive Officer of ArcelorMittal has for over a quarter of a century contributed significantly to shaping and implementing ArcelorMittals business strategy. His strategic vision was instrumental in the creation of the worlds largest and most global steel group. The loss or any diminution of his services to ArcelorMittal could have a material adverse effect on the combined companys business and prospects. The combined company does not intend to maintain key-man life insurance on its President of the Board of Directors and Chief Executive Officer. Mittal Steel increased substantially its outstanding debt in connection with its acquisition of Arcelor, which lowered its credit rating. Cyclical downturns in the steel industry could also lead to credit rating downgrades. Credit rating downgrades could significantly harm the combined companys refinancing capacity, increase its costs of funding and limit its flexibility in managing its business. Mittal Steels debt levels increased significantly during 2006, primarily as the result of financing incurred in connection with its acquisition of Arcelor (and Arcelors prior acquisition of Dofasco). As of December 31, 2006, Mittal Steel had total debt outstanding of $26.6 billion, consisting of $4.9 billion of shortterm indebtedness (including payables to banks and the current portion of long-term debt) and $21.6 billion of long-term indebtedness. As of December 31, 2006, Mittal Steel had $6.1 billion of cash and cash equivalents, including short-term investments and restricted cash, and for the year ended December 31, 2006, Mittal Steel recorded operating income of $7.5 billion. Following the announcement of the final results of Mittal Steels offer for Arcelor, on July 26, 2006 Standard & Poors Rating Services lowered its long-term corporate credit rating on Mittal Steel from BBB+ to BBB and removed the rating from credit watch with negative implications. On July 31, 2006, Moodys Investors Service confirmed the Baa3 ratings of Mittal Steel. On September 26, 2006, Fitch Ratings affirmed Mittal Steels issuer default and senior unsecured ratings at BBB and short-term rating at F2 and removed the ratings from negative rating watch. Credit rating downgrades could also result from a cyclical downturn in the steel industry, as ArcelorMittal and Arcelor have experienced in the past. Any decline in its credit rating would increase the combined companys cost of borrowing and could significantly harm its financial condition, results of operations and profitability, including its ability to refinance its existing indebtedness. ArcelorMittals level of indebtedness and its guarantees of the debt of its subsidiaries may limit ArcelorMittals flexibility in managing its business. ArcelorMittals principal financing facilities (that is, the $3.2 billion term and revolving credit facility, which was amended on February 6, 2007 (the 2005 Credit Facility), the $800 million committed multicurrency letter of credit facility (the Letter of Credit Facility) and the 17 billion (approximately $22 billion) term and revolving credit facility entered into on November 30, 2006 (the 17 Billion Facility)), contain provisions that limit encumbrances on the assets of ArcelorMittal and its subsidiaries and limit the ability of ArcelorMittals subsidiaries to incur debt. The Letter of Credit Facility requires compliance with a minimum interest coverage ratio. The 2005 Credit Facility and the 17 Billion Facility require compliance with a maximum gearing ratio. Limitations arising from these credit facilities could adversely affect ArcelorMittals ability to maintain its dividend policy and make additional strategic acquisitions. A portion of ArcelorMittals working capital financing consists of uncommitted lines of credit, which may be cancelled by the lenders in certain circumstances. The level of debt outstanding could have important adverse consequences to ArcelorMittal, including impairing its ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes, and limiting its flexibility to adjust to changing market conditions or withstand competitive pressures, resulting in greater vulnerability to a downturn in general economic conditions. Mittal Steel had, as of December 31, 2006, guaranteed $644 million of debt of its operating subsidiaries. As of June 30, 2007, Mittal Steel had guaranteed an additional $320 million of debt of its operating subsidiaries. In addition, Mittal Steel had, as of June 30, 2007, guaranteed approximately $14 million of certain debts at its joint venture I/N Tek. ArcelorMittals debt facilities and its guarantees have provisions whereby a default by any borrower within the ArcelorMittal group could, under certain circumstances, lead to defaults 9

under other ArcelorMittal credit facilities. Any possible invocation of these cross-default clauses could cause some or all of the other guaranteed debt to accelerate, creating severe liquidity pressures. Furthermore, most of ArcelorMittals current borrowings are at variable rates of interest and thereby expose ArcelorMittal to interest rate risk. Generally, ArcelorMittal does not use financial instruments to hedge a significant portion of its interest rate exposure. If interest rates rise, ArcelorMittals debt service obligations on its variable rate indebtedness would increase even if the amount borrowed remained the same, resulting in higher interest costs. A substantial portion of ArcelorMittals debt is denominated in euro. Accordingly, ArcelorMittal is exposed to fluctuations in the exchange rates between the U.S. dollar and the euro. Any such fluctuations in the euro and, in particular, a marked appreciation of the euro to the U.S. dollar, could harm the combined companys financial position significantly. ArcelorMittal may not generate or obtain sufficient funds to meet the significant capital expenditure commitments and other commitments ArcelorMittal has made in connection with certain acquisitions. In connection with the acquisition of some of its operating subsidiaries, ArcelorMittal has made significant capital expenditure commitments and other commitments with various governmental bodies involving expenditures required to be made over the next few years. In 2006, capital expenditures for Mittal Steel amounted to $2.9 billion. As of December 31, 2006, Mittal Steel and its subsidiaries had capital commitments outstanding of approximately $3.3 billion under privatization and other major contracts. ArcelorMittal expects to fund these capital expenditure commitments and other commitments primarily through internal sources, but ArcelorMittal cannot assure you that it will be able to generate or obtain sufficient funds to meet these requirements or to complete these projects on a timely basis or at all. In addition, completion of these projects may be affected by factors that are beyond the control of ArcelorMittal. ArcelorMittal has also made commitments relating to employees at some of its operating subsidiaries. It has agreed, in connection with the acquisition of interests in these subsidiaries, including the acquisition of Arcelor, that it will not make collective dismissals for certain periods. These periods generally extend several years following the date of acquisition. The inability to make such dismissals may affect ArcelorMittals ability to coordinate its workforce and efficiently manage its business in response to changing market conditions in the areas affected. The combined company may not be able to remain in compliance with some or all of these requirements in the future. Failure to remain in compliance may result in forfeiture of part of the combined companys investment and/or the loss of tax and regulatory benefits. Because the combined company after the merger will be a holding company, it will depend on the earnings and cash flows of its operating subsidiaries, which may not be sufficient to meet future needs. Because the combined company after the merger will be a holding company, it will be dependent on the earnings and cash flows of, and dividends and distributions from, its operating subsidiaries to pay expenses, meet its debt service obligations, and pay any cash dividends or distributions on its shares. Some of these operating subsidiaries have debt outstanding or are subject to acquisition agreements that impose restrictions or prohibitions on such operating subsidiaries ability to pay dividends. Under the laws of Luxembourg, the combined company will be able to pay dividends or distributions only to the extent that it is entitled to receive cash dividend distributions from its subsidiaries, recognize gains from the sale of its assets or record share premium from the issuance of shares. Some of ArcelorMittals subsidiaries benefited from state aid granted prior to, or in connection with, their respective privatizations, the granting of which is subject to transitional arrangements under the respective treaties concerning the accession of these countries to the European Union. Non-fulfillment or breach of the transitional arrangements and related rules may result in the recovery of aid granted pursuant to the transitional arrangements. ArcelorMittal has acquired formerly state owned companies in the Czech Republic, Poland and Romania, some of which benefited from state aid granted prior to, or in connection with, their respective privatization and restructuring. Moreover, the restructuring of the steel industries in each of the Czech Republic, Poland and Romania is subject to transitional arrangements and related rules that determine the legality of 10

restructuring aid. The transitional arrangements form part of the respective treaties concerning the accession of the Czech Republic, Poland and Romania to the European Union. Non-fulfillment or breach of the transitional arrangements and related rules may nullify the effect of the transitional arrangements and may result in the recovery of aid pursuant to the transitional arrangements that have been breached. The combined companys mining operations will be subject to mining risks. The combined companys mining operations will be subject to hazards and risks normally associated with the exploration, development and production of natural resources, any of which could result in production shortfalls or damage to persons or property. In particular, hazards associated with open-pit mining operations include, among others: flooding of the open pit; collapse of the open-pit wall; accidents associated with the operation of large open-pit mining and rock transportation equipment; accidents associated with the preparation and ignition of large scale open-pit blasting operations; production disruptions due to weather; and hazards associated with the disposal of mineralized waste water, such as groundwater and waterway contamination.

Hazards associated with underground mining operations include, among others: underground fires and explosions, including those caused by flammable gas; cave-ins or ground falls; discharges of gases and toxic chemicals; flooding; sinkhole formation and ground subsidence; other accidents and conditions resulting from drilling; and blasting and removing, and processing material from, an underground mine.

The combined company will be at risk of experiencing any or all of these hazards. For example, in September 2006, a methane gas explosion at ArcelorMittals Lenina mine in Kazakhstan resulted in 41 fatalities and a shutdown of the mine for two days. The occurrence of any of these hazards could delay production, increase production costs and result in death or injury to persons, damage to property and liability for the combined company, some or all of which may not be covered by insurance. Under funding of pension and other post-retirement benefit plans at some of ArcelorMittals operating subsidiaries, and the possible need to make substantial cash contributions to pension plans, which may increase in the future, may reduce the cash available for the combined companys business. ArcelorMittals principal operating subsidiaries in Canada, France, Germany, Trinidad, the United States, South Africa and Ukraine provide defined benefit pension plans to their employees. Some of these plans are currently under funded. At December 31, 2006, the value of Mittal Steel USAs pension plan assets was $2,335 million, while the projected benefit obligation was $3,075 million, resulting in a deficit of $740 million. At December 31, 2006, the value of the pension plan assets of Mittal Steels Canadian subsidiaries was $2,193 million, while the projected benefit obligation $2,730 million, resulting in a deficit of $537 million. At December 31, 2006, the value of the pension plan assets of Mittal Steels European subsidiaries was $551 11

million, while the projected benefit obligation was $2,228 million, resulting in a deficit of $1,677 million. Mittal Steel USA also had an under-funded post-employment benefit obligation of $1,137 million relating to life insurance and medical benefits as of December 31, 2006. Mittal Steels Canadian subsidiaries also had an under-funded post-employment benefit obligation of $934 million relating to life insurance and medical benefits as of December 31, 2006. Mittal Steels European subsidiaries also had an under-funded post-employment benefit obligation of $459 million relating to life insurance and medical benefits as of December 31, 2006. ArcelorMittals funding obligations depend upon future asset performance, the level of interest rates used to measure ERISA minimum funding levels, actuarial assumptions and experience, changes negotiated with unions and future government regulation. Because of the large number of variables that determine pension funding requirements, which are difficult to predict, as well as any legislative action, future cash funding requirements for ArcelorMittals pension plans and other post-employment benefit plans could be significantly higher than currently estimated amounts. These funding requirements could have a material adverse effect on the combined companys business, financial condition, results of operations or prospects. The combined company could experience labor disputes that could disrupt its operations and its relationships with its customers. A majority of the employees of ArcelorMittal are represented by labor unions and are covered by collective bargaining or similar agreements, which are subject to periodic renegotiation. Strikes or work stoppages could occur prior to, or during, the negotiations leading to new collective bargaining agreements, during wage and benefits negotiations or during other periods for other reasons. Any such breakdown leading to work stoppage and disruption of operations could have an adverse effect on the operations and financial results of ArcelorMittal. For example, steel workers at ArcelorMittals Lzaro Crdenas production facilities went on strike on two occasions in the period of February to April of 2006 following the removal of the steel workers union leader by the Mexican government and during 2006 ArcelorMittal experienced various other strikes of limited duration. Additionally, many of the contractors working at ArcelorMittals operating subsidiaries plants employ workers who are represented by various trade unions. Disruptions with these contractors could significantly disrupt ArcelorMittals operations and harm its financial results and its relationships with its customers. Prior to ArcelorMittals acquisition of Arcelor, representatives of various unions representing Arcelor employees made statements critical of the acquisition. Although no union of Arcelor has yet gone on strike, ArcelorMittal may still be subject to strikes and other labor actions by Arcelor employees that would disrupt the combined companys operations and prevent it from achieving the anticipated synergies and efficiencies arising from the acquisition. The combined company will be subject to economic risks and uncertainties in the countries in which it will operate. Any deterioration or disruption of the economic environment in those countries could have a material adverse effect on the combined companys business, financial condition, results of operations or prospects. Over the past few years, many of the countries in which ArcelorMittal operates, or proposes to operate, have experienced economic growth and improved economic stability. For example, Eastern European countries, such as Poland, the Czech Republic and Romania, have initiated free-market economic reforms in connection with, or in anticipation of, their accession to the European Union. Others, such as Algeria, Argentina and South Africa, have attempted to reinforce political stability and improve economic performance after recent periods of political instability. Ukraine and Kazakhstan have implemented free-market economic reforms. ArcelorMittals business strategy was developed partly on the assumption that such economic growth and the modernization, restructuring and upgrading of the physical infrastructure in these countries will continue, thus creating increased demand for ArcelorMittals steel products and maintaining a stable level of steel prices both in these countries and in other key product markets. While the demand in these countries for steel and steel products has gradually increased, this trend will not necessarily continue. In addition, the legal systems in some of the countries in which ArcelorMittal will operate remain underdeveloped, particularly with respect to bankruptcy proceedings, and the prospect of widespread bankruptcy, mass unemployment and the deterioration of various sectors of these economies still exists. Reform policies may not continue to be implemented and, if implemented, may not be successful. In addition, these countries may not remain receptive to foreign trade and investment. Any slowdown in the development of these economies or any reduction in the investment budgets of governmental agencies and companies responsible for the modernization of such physical infrastructure could also have a material adverse effect on the combined companys business, financial condition, results of operations or prospects. 12

The combined company will be subject to political, social and legal uncertainties in some of the developing countries in which it will operate. Any disruption or volatility in the political or social environment in those countries could have a material adverse effect on the combined companys business, financial condition, results of operations or prospects. ArcelorMittal operates in a number of developing countries. Some of these countries, such as Romania and Ukraine, have been undergoing substantial political transformations from centrally controlled command economies to pluralist market-oriented democracies. Political and economic reforms necessary to complete such transformation may not continue. On occasion, ethnic, religious, historical and other divisions have given rise to tensions and, in certain cases, widescale civil disturbances and military conflict, as in Algeria, Bosnia and Herzegovina, Liberia and South Africa. The political systems in these and other developing countries may be vulnerable to the populations dissatisfaction with reforms, social and ethnic unrest and changes in governmental policies, any of which could have a material adverse effect on the combined companys business, financial condition, results of operations or prospects and its ability to continue to do business in these countries. In addition, the combined company may encounter difficulties in enforcing court judgments or arbitral awards in some countries in which it will operate because those countries may not be parties to treaties that recognize the mutual enforcement of court judgments. The combined company could experience currency fluctuations and become subject to exchange controls that could adversely affect its business, financial condition, results of operations or prospects. ArcelorMittal operates and sells products in a number of countries, and, as a result, ArcelorMittals business, financial condition, results of operations or prospects could be adversely affected by fluctuations in exchange rates. Major changes in exchange rates, particularly changes in the value of the U.S. dollar against the currencies of countries in which ArcelorMittal operates, could have an adverse effect on its business, financial condition, results of operations or prospects. Some operations involving the South African rand, Kazakh tenge, Brazilian real, Argentine peso, Algerian dinar and Ukrainian hryvnia are subject to limitations imposed by their respective central banks. The imposition of exchange controls or other similar restrictions on currency convertibility in the countries in which ArcelorMittal operates could adversely affect the combined companys business, financial condition, results of operations or prospects. Disruptions to ArcelorMittals manufacturing processes could adversely affect the combined companys operations, customer service levels and financial results. Steel manufacturing processes are dependent on critical steel making equipment, such as furnaces, continuous casters, rolling mills and electrical equipment (such as transformers), and such equipment may incur downtime as a result of unanticipated failures or other events, such as fires or furnace breakdowns. ArcelorMittals manufacturing plants have experienced, and may in the future experience, plant shutdowns or periods of reduced production as a result of such equipment failures or other events. To the extent that lost production as a result of such a disruption could not be compensated for by unaffected facilities, such disruptions could have an adverse effect on the combined companys operations, customer service levels and financial results. Natural disasters could significantly damage ArcelorMittals production facilities. Natural disasters could significantly damage ArcelorMittals production facilities and general infrastructure. In particular, ArcelorMittal Lzaro Crdenas production facilities are located in Lzaro Crdenas, Michoacan, Mexico, and ArcelorMittal Temirtau is located in the Karaganda region of the Republic of Kazakhstan, both of which are areas that have historically experienced earthquakes of varying magnitude. Extensive damage to either facility, or any other major production complexes, whether as a result of an earthquake or other natural disaster, could, to the extent that lost production as a result of such a disaster could not be compensated for by unaffected facilities, severely affect the combined companys ability to conduct its business operations and, as a result, reduce its future operating results.

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The combined companys insurance policies will provide limited coverage, potentially leaving it uninsured against some business risks. The occurrence of an event that is uninsurable or not fully insured could have a material adverse effect on the combined companys business, financial condition, results of operations or prospects. The combined company will maintain insurance on property and equipment in amounts believed to be consistent with industry practices but it may not be fully insured against some business risks. The combined companys insurance policies will cover physical loss or damage to its property and equipment on a reinstatement basis arising from a number of specified risks and certain consequential losses, including business interruption arising from the occurrence of an insured event under its policies. Arcelor maintains similar coverage, which eventually will be consolidated under appropriate groupwide policies at the time of their renewal. Under these policies, damages and losses caused by some natural disasters, such as earthquakes, floods and windstorms, will also be covered. The coverage for Arcelors plants is similar to the coverage for ArcelorMittals plants, except as to natural hazards, earthquakes and windstorms, for which Arcelor relies on self insurance where external insurance cover is not legally required, as its exposure to those risks is considered to be limited. Each of the operating subsidiaries of the combined company also will maintain various other types of insurance, such as workmens compensation insurance and marine insurance. Notwithstanding the insurance coverage that ArcelorMittal and its subsidiaries will carry, the occurrence of an accident that causes losses in excess of limits specified under the relevant policy, or losses arising from events not covered by insurance policies, could materially harm the combined companys financial condition and future operating results. Product liability claims could adversely affect the combined companys operations. ArcelorMittal sells products to major manufacturers who are engaged to sell a wide range of end products. Furthermore, ArcelorMittals products are also sold to, and used in, certain safety critical applications. If ArcelorMittal were to sell steel that is inconsistent with the specifications of the order or the requirements of the application, significant disruptions to the customers production lines could result. There could also be significant consequential damages resulting from the use of such products. The combined company will have a limited amount of product liability insurance coverage, and a major claim for damages related to products sold could leave the combined company uninsured against a portion or all of the award and, as a result, materially harm its financial condition and future operating results. International trade actions or regulations and trade related legal proceedings could reduce or eliminate the combined companys access to steel markets. ArcelorMittal has international operations and makes sales throughout the world, and, therefore, its businesses have significant exposure to the effects of trade actions and barriers. Various countries, including the United States and Canada, have in the past instituted, or are currently contemplating the institution of, trade actions and barriers. ArcelorMittal cannot predict the timing and nature of similar or other trade actions by the United States, Canada or any other country. Because of the international nature of these operations, ArcelorMittal could be affected by any trade actions or restrictions introduced by any country in which it sells, or has the potential to sell, its products. Any such trade actions could materially and adversely affect the combined companys business by reducing or eliminating the combined companys access to steel markets. In addition to the more general trade barriers described above, if the combined company were party to a regulatory or trade related legal proceeding that was decided adversely to it, its business, financial condition, results of operations or prospects could be adversely affected. Significant expenditures and senior management time may be required with respect to the combined companys internal controls to ensure compliance with the requirements of Section 404 of the Sarbanes Oxley Act of 2002. Section 404 of the Sarbanes Oxley Act of 2002 and the regulations of the SEC thereunder will require senior executive and senior financial officers of the combined company to assess on a regular basis the internal controls over financial reporting, evaluate the effectiveness of such internal controls and disclose any material weaknesses in such internal controls. The combined companys independent registered public accounting firm will also be required to provide an attestation of managements evaluation, including with respect to entities acquired by ArcelorMittal, some of which may have internal control weaknesses or deficiencies. The scope of 14

managements assessment of Mittal Steels internal control over financial reporting did not include an assessment of the disclosure controls and procedures for Arcelor during 2006, and management has excluded Arcelor from its assessment of the effectiveness of Mittal Steels internal control over financial reporting as of December 31, 2006. The disclosure controls and procedures for Arcelor will be included in managements assessment as of December 31, 2007. Consequently, to the extent that Arcelor is discovered to have weak or deficient internal controls, the combined company may be required to allocate significant monetary and management resources to remedy the deficiencies and weaknesses that could otherwise be devoted to its daily business operations. The tax liability of the combined company may substantially increase if the tax laws and regulations in the countries in which it will operate change or become subject to adverse interpretations or inconsistent enforcement. Taxes payable by companies in many of the countries in which the combined company will operate are substantial and include value added tax, excise duties, profit taxes, payroll related taxes, property taxes and other taxes. Tax laws and regulations in some of these countries may be subject to frequent change, varying interpretation and inconsistent enforcement. Ineffective tax collection systems and continuing budget requirements may increase the likelihood of the imposition of arbitrary or onerous taxes and penalties, which could have a material adverse effect on the combined companys financial condition and results of operations. In addition to the usual tax burden imposed on taxpayers, these conditions create uncertainty as to the tax implications of various business decisions. This uncertainty could expose the combined company to significant fines and penalties and to enforcement measures despite its best efforts at compliance, and could result in a greater than expected tax burden. In addition, many of the jurisdictions in which the combined company will operate have adopted transfer pricing legislation. If tax authorities impose significant additional tax liabilities as a result of transfer pricing adjustments, it could have a material adverse effect on the combined companys financial condition and results of operations. It is possible that taxing authorities in the countries in which the combined company will operate will introduce additional revenue raising measures. The introduction of any such provisions may affect the overall tax efficiency of ArcelorMittal and could result in significant additional taxes becoming payable. Any such additional tax exposure could have a material adverse effect on the combined companys financial condition and results of operations. The combined company may face a significant increase in its income taxes if tax rates increase or the tax laws or regulations in the jurisdictions in which it will operate or treaties between those jurisdictions are modified in an adverse manner. This may adversely affect the combined companys cash flows, liquidity and ability to pay dividends. If ArcelorMittal were unable to utilize fully its deferred tax assets, the combined companys profitability could be reduced. At December 31, 2006, Mittal Steel had $1,670 million recorded as deferred tax assets on its balance sheet. These assets can be utilized only if, and only to the extent that, ArcelorMittals operating subsidiaries generate adequate levels of taxable income in future periods to offset the tax loss carry forwards and reverse the temporary differences before they expire. At December 31, 2006, the amount of future income required to recover Mittal Steels deferred tax assets was approximately $5,278 million at certain operating subsidiaries. For each of the years ended December 31, 2005 and 2006, these operating subsidiaries generated approximately 62% and 43%, respectively, of Mittal Steels consolidated income before tax of $4,676 million and $7,195 million respectively. ArcelorMittals ability to generate taxable income is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. If ArcelorMittal generates lower taxable income than the amount it has assumed in determining its deferred tax assets, then the value of deferred tax assets will be reduced.

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Risks Related to the Industry Steel companies are susceptible to the cyclicality of the steel industry, making their results of operations unpredictable. The steel industry has historically been highly cyclical and is affected significantly by general economic conditions and other factors, such as worldwide production capacity, fluctuations in steel imports/exports and tariffs. Steel prices are also sensitive to trends in cyclical industries, such as automotive, construction, appliance, machinery, equipment and transportation industries, which are the significant markets for ArcelorMittals products. Steel markets have been experiencing larger and more pronounced cyclical fluctuations, driven recently by the substantial increase in steel production and consumption in China. This trend, combined with the rising costs of key inputs, mainly metallics, energy, transportation and logistics, presents an increasing challenge for steel producers. The volatility and the length and nature of business cycles affecting the steel industry have historically been unpredictable, and the recurrence of another major downturn in the industry would negatively impact the combined companys results of operations and profitability. Rapidly growing demand and supply of steel products in China and other developing economies may result in additional excess worldwide capacity and falling steel prices. Over the last several years, steel consumption in China and other developing economies, such as India, has increased rapidly. Steel companies have responded by developing steel production capabilities in these countries. Steel production, especially in China, has been expanding significantly and, in 2006, China became a net exporter of steel. Excess Chinese capacity exported to Europe and the United States put downward pressure on steel prices in those markets in 2006. Because China is the largest worldwide steel producer by a large margin, any excess Chinese capacity could have a major negative impact on world steel trade and prices if excess production is continued to be exported to other markets. The combined company could face significant price and other forms of competition from other steel producers, which could have a material adverse effect on its business, financial condition, results of operations or prospects. The markets in which steel companies conduct business are highly competitive. Competition could cause the combined company to lose market share, increase expenditures or reduce pricing, any one of which could have a material adverse effect on its business, financial condition, results of operations or prospects. The global steel industry has historically suffered from substantial over-capacity. This has led to substantial price decreases during periods of economic weakness that have not been offset by commensurate price increases during periods of economic strength. Excess capacity in some of the products sold by ArcelorMittal will intensify price competition for those products. This could require the combined company to reduce the price for its products and, as a result, may have a material adverse effect on its business, financial condition, results of operations or prospects. ArcelorMittal competes primarily on the basis of quality and the ability to meet customers product specifications, delivery schedules and price expectation. Some of ArcelorMittals competitors may have different technologies, lower raw material and energy costs and lower employee postemployment benefit costs. In addition, the competitive position of the combined company within the global steel industry may be affected by, among other things, the recent trend toward consolidation among its competitors, particularly in Europe and the United States; exchange rate fluctuations that may make the products of the combined company less competitive in relation to the products of steel companies based in other countries; and the development of new technologies for the production of steel and steel related products. The combined company could encounter supply shortages and increases in the cost of raw materials, energy and transportation. Steel production requires substantial amounts of raw materials and energy, including iron ore, scrap, electricity, natural gas, coal and coke. Currently, there is a worldwide shortage of coke and coal, mainly as a result of the rapid growth in the demand for steel globally. In 2006, there was a sharp rise in the cost of a number of commodities essential for the process of steel-making. In particular, the prices of zinc and nickel rose substantially due to a worldwide stock shortage. Any prolonged interruption in the supply of raw materials or energy, or substantial increases in their costs, could adversely affect the business, financial condition, results of 16

operations or prospects of steel companies. The availability and prices of raw materials may be negatively affected by, among other factors: new laws or regulations; suppliers allocations to other purchasers; interruptions in production by suppliers; accidents or other similar events at suppliers premises or along the supply chain; wars, natural disasters and other similar events; changes in exchange rates; consolidation in steel related industries; the bargaining power of raw material suppliers; worldwide price fluctuations; and the availability and cost of transportation.

In addition, energy costs, including the cost of electricity and natural gas, make up a substantial portion of the cost of goods sold by steel companies. The price of energy has varied significantly in the past several years and may vary significantly in the future largely as a result of market conditions and other factors beyond the control of steel companies, including significant increases in oil prices. Because the production of direct reduced iron and the re-heating of steel involve the use of significant amounts of natural gas, steel companies are sensitive to the price of natural gas. Further global developments, particularly the dramatic increase in Chinese and Indian demand for materials and inputs used in steel manufacturing, may cause severe shortages and/or substantial price increases in key raw materials and ocean transportation capacity. Inability to recoup such cost increases from increases in the selling prices of steel companies products, or inability to cater to their customers demands because of nonavailability of key raw materials or other inputs, may harm the business, financial condition, results of operations or prospects of steel companies. The combined company will not necessarily be able to procure adequate supplies in the future. A portion of ArcelorMittals raw materials are obtained under contracts that are either short-term or are subject to periodic price negotiations. Any prolonged interruption, discontinuation or other disruption in the supply of raw materials or energy, or substantial increases in their costs, may harm the combined companys business, financial condition and results of operations or prospects. The combined company will be susceptible to changes in governmental policies and international economic conditions that could limit its operating flexibility and reduce its profitability. Governmental, political and economic developments relating to inflation, interest rates, taxation, currency fluctuations, trade regulations, social or political instability, diplomatic relations, international conflicts and other factors could limit the combined companys operating flexibility and reduce its profitability. ArcelorMittal has not obtained and the combined company does not intend to obtain political risk insurance in any country in which it will conduct business. Countries where the combined company will conduct operations where such risks are the greatest would include Algeria, Liberia, Kazakhstan and Ukraine. In particular, regulatory authorities in these countries exercise considerable discretion in the enforcement of local laws and regulations. At times, authorities may use this discretion to enforce laws and regulations in an unpredictable manner, and dealing with this may be costly and time consuming for ArcelorMittal. Additionally, there is uncertainty relating to possible changes in government or in the political climate. For example, a new government may seek to reopen or challenge the tax, legal or other arrangements affecting ArcelorMittals operations, which could have material adverse consequences.

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Competition from other materials could significantly reduce market prices and demand for steel products and thereby reduce the combined companys cash flow and profitability. In many applications, steel competes with other materials that may be used as steel substitutes, such as aluminum (particularly in the automobile industry), cement, composites, glass, plastic and wood. Additional substitutes for steel products could significantly reduce market prices and demand for steel products and thereby reduce the combined companys cash flow and profitability. The combined company will be subject to stringent environmental and health and safety regulations that give rise to significant costs and liabilities, including those arising from environmental remediation programs. The combined company will be subject to a broad range of environmental and health and safety laws and regulations in each of the jurisdictions in which it operates. These laws and regulations, as interpreted by relevant agencies and the courts, impose increasingly stringent environmental and health and safety protection standards regarding, among other things, air emissions, wastewater storage, treatment and discharges, the use and handling of hazardous or toxic materials, waste disposal practices, worker health and safety and the remediation of environmental contamination. For example, U.S. laws and regulations and European Union, or EU, Directives, as well as any new or additional environmental compliance requirements that may arise out of the implementation by different countries of the Kyoto Protocol (United Nations Framework on Climate Change, 1992), may impose new and/or additional rules or more stringent environmental norms with which steel companies may have to comply. Compliance with these obligations may require additional capital expenditures or modifications in operating practices, particularly at steel companies operating in countries that have recently joined the European Union. The costs of complying with health and safety laws and regulations and environmental regulatory or remediation obligations, including participation in the assessment and remediation of contaminated sites, could be significant, and failure to comply could result in the assessment of civil and criminal penalties, the suspension of permits or operations, and lawsuits by third parties. In addition to the impact on current facilities and operations, these standards could give rise to substantial environmental liabilities with respect to divested assets and past activities. ArcelorMittal is involved in a range of compliance actions and legal proceedings concerning environmental matters, all of which relate to legacy obligations arising from acquisitions. In some cases, ArcelorMittal has entered into consent decrees or settlement agreements requiring remediation of contamination or other capital improvements relating to environmental matters. Failure to comply with these commitments could result in significant monetary penalties. ArcelorMittal is also conducting significant remedial activities at various facilities to address environmental liabilities in the absence of any governmental actions. ArcelorMittal has established reserves for environmental remediation activities and liabilities. However, environmental matters cannot be predicted with certainty, and the reserves may not be adequate, especially in light of the potential for change in environmental conditions or the discovery of previously unknown environmental conditions, the risk of governmental orders to carry out additional activities not initially included in the remediation estimates, and the potential for ArcelorMittal to be liable for remediation of other sites for which provisions have not been previously established. Such future developments could result in significantly higher environmental costs and liabilities. ArcelorMittal, like other steel companies with operations in the EU, is subject to carbon dioxide, or CO2 legislation. In Europe, according to the framework of the European Emissions Trading system, every year plants receive a number of CO2 allowances to cover their emissions during that year. In addition, Canada and other countries in which ArcelorMittal has facilities also may issue laws and regulations requiring reductions in greenhouse gas emissions or the purchase of emission credits. The EUs review of the national allocation plans for the 2008-2012 trading period is ongoing. If the allowances granted to ArcelorMittal and its subsidiaries for the 2008-2012 trading period are insufficient to cover their CO2 emissions, ArcelorMittal will have to purchase additional allowances on the open market or import allowances from third countries in which emission-saving projects carried out under the Kyoto Protocols flexible project-based mechanism can generate additional allowances.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS This prospectus and the documents incorporated by reference in this prospectus contain forwardlooking statements based on estimates and assumptions. Forward-looking statements include, among other things, statements concerning the business, future financial condition, results of operations and prospects of ArcelorMittal and Arcelor, including its acquired subsidiaries. These statements usually contain the words believes, plans, expects, anticipates, intends, estimates or other similar expressions. For each of these statements, you should be aware that forward-looking statements involve known and unknown risks and uncertainties. Although it is believed that the expectations reflected in these forward-looking statements are reasonable, there is no assurance that the actual results or developments anticipated will be realized or, even if realized, that they will have the expected effects on the business, financial condition, results of operations or prospects of ArcelorMittal or the combined company. These forward-looking statements speak only as of the date on which the statements were made, and no obligation has been undertaken to update publicly or revise any forward-looking statements made in this prospectus or elsewhere as a result of new information, future events or otherwise, except as required by applicable laws and regulations. In addition to other factors and matters contained or incorporated by reference in this prospectus, it is believed that the following factors, among others, could cause actual results to differ materially from those discussed in the forward-looking statements: the combined companys ability to manage its growth; the timing of realization of cost savings and other synergies expected to result from acquisitions; costs or difficulties related to the integration of acquisitions, including the acquisition of Arcelor by Mittal Steel, may be greater than expected; uncertainty as to the actions of the Significant shareholder; any loss or diminution in the services of Lakshmi N. Mittal, Arcelors President of the Board of Directors and Chief Executive Officer and ArcelorMittals Chairman of the Board of Directors and Chief Executive Officer; any downgrade of the combined companys credit rating; the combined companys ability to operate within the limitations imposed by its financing arrangements; the combined companys ability to refinance existing debt and obtain new financing on acceptable terms to finance its growth; mining risks; the combined companys ability to fund under-funded pension liabilities; the increased cost of wages and the risk of labor disputes; general economic conditions, whether globally, nationally or in the markets in which the combined company will conduct business; the risk of disruption or volatility in the economic, political or social environment in the countries in which the combined company will conduct its business; fluctuations in currency exchange rates, commodity prices, energy prices and interest rates; the risk of disruptions to the combined companys operations; the risk of unfavorable changes to, or interpretations of, the tax laws and regulations in the countries in which the combined company will operate; 19

the risk that the combined company may not be able to fully utilize its deferred tax assets; damage to the combined companys production facilities due to natural disasters; the risk that the combined companys insurance policies may provide limited coverage; the risk of product liability claims adversely affecting the combined companys operations; international trade actions or regulations; expenditures and senior management time required in connection with the combined companys compliance with the Sarbanes-Oxley Act of 2002; the combined companys ability to operate successfully within a cyclical industry; the risk that demand for and supply of steel products in China and other developed / developing economies may result in falling steel prices; the risk of decreasing prices for the combined companys products and other forms of competition in the steel industry; the risk of significant supply shortages and increasing costs of raw materials, energy and transportation; the need for large capital expenditures to maintain the combined companys portfolio of assets; increased competition from substitute materials, such as aluminum; and legislative or regulatory changes, including those relating to protection of the environment and health and safety, and those resulting from international agreements and treaties related to trade, accession to the European Union (EU) or otherwise.

These factors are discussed in more detail in this prospectus, including under the section Risk Factors.

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LETTER TO THE SHAREHOLDERS OF ArcelorMittal To the Shareholders of ArcelorMittal: You are cordially invited to attend the extraordinary general meeting of shareholders of ArcelorMittal scheduled for November 5, 2007, at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg. At the extraordinary general meeting, you will be asked to adopt the decision to merge ArcelorMittal into Arcelor, as contemplated by the merger proposal (projet de fusion) and the explanatory memorandum (rapport crit dtaill) dated as of September 25, 2007, which are referred to as the merger proposal and the explanatory memorandum. In the merger, ArcelorMittal will merge into Arcelor by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal. The combined company will be renamed ArcelorMittal. Upon effectiveness of the merger, each ArcelorMittal share that you own at the effective time of the merger will be converted into one newly-issued Arcelor share without nominal value, which are referred to as Arcelor shares. All Arcelor shares outstanding at the effective time of the merger (other than those held by ArcelorMittal) will remain outstanding following effectiveness of the merger. Based on the number of ArcelorMittal shares issued on the date hereof, Arcelor expects to issue a maximum of 1,417,207,253 Arcelor shares to ArcelorMittal shareholders in the merger, such number being nominally reduced by the number of ArcelorMittal shares that will be held by or on behalf of Arcelor or ArcelorMittal as of November 5, 2007, the day of the extraordinary general meetings of ArcelorMittal and Arcelor convened to vote on the merger. Application will be made to the relevant authorities for the admission of the Arcelor shares (including, if relevant, the existing issued Arcelor shares) to trading on the Luxembourg Stock Exchanges regulated market and for the listing of these shares on the Official List of the Luxembourg Stock Exchange, and for the admission to trading and listing of the Arcelor shares on Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the stock exchanges of Barcelona, Bilbao, Madrid and Valencia and the New York Stock Exchange. Immediately following the effectiveness of the merger, former ArcelorMittal shareholders are expected to hold Arcelor shares representing approximately 97% of the thenissued Arcelor shares. The merger cannot be effected unless, among other things, ArcelorMittal shareholders adopt the decision to merge as contemplated by the merger proposal and the explanatory memorandum (among other conditions set forth in this prospectus). The decision to merge requires the approval of at least two-thirds of the votes cast at the ArcelorMittal extraordinary general meeting where at least 50% of the issued share capital of ArcelorMittal is present or represented at the meeting. Assuming that all conditions precedent will be satisfied or waived (where legally permissible), ArcelorMittal and Arcelor currently expect that the merger will be effective on or about November 13, 2007. The ArcelorMittal Board of Directors has carefully reviewed and considered the terms and conditions of the merger proposal and the explanatory memorandum. Based on its review, the ArcelorMittal Board of Directors has determined that the merger proposal and the explanatory memorandum and the transactions contemplated by the merger proposal and the explanatory memorandum are in the best interests of ArcelorMittal and the ArcelorMittal shareholders. The ArcelorMittal Board of Directors unanimously recommends that ArcelorMittal shareholders vote FOR the decision to merge as contemplated by the merger proposal and the explanatory memorandum. The accompanying disclosure documents (including the merger proposal and the explanatory memorandum, included as Annex B to this prospectus) contain detailed information about the merger and the extraordinary general meeting. We encourage ArcelorMittal shareholders to read carefully this prospectus before voting, including the section entitled Risk Factors beginning on page 7 of this prospectus. Your vote is very important. You are encouraged to vote. Sincerely, Lakshmi N. Mittal Chairman of Board of Directors ArcelorMittal

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LETTER TO THE SHAREHOLDERS OF ARCELOR To the Shareholders of Arcelor: You are cordially invited to attend the extraordinary general meeting of shareholders of Arcelor scheduled for November 5, 2007, at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg. At the extraordinary general meeting, you will be asked to adopt the decision to merge ArcelorMittal into Arcelor, as contemplated by the merger proposal (projet de fusion) and the explanatory memorandum (rapport crit dtaill) dated as of September 25, 2007, which are referred to as the merger proposal and the explanatory memorandum. In the merger, ArcelorMittal will merge into Arcelor by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal. The combined company will be renamed ArcelorMittal. Upon effectiveness of the merger, each ArcelorMittal share outstanding at the effective time of the merger will be converted into one newly-issued Arcelor share without nominal value, which are referred to as Arcelor shares. All Arcelor shares outstanding at the effective time of the merger (other than those held by ArcelorMittal) will remain outstanding following effectiveness of the merger. Based on the number of ArcelorMittal shares issued on the date hereof, Arcelor expects to issue a maximum of 1,417,207,253 Arcelor shares to ArcelorMittal shareholders in the merger, such number being nominally reduced by the number of ArcelorMittal shares that will be held by or on behalf of Arcelor or ArcelorMittal as of November 5, 2007, the day of the extraordinary general meetings of ArcelorMittal and Arcelor convened to vote on the merger. Application will be made to the relevant authorities for the admission of the Arcelor shares (including, if relevant, the existing issued Arcelor shares) to trading on the Luxembourg Stock Exchanges regulated market and for the listing of these shares on the Official List of the Luxembourg Stock Exchange, and for the admission to trading and listing of the Arcelor shares on Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the stock exchanges of Barcelona, Bilbao, Madrid and Valencia and the New York Stock Exchange. Immediately following the effectiveness of the merger, current Arcelor shareholders (excluding ArcelorMittal) are expected to hold Arcelor shares representing approximately 3% of the then-issued Arcelor shares. The merger cannot be effected unless, among other things, Arcelor shareholders adopt the decision to merge as contemplated by the merger proposal and the explanatory memorandum (among other conditions set forth in this prospectus). The decision to merge requires the approval of at least two-thirds of the votes cast at the Arcelor extraordinary general meeting where at least 50% of the issued share capital of Arcelor is present or represented at the meeting. Assuming that all conditions precedent will be satisfied or waived (where legally permissible), ArcelorMittal and Arcelor currently expect that the merger will be effective on or about November 13, 2007. The Arcelor Board of Directors has carefully reviewed and considered the terms and conditions of the merger proposal and the explanatory memorandum. Based on its review, the Arcelor Board of Directors has determined that the merger proposal and the explanatory memorandum and the transactions contemplated by the merger proposal and the explanatory memorandum are in the best interests of Arcelor and the Arcelor shareholders. The Arcelor Board of Directors unanimously recommends that Arcelor shareholders vote FOR the decision to merge as contemplated by the merger proposal and the explanatory memorandum. The accompanying disclosure documents (including the merger proposal and the explanatory memorandum, included as Annex B to this prospectus) contain detailed information about the merger and the extraordinary general meeting. We encourage Arcelor shareholders to read carefully this prospectus before voting, including the section entitled Risk Factors beginning on page 7 of this prospectus. Your vote is very important. You are encouraged to vote. Sincerely, Joseph J. Kinsch Chairman of Board of Directors Arcelor

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE ArcelorMittal EXTRAORDINARY GENERAL MEETING AND THE ARCELOR EXTRAORDINARY GENERAL MEETING The following are some questions that you may have regarding the proposed merger and the other matters being considered at the ArcelorMittal and Arcelor extraordinary general meetings and brief answers to those questions. Arcelor and ArcelorMittal urge you to read carefully the remainder of this prospectus, including without limitation the merger agreement, the merger proposal and the explanatory memorandum, copies of which are attached to this prospectus as Annex A and Annex B, respectively, because the information in this section does not provide all the information that might be important to you with respect to the proposed merger. Additional important information is also contained in the annexes to, and the documents incorporated by reference in, this prospectus. Q: A: What is the proposed transaction? In 2006, Mittal Steel Company N.V., which is referred to as Mittal Steel, conducted a mixed cash and exchange offer, which is referred to as the Offer, for the outstanding shares, American depositary shares and convertible bonds (OCEANES) of Arcelor. As a result of the Offer, Mittal Steel obtained approximately 94% of the share capital and the voting rights of Arcelor and on August 1, 2006 Arcelor became a subsidiary of Mittal Steel and its results of operations have been included in Mittal Steels consolidated results of operations from that date. In connection with the Offer, Mittal Steel, Arcelor, and Mr. Lakshmi N. Mittal and Mrs. Usha Mittal, the latter two referred to together as the Significant shareholder, entered into a Memorandum of Understanding on June 25, 2006 (the Memorandum of Understanding or MOU), pursuant to which it was agreed, among other things, that Mittal Steel would be merged into Arcelor as soon as practicable following the completion of Mittal Steels offer for Arcelor and that the combined entity would be incorporated, domiciled and headquartered in Luxembourg. As a first step in a two-step merger process to combine Mittal Steel and Arcelor in a single legal entity governed by Luxembourg law, on May 2, 2007, Mittal Steel and ArcelorMittal entered into a merger agreement, which provided that Mittal Steel would merge into ArcelorMittal, by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel. After a vote of the shareholders of Mittal Steel at an extraordinary general meeting held on August 28, 2007, this merger became effective on September 3, 2007 and the combined company was named ArcelorMittal. On September 25, 2007, ArcelorMittal and Arcelor entered into the merger agreement, which provides that, subject to the terms and conditions set forth in the merger proposal and the explanatory memorandum and following the merger of Mittal Steel into ArcelorMittal, ArcelorMittal will merge into Arcelor, by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal. The combined company will be renamed ArcelorMittal. For a more complete description of the merger process, see The Merger. Q: A: Why is the merger of Mittal Steel into Arcelor being effected in two steps? The two-step merger process was structured to enable Mittal Steel to comply more rapidly and efficiently with part of the MOU undertakings. In addition, the first-step merger permitted a simplification of the groups corporate structure, as both ArcelorMittal and Arcelor are located in the same jurisdiction (Luxembourg) with the same headquarters. The first-step merger therefore contributed to a more efficient and rapid integration of the management and administrative teams of Mittal Steel and Arcelor. The second-step merger of ArcelorMittal into Arcelor will constitute the second and final step of the combination of Mittal Steel and Arcelor into a single legal entity governed by Luxembourg law. In this second-step merger, ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) will merge into Arcelor and shareholders of ArcelorMittal will become shareholders of Arcelor, which will be renamed ArcelorMittal. Q: A: Why am I receiving this prospectus? In order to complete the merger, ArcelorMittal and Arcelor shareholders must adopt the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. 23

The decision to merge requires the approval of at least two-thirds of the votes cast at the ArcelorMittal extraordinary general meeting where at least 50% of the issued share capital of ArcelorMittal is present or represented at the meeting. The decision to merge requires the approval of at least two-thirds of the votes cast at the Arcelor extraordinary general meeting where at least 50% of the issued share capital of Arcelor is present or represented at the meeting. This prospectus, including the merger agreement, the merger proposal and the explanatory memorandum, copies of which are attached to this prospectus as Annexes A and B, respectively, contain important information about the proposed merger and the ArcelorMittal extraordinary general meeting. You should read this prospectus carefully. Your vote is very important. You are encouraged to vote. Q: A: What will ArcelorMittal shareholders receive in the merger? In the merger, a holder of ArcelorMittal shares will receive one newly-issued Arcelor share for every one ArcelorMittal share, which is referred to as the Exchange Ratio. This Exchange Ratio assumes the prior completion of a share capital restructuring of Arcelor pursuant to which each 7 pre-capital restructuring shares of Arcelor would be exchanged for 8 post-restructuring shares of Arcelor, effected solely to ensure a one-for-one exchange ratio in the merger. For a more complete description of what ArcelorMittal shareholders will receive in the merger, see The Merger Agreement, the Merger Proposal and the Explanatory MemorandumMerger Consideration. For a more complete description of the share capital restructuring, see The Merger Pre-Merger Restructuring of the Share Capital of Arcelor. What will Arcelor shareholders receive in the merger? Arcelor shareholders will not receive shares or any other form of compensation in the merger. Arcelor shareholders will remain shareholders of Arcelor, which will be renamed ArcelorMittal. What will happen in the proposed merger to options to purchase ArcelorMittal shares? The merger proposal provides that for each option to purchase or subscribe for ArcelorMittal shares granted under employee and director stock plans of ArcelorMittal (including those held by directors and senior management) option holders will receive one option of Arcelor, giving the holder the right to acquire, or subscribe, as the case may be, for one Arcelor share, at an exercise price equal to the exercise price of the corresponding ArcelorMittal option, on terms and conditions otherwise similar to those governing the ArcelorMittal options prior to the effective time of the merger (subject to any changes necessary to reflect the effectiveness of the merger). What conditions are required to be fulfilled to effect the merger? ArcelorMittal and Arcelor are not required to effect the merger unless certain specified conditions are satisfied or waived, where legally permissible. These conditions include, among other things, adoption of the decision to merge by the ArcelorMittal shareholders, completion of the share capital restructuring of Arcelor (pursuant to which each 7 pre-capital restructuring shares of Arcelor would be exchanged for 8 post-capital restructuring shares of Arcelor), adoption of the decision to merge and approval of the issuance of Arcelor shares to be issued in the merger and related matters by the Arcelor shareholders, the admission to trading and listing of the Arcelor shares to be issued in the merger on Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext and the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, which are collectively referred to as the Spanish exchanges, and admission to trading on the regulated market of the Luxembourg Stock Exchange and admission to listing on the Official List of the Luxembourg Stock Exchange and the admission to trading and listing of the existing and newly-issued Arcelor shares on Euronext Amsterdam by NYSE Euronext and the New York Stock Exchange, or NYSE. For a complete description of the conditions that must be satisfied or waived (where legally permissible) prior to effectiveness of the merger, see The Merger Agreement, the Merger Proposal and the Explanatory MemorandumConditions to Effectiveness of the Merger. 24

Q: A: Q: A:

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When do ArcelorMittal and Arcelor expect the merger to be effective? ArcelorMittal and Arcelor are working to effect the merger as promptly as practicable and legally possible following the day on which the extraordinary general meeting of shareholders of ArcelorMittal and Arcelor will be held to adopt the decision to merge as contemplated by the merger proposal and the explanatory memorandum. ArcelorMittal and Arcelor currently expect that the merger will be effective on or about November 13, 2007. Are ArcelorMittal shareholders entitled to dissenters rights? No. ArcelorMittal shareholders will not have any appraisal or dissenters rights under Luxembourg law or under ArcelorMittals articles of association in connection with the merger, and neither ArcelorMittal nor Arcelor will independently provide ArcelorMittal shareholders with any such rights. Are Arcelor shareholders entitled to dissenters rights? No. Arcelor shareholders will not have any appraisal or dissenters rights under Luxembourg law or under Arcelors articles of association in connection with the merger, and neither ArcelorMittal nor Arcelor will independently provide Arcelor shareholders with any such rights. How does the ArcelorMittal Board of Directors recommend that ArcelorMittal shareholders vote? The ArcelorMittal Board of Directors has determined that the merger agreement, the merger proposal and explanatory memorandum and the transactions contemplated by the merger agreement, the merger proposal and explanatory memorandum are in the best interests of ArcelorMittal and the ArcelorMittal shareholders and unanimously recommends that ArcelorMittal shareholders vote FOR the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and explanatory memorandum. For a more complete description of the recommendation of the ArcelorMittal Board of Directors, see The Merger Recommendation of the ArcelorMittal and Arcelor Boards of Directors and the ArcelorMittal and Arcelor Boards of Directors Reasons for the Merger. How does the Arcelor Board of Directors recommend that Arcelor shareholders vote? The Arcelor Board of Directors has determined that the merger agreement, the merger proposal and explanatory memorandum and the transactions contemplated by the merger agreement, the merger proposal and explanatory memorandum are in the best interests of Arcelor and the Arcelor shareholders and unanimously recommends that Arcelor shareholders vote FOR the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and explanatory memorandum. For a more complete description of the recommendation of the Arcelor Board of Directors, see The Merger Recommendation of the ArcelorMittal and Arcelor Boards of Directors and the ArcelorMittal and Arcelor Boards of Directors Reasons for the Merger. When and where will the ArcelorMittal extraordinary general meeting be held? The ArcelorMittal extraordinary general meeting will be held on November 5, 2007, at 10:30 a.m., Luxembourg time, at the registered office of ArcelorMittal located at 19, Avenue de la Libert, Luxembourg L - 2930, Grand Duchy of Luxembourg When and where will the Arcelor extraordinary general meeting be held? The Arcelor extraordinary general meeting will be held on November 5, 2007, at 2:30 p.m., Luxembourg time, at the registered office of Arcelor located at 19, Avenue de la Libert, Luxembourg, Grand Duchy of Luxembourg . Who can attend and vote at the ArcelorMittal extraordinary general meeting? If you are a holder of ArcelorMittal shares whose ownership is directly recorded in one of the ArcelorMittal shareholder registries, you can attend and vote at the extraordinary general meeting if you are registered in one of the ArcelorMittal shareholder registries on October 31, 2007 (the blocking date). 25

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If you are a holder of ArcelorMittal shares whose ownership is not directly recorded in one of ArcelorMittals shareholder registries you may vote at the ArcelorMittal extraordinary general meeting if you own ArcelorMittal shares before the blocking date and follow the appropriate instructions for attending the extraordinary general meeting and voting in person or voting by proxy, as applicable. Q: A: Who can attend and vote at the Arcelor extraordinary general meeting? If you are a holder of Arcelor shares whose ownership is directly recorded in one of the Arcelor shareholder registries, you can attend and vote at the extraordinary general meeting if you are registered in one of the Arcelor shareholder registries on October 31, 2007 (the blocking date). If you are a holder of Arcelor shares whose ownership is not directly recorded in one of the Arcelor shareholder registries (for example, if you hold your shares through a bank, financial institution or other intermediary) in order to attend and vote at the extraordinary general meeting you must request and obtain from your intermediary a blocking certificate for your Arcelor shares to be submitted to Arcelor on or before the day preceding the blocking date. Such blocking certificate must indicate clearly the precise identity of the owner of the Arcelor shares, the number of Arcelor shares being blocked, the date of such shares being blocked, which must be no later than the blocking date and a statement that such Arcelor shares are being blocked until the close of the extraordinary general meeting. You must bring a copy of the blocking certificate to the extraordinary general meeting, which will serve as an attendance card for the extraordinary general meeting. Q: A: What are the specific proposals on the agenda at the ArcelorMittal extraordinary general meeting? The ArcelorMittal extraordinary general meeting will vote on two separate proposals. The first proposal will be the approval of the merger of ArcelorMittal with Arcelor as contemplated by the merger proposal and explanatory memorandum. The approval of this agenda item will include an approval to transfer all assets and liabilities of ArcelorMittal to Arcelor in the merger, among other things. Separately, shareholders will vote on the discharge of the directors and auditor of ArcelorMittal from any liability resulting from the performance of their respective duties up to the date of the effectiveness of the merger. For a more complete description of the extraordinary general meeting agenda, see The ArcelorMittal Extraordinary General Meeting Date, Time, Place, Purpose and Agenda of the ArcelorMittal Extraordinary General Meeting. What should ArcelorMittal shareholders do now in order to vote on the proposal being considered at the extraordinary general meeting? Pursuant to the articles of association of the company, the ArcelorMittal shareholder registries will be automatically closed no later than the fifth working day before the date of the extraordinary general meeting, unless ArcelorMittal fixes a shorter period. If you are a holder of ArcelorMittal shares whose ownership is directly recorded in one of the ArcelorMittal shareholder registries, you are invited to announce your intention to participate in the extraordinary general meeting by completing, signing, dating and returning the participation form on or before the day preceding the blocking date. If you are a holder of ArcelorMittal shares whose ownership is indirectly recorded in the ArcelorMittal Luxembourg shareholder registry or local Dutch shareholder registry (for example, if you hold your shares through a bank, financial institution or other intermediary), in order to attend and vote at the extraordinary general meeting you must request and obtain from your intermediary with whom your ArcelorMittal shares are on deposit, a blocking certificate (the blocking certificate) for your ArcelorMittal shares. Such blocking certificate must indicate clearly the precise identity of the owner of the ArcelorMittal shares, the number of ArcelorMittal shares being blocked, the date such shares are being blocked, which must be no later than the blocking date, and a statement that such ArcelorMittal shares are blocked until the close of the extraordinary general meeting. You must bring a copy of the blocking certificate to the extraordinary general meeting, which will serve as an attendance card for the extraordinary general meeting. If you are a holder of ArcelorMittal shares whose ownership is indirectly recorded in the ArcelorMittal New York local shareholder registry you must follow the voting procedures and instructions received 26

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from your financial intermediary (bank, financial institution or other intermediary) or its agents with whom your ArcelorMittal shares are on deposit. In addition, your financial intermediary must complete and return a New York Registry share blocking request to The Bank of New York. The Bank of New York must receive this blocking request on or before the day preceding the blocking date. In order to vote their shares by proxy, holders of ArcelorMittal shares must complete, sign, date and return a participation form or U.S. proxy card, as applicable, before certain specific dates. For a detailed description of the required actions and the corresponding dates by which such actions must be completed in order to vote on the proposals being considered at the extraordinary general meeting, see The ArcelorMittal Extraordinary General Meeting. Q: A: What should Arcelor shareholders do now in order to vote on the proposal being considered at the extraordinary general meeting? In order to vote their shares in person, holders of Arcelor shares are invited to indicate their intention to attend the extraordinary general meeting by completing, signing, dating and returning a participation form on or before the day preceding the blocking date. In order to vote their shares by proxy, holders of Arcelor shares must complete, sign, date and return a participation form on or before the day preceding the blocking date. For a detailed description of the required actions and the corresponding dates by which such actions must be completed in order to vote on the proposal being considered at the extraordinary general meeting, see The Arcelor Extraordinary General Meeting. Q: A: May I change my vote after I have delivered my proxy? If you are a holder of ArcelorMittal shares whose ownership is directly recorded in one of ArcelorMittals shareholder registries, you may revoke your proxy at any time before it is exercised by timely delivering a properly executed, later-dated proxy or by attending the ArcelorMittal extraordinary general meeting and voting in person. See The ArcelorMittal Extraordinary General Meeting. If you are a holder of ArcelorMittal shares whose ownership is indirectly recorded in the ArcelorMittal Luxembourg shareholder registry or Dutch local shareholder registry, you may revoke your proxy at any time by timely delivering a properly executed, later-dated proxy (provided such later-dated proxy arrives on or before the day preceding the blocking date) or by properly attending and voting in person at the ArcelorMittal extraordinary general meeting. In case you want to revoke your proxy by voting at the meeting in person, you are required to bring a copy of the blocking certificate with you to the extraordinary general meeting. If you are a holder of ArcelorMittal shares whose ownership is indirectly recorded in the ArcelorMittal New York local shareholder registry you must contact your financial intermediary regarding the procedures to change or revoke your voting instruction. In any case, simply attending the ArcelorMittal extraordinary general meeting without voting will not revoke your proxy. If you are a holder of Arcelor shares whose ownership is directly recorded in Arcelors shareholder registry, you may revoke your proxy at any time before it is exercised by timely delivering a properly executed, later-dated proxy or by attending the Arcelor extraordinary general meeting and voting in person. See The Arcelor Extraordinary General Meeting. If you are a holder of Arcelor shares whose ownership is not directly recorded in Arcelors shareholder registry, you may revoke your proxy at any time by timely delivering a properly executed, later-dated proxy (provided such later-dated proxy arrives on or before the day preceding the the blocking date) or by properly attending and voting in person at the Arcelor extraordinary general meeting. In either case, simply attending the Arcelor extraordinary general meeting without voting will not revoke your proxy. 27

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Who can help to answer my questions? If you have any questions about the merger or how to submit your proxy, or if you need additional copies of this prospectus, you should contact Investor Relations at +352-4792-2414 or +312-899-3569.

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SUMMARY OF THE MERGER The following is a summary that highlights information contained in this prospectus. This summary may not contain all the information that is important to you. For a more complete description of the merger agreement, the merger proposal and the explanatory memorandum and the transactions contemplated by the merger agreement, the merger proposal and explanatory memorandum, ArcelorMittal and Arcelor encourage you to read carefully this entire prospectus, including the attached annexes. In addition, ArcelorMittal and Arcelor encourage you to read the information incorporated by reference into this prospectus, which includes important business and financial information about ArcelorMittal and Arcelor. You may obtain the information incorporated by reference into this prospectus without charge by following the instructions in the section entitled Incorporation by Reference. The Merger (see page 187) Arcelor and ArcelorMittal have agreed in the merger agreement providing for the terms and conditions of the second-step merger to merge as contemplated by the merger proposal and the explanatory memorandum, as described in this prospectus. Under the terms of the merger proposal and the explanatory memorandum, ArcelorMittal will merge into Arcelor, by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal. The combined company will be renamed ArcelorMittal. The merger agreement, the merger proposal and the explanatory memorandum are attached to this prospectus as Annexes A and B, respectively. Arcelor and ArcelorMittal encourage you to read these documents in their entirety. The merger will be governed by the terms and conditions following from the applicable provisions of Luxembourg law, the merger proposal and the explanatory memorandum. Shareholders of ArcelorMittal and Arcelor will be asked to vote on the decision to merge as contemplated by the merger proposal and the explanatory memorandum at the extraordinary general meeting of shareholders of ArcelorMittal and Arcelor, respectively. The merger constitutes the second step of the combination of Mittal Steel and Arcelor into a single legal entity governed by Luxembourg law. In the first step, Mittal Steel merged into ArcelorMittal, by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel. After a vote of the shareholders of Mittal Steel at an extraordinary general meeting held on August 28, 2007 and a resolution of the sole shareholder of ArcelorMittal on August 28, 2007, this merger became effective on September 3, 2007 and the combined company was named ArcelorMittal. In this second and final step, ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) will merge into Arcelor and shareholders of ArcelorMittal will become shareholders of Arcelor, which will be renamed ArcelorMittal. See The MergerTwo-Step Merger Process for further information with respect to the two-step merger process. Merger Consideration (see page 237) In the merger, a holder of ArcelorMittal shares will receive one newly-issued Arcelor share for every one ArcelorMittal share, which is referred to as the Exchange Ratio. This Exchange Ratio assumes the prior completion of a share capital restructuring of Arcelor pursuant to which each 7 pre-capital restructuring shares of Arcelor would be exchanged for 8 post-capital restructuring shares of Arcelor, as described in more detail below under The Merger Pre-Merger Restructuring of the Share Capital of Arcelor. No additional consideration in cash or in kind will be paid by Arcelor to the shareholders of ArcelorMittal in connection with the merger. ArcelorMittal shares held in treasury by or for the account of ArcelorMittal or Arcelor will disappear in the merger pursuant to Luxembourg law. Arcelor will not issue any shares in consideration of such ArcelorMittal shares held in treasury by or for the account of ArcelorMittal or Arcelor. The Arcelor shares to be issued in the merger will be created under Luxembourg law and will have the same rights as the post-restructuring Arcelor shares as set forth in Arcelors articles of association, which are expected to be amended effective November 13, 2007 (the expected day of effectiveness of the merger), except for the amendments related to the capital restructuring, which are expected to be effective the day following the Arcelor extraordinary general meeting of shareholders (November 6, 2007 under the proposed calendar), and Luxembourg law, provided however that the newly-issued shares shall be entitled only to dividends declared by 29

Arcelor after the effective date of this merger. Specifically, the newly-issued shares will not be entitled either to (i) the last installment of the dividend decided by the annual general meeting of Arcelor held on April 27, 2007 ($0.325 per share before the share capital restructuring described below; $0.284375 after such restructuring), or (ii) the additional $0.040625 per post-restructuring Arcelor share which distribution will be proposed to the general meeting of Arcelor called to approve this merger, which in the aggregate represents a dividend of $0.325 per post-restructuring Arcelor share. Conversely, as a result of this merger, Arcelor will assume ArcelorMittals obligation to pay the last installment of the quarterly dividend decided by the annual general meeting of shareholders of Mittal Steel on June 12, 2007, which, in light of the exchange ratio of the first-step merger and this merger, will represent $0.325 per Arcelor share newly-issued in this merger. Therefore, on or about December 15, 2007, each Arcelor share (whether issued in this merger or previously issued) will be entitled to a dividend payment of $0.325. Based on the number of ArcelorMittal shares issued on the date hereof, after the effective time of the merger, former ArcelorMittal shareholders will hold approximately 97% of the then-issued Arcelor shares. Treatment of Stock Options (see page 238) The merger proposal provides that for each option to purchase or subscribe for ArcelorMittal shares granted under employee and director stock option plans of ArcelorMittal (including those held by directors and senior management) option holders will receive one option of Arcelor, each of which will give the holder the right to acquire, or subscribe, as the case may be, for one Arcelor share, at an exercise price equal to the exercise price of the corresponding ArcelorMittal option, on terms and conditions otherwise similar to those governing the ArcelorMittal options prior to the effective time of the merger (subject to any changes necessary to reflect the effectiveness of the merger). Pre-Merger Restructuring of the Share Capital of Arcelor (see page 190) Following discussions at a meeting held on May 15, 2007, the ArcelorMittal and the Arcelor Board of Directors unanimously decided to approve an exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share. At a meeting held on September 25, 2007, the ArcelorMittal and the Arcelor Boards of Directors decided that it would be advisable to restructure the share capital of Arcelor prior to the effectiveness of this second-step merger so as to have a one-to-one exchange ratio in the merger. The share capital restructuring would take the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 post-restructuring Arcelor shares, thus mechanically resulting in an adjusted exchange ratio of one new Arcelor share for every one ArcelorMittal share without any economic effect on Arcelor or ArcelorMittal shareholders. The sole purpose for the decision of the Boards of Directors to implement such share capital restructuring was to limit the effect of the merger on the ArcelorMittal share price and hence its comparability pre- and post-merger. The share prices of Arcelor and ArcelorMittal are currently not aligned. Given that the trading volume of ArcelorMittal shares is far greater than that of Arcelor, it is anticipated that the trading characteristics of Arcelor (to be renamed ArcelorMittal at the time of the effectiveness of the merger) will immediately upon effectiveness of the merger inherit the pre-merger trading characteristics of ArcelorMittal. Without the share capital restructuring, the 0.875 exchange ratio would necessarily and mechanically cause the ArcelorMittal share price immediately post-merger to be different from the ArcelorMittal share price immediately pre-merger, because the application of the 0.875 ratio would affect the share price in a manner similar to a reverse stock split; effecting the Arcelor share capital restructuring pre-merger resulting in a one-toone merger exchange ratio will avoid the merger from having this mechanical effect on the post-merger ArcelorMittal share price. Recommendation of the ArcelorMittal and Arcelor Boards of Directors and the ArcelorMittal and Arcelor Boards of Directors Reasons for the Merger (see page 199) By unanimous vote, the ArcelorMittal Board of Directors, at a meeting held on September 25, 2007, approved the merger agreement, merger proposal and the explanatory memorandum and signed the merger agreement, merger proposal and the explanatory memorandum. The ArcelorMittal Board of Directors unanimously recommends that the ArcelorMittal shareholders vote FOR the decision to merge as contemplated by the merger proposal and the explanatory memorandum.

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By unanimous vote, the Arcelor Board of Directors, at a meeting held on September 25, 2007, approved the merger agreement, merger proposal and the explanatory memorandum and signed the merger agreement, merger proposal and the explanatory memorandum. The Arcelor Board of Directors unanimously recommends that the Arcelor shareholders vote FOR the decision to merge as contemplated by the merger proposal and the explanatory memorandum. The ArcelorMittal and Arcelor Boards of Directors realized that there could be no assurance about future results, including results expected or considered in the factors weighed and reviewed by each of them. However, the ArcelorMittal and Arcelor Boards of Directors each concluded that the potential benefits of effecting the merger were significant and outweighed any potential risks of Arcelor minority shareholder challenges to, or litigation in respect of, the merger based on the Exchange Ratio as the Boards believed any such challenges or litigation would be groundless. The ArcelorMittal and Arcelor Boards of Directors also concluded, in particular, that the merger would enable their respective companies to comply with MOU undertakings. The first-step merger of Mittal Steel with and into ArcelorMittal became effective on September 3, 2007. This merger constitutes the second and final step of the combination of Mittal Steel and Arcelor in a single legal entity governed by Luxembourg law. The ArcelorMittal and Arcelor Boards of Directors decided that this second-step merger would further rationalize the corporate structure of the group initiated by the firststep merger of Mittal Steel and ArcelorMittal. With respect to the Exchange Ratio in the merger, each of the Arcelor and ArcelorMittal Boards of Directors considers it to be (i) relevant and reasonable to shareholders of ArcelorMittal and Arcelor, and (ii) consistent with previous guidance on the principles that would be used to determine the exchange ratio in the second step merger. The basis of the determination of the Exchange Ratio is further described in the explanatory memorandum attached to this prospectus in Annex B. Shareholders Entitled to Vote; Vote Required (see pages 176 and 184) Holders of ArcelorMittal shares whose ownership is directly recorded in one of ArcelorMittals shareholder registries may vote at the ArcelorMittal extraordinary general meeting if they are registered in one of the ArcelorMittal shareholder registries on the blocking date. Holders of ArcelorMittal shares whose ownership is not directly recorded in one of ArcelorMittals shareholder registries may vote at the ArcelorMittal extraordinary general meeting if they own ArcelorMittal shares before the blocking date and follow the appropriate instructions for attending the extraordinary general meeting and voting in person or voting by proxy, as applicable. Holders may cast one vote for each ArcelorMittal share that they own on the dates indicated above. In order to effect the merger, ArcelorMittal shareholders must adopt the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. The decision to merge requires the approval of at least two-thirds of the votes cast at the ArcelorMittal extraordinary general meeting where at least 50% of the issued share capital of ArcelorMittal is present or represented at the meeting. Holders of Arcelor shares whose ownership is directly recorded in one of Arcelors shareholder registries may vote at the Arcelor extraordinary general meeting if they own Arcelor shares at the date of the extraordinary general meeting, which is November 5, 2007. Holders of Arcelor shares whose ownership is not directly recorded in one of Arcelors shareholder registries may vote at the Arcelor extraordinary general meeting if they own Arcelor shares before the blocking date, which is October 31, 2007, and follow the appropriate instructions for attending the extraordinary general meeting and voting in person or voting by proxy, as applicable. Holders may cast one vote for each Arcelor share that they own on the dates indicated above. In order to effect the merger, Arcelor shareholders must adopt the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. The decision to merge requires the approval of at least two-thirds of the votes cast at the Arcelor extraordinary general meeting where at least 50% of the issued share capital of Arcelor is present or represented at the meeting 31

Timetable for the Merger (see page 202) The merger proposal and the explanatory memorandum, each dated September 25, 2007, will be publicly available as of September 26, 2007. A copy of the merger proposal and a copy of the explanatory memorandum are attached to this prospectus as Annex B. In order to complete the merger, ArcelorMittal and Arcelor shareholders must adopt the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. The extraordinary general meeting of shareholders of ArcelorMittal that will vote on the proposal to merge ArcelorMittal into Arcelor will be held on November 5, 2007, at 19, Avenue de la Libert,L-2930 Luxembourg, Grand Duchy of Luxembourg . The extraordinary general meeting of shareholders of Arcelor that will vote on the proposal to merge ArcelorMittal into Arcelor will be held on November 5, 2007, at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg. If the proposal to merge is adopted by the requisite majority at the extraordinary general meetings of shareholders of ArcelorMittal and Arcelor and all other conditions precedent are satisfied or waived, the merger is expected to be effected on or about November 13, 2007. Upon effectiveness of the merger, holders of ArcelorMittal shares will automatically receive newlyissued Arcelor shares in accordance with the Exchange Ratio and on the basis of their respective holdings as entered in the ArcelorMittal shareholder registry (registre des actionnaires) or their respective securities accounts. Holders of ArcelorMittal shares whose shares are registered directly in the ArcelorMittal shareholder registry, will automatically receive newly-issued Arcelor shares through an entry in the shareholder registry (registre des actionnaires) of Arcelor. Holders of ArcelorMittal shares whose shares are registered indirectly, that is through a book-entry system, in the ArcelorMittal shareholder registry, will automatically receive newlyissued Arcelor shares through a credit to their respective securities accounts. Upon the day of effectiveness of the merger, which is expected to be on or about November 13, 2007, the Arcelor shares issued in the merger will be listed and traded on Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext and the Spanish exchanges and admitted to trading on the regulated market of the Luxembourg Stock Exchange and listed on the Official List of the Luxembourg Stock Exchange. Additionally, both the existing and the newly-issued Arcelor shares will be admitted to trading and listing on Euronext Amsterdam by NYSE Euronext and the NYSE. Finally, the ArcelorMittal shares, which will automatically disappear in the merger, will no longer be listed and traded on the Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the Spanish exchanges and the NYSE or traded on the regulated market of the Luxembourg Stock Exchange, or listed on the Official List of the Luxembourg Stock Exchange, as of the day of effectiveness of the merger. The last day of listing and trading of the ArcelorMittal shares at these exchanges is expected to be on or about November 12, 2007. Auditors Opinions (see page 202) On September 25, 2007, Mazars S.A. (Mazars) issued its written report (un rapport crit destin aux actionnaires) to the Board of Directors of ArcelorMittal with respect to, among other things, the fairness of the Exchange Ratio, as required pursuant to Luxembourg law. Mazars opined, among other things, that, as of the date of its report and based upon the factors and assumptions set forth therein, no fact has come to its attention that causes it to believe that the Exchange Ratio is not relevant and reasonable (pertinent et raisonnable) to all shareholders of ArcelorMittal or that the valuation methods used by the Board of Directors to determine the Exchange Ratio are not adequate. A copy of the report is attached to the merger proposal, a copy of which is attached to this prospectus as Annex B, and both the merger proposal and the report are also available at the offices of Arcelor and ArcelorMittal and at the Luxembourg Registry of Trade and Companies. On September 25, 2007, Compagnie Luxembourgeoise dExpertise et de Rvision Comptable (CLERC) issued its written report (un rapport crit destin aux actionnaires) to the Board of Directors of Arcelor with respect to, among other things, the fairness of the Exchange Ratio, as required pursuant to Luxembourg law. CLERC opined, among other things, that, as of the date of its report and based upon the factors and assumptions set forth therein, no fact has come to its attention that causes it to believe that the Exchange Ratio is not relevant and reasonable (pertinent et raisonnable) to all shareholders of Arcelor or that the valuation methods used by the Board of Directors to determine the Exchange Ratio are not adequate. A copy of the report is attached to the merger proposal, a copy of which is attached to this prospectus as Annex B, and each 32

of the merger proposal and the report are also available at the offices of Arcelor and ArcelorMittal and at the Luxembourg Registry of Trade and Companies. Fairness Opinion of Financial Advisor to Mittal Steel and ArcelorMittal (see page 204) Goldman Sachs International (Goldman Sachs) delivered its opinion to the Boards of Directors of each of Mittal Steel and ArcelorMittal that, as of May 15, 2007 and based upon and subject to the factors and assumptions set forth therein, and assuming that the First Step Merger (as defined below) had been consummated, the proposed exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the draft merger agreement provided to them was fair, from a financial point of view, to the holders of the outstanding shares of ArcelorMittal (which holders were, immediately prior to consummation of the first-step merger, holders of the outstanding Mittal Steel class A and Mittal Steel class B common shares). This fairness opinion was issued before the decision was made to condition the effectiveness of the second-step merger to the completion of the Arcelor share capital restructuring. The full text of the written opinion of Goldman Sachs, dated May 15, 2007, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C to this prospectus. ArcelorMittals shareholders should read this opinion in its entirety. Goldman Sachs provided its opinion for the information and assistance of the Board of Directors of Mittal Steel and the Board of Directors of ArcelorMittal in connection with their respective consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holder of the ArcelorMittal shares or Arcelor shares should vote with respect to the merger or any issuance of Arcelor shares. Fairness Opinions of Financial Advisors to Arcelor (see page 210) The Arcelor Board of Directors received opinions from (i) Fortis Bank (Nederland) N.V., that, based upon and subject to the various considerations set forth therein, as of May 15, 2007, the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share applied to the second-step merger, pursuant to the draft merger agreement provided to them, was fair from a financial point of view to the shareholders holding the 5.76% of the issued share capital of Arcelor not held by ArcelorMittal (as successor to Mittal Steel) (the Public Shareholders); (ii) Morgan Stanley & Co. Limited, that, based upon and subject to the various considerations set forth therein, as of May 15, 2007, the Exchange Ratio applied to the second-step merger, pursuant to the draft merger agreement provided to them, was fair from a financial point of view to the Public Shareholders; (iii) Ricol, Lasteyrie & Associs that, based upon and subject to the various considerations set forth therein and based upon such other matters which were considered relevant, as of May 15, 2007, the proposed exchange ratio for the merger of 0.875 Arcelor shares for every ArcelorMittal share was fair from a financial point of view to the Public Shareholders; and (iv) Socit Gnrale, that, based upon and subject to the factors and assumptions set forth therein, as of May 15, 2007, the exchange ratio of 0.875 Arcelor shares for every ArcelorMittal share applied to the second-step merger, pursuant to the draft merger agreement provided to them, was fair from a financial point of view to the Public Shareholders. These fairness opinions were issued before the decision was made to condition the effectiveness of the second-step merger to the completion of the Arcelor share capital restructuring. The full texts of these opinions are attached as Annexes D through G to this prospectus. We encourage you to read these opinions in their entirety. These opinions are not a recommendation as to how any holder of the ArcelorMittal shares or Arcelor shares should vote with respect to the merger or any issuance of Arcelor shares. Directors and Management of the Combined Company After the Merger (see page 245) As described in Management and Employees, the combined company will be governed by a Board of Directors and a Group Management Board. Pursuant to the Memorandum of Understanding, certain special governance mechanisms designed to promote the integration of Arcelor and Mittal Steel have been put into place for a period of three years ending on August 1, 2009 (the Initial Term). Arcelor and Mittal Steel agreed to change and unify their respective corporate governance structure and rules and to change the composition and operation of their respective Boards of Directors and Group Management Boards so that until the completion of the merger, the board composition and governance structure of both companies would be identical. In connection with the first-step merger of Mittal Steel into ArcelorMittal, ArcelorMittal adopted a governance structure identical to Arcelor and Mittal Steel in all material respects.

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The Board of Directors of Arcelor is in charge of the overall management of Arcelor. The Arcelor Board of Directors is responsible for the performance of all acts of administration necessary or useful in furtherance of the corporate purpose of Arcelor, except those expressly reserved by Luxembourg law or by the articles of association of Arcelor to the general meeting of shareholders. The members of the Board of Directors are appointed and dismissed by the general meeting of shareholders. The Group Management Board of Arcelor is entrusted with the day-to-day management of Arcelor. The members of the Group Management Board are appointed and dismissed by the Board of Directors. The composition of the Board of Directors and Group Management Board of Arcelor will not change as a result of the merger. Name and Executive Offices of the Combined Company After the Merger (see page 233) The combined company shall be named ArcelorMittal, as Arcelor will be renamed ArcelorMittal upon the effectiveness of the merger. The executive offices of the combined company will continue to be located in Luxembourg. Ownership of the Combined Company After the Merger (see page 269) Based on the number of ArcelorMittal shares issued on the date hereof, Arcelor expects to issue a maximum of 1,417,207,253 Arcelor shares to ArcelorMittal shareholders in the merger, such number being nominally reduced by the number of ArcelorMittal shares that will be held by or on behalf of Arcelor or ArcelorMittal as of November 5, 2007, the date of the extraordinary general meetings of Arcelor and ArcelorMittal convened to vote on the merger. Based on the number of ArcelorMittal shares issued on the date hereof, after the effective time of the merger, former ArcelorMittal shareholders will hold approximately 97% of the then-issuedArcelor shares. In addition, Arcelor may issue additional Arcelor shares as a result of the future exercise of (former) ArcelorMittal or Arcelor stock options. Share Ownership of Directors and Senior Management (see page 259) As of September 3, 2007, the aggregate beneficial share ownership of ArcelorMittals directors and members of senior management (40 individuals, who were the same as Mittal Steels directors and senior management prior to the first-step merger and are currently the same as Arcelors directors and senior management) was 2,263,181 ArcelorMittal shares (excluding shares owned by ArcelorMittals Significant shareholder and including options to acquire 368,525 ArcelorMittal shares that are exercisable within 60 days of September 3, 2007) being 0.16% of the total issued share capital of ArcelorMittal. Excluding options to acquire ArcelorMittal shares, these 40 individuals beneficially owned 1,923,208 ArcelorMittal shares. As of September 3, 2007, the Significant shareholder beneficially owned 623,285,000 of ArcelorMittals outstanding shares, representing 43.98% of ArcelorMittals outstanding shares. ArcelorMittal directors and members of senior management have indicated that they expect to vote for the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. Admission to Trading and Listing of Arcelor Shares; Delisting of ArcelorMittal Shares (see page 233) Under the merger agreement, Arcelor is required to have the admission to trading and listing of the Arcelor shares to be issued in the merger on Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext and the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, which are collectively referred to as the Spanish exchanges, as well as their admission to trading on the regulated market of the Luxembourg Stock Exchange and listing on the Official List of the Luxembourg Stock Exchange approved by these respective exchanges. Additionally, Arcelor is required to have the admission to trading and listing of the existing and newly-issued Arcelor shares on Euronext Amsterdam by NYSE Euronext and the New York Stock Exchange, or NYSE, approved by these exchanges. Upon effectiveness of the merger, the ArcelorMittal shares will no longer be listed on the NYSE and ArcelorMittal shares will no longer be admitted to trading and will be delisted from Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the Spanish exchanges and will no longer be admitted to trading on the Luxembourg Stock Exchanges regulated market and no longer be listed on the Official List of the Luxembourg Stock Exchange. Dissenters Rights in the Merger (see page 234) ArcelorMittal shareholders will not have any appraisal or dissenters rights under Luxembourg law or under ArcelorMittals articles of association in connection with the merger, and neither ArcelorMittal nor 34

Arcelor will independently provide ArcelorMittal shareholders with any such rights. Arcelor shareholders will not have any appraisal or dissenters rights under Luxembourg law or under Arcelors articles of association in connection with the merger, and neither ArcelorMittal nor Arcelor will independently provide Arcelor shareholders with any such rights. Conditions to Effectiveness of the Merger (see page 241) The obligations of ArcelorMittal and Arcelor to complete the merger are subject to the satisfaction or waiver, where legally permissible, of the following conditions: the decision to merge as contemplated by the merger proposal and the explanatory memorandum will have been adopted by the requisite affirmative vote of the shareholders of ArcelorMittal; the following will have been approved by the requisite affirmative vote of the shareholders of Arcelor: the completion of a share capital restructuring of Arcelor pursuant to which each 7 pre-capital restructuring shares of Arcelor would be exchanged for 8 post-capital shares of Arcelor, as more fully described under The Merger Pre-Merger Restructuring of the Share Capital of Arcelor; the increase of the share capital of Arcelor by incorporation of free reserves without issuing new shares, but by increasing the par value of the shares in order to round up the par value of the post-capital restructuring shares of Arcelor to the immediately higher euro cent; the decision of Arcelor to distribute an additional dividend of $0.040625 per post-share capital restructuring Arcelor share, payable simultaneously with the last installment of the dividend decided by the ordinary general meeting of Arcelor on April 27, 2007, so that each post-share capital restructuring Arcelor share (other than those issued in the second-step merger) will be entitled to a dividend payment of $0.325 on or about December 15, 2007; the decision to create an authorized share capital and authorize the Board of Directors of Arcelor to issue Arcelor shares within the limits of the authorized share capital for delivery upon exercise or conversion, as applicable, of Arcelor stock options or other equity-based awards granted under any Arcelor employee incentive or benefit plan and to limit or cancel the preferential subscription right of the existing shareholders; the amendment of Arcelors articles of association and adoption of an English language version and the change of the binding language of the articles of association from French to English; the decision to merge as contemplated by the merger proposal and the explanatory memorandum; the decision to issue the Arcelor shares in the merger; the decision to cancel, upon effectiveness of the merger, the Arcelor shares, except the fractions of Arcelor shares, if any, that will be transferred by ArcelorMittal to Arcelor pursuant to the merger; and the decision to issue Arcelor stock options in the merger in exchange for the ArcelorMittal stock options;

this prospectus will have been approved by the Luxembourg Commission de Surveillance du Secteur Financier, or the CSSF, and a copy of that approval will have been notified by the CSSF to the competent securities regulator in Belgium, France, The Netherlands, Spain and any other relevant competent securities regulator in the European Union and no actions by third parties challenging the CSSFs approval shall be pending or threatened before the competent Luxembourg courts and the CSSF shall not have withdrawn or threatened to withdraw its approval; 35

the F-4 Registration Statement, will have been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness of the F-4 Registration Statement will be in effect and no proceedings for such purpose will be pending before, or threatened by, the SEC; the Arcelor shares issued in the merger will have been (provisionally) admitted to trading and listing on Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext and the Spanish exchanges as well as admitted to trading on the regulated market of the Luxembourg Stock Exchange and listed on the Official List of the Luxembourg Stock Exchange and admitted to trading and listing on Euronext Amsterdam by NYSE Euronext and the NYSE; the existing and newly-issued Arcelor shares will have been (provisionally) admitted to trading and listing on Euronext Amsterdam by NYSE Euronext and the NYSE (subject to official notice of issuance); and there will be no action, litigation or proceeding by any court or person, instituted or pending, or statute, rule, regulation, injunction, order or decree by any court or person issued or deemed to be applicable to the merger, that seeks to prohibit or restrain the merger or seeks a divestiture of any ArcelorMittal shares or Arcelor shares (including any shares issued in the merger) or limitation on the ownership rights of Arcelor over the assets and liabilities of ArcelorMittal that are transferred to Arcelor upon effectiveness of the merger that would reasonably be expected to have a material adverse effect, as such concept is defined in the merger agreement.

Minority Shareholder Claims Regarding the Exchange Ratio (see page 234) Several minority shareholders of Arcelor or their representatives have made allegations regarding or brought legal proceedings relating to the merger process and more specifically the proposed exchange ratio in the merger. Their principal actions have been the following: writing letters to the Boards of Directors of Arcelor and Mittal Steel; seeking to instigate investigations or actions by market regulatory authorities; and seeking injunctions from Dutch and French courts. Arcelor and ArcelorMittal each believe that the allegations made and claims brought by the minority shareholders regarding the proposed exchange ratio are without merit and that such exchange ratio complies with the requirements of applicable law, is consistent with previous guidance on the principles that would be used to determine the exchange ratio in the second step merger and is relevant and reasonable to shareholders of ArcelorMittal and Arcelor. To date, the courts and regulators that have ruled on the claims brought by minority shareholders have rejected the claims. It is possible that additional claims may be brought before regulators or courts prior to the ArcelorMittal and Arcelor extraordinary general meetings that will be convened to vote on the second-step merger. Regulatory Matters (see page 236) The merger may be subject to various regulatory requirements of other municipal, state, federal and foreign governmental agencies and authorities, including filings with antitrust authorities in certain jurisdictions and those relating to the offer and sale of securities. ArcelorMittal and Arcelor are continuing to evaluate and comply in all material respects with these requirements, as appropriate, and do not anticipate that they will hinder, delay or restrict the effectiveness of the merger. Termination of the Merger Agreement (see page 242) The merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time of the merger by the mutual written consent of Arcelor and ArcelorMittal. If any of the conditions precedent to the effectiveness of the merger have not been satisfied or waived, where legally permissible, by December 31, 2007, either party may terminate the merger agreement upon written notice to the other party; provided that the right to terminate the merger agreement will not be available to the party whose failure to fulfill any condition precedent under the merger agreement has been the cause of, or resulted in, the failure of the satisfaction of that condition precedent to occur on or before that date. If no such written notice is sent, the merger agreement will remain in full force and the parties may agree to either consider such condition precedent waived or amend the merger agreement. Taxation (see page 243) The following is a summary. Holders are urged to consult their tax advisors regarding tax consequences of the merger and of holding and disposing of Arcelor shares. 36

Belgian Taxation Capital gains realized by Belgian individuals holding the shares as a private investment and by Belgian legal entities in connection with the merger will, as a rule, not be subject to tax. Capital gains realized by Belgian individuals holding the shares for professional purposes and Belgian companies may qualify for rollover relief, provided that a specific certificate issued by the Luxembourg tax authorities is filed together with the annual tax return. Dutch Taxation Capital gains or other benefits derived or deemed to be derived by Dutch holders in connection with the merger are, in general, taxable. Roll-over relief should be available for certain shareholders. Capital gains or other benefits derived in connection with the merger are as such not subject to Dutch income tax if the holder is an individual and the Mittal Steel shares are recognized as investment assets for the calculation of his or her income from savings and investments (belastbaar inkomen uit sparen en beleggen). French Taxation Roll-over relief will automatically apply to capital gains realized by French resident individuals in connection with the merger. As far as French resident corporations are concerned, availability of roll-over relief will be conditioned on them making a specific election in this respect. Luxembourg Taxation Capital gains on ArcelorMittal shares realized by Luxembourg Holders (as defined under Taxation Luxembourg Taxation) will not be deemed realized under Luxembourg law provided such Luxembourg Holders opt for roll-over relief and do not receive a cash balance payment exceeding 10% of the par value of the Arcelor shares they receive in exchange for their ArcelorMittal shares as provided by Articles 22 bis and 102 (10) of the Luxembourg Income Tax Law. If a capital gain is realized, an individual Luxembourg Holder shall only be taxable if the merger takes place within six months following the acquisition by the Luxembourg Holder of its ArcelorMittal shares, or if the relevant holder holds more than 10% of the ArcelorMittal shares. If the holder is a Luxembourg company, such capital gain on ArcelorMittal shares shall only be taxable if such holder does not benefit from the full exemption set forth in Article 166 of the Luxembourg Income Tax Law and the Grand Ducal Decree of December 21, 2001, as amended. Spanish Taxation Capital gains or other benefits derived or deemed to be derived in connection with the merger are, in general, taxable. Roll-over relief should be available for certain shareholders, but always conditioned on them making a specific election in this respect. Accounting Treatment (see page 233) For accounting purposes, the merger of ArcelorMittal into Arcelor shall be considered a combination of entities under common control as of January 1, 2007. All recorded assets and liabilities of ArcelorMittal and Arcelor shall be carried forward at their historical book values, and the income of Arcelor shall include the income of ArcelorMittal as of January 1, 2007. For statutory reporting purposes in Luxembourg, the final accounting year of ArcelorMittal shall end on December 31, 2006. Comparison of Rights of ArcelorMittal Shareholders and Arcelor Shareholders (see page 277) As a result of the merger, ArcelorMittal shares will be automatically exchanged for Arcelor shares. Because ArcelorMittal and Arcelor are both socit anonymes organized under the laws of Luxembourg and the articles of association of Arcelor upon effectiveness of the merger will be identical to those of ArcelorMittal prior to the merger (except for the amount of issued capital, which shall be increased in the merger, the provisions relating to the authorized share capital and to share fractions, and certain other non-material items) there will be no material differences between the rights of ArcelorMittal shareholders and Arcelor shareholders upon effectiveness of the merger.

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PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION Financial Information This prospectus includes the audited consolidated financial statements of Mittal Steel Company N.V. (of which ArcelorMittal is the successor) and its consolidated subsidiaries, including the consolidated balance sheets as of December 31, 2005 and 2006, and the consolidated statements of income, changes in equity and cash flows for each of the years ended December 31, 2004, 2005 and 2006, which we refer to as the Mittal Steel Consolidated Financial Statements. In addition, this prospectus includes the Unaudited Condensed Consolidated Financial Statements of ArcelorMittal for the six months ended June 30, 2007 (which includes Mittal Steel as of January 1, 2007), starting on page H-1. In addition, this prospectus includes, the following unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined income statement (Unaudited Pro Forma Condensed Combined Financial Information) of Arcelor giving effect to the following transactions as if they occurred on January 1, 2006 for the pro forma condensed combined income statement and as if they occurred on December 31, 2006 for the pro forma condensed combined balance sheet: the acquisition by Mittal Steel of 94.2% of the share capital (on a diluted basis) of Arcelor and all of the outstanding OCEANEs (convertible bonds) of Arcelor (collectively, the Arcelor acquisition) (the acquisition is reflected in the historical balance sheet as of December 31, 2006 of Mittal Steel); the tender offer by Mittal Steel for the acquisition of all outstanding minority interests in Arcelor Brasil S.A. (Arcelor Brasil), a subsidiary of Arcelor; the $590 million share buy-back program announced on April 2, 2007 and the 27 million share buy back program announced on June 12, 2007; the merger of Mittal Steel into ArcelorMittal; and the proposed merger of ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) into Arcelor, which will subsequently be renamed ArcelorMittal.

An auditors assurance report in respect of these unaudited pro forma condensed financial information is included in this prospectus on page I-162. All of the financial statements included in this prospectus have been prepared based on International Financial Reporting Standards as endorsed by the European Union (IFRS) except where indicated. IFRS as endorsed by the European Union differs in certain respects from IFRS as issued by the International Accounting Standards Board (IASB). Mittal Steel has, however, determined that the financial information as of December 31, 2005 and 2006 and for each of the three years in the period ended December 31, 2006 would not be different had it applied IFRS as issued by the IASB. The financial information in this prospectus, or incorporated by reference herein, also includes a reconciliation of certain items from IFRS to the accounting principles generally accepted in the United States of America (U.S. GAAP), prepared for purposes of Mittal Steels filings with the U.S. SEC. IFRS differs in certain significant respects from U.S. GAAP. In addition, this prospectus incorporates by reference the consolidated financial statements of Mittal Steel for the year ended December 31, 2004, prepared in accordance with Dutch GAAP, including an auditors report in respect thereof, the consolidated financial statements of Arcelor for the years ended December 31, 2004, 2005 and 2006, including the auditors reports in respect thereof, and "the Unaudited Condensed Consolidated Financial Statements of Arcelor for the six months ended June 30, 2007." Mittal Steels significant acquisitions in 2004, 2005 and 2006, including in particular those of Arcelor, ISG and Kryvorizhstal, have been accounted for using the purchase method of accounting, with Mittal Steel as the acquiring entity in accordance with IFRS 3 (Business Combinations). Inter-company transactions have been eliminated in financial consolidation. The financial information and certain other information presented in a number of tables in this prospectus have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this prospectus reflect calculations based upon the underlying information 38

prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers. In this document, references to $, dollars, USD or U.S. dollars are to United States dollars; euro, euros, EUR or are to the currency of the European Union member states participating in the European Monetary Union; and real, reais or R$ are to Brazilian reais, the official currency of Brazil. Market Information This prospectus includes or incorporates by reference industry data and projections about ArcelorMittals and Arcelors markets obtained from industry surveys, market research, publicly available information and industry publications. Statements on ArcelorMittals competitive position contained in this prospectus are based primarily on public sources including, but not limited to, publications of the International Iron and Steel Institute (IISI). Industry publications generally state that the information they contain has been obtained from sources believed to be reliable and that the projections they contain are based on a number of significant assumptions. In addition, in many cases ArcelorMittal and Arcelor have made statements in this prospectus regarding their industry and their position in the industry based on internal surveys, industry forecasts, market research and their own experience. No Significant Change There has been no significant change in the financial or trading position of ArcelorMittal since June 30, 2007. Other Information Certain information provided in this prospectus has been sourced from third parties. Arcelor confirms that such third-party information has been accurately reproduced and that, so far as it is aware and is able to ascertain from information established by such third parties, no facts have been omitted which would render the third-party information reproduced herein inaccurate or misleading. Internet Sites ArcelorMittal and Arcelor maintain an Internet site: www.arcelormittal.com. Information contained in or otherwise accessible through this Internet site is not a part of this prospectus unless otherwise incorporated by reference in this prospectus, as described in Incorporation by Reference. All references in this prospectus to ArcelorMittals and Arcelors Internet site are inactive textual references to the URL and are for your information only. Recent Developments Various Matters In January 2007, Mittal Steel sold Travi e Profilati di Pallanzeno (TPP) and its 49.9% stake in San Zeno Acciai to Duferco for an enterprise value of 117 million. Such divestment was pursuant to a commitment made to the European Commission in connection with Mittal Steels acquisition of Arcelor. In 2006, TPP generated sales of approximately 190 million with an annual production of approximately 500,000 tonnes of long carbon steel products. On January 19, 2007, Mittal Steel announced that it had agreed to sell Huta Bankowa Splka z.o.o. (Huta Bankowa) to Alchemia SA Capital Group for an enterprise value of approximately 37 million (approximately $48 million). Such divestment was pursuant to a commitment made to the European Commission in connection with Mittal Steels acquisition of Arcelor. Huta Bankowa, a wholly-owned subsidiary of ArcelorMittal, is located in Dabrowa Gornicza in southern Poland. The transaction is expected to close in 2007, subject to European Commission approval and applicable antitrust clearances. On February 14, 2007, Mittal Steel signed a joint venture agreement with the Bin Jarallah Group of companies for the design and construction of a seamless tube mill in Saudi Arabia. This facility will be located in Jubail Industrial City, north of Al Jubail on the Persian Gulf. The mill will have a capacity of 500,000 tonnes per year. Construction is planned to commence at the end of the first quarter of 2008 and to be completed by the 39

fourth quarter of 2009. ArcelorMittal (as successor to Mittal Steel) will hold a 51% interest in the company established for this project, with the Bin Jarallah Group holding the remaining 49%. On February 23, 2007, Mittal Steel announced that it had signed agreements with the State of Senegal in West Africa to develop iron ore mines in the Faleme region of South East Senegal. The project is expected to require an investment of approximately $2.2 billion. The project is an integrated mining project that will encompass the development of the mine, the building of a new port near Dakar and the development of approximately 750 kilometers of rail infrastructure to link the mine with the port. ArcelorMittal expects the mine to produce approximately 750 million tonnes of iron ore. ArcelorMittal expects to commence production of the mines in 2011. The Government of Senegal officially handed the concessions to Mittal Steel on July 18, 2007. On March 5, 2007, Mittal Steel sold Stahlwerk Thringen GmbH (SWT) to Grupo Alfonso Gallardo for an enterprise value of 591 million (approximately $768 million). Such divestment was pursuant to a commitment made to the European Commission in connection with Mittal Steels acquisition of Arcelor. SWT, which was a wholly-owned subsidiary of Mittal Steel, is located at Unterwellenborn, Thringen, Germany. In 2005, SWTs sales were approximately 400 million. SWT employs approximately 700 people and produces steel sections of up to 550 millimeters in width used in building and construction. On March 16, 2007, Mittal Steel announced that it was investing in a new steel service center in Krakow, Poland. Incorporating two de-coiling lines and a slitting line, this facility will have a processing capacity of 450,000 tonnes per year and will strengthen ArcelorMittals network of steel service centers in Poland. Operation is expected to commence in the fall of 2007. On March 16, 2007, Mittal Steel announced that it had signed a definitive agreement with Noble International, Ltd. (Noble) for the combination of their laser-welded tailored blanks businesses. In exchange for its laser-welded blanks business in western and eastern Europe, China, India and the United States, Mittal Steel received $300 million from Noble, including $131,250,000 in a combination of cash, a Noble note and the assumption of certain financial obligations, and 9,375,000 shares of Noble common stock. The completion of this transaction in August, 2007 made ArcelorMittal the largest shareholder of Noble, with approximately 40% of its issued and outstanding common shares and the ability to appoint four of the nine seats on its Board of Directors. On April 23, 2007, Mittal Steel announced that it had finalized the acquisition of Sicartsa, a Mexican integrated steel producer, from Grupo Villacero for an enterprise value of approximately $1.4 billion. Sicartsa, with production facilities in Mexico and Texas, is a fully-integrated producer of long steel, with an annual production capacity of approximately 2.7 million tonnes. Sicartsas wholly-owned mine is linked directly to the plant via a slurry pipeline. In addition to a fully-integrated steel-making facility at Lzaro Crdenas, next to Mittal Steels Lzaro Crdenas site, the acquisition included Metaver, a mini-mill, Sibasa and Camsa, two rolling mills in Celaya, Guanajuato (Sibasa) and Tultitln in the state of Mexico, as well as Border Steel, a mini-mill in the state of Texas in the United States. On July 26, 2007, Mittal Steel announced that it had reached an agreement with the Polish government to acquire the 25.2% of shares in ArcelorMittal Poland held by the Polish state and treasury ministry. Mittal Steel agreed to acquire the shares for approximately 436 million Polish zloty or approximately $157 million. Mittal Steel initially acquired approximately 69% of the Polish company in March 2004 and as part of that agreement received an option to purchase a further 25% from the Polish state, which was exercised in this transaction. On August 28, 2007, Mittal Steel sold 13,400,000 class A common shares for an aggregate amount of 616 million pursuant to a block trade transaction and simultaneously bought a call option giving it the right to purchase the equivalent number of shares (or the shares substituted for them in the merger of Mittal Steel into ArcelorMittal or in the proposed merger of ArcelorMittal into Arcelor, as the case may be). The call option was transferred to ArcelorMittal as a result of the first step merger. ArcelorMittal expects to use any shares that would be purchased pursuant to the call option for share deliveries under the ArcelorMittal employee stock option plan. The purchase price for the call option was 315 million and the strike price was 22.975 per share. The call option expires on November 28, 2007. "As of September 26, 2007, ArcelorMittal had purchased 1.2 million shares through the partial exercise of the call option."

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On August 31, 2007, Mittal Steel announced that it had signed a definitive agreement with RAG Beteligungs-AG, Essen (RAG) for the acquisition of the 76.88% stake held by RAG in Saar Ferngas AG, Saarbrcken. The sale is subject to board approval and approval by the European anti-trust authorities. The purchase price under the agreement is approximately 367 million and the transaction is expected to complete in the fourth quarter of 2007. Saar Ferngas is the largest gas distribution company in Saarland and RhinelandPalatinate and supplies natural gas to municipal power utilities, industrial plans and power stations. On September 5, 2007, ArcelorMittal announced that it would acquire all of the outstanding interests of Wabush Mines, an iron ore and pellet producer in northeastern Canada. The company will acquire the remaining interests it does not own in the joint venture through the exercise of a right of first refusal over such interests held by its Dofasco subsidiary. Dofasco, which already held 28.6% of the mining venture, will acquire the interests of Stelco (44.6%) and Cleveland Cliffs (26.8%) for an aggregate cash element of approximately $67 million and the assumption of certain liabilities. The transaction, which is subject to regulatory approval, is expected to close in December 2007. On September 10, 2007, ArcelorMittal announced that it would acquire 51% of the shares of Rozak A.S., a Turkish steel company. Rozak specializes in H-profiles, sheets and plates and shipped approximately 450,000 tonnes of steel during 2006 with revenues of approximately 260 million. The transaction is subject to antitrust authorities approval, and is expected to be completed by year-end 2007. Dofasco On January 26, 2006, Mittal Steel and ThyssenKrupp AG entered into a letter agreement which provided that if Mittal Steel was successful in its tender offer for Arcelor and was able to exert management control with the ability to sell Dofasco, Mittal Steel would cause Arcelor to sell Dofasco to ThyssenKrupp. During March and April 2006, Arcelor acquired 100% of the shares of Dofasco. On April 3, 2006, Arcelor transferred 89% of the shares of Dofasco to the Strategic Steel Stichting (S3), an independent foundation under Dutch law, thereby removing Arcelors ability to sell or otherwise dispose of such shares without S3s consent. On June 25, 2006, Mittal Steel and Arcelor agreed to the terms of a recommended offer, pursuant to which Mittal Steel has acquired approximately 94% of the share capital of Arcelor. On August 1, 2006, the Department of Justice (DOJ) announced that it had concluded that the acquisition by Mittal Steel of Arcelor was likely to lessen substantially competition in the market for tin mill products in the eastern United States and filed in the U.S. District Court in Washington, D.C. a consent decree that Mittal Steel had previously signed with the DOJ on May 11, 2006. The consent decree required the divestiture of Dofasco or, if Mittal Steel were unable to sell Dofasco, the divestiture of either Mittal Steels Sparrows Point facility in Maryland or Mittal Steels Weirton facility in West Virginia. The consent decree provided that the DOJ in its sole discretion would choose which plant would be sold. The consent decree also included a Hold Separate Stipulation and Order, which provided that Dofasco would be maintained as a separate business, independent of the other businesses of Mittal Steel and Arcelor, until Dofasco was divested or the DOJ made its selection of the alternative plant to be divested. After the consent decree was filed in court, the boards of both Mittal Steel and Arcelor requested the directors of S3 to dissolve the foundation in order to allow the sale of Dofasco. On November 10, 2006, however, S3s directors unanimously decided not to dissolve the foundation and to retain the Dofasco shares, thereby continuing to prevent their sale. On December 22, 2006, ThyssenKrupp initiated summary legal proceedings against Mittal Steel in the District Court in Rotterdam alleging that Mittal Steel had breached the letter agreement by failing to cause Arcelor to initiate litigation against S3 to force S3 to transfer the Dofasco shares to Arcelor so as to permit their sale to ThyssenKrupp. The suit sought, among other things, a court order directing Mittal Steel to cause Arcelor to commence summary proceedings in the Dutch courts to force S3 to return the Dofasco shares to Arcelor. On January 23, 2007, the District Court in Rotterdam denied ThyssenKrupps petition for an order. The time for ThyssenKrupp to appeal the Rotterdam District Courts order has expired. On February 20, 2007, the DOJ informed Mittal Steel that the DOJ had selected the Sparrows Point steel mill located near Baltimore, Maryland for divestiture under the consent decree filed by the DOJ in August 2006. The selection of Sparrows Point by the DOJ ended the period during which Mittal Steel was required to hold Dofasco separate from its operations. According to the decree, the divestiture of Sparrows Point was required to take place within 90 days from February 20, 2007, subject to possible extensions. As a result of various DOJ and district court extensions, the divestiture period was extended until August 6, 2007. On August 41

2, 2007 Mittal Steel announced that it had entered into an agreement to sell Sparrows Point and related railroad, intellectual property and other assets to a joint venture entity sponsored by Esmark Incorporated and WheelingPittsburgh Corporation, with participation by industry and institutional investors. ArcelorMittal, as successor to Mittal Steel, received approval for the sale from the DOJ on September 5, 2007. The transaction is expected to close in the fourth quarter of 2007. Brazilian Subsidiaries On September 25, 2006, the Comisso de Valores Mobiliros (the CVM), the Brazilian securities regulator, ruled that, as a result of Mittal Steels acquisition of Arcelor, Mittal Steel was required to carry out a public offer to acquire all the outstanding shares in Arcelor Brasil not owned by Arcelor or any other affiliate of Mittal Steel. Pursuant to the ruling, the value to be offered to Arcelor Brasils shareholders was to be determined on the basis of the value of the part of the overall consideration paid for Arcelor by Mittal Steel that was attributable to Arcelor Brasil. On April 17, 2007, the CVM granted registration of the offer, which opened on April 27, 2007 and closed on June 4, 2007. The consideration to be offered per Arcelor Brasil share was R$10.82 in cash and 0.3568 Mittal Steel class A common shares, subject to certain adjustments. Tendering Arcelor Brasil shareholders could also accept an all-cash option, pursuant to which they would receive cash in an amount equal to the value of the cash and share consideration described above, calculated in the manner set forth in the offering documents. On June 5, 2007, Mittal Steel publicly announced the results of the tender offer. In the aggregate, Mittal Steel acquired 29.5% of the total share capital and 89.7% of the free float of Arcelor Brasil as of June 5, 2007, thereby increasing its then 67.1% shareholding in Arcelor Brasil to 96.6%. Mittal Steel paid for the shares with $3.5 billion in cash and approximately 27.0 million Mittal Steel class A common shares, representing a total consideration of $5.2 billion. On June 15, 2007, Arcelor Brasil received confirmation from the CVM that its registration as a listed company had been cancelled and on June 21, 2007, Arcelor Brasil received confirmation from BOVESPA (the stock exchange of So Paulo, Brazil) that its securities could no longer be traded on the exchange. As of August 8, 2007, Mittal Steel had paid an additional $434 million in cash for additional shares of Arcelor Brasil. These purchases were made pursuant to the sell-out procedure under applicable Brazilian regulations that required that the remaining Arcelor Brasil shareholders have the opportunity to sell their shares to Mittal Steel for R$53.89 per share in cash (the same price offered to Arcelor Brasil shareholders in the allcash option of the tender offer) plus an interest component from June 8, the date of the settlement of the all-cash option of the tender offer, until settlement of such sales. On August 8, 2007, a general Arcelor Brasil shareholders meeting was held which approved the redemption by Arcelor Brasil of the remaining shares of Arcelor Brasil not held by Mittal Steel. On August 17, 2007, Arcelor Brasil paid a total of $132.7 million in cash to the remaining shareholders and redeemed all the remaining shares of Arcelor Brasil for R$53.89 per share plus an interest component for the period from June 8, 2007, the date of the settlement of the all-cash option of the tender offer, until August 17, 2007, the date the funds were made available to the remaining shareholders. On August 20, 2007, Mittal Steel Brasil Participaes S.A., a wholly owned subsidiary of Mittal Steel that was incorporated in order to acquire the Arcelor Brasil shares in the context of the tender offer, was merged with and into Arcelor Brasil S.A. Following this merger, on August 31, 2007, Arcelor Brasil was merged into Belgo Siderurgia S.A., which was then renamed ArcelorMittal Brasil S.A. The combined entity is now 100% owned by ArcelorMittal subsidiaries.

42

SELECTED HISTORICAL FINANCIAL INFORMATION FOR MITTAL STEEL The following disclosure relates to Mittal Steel Company N.V., which merged into its wholly-owned subsidiary ArcelorMittal on September 3, 2007, and its direct and indirect subsidiaries, including Arcelor. Since Arcelor forms a part of the ArcelorMittal group and, following the completion of this merger, will be the successor of ArcelorMittal, the (historical) narrative and financial disclosure in this prospectus is at certain places, including this section, based substantially or exclusively on the business and operations of Mittal Steel Company N.V. and its direct and indirect subsidiaries, including Arcelor. The following tables present selected consolidated financial information of Mittal Steel as of and for the years ended December 31, 2004, 2005 and 2006, which has been prepared in accordance with IFRS. This selected consolidated financial information should be read in conjunction with the Mittal Steel Consolidated Financial Statements, including the notes thereto.
Statement of Income Data (Amounts in $ millions except per share data and percentages) Sales ...................................................................................................... Cost of sales (including depreciation and amortization)(2)........................ Selling, general and administrative .......................................................... Operating income ..................................................................................... Operating income as percentage of Sales ................................................. Other income net ................................................................................... Income from equity method investments ................................................. Financing costs net ................................................................................ Income before taxes ................................................................................. Net income (including minority interest) ................................................. Basic earnings per common share ......................................................... Diluted earnings per common share ...................................................... Dividends declared per share ................................................................
(4) (3) (3) (1)

Year Ended December 31, 2004

(6)

2005(6)

2006

$20,612 14,422 676 5,514 26.8% 1,143 149 (214) 6,592 5,625 $8.10 $8.10

$28,132 22,341 1,062 4,729 16.8% 214 86 (353) 4,676 3,795 $4.80 $4.79 $0.30

$58,870 48,411 2,960 7,499 12.7% 49 301 (654) 7,195 6,086 $5.29 $5.28 $0.50

Balance Sheet Data (Amounts in $ millions except share data) Cash and cash equivalents, including short-term investments and restricted cash ...................................................................................... Property, plant and equipment.................................................................. Total assets............................................................................................... Payable to banks and current portion of long-term debt........................... Long-term debt, net of current portion ..................................................... Net assets.................................................................................................. Basic weighted average common shares outstanding (millions) .............. Diluted weighted average common shares outstanding (millions) ...........
2004
(6)

As of December 31, 2005(6) 2006

$2,634 11,058 21,692 341 1,639 11,079 643 643

$2,149 19,045 33,867 334 7,974 15,457 687 689

$6,146 54,696 112,166 4,922 21,645 50,191 988 990

43

Other Data (Amounts in $ millions except volume data) Net cash provided by operating activities................................................. Net cash (used in) investing activities ...................................................... Net cash (used in) provided by financing activities.................................. Total production of crude steel (thousands of tonnes).............................. Total shipments of steel products (thousands of tonnes) .......................
(5)

Year Ended December 31, 2004 2005 2006

$4,300 (656) (2,118) 39,362 35,067

$3,874 (7,512) 3,349 48,916 44,614

$7,122 (8,576) 5,445 85,620 78,950

(1) Including $2,235 million in 2004, $2,339 million in 2005 and $3,847 million in 2006 of sales to related parties (see Note 12 to the Mittal Steel Consolidated Financial Statements). (2) Including depreciation and amortization of $734 million in 2004, $1,113 million in 2005 and $2,296 million in 2006. (3) Earnings per common share are computed by dividing net income attributable to equity holders of Mittal Steel Company N.V. by the weighted average number of common shares outstanding during the periods presented considering retroactively the shares issued by Mittal Steel in connection with the acquisition of LNM Holdings. (4) This does not include the dividends declared by LNM Holdings to its shareholder prior to its acquisition by Ispat International. (5) Shipment volumes of steel products for the operations of Arcelor and its subsidiaries includes inter-company sales, while shipment volumes of steel products for the operations of Mittal Steel and its subsidiaries do not include intercompany sales. (6) The 2005 comparative information has been adjusted retrospectively for the adoption of International Financial Reporting Interpretations Committee (IFRIC) 4, which occurred as of January 1, 2006 (see Note 1 to the Mittal Steel Consolidated Financial Statements), as well as the finalization of purchase price allocations relating to ISG and Mittal Steel Kryviy Rih (see Note 3 to the Mittal Steel Consolidated Financial Statements).

44

SELECTED HISTORICAL FINANCIAL INFORMATION FOR ARCELOR The following table presents selected consolidated financial information of Arcelor for the years ended December 31, 2004, 2005, 2006, as set forth in (except as otherwise indicated) Arcelors annual reports for such years, which are incorporated by reference into this prospectus. This selected consolidated financial information is derived from and should be read in conjunction with the respective consolidated financial statements of Arcelor for the years ended December 31, 2004, 2005 and 2006, including the notes thereto, incorporated by reference into this prospectus. In order to facilitate meaningful year-on-year comparisons, the financial statements as of and for the year ended December 31, 2004 have been adjusted to conform to the presentation in Arcelors 2005 annual report and the financial statements as of and for the year ended December 31, 2005 have been adjusted to conform to the presentation in Arcelors 2006 annual report.
As at and for the Year ended December 31, 2004 2005 2006

(All amounts in millions, except per share data) Income statement data Amounts in accordance with IFRS

Revenue ........................................................................................................................... Operating result ............................................................................................................. Operating margin(1) .......................................................................................................... Net financing costs........................................................................................................... Share of results in companies accounted for using the equity method............................ Result before tax............................................................................................................. Taxation............................................................................................................................ Result after tax ............................................................................................................... Minority interests ............................................................................................................. Net resultgroup share ................................................................................................ Basic earnings per share................................................................................................... Diluted earnings per share................................................................................................ Balance sheet data (at period end) Amounts in accordance with IFRS Total shareholders equity................................................................................................ Minority interests ............................................................................................................. Total assets ....................................................................................................................... Total non-current assets ................................................................................................... Total non-current liabilities.............................................................................................. Cash Flow Data Amounts in accordance with IFRS Cash flows from operating activities ............................................................................... Cash flows from (used in) investing activities................................................................. Cash flows from (used in) financing activities ................................................................

30,176 3,314 11.0% (521) 413 3,206 (513) 2,693 (403) 2,290 4.21(2) 3.80

32,611 4,417 13.5% (254) 317 4,480 (175) 4,305 (432) 3,873 6.31(3) 5.94

40,611 4,454 11% (696) 363 4,121 (462) 3,659 (652) 3,007 4.71(3) 4.71

10,812 1,415 31,238 15,265 8,624

14,908 2,522 35,864 18,145 8,430

19,190 2,896 44,839 23,314 10,921

3,205(4) (1,382) 354

4,464(4) (1,606) (2,389)

4,280(4) (6,269) (691)

(1) Calculated by Mittal Steel as operating result divided by revenue. (2) Including 106,629,054 new shares issued on July 27, 2004, and excluding treasury shares. (3) Excluding treasury shares. (4) Including taxes paid in the amount of 199 million in 2004, 405 million in 2005 and 482 million in 2006, and net interest paid in the amount of 151 million in 2004, 107 million in 2005 and 195 million in 2006.

45

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION OF ARCELOR AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2006 The following unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined income statement (Unaudited Pro Forma Condensed Combined Financial Information) of Arcelor give effect to the following transactions as if they occurred on January 1, 2006 for the pro forma condensed combined income statement and as if they occurred on December 31, 2006 for the pro forma condensed combined balance sheet: the acquisition by Mittal Steel of 94.2% of the share capital (on a diluted basis) of Arcelor and all of the outstanding OCEANEs (convertible bonds) of Arcelor (collectively, the Arcelor acquisition) (the acquisition is reflected in the historical balance sheet as of December 31, 2006 of Mittal Steel); the tender offer by Mittal Steel for the acquisition of all outstanding minority interests in Arcelor Brasil S.A. (Arcelor Brasil), a subsidiary of Arcelor; the $590 million share buy-back program announced on April 2, 2007 and the 27 million share buy-back program announced on June 12, 2007; the merger of Mittal Steel into ArcelorMittal; and the proposed merger of ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) into Arcelor, which will subsequently be renamed ArcelorMittal.

An auditors assurance report in respect of this unaudited pro forma condensed financial information is included in this prospectus on page I-162. On August 1, 2006, Mittal Steel acquired 91.9% of the share capital of Arcelor (on a diluted basis). Through subsequent transactions Mittal Steel has increased its ownership to 94.2% which includes the issued and outstanding shares of Arcelor and all of Arcelors convertible bonds, which were acquired in exchange for approximately 680 million Mittal Steel class A common shares and approximately 8.0 billion ($10.2 billion) in cash. The acquisition was accounted for using the purchase method of accounting, which requires that the assets acquired and liabilities assumed be recorded at their estimated fair values at the date of acquisition. The assets acquired and liabilities assumed of Arcelor are reflected in the historical consolidated balance sheet as of December 31, 2006. Accordingly, no pro forma adjustments are recorded in the Unaudited Pro Forma Condensed Combined Balance Sheet related to this acquisition. The results of operations for Arcelor have been included in the consolidated income statement of Mittal Steel since the date of acquisition, August 1, 2006. For purposes of preparing the Unaudited Pro Forma Condensed Combined Income Statement, the Arcelor historical consolidated income statement for the period from January 1, 2006 through July 31, 2006 has been translated from euros into U.S. dollars using an average exchange rate of 1 to $1.2343. On September 25, 2006, the Comisso de Valores Mobilirios (the CVM), the Brazilian securities regulator, ruled that, as a result of Mittal Steels acquisition of Arcelor, Mittal Steel was required to carry out a public offer to acquire all of the outstanding shares in Arcelor Brasil not owned by Arcelor or any other affiliate of Mittal Steel. Pursuant to the ruling, the value to be offered to Arcelor Brasils shareholders was to be determined on the basis of the value of the part of the overall consideration paid for Arcelor by Mittal Steel that was attributable to Arcelor Brasil. On April 17, 2007, the CVM granted registration of the offer, which opened on April 27, 2007 and closed on June 4, 2007. The consideration to be offered per Arcelor Brasil share was R$10.82 in cash and 0.3568 Mittal Steel class A common shares, subject to certain adjustments. Tendering Arcelor Brasil shareholders could also accept an all-cash option, pursuant to which they would receive cash in an amount equal to the value of the cash and share consideration described above, calculated in the manner set forth in the offering documents. As of June 4, 2007, 191.3 million Arcelor Brasil shares were tendered, representing 29.5% of the total Arcelor Brasil share capital and 89.7% of the free float of Arcelor Brasil. Of the total number of shares tendered 39.6% were tendered pursuant to the Mixed Offer and 60.4% pursuant to the Cash Offer. The total value offered per Arcelor Brasil share was 21.05 ($28.31). The amount of cash paid by Mittal Steel was approximately 2.6 billion ($3.5 billion). The number of Mittal Steel class A common shares issued was approximately 27 million shares, representing 2% of the share capital of Mittal Steel on a diluted basis. As of August 8, 2007, Mittal Steel had paid an additional $ 0.4 billion in cash for additional shares of Arcelor Brasil. These purchases were made 46

pursuant to the sell-out procedure under applicable Brazilian regulations that required that the remaining Arcelor Brasil shareholders have the opportunity to sell their shares to Mittal Steel for R$53.89 per share in cash (the same price offered to Arcelor Brasil shareholders in the all-cash option of the tender offer) plus an interest component from June 8, the date of the settlement of the all-cash option of the tender offer, until settlement of such sales. On August 8, 2007, a general Arcelor Brasil shareholders meeting was held which approved the redemption by Arcelor Brasil of the remaining shares of Arcelor Brasil not held by Mittal Steel. On August 17, 2007, Arcelor Brasil paid a total of $ 0.1 billion in cash to the remaining shareholders and redeemed all the remaining shares of Arcelor Brasil for R$53.89 per share plus an interest component for the period from June 8, 2007, the date of the settlement of the all-cash option of the tender offer, until August 17, 2007, the date the funds were made available to the remaining shareholders. The Unaudited Pro Forma Condensed Combined Financial Information reflect the acquisition by Mittal Steel of 100% of the outstanding minority interests pursuant to the offer described above. On April 2, 2007, Mittal Steel announced the commencement of a share buy-back program to repurchase up to a maximum aggregate amount of $590 million of its class A common shares. This share buyback program was scheduled to end at the earliest of (i) December 31, 2007, (ii) the moment on which the aggregate value of class A common shares repurchased by Mittal Steel since the start of this share buy-back program reaches $590 million, (iii) the moment on which Mittal Steel and its subsidiaries hold 10% of the total number of the then-issued class A and class B common shares, or (iv) the moment on which ArcelorMittal no longer has any corporate authorization to to repurchase its shares. This share buy-back program was completed on September 4, 2007 as the $590 million limit was reached. Mittal Steel and ArcelorMittal, as its successor, purchased an aggregate of 9,513,960 Mittal Steel class A common shares and ArcelorMittal shares under the program. On June 12, 2007, Mittal Steel announced its intention to start a share buy-back program for up to a maximum of 27 million class A common shares, immediately following the completion of the $590 million share buy-back program summarized above. This new share buy-back program is designed to offset the issuance of shares as partial consideration for the acquisition of the outstanding minority interests in Arcelor Brasil. This share buy-back program commenced upon the termination of the $590 million buy-back program described above and will end at the earliest of the moment at which (i) the aggregate number of shares purchased under this program reaches the 27 million share limit, (ii) ArcelorMittal and its subsidiaries will hold 10% of the thenissued ArcelorMittal shares, or (iii) ArcelorMittal no longer has corporate authorization to repurchase its shares. In the Memorandum of Understanding of June 25, 2006 (the MOU), Mittal Steel agreed that it would merge into Arcelor as soon as practicable following completion of its revised offer for Arcelor, and that the combined entity would be incorporated, domiciled and headquartered in Luxembourg. Following discussions at a meeting held on April 27, 2007, the Mittal Steel Board of Directors decided, pursuant to written decisions dated May 2, 2007, to organize a two-step process pursuant to which Mittal Steel would first be merged into ArcelorMittal, which would subsequently be merged into Arcelor as the ultimate surviving entity. The objective of the two-step process is to ensure the earliest possible compliance with the undertakings made by Mittal Steel in the context of its revised offer for Arcelor (as reflected in the MOU). As a first step in a two-step merger process to combine Mittal Steel and Arcelor in a single legal entity governed by Luxembourg law, on May 2, 2007, Mittal Steel and ArcelorMittal entered into a merger agreement which provided that Mittal Steel would merge into ArcelorMittal, by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel. This merger became effective on September 3, 2007 and the combined company was named ArcelorMittal. ArcelorMittal was incorporated on August 13, 2004 under the name Verger Investments S.A. It was a wholly-owned subsidiary of Mittal Steel from April 24, 2007 and was renamed ArcelorMittal on April 26, 2007. ArcelorMittal did not conduct operations prior to the merger with Mittal Steel. Prior to the merger with Mittal Steel, ArcelorMittal did not have any assets, liabilities (contingent or otherwise) or commitments, other than assets consisting of an immaterial amount of cash. It was used to facilitate the two-step merger process described above. For accounting purposes, the merger of Mittal Steel into ArcelorMittal was considered a combination of entities under common control. All recorded assets and liabilities of Mittal Steel and ArcelorMittal were carried forward at their historical book values, and the income of ArcelorMittal includes the income of Mittal Steel for all periods presented.

47

In this second-step merger, ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) will merge into Arcelor and shareholders of ArcelorMittal will become shareholders of Arcelor, which will subsequently be renamed ArcelorMittal. This second-step merger is intended to further rationalize the corporate structure of the combined company initiated by the first-step merger of Mittal Steel and ArcelorMittal. In this second-step merger, a holder of ArcelorMittal shares will receive one newly-issued Arcelor share for every one ArcelorMittal share, which is referred to as the Exchange Ratio. This Exchange Ratio assumes the prior completion of a share capital restructuring of Arcelor pursuant to which each 7 pre-capital restructuring shares of Arcelor would be exchanged for 8 post-capital restructuring shares of Arcelor. No additional consideration in cash or in kind will be paid by Arcelor to the shareholders of ArcelorMittal in connection with the merger. The acquisition of the minority interest in connection with the merger of ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) into Arcelor will be accounted for using the purchase method of accounting. The excess of the purchase price over the historical book value of the minority interest will be recorded as goodwill. The Unaudited Pro Forma Condensed Combined Financial Information presents Arcelor, the combined company, as if the transaction occurred on January 1, 2006. The assumptions and adjustments to Arcelors historical shareholders equity are described in Note 6 of the Unaudited Pro Forma Condensed Combined Financial Information. Other referenced acquisitions and divestitures as disclosed on pages 39 through 42 in Presentation of Certain Financial and Other Information - Recent Developments, have not been reflected in the pro forma adjustments. The Unaudited Pro Forma Condensed Combined Financial Information has been prepared for illustrative purposes only. Because of its nature, it addresses a hypothetical situation and, therefore, does not represent Arcelors actual financial position or results. It does not purport to indicate the results of operations or the combined financial position that would have resulted had the transactions been completed at the beginning of the period presented, nor is it intended to be indicative of expected results of operations in future periods or the future financial position of Arcelor. The pro forma adjustments are based upon available information and certain assumptions that Arcelor believes to be reasonable. The Unaudited Pro Forma Condensed Combined Financial Information should be read in conjunction with the notes thereto as well as the historical consolidated financial statements of Mittal Steel and Arcelor. The historical consolidated financial statements of Arcelor are available at the offices of Arcelor, see Documents on Display. The audited consolidated financial statements of Mittal Steel as of and for the year ended December 31, 2006, were prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The audited consolidated financial statements of Arcelor were prepared in accordance with IFRS. To assist in understanding the Unaudited Pro Forma Condensed Combined Financial Information, a quantitative and qualitative reconciliation from IFRS to accounting principles generally accepted in the United States (U.S. GAAP) for the pro forma combined shareholders equity as of December 31, 2006 and the pro forma combined net income for the year ended December 31, 2006 is included in Note 12 herein.

48

ARCELOR UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET As of December 31, 2006
Pro Forma Adjustments Acquisition of Minority Interest of Arcelor Brasil (Note 3) Merger of Mittal Steel into ArcelorMittal (Note 5) Merger of ArcelorMittal into Arcelor (Note 6)

Mittal Steel Historical (Note 2a)

Share Buy-Back Program (Note 4)

Pro Forma Combined Mittal Steel

Pro Forma Combined ArcelorMittal

Pro Forma Combined ArcelorMittal

(in millions of U.S. Dollars)

CURRENT ASSETS Cash and cash equivalents, restricted cash and shortterm investments..................... $ Trade accounts receivable............. Inventories..................................... Prepaid expenses and other current assets........................... Total Current Assets................... Goodwill and intangible assets ....................................... Property, plant and equipment................................ Investments accounted for using the equity method.......... Other assets ................................... Deferred tax assets ........................ Total Assets.................................. $ CURRENT LIABILITIES Payable to banks and current portion of longterm debt ................................. $ Trade accounts payable................. Accrued expenses and other liabilities.................................. Total Current Liabilities ............ Long-term debt, net of current portion......................... Deferred employee benefits .......... Deferred tax liabilities................... Other long-term obligations.......... Total Liabilities ........................... Equity attributable to the equity holders of the parent ..................................... Minority interest ......................... Total equity.................................. Total liabilities and equity.......... $

6,146 $ 8,769 19,238 5,209 39,362 11,030

(3,944) a (3,944) 3,300

(590) $ (590)

1,612 $ 8,769 19,238 5,209 34,828 14,330

1,612 $ 8,769 19,238 5,209 34,828 14,330

1,435

1,612 8,769 19,238 5,209 34,828 15,765

54,784 3,469 2,181 1,670 112,496 $

(644) $

(590) $

54,784 3,469 2,181 1,670 111,262 $

a,b $

54,784 3,469 2,181 1,670 111,262 $

1,435 $

54,784 3,469 2,181 1,670 112,697

4,922 $ 10,717 8,921 24,560 21,645 5,285 7,023 3,756 62,269

1,983 $ 1,983 1,983

6,905 $ 10,717 8,921 26,543 21,645 5,285 7,023 3,756 64,252

6,905 $ 10,717 8,921 26,543 21,645 5,285 7,023 3,756 64,252

6,905 10,717 8,921 26,543 21,645 5,285 7,023 3,756 64,252

42,127 8,100 50,227 112,496 $

1,713 a,b (2,357) b (644) (644) $

2,573 2,573 (590) $

41,267 5,743 47,010 111,262 $

a,b $

41,267 5,743 47,010 111,262 $

3,239 a,b (1,804) b 1,435 1,435 $

44,506 3,939 48,445 112,697

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information

49

ARCELOR UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT As of December 31, 2006
Pro forma adjustments
Arcelor Historical (January 1 to July 31, 2006) Acquisition of Minority Interest of Arcelor Brasil Merger of Mittal Pro Forma Pro Forma Steel into Arcelor Combined Combined Mittal ArcelorMittal Mittal Steel

Mittal Steel Historical

Acquisition of Arcelor

Share BuyBack Program

Merger of ArcelorMittal into Arcelor

Pro Forma Combined ArcelorMittal

(Note 2b)

(Note 2c)

(Note 7)

(Note 8)

(Note 9)

(Note 5)

(Note 10)

(in millions of U.S. Dollars, except per share data)

Sales................................................ $ 58,870 $ Cost of sales.................................... 48,411 Selling, general, and administrative ........................... 2,960 Operating income ........................... 7,499 Other income net ......................... 49 Income from equity method investments............................... 301 Finance costs net ......................... (654) Income before income taxes ......................................... Income Tax Expense ...................... 7,195 (1,109)

28,659 $ 23,381 2,260 3,018 (341) 269 (451) 2,495 34 2,529 $

56 a (56) 341 b (222) c 63 (16) d 47 (90) e 137 e

(83) a (83) 21 b

$ 87,529 $ 71,848 5,220 10,461 49 570 (1,410) 9,670 (1,070) $ 8,600 $ $ 7,653 $ 947 $ $ 5.57 5.56

$ 87,529 $ 71,848 $ $ $ 5,220 10,461 49 570 (1,410) 9,670 (1,070) 8,600 $ 7,653 $ 947 5.57 5.56

217 (217) a a

$ 87,529 71,848 5,220 10,461 49 570 (1,410) 9,670 (1,070) $ $ 8,600 7,870 730 5.55 5.54

Net income (including minority interest).................... $ 6,086 $ Attributable to: Equity holders of parent ........... $ 5,226 $ Minority interest....................... 860 Earnings-per-share: Basic ......................................... $ 5.29 Diluted...................................... 5.28 Weighted average shares outstanding: Basic ......................................... 988 Diluted...................................... 989

$ $

476 a (476) a

$ (62) $ (62)

2,103 $ 426

396 f 396 f

27 b 27 b

(36) c (36) c

1,375 1,376

1,375 1,376

44 b 44 b

1,419 1,420

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information

50

Note 1 - Basis of Pro Forma Presentation The Unaudited Pro Forma Condensed Combined Income Statement for the year ended December 31, 2006 reflects adjustments as if each of the acquisition of Arcelor, accounted for using the purchase method of accounting, the acquisition of the outstanding minority interest in Arcelor Brasil, the merger of Mittal Steel into ArcelorMittal, and the proposed merger of ArcelorMittal into Arcelor had occurred on January 1, 2006. The Unaudited Pro Forma Condensed Combined Balance Sheet reflects adjustments as if the acquisition of the outstanding minority interest in Arcelor Brasil, the merger of Mittal Steel into ArcelorMittal, and the proposed merger of ArcelorMittal into Arcelor had occurred as of December 31, 2006. The Unaudited Pro Forma Condensed Combined Financial Information is presented for illustrative purposes only and does not purport to indicate the results of operations or the combined financial position that would have resulted had the transactions been completed as of the dates indicated, nor is it intended to be indicative of expected results of operations in future periods or the future financial position of Arcelor. Likewise, the pro forma combined provision for income taxes and the pro forma combined balances of deferred taxes may not represent the amounts that would have resulted had the entities filed consolidated income tax returns during the periods presented. In addition, they do not reflect cost savings or other synergies resulting from the acquisitions that may be realized in future periods. Intercompany sales between the entities included in the Unaudited Pro Forma Condensed Combined Financial Information have not been excluded or eliminated from the Unaudited Pro Forma Condensed Combined Information as the amounts are not material. The Unaudited Pro Forma Condensed Combined Financial Information has been prepared on the basis of assumptions described in these notes. Note 2 - Historical Financial Statements Represents the historical financial statements of Mittal Steel and Arcelor in accordance with IFRS. a) Represents the historical condensed consolidated balance sheet of Mittal Steel as of December 31, 2006, adjusted for purchase price adjustments for the acquisistion of Arcelor made after the issuance of the December 31, 2006 financial statements. Represents the historical condensed consolidated income statement of Mittal Steel for the year ended December 31, 2006. Represents the historical condensed consolidated statement of income of Arcelor for the period from January 1, 2006 through July 31, 2006 translated from euros into U.S. dollars using an average exchange rate of 1 to $1.2343.

b) c)

Note 3 - Acquisition of the Minority Interest in Arcelor Brasil (Balance Sheet) On September 25, 2006, the CVM ruled that, as a result of Mittal Steels acquisition of Arcelor, Mittal Steel was required to carry out a public offer to acquire all of the outstanding shares in Arcelor Brasil not owned by Arcelor or any other affiliate of Mittal Steel. Pursuant to the ruling, the value to be offered to Arcelor Brasils shareholders was to be determined on the basis of the value of the part of the overall consideration paid for Arcelor by Mittal Steel that was attributable to Arcelor Brasil. On April 17, 2007, the CVM granted registration of the offer, which opened on April 27, 2007 and closed on June 4, 2007. The consideration offered per Arcelor Brasil share was R$10.82 in cash and 0.3568 Mittal Steel class A common shares, subject to certain adjustments. Tendering Arcelor Brasil shareholders could also accept an all-cash option, pursuant to which they would receive cash in an amount equal to the value of the cash and share consideration described above, calculated in the manner set forth in the offering documents. As of June 4, 2007, 191.3 million Arcelor Brasil shares were tendered, representing 29.5% of the total Arcelor Brasil share capital and 89.7% of the free float of Arcelor Brasil. Of the total number of shares tendered 39.6% were tendered pursuant to the Mixed Offer and 60.4% pursuant to the Cash Offer. The total value offered per Arcelor Brasil share was 21.05 ($28.31). The amount of cash paid by Mittal Steel was approximately 2.6 billion ($3.5 billion). The number of Mittal Steel class A common shares issued was approximately 27 million shares, representing 2% of the share capital of Mittal Steel on a diluted basis. As of August 8, 2007, Mittal Steel had paid an additional $434 million in cash for additional shares of Arcelor Brasil. These purchases were made 51

pursuant to the sell-out procedure under applicable Brazilian regulations that required that the remaining Arcelor Brasil shareholders have the opportunity to sell their shares to Mittal Steel for R$53.89 per share in cash (the same price offered to Arcelor Brasil shareholders in the all-cash option of the tender offer) plus an interest component from June 8, the date of the settlement of the all-cash option of the tender offer, until settlement of such sales. On August 8, 2007, a general Arcelor Brasil shareholders meeting was held which approved the redemption by Arcelor Brasil of the remaining shares of Arcelor Brasil not held by Mittal Steel. On August 17, 2007, Arcelor Brasil paid a total of $132.7 million in cash to the remaining shareholders and redeemed all the remaining shares of Arcelor Brasil for R$53.89 per share plus an interest component for the period from June 8, 2007, the date of the settlement of the all-cash option of the tender offer, until August 17, 2007, the date the funds were made available to the remaining shareholders. The Unaudited Pro Forma Condensed Combined Financial Information assumes that the value offered per Arcelor Brasil share is as described above and that the reference price of class A common shares of Mittal Steel to be used for determining the number of shares to be delivered pursuant to the offering documents is assumed to be $63.37, the weigted average closing share price on the New York Stock Exchange from June 4, 2007 to June 25, 2007. In addition, the impact of ongoing integration activities, transaction costs to be allocated or incurred, and other changes, could cause material differences between actual and pro forma results in the information presented. a) The total purchase price for the acquisition is as follows: Amount (in millions)

Value of Mittal Steel shares issued (approximately 27 million shares x $ 63.37) ........................................................... Total cash paid to security holders.................................................

$1,713 3,944

Total purchase price .......................................................................

$5,657

b)

Represents the elimination of the historical book value of minority interest acquired of $2,357 and the excess of the purchase price over the book value of the Arcelor Brasil minority interest. The excess of $3,300 million is recorded as an increase in goodwill. Amount (in millions)

Total purchase price ....................................................................... Less: historical book value of minority interest acquired...............

$5,657 2,357

Adjustment to goodwill resulting from the excess of purchase price over book value .....................................................................

$3,300

Although during 2006 there were no acquisitions of minority interest, in the preparation of its consolidated financial statements Mittal Steel determined the policy to be applied for future acquisition of minority interest to be that which is disclosed in Note 2 to the consolidated financial statements. Subsequent to the issuance of Mittal Steels Annual Report on Form 20-F for the year ended December 31, 2006, and in connection with its considerations related to the accounting for acquisition of the minority interest in Arcelor Brasil, Mittal Steel determined to voluntarily change its accounting policy to account for the excess of purchase price and the historical book value as goodwill. ArcelorMittal (as successor to Mittal Steel) believes that accounting for such excess as goodwill provides more relevant information consistent with the economics of the transaction. As no transactions were accounted for applying the policy disclosed in Note 2 to the consolidated 52

financial statements, retrospective application of this change has no effect on prior periods. The pro forma adjustments above reflect the acquisition of Arcelor Brasil in accordance with the revised policy. Note 4 Share-buy Back Programs (Balance Sheet) On April 2, 2007, Mittal Steel announced the commencement of a share buy-back program to repurchase up to a maximum aggregate amount of $590 million of its class A common shares. This share buyback program was scheduled to end at the earliest of (i) December 31, 2007, (ii) the moment on which the aggregate value of class A common shares repurchased by Mittal Steel since the start of this share buy-back program reaches $590 million, (iii) the moment on which Mittal Steel and its subsidiaries hold 10% of the total number of the then-issued class A and class B common shares, or (iv) the moment on which ArcelorMittal no longer has any corporate authorization to to repurchase its shares. This share buy-back program was completed on September 4, 2007 as the $590 million limit was reached. Mittal Steel and ArcelorMittal, as its successor, purchased an aggregate of 9,513,960 Mittal Steel class A common shares and ArcelorMittal shares under the program. On June 12, 2007, Mittal Steel announced its intention to start a share buy-back program for up to a maximum of 27 million class A common shares, immediately following the completion of the $590 million share buy-back program summarized above. This new share buy-back program is designed to offsett the issuance of shares as partial consideration for the acquisition of the outstanding minority interests in Arcelor Brasil. This share buy-back program commenced upon the termination of the $590 million buy-back program described above and will end at the earliest of the moment at which (i) the aggregate number of shares purchased under this program reaches the 27 million share limit, (ii) ArcelorMittal and its subsidiaries will hold 10% of the thenissued ArcelorMittal shares, or (iii) ArcelorMittal no longer has corporate authorization to repurchase its shares. The Unaudited Pro Forma Condensed Combined Financial Information includes estimated consideration to be paid for this new share buy-back program of approximately $1,983 million assuming the maximum number of shares repurchased of 27 million and a price per share of $73.44, the closing price on the New York Stock Exchange on September 20, 2007. This share buy-back program is assumed to be financed through new credit facilities. Note 5 Merger of Mittal Steel into ArcelorMittal ArcelorMittal and Mittal Steel agreed in a merger agreement dated May 2, 2007 to merge as contemplated by the merger proposal and explanatory memorandum for such transaction. After a vote of the shareholders of Mittal Steel at an extraordinary general meeting held on August 28, 2007 and a resolution of the sole shareholder of ArcelorMittal, this merger became effective on September 3, 2007 and the combined company was named ArcelorMittal. ArcelorMittal was incorporated on August 13, 2004 under the name Verger Investments S.A. It has been a wholly-owned subsidiary of Mittal Steel since April 24, 2007 and was renamed ArcelorMittal on April 26, 2007. ArcelorMittal did not conduct operations prior to the merger with Mittal Steel. Prior to the merger with Mittal Steel, ArcelorMittal did not have any assets, liabilities (contingent or otherwise) or commitments, other than assets consisting of an immaterial amount of cash. It was being used to facilitate the two-step merger process described above. In the merger, a holder of Mittal Steel class A common shares received one newly-issued ArcelorMittal share for every Mittal Steel class A common share, which is referred to as the Class A Exchange Ratio. A holder of Mittal Steel class B common shares received one newly-issued ArcelorMittal share for every one Mittal Steel class B common share, which is referred to as the Class B Exchange Ratio. No additional consideration in cash or in kind was paid by ArcelorMittal to the shareholders of Mittal Steel in connection with that merger. Former Mittal Steel shareholders held 100% of the outstanding shares of ArcelorMittal immediately after the merger. a) b) Reflects the issuance of ArcelorMittal shares and merger premium in exchange for the net assets of Mittal Steel as of December 31, 2006. Reflects the elimination of ArcelorMittals investment in Mittal Steel against the combined equity of Mittal Steel. 53

Amount (in millions) a) Issuance of ArcelorMittal shares and merger premium.... b) Elimination of ArcelorMittals investment ...................... Total pro forma adjustment ................................................... Note 6 Merger of ArcelorMittal into Arcelor (Balance Sheet) In this second-step merger, ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) will merge into Arcelor and shareholders of ArcelorMittal will become shareholders of Arcelor, which will subsequently be renamed ArcelorMittal. This second-step merger is intended to further rationalize the corporate structure of the combined company initiated by the first-step merger of Mittal Steel and ArcelorMittal. In this second-step merger, a holder of ArcelorMittal shares will receive one newly-issued Arcelor share for every one ArcelorMittal share, which is referred to as the Exchange Ratio. This Exchange Ratio assumes the prior completion of a share capital restructuring of Arcelor pursuant to which each 7 pre-capital restructuring shares of Arcelor would be exchanged for 8 post-capital restructuring shares of Arcelor. No additional consideration in cash or in kind will be paid by Arcelor to the shareholders of ArcelorMittal in connection with the merger. The acquisition of the minority interest in connection with the merger of ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) into Arcelor will be accounted for using the purchase method of accounting. The excess of the purchase price over the historical book value of the minority interest will be recorded as goodwill. The Unaudited Pro Forma Condensed Combined Financial Information assumes the per share price of ArcelorMittal shares to be $73.44, the closing share price on the New York Stock Exchange on September 20, 2007. a) The estimated total purchase price for the acquisition of the minority interest in Arcelor is as follows: Amount (in millions) Estimated value of ArcelorMittal shares issued (approximately 44.1 million shares x $73.44) .. Estimated cash paid to security holders............ Total purchase price ......................................... b) $ $ 3,239 3,239 $ $ 42,127 (42,127)

Represents the elimination of the historical book value of minority interest acquired of $1,804 million and the estimated excess of the proposed purchase price over the book value of the Arcelor minority interest. The excess of $1,435 million is recorded as an increase in goodwill. Amount (in millions) Total purchase price ................................................................ Less: historical book value of minority interest acquired........ Adjustment to goodwill resulting from the excess of purchase price over book value.......................................................... $ $ 3,239 1,804 1,435

Note 7 - Acquisition of Arcelor (Income Statement) Mittal Steel, through a series of transactions, acquired 94.2% of the issued and outstanding shares of Arcelor and all of Arcelors Convertible bonds. Aggregate consideration consisted of cash paid by Mittal Steel 54

of approximately 8.0 billion (approximately $10.2 billion) and approximately 680 million Mittal Steel class A shares, valued at $34.20 per share for IFRS accounting purposes, the weighted average closing price on August 1, 2006 and September 4, 2006 (the dates of the issuance of Mittal Steel shares as consideration).

The purchase price for the Arcelor acquisition was determined as follows: Amount (in millions) Value of Mittal Steel shares issued............. Cash paid to security holders ...................... Bankers fees and other transaction costs ... Total purchase price.................................... Less: Cash acquired .................................... Total purchase price, net............................. $ $ $ 23,240 10,247 188 33,675 4,594 29,081

The following table presents the amounts assigned to the net assets acquired based on their estimated fair values at the date of acquisition: Purchase Accounting Adjustments $ 1,060 11,858 2,320 Preliminary Purchase Price Allocation $ 22,352 34,338 8,676

(in millions) Assets: Current assets................................ Property, plant and equipment ...... Other non-current assets ............... Liabilities: Current liabilities .......................... Long-term loan ............................. Other long-term liabilities............. Deferred income taxes .................. Minority interest ........................... Net assets ...................................... Minority interest................................ Net assets acquired............................ Fair value of shares issued ................ Cash paid, net of $4,594 cash acquired ........................................ Purchase price, net ............................ Goodwill ...........................................

Arcelor Historical $ 21,292 22,480 6,356

(16,178) (8,830) (5,532) (1,276) (3,303) $ $ 15,009 (1,147) 13,862 $ $

(80) (1,244) (3,778) (794) 9,342 9,342 $ $

(16,178) (8,910) (6,776) (5,054) (4,097) 24,351 (1,147) 23,204 23,240 5,841 $ $ 29,081 5,877

The Arcelor acquisition was financed with credit extended by financial institutions under agreements entered into on January 30, 2006 (as subsequently amended) and May 23, 2006 totaling 7.8 billion (approximately $10.0 billion). Further, on September 7, 2006 and September 11, 2006, Mittal Steel signed a revolving credit facility of 1.0 billion (approximately $1.3 billion) to finance the further acquisition of shares. $9,067 million was utilized towards the cash settlement of the purchase consideration of the Arcelor acquisition. 55

The cash acquired from the Arcelor acquisition has been reduced for transaction costs of $165 million and a $176 million fee paid by Arcelor to Severstal upon the termination of the agreement relating to a proposed transaction between Arcelor and Severstal. The financing of the cash paid is summarized below: Amount (in millions) Short-term debt incurred......... Long-term debt incurred ......... Cash from balance sheet paid . Total financing........................ a) $ $ 2,750 6,317 1,709 10,776

Reflects the incremental amortization of unfavorable and favorable contracts recognized in connection with the acquisition of Arcelor, for the period from January 1, 2006 through July 31, 2006. Expected amortization is $96 million per annum, based on current estimates. Therefore the $56 million adjustment reflects the incremental amortization for the seven months ended July 31, 2006. Approximately $5.9 billion has been allocated to goodwill. As ArcelorMittal (as successor to Mittal Steel) completes the purchase price allocation, this excess may be allocated to other identified tangible or intangible assets, including patents, customer related intangibles, and favorable and unfavorable contracts, which could be depreciable or amortizable. If this amount were allocated to assets with estimated useful lives of 10-25 years, amortization expense would increase by approximately $640 million to $256 million per annum, before income taxes. Based on current estimates, ArcelorMittal (as successor to Mittal Steel) has allocated $11.9 billion to property, plant and equipment. Historically, the useful lives of property, plant and equipment applied by Arcelor ranged from 5 to 25 years. In connection with Mittal Steels acquisition of Arcelor and its fair valuation of the acquired assets and liabilities, Mittal Steel assessed the remaining useful lives of property, plant and equipment based on its current state and Mittal Steels experience in operating such assets. This assessment resulted in the assignment of remaining useful lives ranging from 5 to 38 years. As a result of these two offsetting effects, ArcelorMittal (as successor to Mittal Steel) does not expect the acquisition to have a significant impact on depreciation expense.

b)

Represents the elimination of $341 million of costs directly incurred by Arcelor related to the acquisition that were expensed during the seven months ended July 31, 2006. The costs are primarily composed of financial advisory, legal and other non-recurring professional fees. Assuming the acquisition took place on January 1, 2006, these costs would not have been expensed during the period presented. Represents the incremental interest expense related to the borrowings noted above, for the period from January 1, 2006 through July 31, 2006. Interest is calculated based on EURIBOR plus a margin. The interest rate has been estimated at 4.2% or approximately $381 million per annum. Therefore the $222 million adjustment represents the incremental interest expense for the seven months ended July 31, 2006. A 0.5% or 50 basis point change in the interest rate would increase or decrease net income by approximately $45 million per annum, before income taxes. Represents the tax impact of the above adjustments assuming a 25% blended statutory rate. The following represents the reallocation of the net income attributable to minority interests to net income attributable to equity holders of the parent resulting from the adjustments as if the acquisition of Arcelor had occurred on January 1, 2006.

c)

d) e)

56

Amount (in millions) Attributable to: Equity holders of the parent Net income (including minority interest).............................................. Allocation of 5.8% minority interest share of Arcelor historical net income attributable to equity holders of the parent (2,103 x 5.8%).. Allocation of 5.8% minority interest share of 7b) net of income taxes of $85 million ................................................................................... Total .............................................................................................................. Minority interest Allocation of 5.8% minority interest share of Arcelor historical net income attributable to equity holders of the parent (2,103 x 5.8%).. Allocation of 5.8% minority interest share of 7b) net of income taxes of $85 million ................................................................................... Total .............................................................................................................. f) $ $ 122 15 137 $ $ 47 (122) (15) (90)

Represents the incremental weighted average of the 680 million Mittal Steel class A common shares issued for the acquisition of Arcelor for seven months.

Note 8 - Acquisition of the Minority Interest of Arcelor Brasil (Income Statement) Mittal Steel acquired the outstanding minority interest of Arcelor Brasil. See Note 3 for a description of the transaction. a) Represents the reallocation of the net income attributable to minority interests to net income attributable to equity holders of the parent, as a result of the acquisition of the minority interest. Represents the number of Mittal Steel class A common shares issued in the acquisition of Arcelor Brasil.

b)

Note 9 Share-buy Back Programs (Income Statement) Mittal Steel (and ArcelorMittal as successor) has undertaken share-buy back programs as described in Note 4. a) Represents the incremental interest expense related to the borrowings to fund the 27 million share buy-back program for the period from January 1, 2006 to December 31, 2006. Interest is calculated based on EURIBOR plus a margin. The interest rate has been estimated at 4.2% or approximately $83 million per annum. A 0.5% or 50 basis point change in the interest rate would increase or decrease net income by approximately $9 million per annum, before income taxes. Represents the tax impact of the above adjustments assuming a 25% blended statutory rate. Represents the number of Mittal Steel class A common shares, or ArcelorMittal shares as applicable, repurchased for the $590 million share buy-back program (approximately 9.5 million shares) and the 27 million share buy-back program.

b) c)

57

Note 10 Merger of ArcelorMittal into Arcelor (Income Statement) ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) will merge into Arcelor. See Note 6 for a description of the proposed transaction. a) Represents the reallocation of the net income attributable to minority interests to net income attributable to equity holders of the parent, as a result of the acquisition of the minority interest of $80 million recorded for the five-month period ended December 31, 2006 and $137 million recorded for the pro forma adjustment as described in Note 7e). Represents the number of additional ArcelorMittal shares to be issued in connection with the proposed merger of ArcelorMittal into Arcelor.

b)

Note 11 - Other Information Described below are various events which occurred subsequent to the acquisition and which have not been reflected in the pro forma adjustments described above: a) Following the Arcelor acquisition, Mittal Steel adopted a dividend policy to distribute 25% of its annual net income. Had this policy been in effect as of January 1, 2006, the pro forma dividend per share of Mittal Steel and Arcelor combined would have been $1.49 for the year ended December 31, 2006, on a basic and diluted basis. On February 20, 2007 the United States Department of Justice (DOJ) informed Mittal Steel that it had selected the Sparrows Point plant for divesture under the consent decree filed by the DOJ in August 2006. See Recent Developments Dofasco for a discussion of the consent decree and the context in which it was entered. ArcelorMittal is currently in the process of divesting the Sparrows Point plant. Given that this divestiture is not material, it has not been included in the pro forma adjustments. Other referenced acquisitions and divestitures as disclosed on pages 39 through 42 in Presentation of Certain Financial and Other Information - Recent Developments, have not been reflected in the pro forma adjustments.

b)

c)

58

Note 12 - Significant Differences between IFRS and U.S. GAAP The Unaudited Pro Forma Condensed Combined Financial Information was prepared in accordance with IFRS, which, as applied by Arcelor, differs, in certain significant respects from U.S. GAAP. Under Arcelors accounting policies, there are no differences between IFRS and International Financial Reporting Standards as issued by the International Accounting Standards Board. The effects of the application of U.S. GAAP to pro forma consolidated net income for the year ended December 31, 2006, respectively, as reported under IFRS, are set out in the table below: For the Year Ended December 31, 2006 $ 8,600 730

(in millions) Pro forma combined net income (including minority interest) as reported under IFRS................................................................................................... Less: pro forma combined minority interest share of net income .................... Pro forma net income attributable to equity holders of parent, as reported under IFRS ................................................................................. U.S. GAAP adjustments: (a) Employee benefits .................................................................................. (b) Business combination related adjustments (1) Negative goodwill.............................................................................. (2) Measurement date.............................................................................. (3) Revaluation of minority interests....................................................... (4) Restructuring provisions.................................................................... (5) Finalization of purchase price allocation ........................................... (c) Other....................................................................................................... (d) Deferred income tax effect on adjustments............................................ (e) Effect of minority interests on adjustments............................................ Total U.S. GAAP adjustments ...................................................................... Pro forma net income, as determined under U.S. GAAP ...........................

7,870

54 280 379 80 (153) (279) (175) 186 $ 8,056

59

The effects of the application of U.S. GAAP to pro forma consolidated shareholders equity as of December 31, 2006, as reported under IFRS, is set out in the table below: (in millions) Pro forma combined shareholders equity, as reported under IFRS..................................... Less: pro forma combined minority interest, as reported under IFRS ................................ Pro forma combined shareholders equity excluding minority interest, as reported under IFRS..................................................................................................................... U.S. GAAP adjustments: (a) Employee benefits ...................................................................................................... (b) Business combination related adjustments (1) Negative goodwill.................................................................................................. (2) Measurement date .................................................................................................. (3) Transactions with minority interests ...................................................................... (4) Restructuring provisions ........................................................................................ (5) Finalization of purchase price allocation ............................................................... (c) Other........................................................................................................................... (d) Deferred income tax effect on adjustments ................................................................ (e) Effect of minority interests on adjustments ................................................................ Total U.S. GAAP adjustments .......................................................................................... Pro forma combined shareholders equity under U.S. GAAP ....................................... (a) Employee benefits The aggregate adjustments included in the table above as of December 31, 2006 for the balance sheet and for the year then ended for the income statement consist of the following: As of December 31, 2006 Recognition of funded status (SFAS 158)..................................... Prior service costs ......................................................................... Total U.S. GAAP adjustments (before income Taxes and minority interest) .................................................................... Recognition of funded status (SFAS 158) Under U.S. GAAP, the Company (which refers to Mittal Steel before the merger with ArcelorMittal and ArcelorMittal after the merger) accounts for its pensions and post-retirement benefit plans in accordance with Statement of Financial Accounting Standards (SFAS) No. 87, Employers Accounting for Pensions and SFAS 106, Employers Accounting for Post-retirement Benefits and, from December 31, 2006, SFAS 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R). Effective December 31, 2006, SFAS No. 158 requires the Company to recognize the funded status of employee benefit plans on the balance sheet. Prior to the adoption of SFAS No. 158, the Company recognized an additional minimum pension liability as described below. Due to the adoption of SFAS 158, actuarial gains and losses and past service costs, (which remain unrecognized amounts under IFRS) are recognized as of December 31, 2006 directly in equity, net of deferred income taxes. 60 $ $ (1,012) (213) (1,225) $ For the Year Ended December 31, 2006 $ 12 42 54 $ (3,240) (2,133) (1,632) 80 121 (161) 1,125 (1,817) (5,248) 39,258 (1,225) December 31, 2006 $ 48,445 (3,939) 44,506

Prior service costs Under IFRS, in accordance with IAS 19, Employee Benefits, where pension benefits have already vested, past service costs are recognized immediately. Under U.S. GAAP, in accordance with FAS 87, Employers Accounting for Pensions, prior service costs are amortized over the remaining working lives for both vested and unvested rights. (b) Business combinations (1) Negative goodwill Under IFRS 3, Business Combinations, any excess of the fair value of acquired net assets over the acquisition cost (negative goodwill) is recognized immediately as income. Under U.S. GAAP, in accordance with Statement of Financial Accounting Standards (FAS) 141, Business Combinations, any excess of the fair value of acquired net assets over the acquisition cost (negative goodwill) is allocated on a pro rata basis to reduce the amount allocated to non-current, non-monetary assets until such assets are reduced to zero. Any remaining excess is recognized immediately as an extraordinary gain. During the year ended December 31, 2006, U.S. GAAP depreciation and amortization expense was reduced by $280 million and U.S. GAAP equity was decreased by $3,240 million as a result of the above difference. (2) Measurement date Under IFRS, the guidance of IFRS 3 requires that securities issued as consideration in a business combination be recorded at their fair value as of the date of exchange the date on which an entity obtains control over the acquirees net assets and operations. Under U.S. GAAP, in accordance with Emerging Issues Task Force (EITF) 99-12: Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination, the measurement date used to determine the fair value of securities issued as consideration in a business combination is date when the terms of transaction are agreed to and announced. (3) Revaluation of minority interest Under IFRS, when Mittal Steel acquires less than 100% of a subsidiary, the minority interest is stated on Mittal Steels balance sheet at the minoritys proportion of the net fair value of acquired assets, liabilities and contingent liabilities assumed. Under U.S. GAAP, the minority interest is valued at its historical book value. Fair values are only assigned to Mittal Steels share of the net assets acquired. This decreased U.S. GAAP equity by approximately $1,632 million, before income tax, as of December 31, 2006 and increased U.S. GAAP net income by approximately $379 million, before income tax, for the year ended December 31, 2006, respectively. (4) Restructuring provisions Under IFRS, the Company may recognize restructuring provisions as part of the acquired liabilities only if the Company has an existing liability at the acquisition date for a restructuring plan recognized in accordance with International Accounting Standards (IAS) 37, Provisions, contingent liabilities, and contingent assets. Under U.S. GAAP, EITF 95-3, Recognition of Liabilities in Connection with a Business Combination, requires the Company to recognize a restructuring liability at the acquisition date if specific criteria are met. Mittal Steel must have a plan to exit an activity as of the acquisition date, and communication of such a plan should have occurred. Acquisition of ISG In conjunction with the acquisition of ISG, a restructuring provision was recognized under U.S. GAAP, which could not be recognized for IFRS purposes. Therefore, under IFRS, the net assets acquired were higher than those recognized under U.S. GAAP in the opening balance sheet, resulting in a corresponding adjustment to the amount of negative goodwill recognized immediately in the income statement under IFRS, which is not recognized for U.S. GAAP purposes. The difference has no impact on consolidated shareholders equity in total between IFRS and U.S. GAAP, however, in reconciling from IFRS to U.S. GAAP, a reclassification adjustment 61

is necessary within equity (from retained earnings under IFRS to additional paid in capital under U.S. GAAP) for the above difference. During the year ended December 31, 2006, ISG recorded a restructuring provision of $80 million under IFRS, which was recognized under U.S. GAAP through the purchase accounting during the year ended December 31, 2005. Accordingly, the provision recorded under IFRS has been reversed during the year ended December 31, 2006 under U.S. GAAP. (5) Finalization of purchase price allocation (PPA) The aggregate adjustments included in the tables above as of and for the year ended December 31, 2006 consist of the following: As of December 31, 2006 U.S. GAAP adjustments: Finalization of ISG PPA ................................................................... Finalization of Kryviy Rih PPA........................................................ Total U.S. GAAP adjustments (before income taxes and minority interest) ............................................................................................ Effect of income taxes on adjustments.................................................. Effect of minority interests on adjustments........................................... Total U.S. GAAP adjustments (after income taxes and minority interest) ............................................................................................ $ $ 130 (9) 121 10 131 $ $ For the Year Ended December 31, 2006

Under IFRS and U.S. GAAP, the period that is allowed for finalizing the identification and measurement of the fair value of assets acquired and liabilities assumed in a business combination ends when the acquiring entity is no longer waiting for information that it has arranged to obtain and that is known to be available or obtainable. That allocation period should usually not exceed one year from the consummation of a business combination. Accordingly, the measurement and recognition of certain items that were recorded on a preliminary basis as of December 31, 2005, have been subsequently adjusted to take into account the new information obtained in 2006 regarding the facts and circumstances that existed as of the acquisition date and that, if known, would have affected the measurement or recognition of the amounts as of that date. Under IFRS, the prior period financial statements were modified to reflect these adjustments from the date of acquisition. Under U.S. GAAP, the prior period financial statements were not modified to reflect these adjustments. Accordingly, the negative goodwill adjustment along with the impact of other changes applied retrospectively under IFRS, were reversed as of and for the year ended December 31, 2005 under U.S. GAAP. The final U.S. GAAP purchase price adjustments were recorded during the year ended December 31, 2006, with no impact on the consolidated income statement.

62

(c) Other The aggregate other adjustment included as of December 31, 2006 and for the year then ended consists of the following: As of December 31, 2006 Inventory valuation ............................................................................... Change in discount rates for asset retirement obligations ..................... Embedded leases ................................................................................... Other ..................................................................................................... Total U.S. GAAP adjustments (before income taxes and minority interest) ............................................................................................ Inventory valuation Under IFRS, inventory is measured on the basis of first in first out (FIFO). Under U.S. GAAP, the Company measures certain inventory on the basis of last in first out (LIFO). Change in discount rates for asset retirement obligations Under IFRS, the discount rate applied is adjusted at each reporting period, with a corresponding adjustment to the cost of the property, plant and equipment and to the liability. Under U.S. GAAP, the original discount rate is not adjusted. Embedded leases Under IFRS, from January 1, 2004, the Company applied the accounting requirements of International Financial Reporting Interpretations Committee (IFRIC) 4, Determining Whether an Arrangement Contains a Lease. In accordance with the transition provisions of IFRIC 4, the Company was required to analyze all existing arrangements and to account for them in accordance with IFRIC 4 irrespective of when the arrangement was entered into or last modified. Under U.S. GAAP, EITF 01-08, Determining Whether an Arrangement Contains a Lease, is required to be applied only to contracts containing embedded leases which have been entered into, last modified or acquired in a business combination after January 1, 2004 (the Companys first reporting period beginning after May 28, 2003). Retroactive application of EITF 01-08 is not permitted. Accordingly, the adjustments included in the reconciliation of consolidated shareholders equity and consolidated net income as of and for the year ended December 31, 2006 reflect the elimination of the lease accounting impacts of embedded leases entered into, last modified or acquired in a business combination prior to December 31, 2003. (d) Deferred income tax effect on adjustments This adjustment reflects the deferred tax effects attributable to the aforementioned adjustments. (e) Effect of minority interests on adjustments This adjustment reflects that portion of the aforementioned adjustments attributable to the outside minority interests of subsidiaries for those adjustments that impact subsidiaries with minority interests. (f) Other presentation differences The major reclassifications, adjusting the IFRS presentation to conform to U.S. GAAP, are as follows: $ $ (154) 15 9 (31) (161) $ For the year ended December 31, 2006 $ (144) 10 (1) (18) (153)

63

Deferred income taxes Under IFRS, current deferred tax assets and current deferred tax liabilities are presented as non-current items in the balance sheet. Under U.S. GAAP, current deferred tax assets and current deferred tax liabilities are presented within the current assets and current liabilities, respectfully, in the balance sheet. Classification of accreted interest Under IFRS, the interest component of discounted obligations is presented as part of interest. Under U.S. GAAP the interest component of discounted obligations is presented as part of cost of sales. Deferred financing costs Under IFRS, borrowings are recognized in the balance sheet net of issuance related costs. Under U.S. GAAP, issuance related costs are recognized in the balance sheet as an asset. Pension costs Under IFRS, the Company has classified the interest component and the expected return on plan assets component of net periodic pension cost as a financial expense in the consolidated income statement. Under U.S. GAAP, the interest component and the expected return on plan assets component of net periodic pension costs is included within the operating expense section of the consolidated income statement. (g) Other disclosures required by U.S. GAAP Variable interest entities (VIE) The Company holds a 49% equity interest in Cia Hispano-Brasileira de Pelotizacao SA, a VIE that is accounted for using the equity method of accounting. Cia Hispano-Brasileira de Pelotizacao SA was established in 1974 with Companhia Vale do Rio Doce for the production and sale of iron ore pellets, destined mainly for the shareholders and related parties. As of and for the year ended December 31, 2006, the VIE had total assets of approximately $172 million and reported sales and earnings before interest and taxes of $309 million and $51 million, respectively. The exposure to loss as a result of involvement with the VIE is limited to the Companys equity and financing interests. The Company holds a 10% equity interest in Traxys SA, Bertrange (Traxys), a VIE that is accounted for using the equity method of accounting. Traxys was established as a joint venture in 2002 between Arcelor International S.A. and Umicore Marketing Services S.A. for the sourcing, trading, marketing and distribution of non-ferrous metals, ferro-alloys, minerals and industrial raw materials. In January 2006, following a management buy-out, the Companys interest in Traxys was reduced from 50% to 10%. As of and for the year ended November 30, 2006, the VIE had total assets of approximately $760 million and reported sales and earnings before interest and taxes of $2,862 million and $62 million, respectively. The exposure to loss as a result of involvement with the VIE is limited to the Companys equity and financing interests. (h) Pro Forma U.S. GAAP earnings per share Under U.S. GAAP, basic earnings-per-share is calculated by dividing the net income available to common shareholders by the weighted average number of shares outstanding during the period, and diluted earnings-per-share is calculated by adjusting both the numerator and denominator used for the calculation of basic earnings-per-share for instruments that provide holders with potential access to the capital of the Company, whether they are issued by the Company itself or by one of its subsidiaries. The dilution is calculated, instrument-by-instrument, taking into account the conditions existing at the balance sheet date, and excluding anti-dilutive instruments.

64

The following table sets out the calculation of pro forma basic and diluted earnings-per-share (in millions), as determined in accordance with U.S. GAAP, for the year ended December 31, 2006: December 31, 2006 Pro forma U.S. GAAP net income available to common shareholders................................. Pro forma U.S. GAAP net income available to common shareholders and assumed conversion......................................................................................................................... Pro forma weighted average common shares outstanding (in millions): .............................. Plus: Incremental shares from assumed exercise of stock options.................................... Pro forma weighted average common shares assuming conversion ..................................... Pro forma U.S. GAAP earnings per share (Class A and Class B): Basic ................................................................................................................................. Diluted .............................................................................................................................. $ 5.68 5.67 $ 8,056 8,056 1,419 1 1,420

65

MARKET PRICE AND DIVIDEND DATA Arcelor Trading History Arcelor shares were first admitted to trading on February 18, 2002, and are admitted to trading on the Luxembourg Stock Exchanges regulated market, and listed on the Official List of the Luxembourg Stock Exchange, and are admitted to listing and traded on Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, and the Spanish exchanges of Madrid, Barcelona, Bilbao and Valencia, in each case under the symbol LOR, except for Euronext Brussels by NYSE Euronext where they are admitted to trading under the symbol LORB. The table below shows, for the periods indicated, the reported high and low quoted prices (in euro) of Arcelor shares on these exchanges. Arcelor Shares Euronext Brussels High Year ended December 31, 2002 Year ended December 31, 2003 Year ended December 31, 2004 Year ended December 31, 2005 First Quarter ........................ Second Quarter.................... Third Quarter ...................... Fourth Quarter..................... Year ended December 31, 2006 First Quarter ........................ Second Quarter.................... Third Quarter ...................... Fourth Quarter..................... Month ended January 2007 ....................... February 2007 ..................... March 2007 ......................... April 2007 ........................... May 2007 ............................ June 2007 ............................ July 2007............................. August 2007 ........................
Source: Bloomberg Professional Service (1) Spanish exchanges in Madrid, Barcelona, Bilbao and Valencia (MTS).

Euronext Paris High 16.05 13.37 17.16 Low 8.12 7.61 12.32

Luxembourg Stock Exchange High 15.81 13.40 17.10 Low 8.22 7.68 12.09

Spanish Exchanges (1) High 16.15 13.34 17.65 Low 8.12 7.55 12.31

Low 8.22 7.74 12.19

15.96 13.44 17.13

19.40 17.81 19.45 21.27

16.06 15.07 16.00 18.25

19.41 17.66 19.46 21.27

16.14 15.12 15.96 18.25

19.20 17.76 19.50 21.30

16.30 15.06 15.90 18.37

19.44 17.70 19.45 21.25

16.15 15.11 15.94 18.25

33.00 37.71 42.60 44.95

20.88 32.00 35.11 40.41

33.05 37.80 43.00 43.77

20.86 32.00 35.29 40.60

33.00 37.80 41.50 45.00

20.82 32.25 35.02 40.40

33.01 37.66 42.95 43.50

20.83 31.54 34.67 40.47

46.26 52.50 53.53 55.82 58.20 62.32 59.14 57.07

43.01 46.25 50.47 53.36 52.66 55.99 54.20 50.00

46.05 52.60 53.00 55.68 59.25 60.92 60.20 57.35

43.00 46.70 49.74 53.43 52.05 56.23 55.87 48.90

45.05 51.00 52.75 55.65 58.70 62.00 60.00 60.00

42.25 46.85 49.00 52.50 49.50 52.50 54.85 48.50

46.30 52.75 53.55 55.30 58.75 60.40 59.85 57.70

42.80 46.69 49.81 52.95 52.20 56.10 55.85 48.00

66

ArcelorMittal Trading History ArcelorMittal shares are listed and traded on the NYSE (symbol MT), are admitted to trading on the Luxembourg Stock Exchanges regulated market and listed on the Official List of the Luxembourg Stock Exchange (symbol MTL) and are admitted to listing and trading on Euronext Amsterdam by NYSE Euronext (symbol MT), Euronext Paris by NYSE Euronext (symbol MTP), Euronext Brussels by NYSE Euronext (symbol MTBL) and the Spanish exchanges (symbol MTS). The following tables set forth, for the periods indicated, the high and low sales prices per share of ArcelorMittal shares as reported on these exchanges. For all periods prior to the merger of Mittal Steel with and into ArcelorMittal, the prices shown are for the Mittal Steel class A common shares. (In the first-step merger, each Mittal Steel class A common share was converted into one newly-issued ArcelorMittal share). NYSE High Low Euronext Amsterdam High Low Euronext Paris High Low

(in U.S. dollars) Year ended December 31, 2002 Year ended December 31, 2003 Year ended December 31, 2004 Year ended December 31, 2005 First Quarter ............................ Second Quarter........................ Third Quarter .......................... Fourth Quarter......................... Year ended December 31, 2006 First Quarter ............................ Second Quarter........................ Third Quarter .......................... Fourth Quarter......................... Month ended January 2007 ........................... February 2007 ......................... March 2007 ............................. April 2007 ............................... May 2007 ................................ June 2007 ................................ July 2007................................. August 2007 ............................
Note: Includes intraday highs and lows Source: Bloomberg Professional Service.

(in euros) 3.25 7.50 32.45 1.51 2.05 5.20 -

(in euros) -

$ 3.10 9.06 42.80

$ 1.26 2.05 6.80

43.86 34.00 30.78 29.54

29.70 22.11 23.55 22.95

33.25 26.10 25.34 25.60

22.55 17.31 19.00 19.25

39.75 42.81 35.09 43.67

26.72 28.80 27.79 33.90

32.58 32.99 28.14 34.95

22.05 22.50 21.82 26.91

28.16 35.00

23.00 26.67

47.57 54.05 54.35 55.49 59.99 66.31 67.89 66.20

39.59 46.45 48.89 52.50 52.95 60.40 60.65 53.82

36.32 41.03 41.00 41.49 44.62 49.47 49.15 48.28

30.02 35.80 36.87 38.15 39.70 45.50 44.59 39.52

36.32 41.03 41.00 41.49 44.63 49.46 49.15 48.37

30.02 35.80 36.86 38.15 39.69 45.50 44.61 39.55

67

Luxembourg Stock Exchange High Low

Euronext Brussels High Low

Spanish Exchanges(1) High Low

(in euros) Year ended December 31, 2002 Year ended December 31, 2003 Year ended December 31, 2004 Year ended December 31, 2005 First Quarter ........................ Second Quarter.................... Third Quarter ...................... Fourth Quarter..................... Year ended December 31, 2006 First Quarter ........................ Second Quarter.................... Third Quarter ...................... Fourth Quarter..................... Month ended January 2007 ....................... February 2007 ..................... March 2007 ......................... April 2007 ........................... May 2007 ............................ June 2007 ............................ July 2007............................. August 2007. Source: Bloomberg Professional Service. 36.00 40.10 40.90 41.25 44.50 49.98 48.82 48.22 30.60 35.95 37.20 39.00 39.33 45.33 45.06 40.27 27.35 35.00 24.50 27.00 -

(in euros) -

(in euros) -

28.10 34.84

24.60 26.90

28.03 34.85

24.00 26.65

36.00 40.74 41.17 41.59 44.23 49.89 52.35 47.53

30.10 35.67 36.75 36.75 39.61 45.34 45.12 40.00

36.31 41.03 40.40 41.47 43.92 49.51 49.00 48.20

30.12 35.80 36.86 38.80 39.24 45.30 44.38 39.48

(1) Spanish stock exchanges in Madrid, Barcelona, Bilbao and Valencia (MTS). Note:

Includes intraday highs and lows. Mittal Steel class A common shares were listed on Euronext Paris and the Spanish exchanges on July 27, 2006 and on Euronext Brussels and the Official List of the Luxembourg Stock Exchange on August 1, 2006.

68

Arcelor Dividends The following table sets forth the dividends declared by Arcelor since its inception: Dividend Year Total ( in millions) 2006.......................... 2005.......................... 2004.......................... 2003.......................... 2002.......................... 669.8 1,183.6 415.9 213.2 202.3 Per Share () 1.0* 1.85 0.65 0.40 0.38

* A dividend equal to $1.30 to be converted into euro at the applicable rate at the applicable dividend dates. At the annual general meeting of Arcelor held on April 27, 2007, Arcelor declared a dividend policy of an annual base dividend of $1.30 per share. At a meeting held on September 25, 2007, the Arcelor Board of Directors decided to propose to the shareholders meeting of Arcelor the distribution of an additional dividend of $0.040625 per post-share capital restructuring Arcelor share, payable simultaneously with the last installment of the dividend decided by the ordinary general meeting of Arcelor on April 27, 2007, so that each post-share capital restructuring Arcelor share (other than those issued in the second-step merger) would be entitled to a dividend payment of $0.325 on or about December 15, 2007. ArcelorMittal Dividends On September 27, 2006, Mittal Steel (the predecessor entity to ArcelorMittal) announced that its Board of Directors had agreed upon a new dividend and cash distribution policy, and this policy was approved at Mittal Steels annual general meeting of shareholders on June 12, 2007. The new policy aims to return 30% of Mittal Steels prior years annual net income to shareholders every year through an annual base dividend, supplemented by share buy-backs. Mittal Steels Board of Directors proposed an annual base dividend of $1.30 per share. This base dividend has been designed to provide a minimum payout per year and would rise in order to reflect Mittal Steels underlying growth. Payment of this dividend will be made on a quarterly basis. Payment of the installment occurring after the effectiveness of the first-step merger was made by ArcelorMittal and payment of the installment occurring after the effectiveness of the second-step merger will be made by Arcelor. Any such dividends may be subject to Luxembourg withholding tax. Please see TaxationLuxembourg Taxation. In addition to this cash dividend, Mittal Steels Board of Directors approved a share buy-back program tailored to achieve the 30% distribution pay-out commitment. Based on the annual net income announced for the twelve months ended December 31, 2006, ArcelorMittal will implement a $590 million share buy-back. On February 2, 2007, Mittal Steels Board of Directors declared an interim dividend of $0.325 per share payable on March 15, 2007; on May 18, 2007, Mittal Steels Board of Directors declared an interim dividend of $0.325 per share payable on June 15, 2007 and on August 17, 2007, Mittal Steels Board of Directors declared an interim dividend of $0.325 per share payable on September 17, 2007. All such declared dividends have since been paid. Further to the September 27, 2006 announcement described above, Mittal Steel announced on April 2, 2007, the commencement of a share buy-back program to repurchase up to a maximum aggregate amount of $590 million of its class A common shares. The share buy-back program was scheduled to end at the earliest of (i) December 31, 2007, (ii) the moment on which the aggregate value of ArcelorMittal shares (including Mittal Steel class A common shares repurchased prior to the first step merger) repurchased by ArcelorMittal (or Mittal Steel as predecessor) since the start of this share buy-back program reaches $590 million, (iii) the moment on which ArcelorMittal and its subsidiaries hold 10% of the total number of the then-issued ArcelorMittal shares, or (iv) the moment on which ArcelorMittal no longer has any corporate authorization to repurchase its shares. This share buy-back program was completed on September 4, 2007 as the aggregate amount of repurchases reached the $590 million limit. Mittal Steel and ArcelorMittal, as its successor, purchased an aggregate of 9,513,960 Mittal Steel class A common shares and ArcelorMittal shares under the program. 69

On June 12, 2007, Mittal Steel announced its intention to start a share buy-back program for up to a maximum of 27 million class A common shares, immediately following the completion of the $590 million share buy-back program summarized above. This new share buy-back program is designed to offset the issuance of shares as partial consideration for the acquisition of the outstanding minority interests in Arcelor Brasil, described under Presentation of Certain Financial and Other InformationRecent Developments. This share buy-back program commenced upon the termination of the $590 million buy-back program described above and will end at the earliest of the moment at which (i) the aggregate number of shares purchased under this program reaches the 27 million share limit, (ii) ArcelorMittal and its subsidiaries will hold 10% of the then-issued ArcelorMittal shares, or (iii) ArcelorMittal no longer has corporate authorization to repurchase its shares. All necessary corporate actions have been taken at the level of ArcelorMittal and will be taken at the level of Arcelor in order to allow the implementation by ArcelorMittal and Arcelor of this share buy-back program. Under the share buy-back program, the price per ArcelorMittal share, which will be paid in cash, will not exceed 125% of the trading price on the New York Stock Exchange, Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the Luxembourg Stock Exchange or the Spanish exchanges, depending on the market on which the transactions are effected and will not be less than the par value of the share at the time of repurchase. Any determination to pay cash dividends is at the discretion of ArcelorMittals general meeting of shareholders or its Board of Directors in the case of interim dividends, in accordance with Luxembourg law and ArcelorMittals articles of association, and after taking into account various factors, including ArcelorMittals financial condition, results of operations, outstanding indebtedness, current and anticipated cash needs, plans for expansion, commercial restrictions and other factors affecting ArcelorMittals operating subsidiaries.The following table sets forth the dividends declared by Mittal Steel to its shareholders, including the dividends declared by its predecessor company, LNM Holdings N.V., to its shareholder before it was acquired by Mittal Steel:

Dividend Year/Date Total $ in millions 2006 ........................................................................... 2005 ........................................................................... 2004 ...........................................................................
(1)

Per Share $ 0.50 0.30

522 213
(1)

A dividend of $2,385 million was declared in 2004 by LNM Holdings N.V. to its shareholder before it was acquired by Ispat International (which subsequently became Mittal Steel).

70

ArcelorMittal CAPITALIZATION The following table sets forth the consolidated capitalization of Mittal Steel as of June 30, 2007, thus prior to the merger into its wholly-owned subsidiary ArcelorMittal on September 3, 2007. This table was prepared in accordance with IFRS. This table should be read in conjunction with the financial statements and other financial information included in this prospectus. As of June 30, 2007 (in millions of U.S. dollars) Total Current Debt Guaranteed...................................................................................... Secured ........................................................................................... Unguaranteed/Unsecured................................................................ Total Non-Current Debt (excluding Current Portion of LongTerm Debt Guaranteed and Unsecured ............................................................. Guaranteed and Secured ................................................................. Unguaranteed and Secured ............................................................. Unguaranteed /Unsecured............................................................... 17 7,600 7,617

524 423 369 21,073 22,389 48,549

Equity

Total capitalization excluding minority interests .................. $

78,555

The following table sets forth the statement of short and medium-long term indebtedness (including indirect and contingent indebtedness) of Mittal Steel as of June 30, 2007. This table was prepared in accordance with IFRS. This table should be read in conjunction with the financial statements and other financial information included in this prospectus. As of June 30, 2007 (in millions of U.S. dollars) Cash and cash equivalents, restricted cash and short-term investments ... Payable to Banks and current portion of long term debt........................... Net Current Financial Indebtedness ..................................................... Long term debt, net of current portion...................................................... Net Financial Indebtedness.................................................................... $ 6,782 7,617 -835 22,389 21,554

Indebtedness

71

ARCELOR CAPITALIZATION The following table sets forth the consolidated capitalization of Arcelor as of June 30, 2007. This table was prepared in accordance with IFRS. This table should be read in conjunction with the financial statements and other financial information included or incorporated by reference in this prospectus. As of June 30, 2007 (in millions of euros) Total Current Debt Guaranteed........................................................................................... Secured ................................................................................................ Unguaranteed/Unsecured..................................................................... Total Non-Current Debt (excluding Current Portion of Long-Term Debt Guaranteed and Unsecured .................................................................. Guaranteed and Secured ...................................................................... Unguaranteed and Secured .................................................................. Unguaranteed /Unsecured.................................................................... 4,692 4,692

275 6,193 6,468 21,315

Equity

Total capitalization excluding minority interests .......................

32,475

The following table sets forth the statement of short and medium-long term indebtedness (including indirect and contingent indebtedness) of Arcelor as of June 30, 2007. This table was prepared in accordance with IFRS. This table should be read in conjunction with the financial statements and other financial information included in this prospectus. As of June 30, 2007 (in millions of euros) Cash and cash equivalents, restricted cash and short-term investments ... Payable to Banks and current portion of long term debt........................... Net Current Financial Indebtedness ..................................................... Long term debt, net of current portion...................................................... Net Financial Indebtedness.................................................................... 1,892 4,692 -2,800 6,468 3,668

Indebtedness

72

ArcelorMittal OPERATING AND FINANCIAL REVIEW The following disclosure relates to Mittal Steel Company N.V., which merged into its wholly-owned subsidiary ArcelorMittal on September 3, 2007, and its direct and indirect subsidiaries, including Arcelor. Since Arcelor forms a part of the ArcelorMittal group and, following the completion of this merger, will be the successor of ArcelorMittal, the (historical) narrative and financial disclosure in this prospectus is at certain places, including this section, based substantially or exclusively on the business and operations of Mittal Steel Company N.V. and its direct and indirect subsidiaries, including Arcelor. Overview Mittal Steel is the worlds largest and most global steel producer1, with an annual production capacity of approximately 138 million tonnes of crude steel in 2006. Mittal Steel has steel-making operations in 26 countries on four continents, including 64 integrated, mini-mill and integrated mini-mill steel-making facilities. Mittal Steel is the largest steel producer in the Americas, Europe and Africa, and it has a growing presence in Asia. As of December 31, 2006, Mittal Steel had approximately 320,000 employees. In 2006, Mittal Steel increased its size significantly by acquiring Arcelor, which, at the time of its acquisition, was the worlds second-largest steel producer by production volume. On a pro forma basis after giving effect to its acquisition of Arcelor as if the acquisition occurred on January 1, 2006, Mittal Steel had sales of approximately $87.5 billion and steel shipments of approximately 110.5 million tonnes for the year ended December 31, 2006. Mittal Steel produces a broad range of high-quality finished and semi-finished steel products. Specifically, Mittal Steel produces flat products, including sheet and plate, long products, including bars, rods and structural shapes, and stainless steel products. Mittal Steel also produces pipes and tubes for various applications. Mittal Steel sells its products primarily in local markets and through its centralized marketing organization to a diverse range of customers in approximately 187 countries, including the automotive, appliance, engineering, construction and machinery industries. Key Factors Affecting Results of Operations The steel industry has historically been highly cyclical and is affected significantly by general economic conditions and other factors, such as worldwide production capacity, fluctuations in steel imports/exports and tariffs. As the steel industry has recently begun to consolidate, uptrends and downtrends are expected to become less pronounced. Over the last three to five years, the steel industry has been experiencing a cyclical uptrend, primarily driven by the continued increase in Chinese production and consumption of steel products. This trend, combined with the upward pressure on the costs of key production inputs, primarily metals, energy, and transportation and logistics, presents an increasing challenge for steel producers. The key drivers for maintaining a competitive position and positive financial performance in this challenging environment are product differentiation, geographic diversification, vertical integration, customer service, and cost reduction. Mittal Steels revenues are predominantly derived from the sale of flat steel products, long steel products and stainless steel products. Prices of steel products, in general, are sensitive to changes in worldwide and local demand, which in turn are affected by worldwide and country-specific economic conditions and to available production capacity. Unlike other commodities, steel is not completely fungible due to wide differences in shape, chemical composition, quality, specifications and application, all of which impact prices. Accordingly, there is no exchange trading of steel or uniform pricing. Commodity spot prices may vary, and, therefore, export sales revenue fluctuates as a function of worldwide balance of demand and supply conditions at the time such sales are made. Although steel prices typically follow trends in raw material prices, the percentage changes may not be proportional, and price increases in steel may lag price increases in production costs. Increases in production costs are driven by supply-demand balance and demand from alternative markets. Steel price surcharges are often implemented on contracted steel prices to recover increases in input costs. However, spot market steel prices and short-term contracts are driven by market prices.

Statements on Mittal Steels competitive position contained herein are based primarily on public sources including, but not limited to, publications of the International Iron and Steel Institute. 73

Economic Environment The global economy recorded strong growth in 2006, with gross domestic product (GDP) increasing, 4.0% in real terms; over the preceding decade, only 2000 and 2004 experienced higher rates of GDP growth. This increase was due to a recovery in the European Union after five years of slow growth and a continuation of the strong growth in emerging markets, such as China, India and other Asian countries, South America, central and eastern Europe. Economic growth in the United States began to slow during the second half of 2006 as a tightening monetary policy began to take effect; however, the United States experienced 3.3% real GDP growth in 2006. High oil and natural gas prices continued to benefit the major oil and natural gas-exporting countries of the Commonwealth of Independent States (CIS) and the Middle East, while high commodity prices supported growth in both Africa and Latin America. Eastern Europe benefited from the recovery in the European Union, which lifted exports. India continued to underpin strong real GDP growth in Asia of approximately 7.5% in 2006. Global manufacturing output increased 4.5% during 2006, the strongest performance since 2000, buoyed by robust investment and an increase in global trade. Output has been particularly strong in the more mature economies of the United States, Japan and Western Europe. This economic growth, and with it the continuous growth in capital spending, led to strong worldwide steel demand, especially in developing countries and emerging markets. Steel Production In 2006, world crude steel production increased 9.4% to 1.2 billion tonnes as compared with 1.1 billion tonnes in 2005.2 This total represented the highest level of crude steel production in history and marked 2006 as the third consecutive year in which crude steel production had exceeded 1 billion tonnes. The increase in production in 2006 was led primarily by China, which increased production by 68 million tonnes, or 19%, to 421 million tonnes. In North America, steel production increased by 5.7 million tonnes, or 4.6%, to 132 million tonnes. Steel production in the European Union increased 6% to 198 million tonnes during 2006. Trade and Import Competition Import competition has increased in the United States and European markets. In the European Union, the import penetration ratio (imports/market supply) reached 16% during 2006. The increase in imports impacted the steel pricing environment. Historically in the United States, imports have played a significant role. With an import penetration ratio of approximately 30% for 2006, total imports into the United States of approximately 41 million tonnes were a historic record. Finished steel imports of 33 million tonnes increased 43% over 2005. During certain periods in 2006, domestic mills reduced production to address inventory overhang and maintain the demand and supply balance. Consolidation in the Steel Industry There has been significant recent consolidation in the global steel industry, including a growing trend of inter-regional consolidation, which has been the primary focus of Mittal Steel. Within the past few years, the U.S. steel industry has consolidated significantly, primarily led by ISG, United States Steel Corporation (US Steel), Nucor and Steel Dynamics. ISG was formed as a result of the acquisition of, among others, LTV, Bethlehem, Acme, Weirton and Georgetown. US Steel acquired National Steel and more recently Lonestar Technology; Nucor acquired Birmingham Steel and Trico; and Steel Dynamics acquired Qualitech Steel and GalvPro. In Europe, consolidation occurred with the formation of Arcelor, which is a combination of Aceralia Corporacin Siderrgica, S.A., Arbed and Usinor, three large European companies. Recently, Mittal Steel acquired assets in Romania, Czech Republic, Poland, Macedonia, Ukraine and Bosnia.
2

Source: International Iron and Steel Institute. 74

Consolidation is also expected to take place in China. The government of China has publicly stated that it expects consolidation of the Chinese steel industry and the top 10 producers to account for 50% of national production over a period of time. In addition, the Chinese government has also announced the rationalization of steel production using obsolete technology such as open-hearth furnaces. Inter-regional consolidation, which has been Mittal Steels focus, has occurred with Mittal Steels acquisitions and investments in Ukraine, Mexico and China, Arcelors acquisitions in Brazil and Canada, Tata Steels acquisitions in India, the United Kingdom and The Netherlands, and US Steels acquisitions in Slovakia and Serbia. This wave of consolidation should enable steel producers, and the steel industry generally, to maintain consistent performance through steel cycles by achieving greater efficiency and economies of scale, particularly in response to the effective consolidation undertaken by raw material suppliers and consumers of steel products. Mittal Steel has begun to realize efficiencies of its major acquisitions. Moreover, steel-industry consolidation should result in fewer duplicate investments, both nationally and internationally. In addition, consolidation among steel producers provides increased bargaining power with both suppliers and customers. The wave of consolidation has followed the lead of its suppliers, where, for example, there are only three primary iron-ore suppliers, and scrap suppliers are beginning to form larger and stronger groups, such as the Sims-Neu merger, in order to maintain a stronger bargaining position with steel producers. There is a similar trend towards greater concentration among steel customers, such as the automobile manufacturers. Raw Materials Mittal Steel consumes large amounts of raw materials. Its primary raw material inputs are iron ore, coke, scrap, natural gas and base metals. The increased global demand for steel, primarily as a result of the continuous strong demand from China, has resulted in significant upward price pressure for these raw materials during the period under review. While the impact on costs at Mittal Steel is partially mitigated by its ownership of various mining assets and strategic contracts for iron ore, rapid cost increases nonetheless adversely affected its results for 2006. Iron Ore Seaborne iron ore prices increased by 19% in 2006 as compared to 2005 due to tightness in the seaborne ore market. This increase was in addition to a 71.5% price increase in that market in 2005. Approximately half of Mittal Steels iron ore purchases are made in the seaborne ore market. Price of iron ore also increased steeply elsewhere. During 2006, Chinese steel producers increased iron ore imports by 18% to 325 million tonnes as compared to 2005.3 This has required China to import iron ore not only from Australia and Brazil, but also from countries such as North Korea, Ukraine and India. Chinas 2006 ore purchases represent approximately 43% of the seaborne market.4 Coking Coal Prices for coal settlements also increased over the past two years. In 2005, international settlement prices were approximately $125 per tonne free on board (FOB) on average for premium coking coal from Australia compared to $55 per tonne FOB on average in 2004. In 2006, international settlement prices eased slightly to $115 per tonne FOB on average due to a larger than anticipated growth in the supply of seaborne coal. The Chinese coke prices for 12.5% ash content rose steadily from $125 per tonne FOB in January 2006 to $173 per tonne FOB in December 2006.

3 4

Source: International Iron and Steel Institute. Source: AME / MB / BRS. 75

Natural Gas Natural gas prices continued to remain volatile during 2006, particularly in North America, primarily due to increased demand from the electric generation industry and declines in the North American natural gas resource base and inventory fluctuations. Prices ranged from approximately $6.00 to $9.00 per mmbtu during 2006. A mild winter during 2006, and slightly higher inventories caused natural gas prices to decrease slightly at the end of 2006. Scrap Prices for #1 Heavy Metal Scrap (HMS) grade scrap increased steadily during the first half of 2006, reaching a high of $266 per tonne in July 2006, and then eased during the second half of the year to $246 per tonne by December 2006. The average price of #1 HMS grade scrap during 2006 increased to $242 per tonne as compared to an average price of $212 per tonne during 2005. In addition, the scrap market continued to consolidate during 2006. Base Metals Key base metals used by Mittal Steel are zinc for galvanizing and nickel for manufacturing stainless steel. Mittal Steel generally hedges its exposure to its base metal inputs in accordance with its risk management policies. During 2006, primarily due to the shortage of concentrates, zinc metal output was limited while worldwide zinc consumption was rising and zinc stocks were decreasing to their lowest historical levels (less than 100,000 tonnes in November in London Metals Exchange (LME) warehouses). As a consequence, zinc LME cash prices increased steadily from $1,912 per tonne in January 2006 to a historic high of $4,600 per tonne on December 5, 2006. In 2006, nickel prices rose from $13,900 per tonne in January 2006 to $33,325 per tonne on December 31, 2006, due to strong demand and weak supply. This strong demand caused LME nickel stocks to decline from 35,994 tonnes on January 3, 2006 to 6,594 tonnes on December 29, 2006. In 2006, no significant new nickel production was started, and several nickel producers could not perform at full capacity due to technical problems or strikes. Ocean Freight Ocean freight rates remained strong and volatile throughout 2006, with prices higher in the second half of 2006 compared to the first half of 2006. The primary reasons for this strength include the strong demand in China, which in 2006 increased its iron ore imports by 18% compared to 2005 and became a net importer of coal. In addition, port congestion in Australia, where waiting time increases for loading turns, led to a shortage of ships. It is expected that freight rates may remain strong over the next several years as, in addition to the foregoing demand, the world fleet has a high percentage of old tonnage that is overdue for scrapping. Mittal Steel attempts to meet its shipping needs with long-term contracts and currently has long-term contracts for over 65% of its raw material import needs. Mittal Steel expects to increase its own fleet (including long-term charter) of Capesize and Panamex vessels to cover its shipping needs. Capesize ships are very large bulk carriers with deadweight exceeding 100,000 tons. Such ships are unable to go through the Panama Canal and therefore have to sail via the Cape of Good Hope. Panamex ships are large ships capable of transiting the Panama Canal and have deadweight of 55,00080,000 tons. Impact of Exchange Rate Movements Because a substantial portion of Mittal Steels assets, liabilities, sales and earnings are denominated in currencies other than the U.S. dollar (its reporting currency), Mittal Steel has exposure to fluctuations in the values of these currencies relative to the U.S. dollar. These currency fluctuations, especially the fluctuation of the value of the U.S. dollar relative to the euro, the Canadian dollar, Brazilian real and South African rand, as well as fluctuations in the currencies of the other countries in which Mittal Steel significant operations and/or sales, could have a material impact on its results of operations. Mittal Steel faces transaction risk, where its businesses generate sales in one currency but incur costs relating to that revenue in a different currency. For example, Mittal Steels non-U.S. subsidiaries purchase raw materials, including iron ore, in U.S. dollars, but make sales of finished steel products in other currencies. Consequently, a general rise in the value of the U.S. dollar will increase the cost of raw materials and decrease the value of Mittal Steels sales, thereby shrinking its operating margins. In particular, Mittal Steel South Africa purchases most of its raw materials in U.S. dollars and makes most of its sales in South African rands. 76

Consequently, an increase of the value of the U.S. dollar against the South African rand will make Mittal Steel South Africas inputs more costly and decrease the value of its revenue. Mittal Steel also faces translation risk, which arises when Mittal Steel translates the income statements of its subsidiaries into U.S. dollars for inclusion in the Mittal Steel Consolidated Financial Statements. In particular, a significant portion of the sales of Mittal Steels subsidiaries are denominated in euros, Canadian dollars, Brazilian real and South African rand. Consequently, a rise in the value of the U.S. dollar against these currencies will result in a translation loss. In 2006, the U.S. dollar weakened against more currencies of the jurisdictions in which Mittal Steel operates than it did in 2005. The US dollar weakened against the Central and Eastern European currencies (including Polish zloty, Czech koruna, Romanian leu, and Kazakh tenge), Canadian dollar and Euro. The U.S. dollar strengthened against the South African rand while the Mexican peso remained relatively flat in 2006 as compared to 2005. Mittal Steel manages foreign exchange risk through specific hedges to the extent management considers appropriate. Mittal Steel does not engage in any speculative foreign exchange trading. See Quantitative and Qualitative Disclosures About Market Risk. Critical Accounting Policies and Use of Judgments and Estimates Managements discussion and analysis of Mittal Steels operational results and financial condition is based on Mittal Steels consolidated financial statements, which have been prepared in accordance with IFRS. The preparation of these financial statements requires Mittal Steels management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at year-end and the reported amounts of revenues and expenses during the year. Management regularly evaluates these estimates, including those related to the carrying value of property, plant and equipment, valuation allowances of receivables and inventories, the realization of deferred tax assets, liabilities of deferred income taxes, potential tax deficiencies, environmental obligations, potential litigation claims and settlements, and assets and obligations related to employee benefits. These estimates and assumptions are based on historical experience, available facts and various other assumptions that are believed to be reasonable under the circumstances. Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. Management believes that the following are the more significant judgments and estimates used in preparing the financial statements. Purchase Accounting Accounting for acquisitions requires Mittal Steel to allocate the cost of the enterprise to the specific assets acquired and liabilities assumed based on their estimated fair values at the date of the acquisition. In connection with each of its acquisitions, Mittal Steel undertakes a process to identify all assets and liabilities acquired, including acquired intangible assets. The judgments made in identifying all acquired assets, determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact Mittal Steels results of operations. Estimated fair values are based on information available near the acquisition date and expectations and assumptions that have been deemed reasonable by management. There are several methods that can be used to determine the fair value of assets acquired and liabilities assumed. For intangible assets, Mittal Steel typically uses the income method. This method starts with Mittal Steels forecast of all of the expected future net cash flows. These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams. Some of the more significant estimates and assumptions inherent in the income method or other methods include: the amount and timing of projected future cash flows; the discount rate selected to measure the risks inherent in the future cash flows (weighted average cost of capital); the assessment of the assets life cycle; and the competitive trends impacting the asset, including consideration of any technical, legal, regulatory, or economic barriers to entry.

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The most common purchase accounting adjustments relate to the following assets and liabilities, whose fair value is estimated as indicated: The fair value of identifiable intangible assets (generally, patents, customer relationships and favorable and unfavorable contracts) is estimated as described above. Property, plant and equipment is recorded at replacement cost. The fair value of pension and other post-employment benefits is determined separately for each plan, with the assistance of actuaries, using assumptions valid as of the acquisition date regarding the population of employees involved and the latest market data for the valuation of plan assets. The fair value of inventories is estimated based on expected selling prices for inventory on hand at the date of acquisition reduced by an estimate of selling expenses and an appropriate gross margin. Adjustments are recorded to deferred tax assets and liabilities of the acquiree to reflect purchase price adjustments other than goodwill.

Determining the estimated useful lives of tangible and intangible assets acquired also requires judgment, as different types of assets will have different useful lives, and certain intangible assets may even be considered to have indefinite useful lives. For example, the useful life of an intangible asset recognized associated with a favorable contract will be finite and will result in amortization expense being recorded in Mittal Steels results of operations over a determinable period. Finally, when the fair value of the assets acquired exceeds their cost, the excess is recognized immediately as a gain in the statement of income, making the amount initially assigned to all assets and liabilities more important. Deferred Tax Assets Mittal Steel charges tax expenses or accounts for tax credits based on the differences between the financial statement amounts and the tax base amounts of assets and liabilities. Deferred tax assets are also recognized for the estimated future effects of tax losses carried forward. Mittal Steel reviews the deferred tax assets in the different jurisdictions in which it operates annually to assess the possibility of realizing such assets based on projected earnings, the expected timing of the reversals of existing temporary differences, and the implementation of tax-planning strategies. It is probable that the deferred tax assets of $1,670 million recognized as of December 31, 2006 will be fully realized. The amount of future taxable income required to be generated by Mittal Steels operating subsidiaries in order to recover fully deferred tax assets is approximately $5,278 million. For each of the years ended December 31, 2005 and 2006, these operating subsidiaries generated approximately 62% and 43%, respectively, of Mittal Steels consolidated taxable income of $4,676 million and $7,196 million, respectively. Historically, Mittal Steel has been able to generate taxable income in sufficient amounts to permit it to realize tax benefits associated with net operating loss carry forwards and other deferred tax assets that have been recognized in its consolidated financial statements. At December 31, 2006, Mittal Steel had total estimated net tax loss carry forwards of $9,019 million. Such amount includes net operating losses of $2,425 million primarily related to Mittal Steels operating subsidiaries in the United States, Spain, Canada and Mexico, which expire as follows: Year Expiring 2007 ...................................................................................... 2008 ...................................................................................... 2009 ...................................................................................... 2010 ...................................................................................... 2011 ...................................................................................... Thereafter.............................................................................. 78 (millions of US$) 60 70 44 82 40 2,129

The remaining tax loss carry forwards of $6,594 million are indefinite lived and are principally attributable to Mittal Steels operations in Luxembourg, Belgium, Germany, Brazil, France, Trinidad and Tobago and South Africa. Mittal Steel had unrecognized deferred tax assets relating to tax loss carry forwards and other temporary differences, amounting to $1,468 million as of December 31, 2006 ($163 million as of December 31, 2005). As per December 31, 2006, most of these temporary differences relate to tax loss carry forwards attributable to Mittal Steels operating subsidiaries in Brazil, Belgium, Luxembourg and the United States. The majority of unrecognized tax losses have no expiration date. The utilization of tax loss carry forwards is, however, restricted to the taxable income of the subsidiary generating the losses. Provisions for Pensions and Other Post-Employment Benefits Mittal Steels operating subsidiaries have different types of pension plans and post-employment benefit plans, primarily post-employment health care, for their employees. The expense associated with these pension plans and employee benefits, as well as the carrying amount of the related liability/asset on the balance sheet, is based on a number of assumptions and factors such as discount rates, rate of compensation increase, expected return on plan assets, health care cost trend rates, mortality rates, and retirement rates. Discount rates. The discount rate reflects the current rate at which the pension liabilities could be effectively settled at the measurement date. In setting these rates, Mittal Steel utilizes several high quality bond indexes in the appropriate jurisdictions (rated AA or higher by a recognized rating agency). Nominal interest rates vary worldwide due to exchange rates and local inflation rates. The weighted average assumed discount rate for Mittal Steels worldwide defined benefit plans and other post employment benefit plans was 4.43%-10.97% and 4.5%-8.75%, respectively, at December 31, 2006. Rate of compensation increase. The rate of compensation increase reflects Mittal Steels long-term actual experience and its outlook, including contractually agreed upon wage rate increases, for represented hourly employees. Expected return on plan assets. Mittal Steels expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated longterm performance of individual asset classes, risks (standard deviations), and correlations of returns among the asset classes that comprise the plans asset mix. While the studies give appropriate consideration to recent plan performance and historic returns, the assumptions are primarily longterm, prospective rates of return. Health care cost trend rate. Mittal Steels healthcare cost trend rate is based on historical retiree cost data, near-term health care outlook, including appropriate cost control measures implemented by us, and industry benchmarks and surveys. Mortality and retirement rates. Mortality and retirement rates are based on actual and projected plan experience.

In accordance with IFRS, actual gains or losses resulting from changes in actuarial assumptions are recognized in Mittal Steels income statement only if the net cumulative unrecognized actuarial gains and losses at the end of the previous reporting period exceeded the greater of 10% of the present value of the defined benefit obligation at that date and 10% of the fair value of any plan asset at that date. The fraction exceeding 10% is then recognized over the expected average remaining working lives of the employees participating in the plan. Such accumulated unrecognized costs amounted to $831 million for pensions and $351 million for other post-employment benefits as of December 31, 2006. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect Mittal Steels pension and other postretirement obligations and future expense.

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The following information illustrates the sensitivity to a change in certain assumptions for pension plans (as of December 31, 2006 the projected benefit obligation (PBO) for pension plans was $8.6 billion):
(in millions of U.S. Dollars) Change in assumption Effect on 2007 Pre-Tax Pension Expense Effect of December 31, 2006 PBO

100 basis point decrease in discount rate .................... 100 basis point increase in discount rate.....................

18 (22)

703 (620)

The following table illustrates the sensitivity to a change in the discount rate assumption related to Mittal Steels OPEB plans (as of December 31, 2006 the PBO for post-employment benefit plans was $2.6 billion):
(in millions of U.S. Dollars) Change in assumption Effect on 2007 Pre-Tax OPEB Expense Effect of December 31, 2006 PBO

100 basis point decrease in discount rate ...................... 100 basis point increase in discount rate....................... 100 basis point decrease in healthcare cost trend.......... 100 basis point increase in healthcare cost trend ..........

6 (5) (6) 7

586 (365) (136) 160

The above sensitivities reflect the effect of changing one assumption at a time. Actual economic factors and conditions often affect multiple assumptions simultaneously, and the effects of changes in key assumptions are not necessarily linear. Environmental and Other Contingencies Mittal Steel is currently engaged in the investigation and remediation of environmental contamination at a number of its facilities. All of these are legacy obligations arising from acquisitions. Mittal Steel is subject to changing and increasingly stringent environmental laws and regulations concerning air emissions, water discharges and waste disposal, as well as certain remediation activities that involve the clean-up of soil and groundwater. Mittal Steel recognizes a liability for environmental remediation when it is more likely than not that such remediation will be required and the amount can be estimated. Environmental liabilities assumed in connection with the acquisition of steel facilities and other assets are recorded at the present value of the estimated future payments. There are numerous uncertainties over both the timing and the ultimate costs that Mittal Steel expects to incur with respect to this work. Significant judgment is required in making these estimates and it is reasonable that others may come to different conclusions. If, in the future, Mittal Steel is required to investigate and remediate any currently unknown contamination and waste on properties that it owns, Mittal Steel may record significant additional liabilities. Also, if Mittal Steel estimates the cost to remediate currently known contamination and waste change, it will reduce or increase the recorded liabilities through credits or charges in the income statement. Mittal Steel does not expect these environmental issues to affect the utilization of its plants, now or in the future. The estimates of loss contingencies for environmental matters are based on various judgments and assumptions. These estimates typically reflect judgments and assumptions relating to the likelihood, nature, magnitude and timing of assessment, remediation and/or monitoring activities and the probable cost of these activities. In some cases, judgments and assumptions are made relating to the obligation or willingness and ability of third parties to bear a proportionate or allocated share of cost of these activities, including third parties who sold assets to Mittal Steel or purchased assets from it subject to environmental liabilities. Mittal Steel also considers, among other things, the activity to date at particular sites, information obtained through consultation with applicable regulatory authorities and third-party consultants and contractors and its historical experience with other circumstances judged to be comparable. Due to the numerous variables associated with these judgments and assumptions, and the effects of changes in governmental regulation and environmental technologies, both the precision and reliability of the resulting estimates of the related contingencies are subject to substantial uncertainties. Mittal Steel regularly monitors environmental matters and estimated exposure to loss contingencies, reporting changes to the appropriate individuals and agencies, and modifying any disclosure of such matters and contingencies.

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Valuation of Long-Lived Assets, Intangibles and Goodwill At each reporting date, Mittal Steel reviews the carrying amounts of its non-current assets (excluding goodwill) to determine whether there is any indication that the carrying amount of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the amount of the impairment, if any. The recoverable amount is the higher of its net selling price (fair value reduced by selling costs) and its value in use. In assessing its value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets corresponding to the operating segments that generates cash inflows. If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, an impairment loss is recognized. An impairment loss recognized in prior years is reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognized. However, the increased carrying amount of an asset due to a reversal of an impairment loss will not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized in income immediately. Goodwill is reviewed for impairment annually at the cash generating unit level or whenever changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amounts of the cash generating units are determined from value in use calculations, as described above. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the cash generating units. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on historical experience and expectations of future changes in the market. Cash flow forecasts are derived from the most recent financial budgets approved by management for the next five years. Beyond the specifically forecasted period, Mittal Steel extrapolates cash flows for the remaining years based on an estimated growth rate. This rate does not exceed the average long-term growth rate for the relevant markets. Once recognized, impairment losses recognized for goodwill are not reversed. Based on its impairment review during 2006, Mittal Steel recorded $41 million and $nil of impairment losses for long-lived assets and goodwill, respectively. At December 31, 2006, Mittal Steel had $10,782 million of intangible assets, of which $8,020 million represented goodwill. An impairment to Mittal Steels intangible assets could result in a material, non-cash expense in its consolidated statement of income. Operating Results The following discussion and analysis should be read in conjunction with the Mittal Steel Consolidated Financial Statements included in this prospectus. Prior to its acquisition of Arcelor in August 2006, Mittal Steel reported the results of its operations based on their geographic location (Americas, Europe and Asia/Africa). Following the acquisition, Mittal Steel restructured its operations to generally align them with the structure in place at Arcelor and the combined groups new management structure. Mittal Steel now reports its operations in six operating segments: Flat Carbon Americas, Flat Carbon Europe, Long Carbon Americas and Europe, Asia, Africa and CIS (AACIS), Stainless Steel and AM3S (trading and distribution). Key Indicators The key performance indicators that Mittal Steels management uses to analyze operations are sales revenue, average steel selling prices, steel shipments and operating income. Managements analysis of liquidity and capital resources is driven by operating cash flows. 81

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005 Acquisitions and Divestments The following acquisitions had a significant effect on Mittal Steels results of operations during the period: the acquisition of Arcelor, whose results of operations were included in the consolidated results of operations from August 1, 2006; the acquisition of Mittal Steel Kryviy Rih, whose results of operations were included in the consolidated results of operations from November 26, 2005; and the acquisition of Mittal Steel USA ISG Inc., whose results of operations were included in the consolidated results of operations from April 15, 2005.

The following discussion and analysis distinguishes between Mittal Steels consolidated results of operations including and excluding the effect of these significant acquisitions. The results of operations of the former subsidiaries of Stelco acquired by Mittal Canada are included in Mittal Steels consolidated results of operations from February 1, 2006. Sales, Steel Shipments and Average Steel Selling Prices The following table provides a summary of sales at Mittal Steel by operating segment for the year ended December 31, 2006 as compared to the year ended December 31, 2005:
Sales for the Year ended December 31(1) Changes in Average Steel Selling Price (%)

2005 (in $ millions)

2006 (in $ millions)

Sales (%)

Steel Shipments (%)

Segment(2) Flat Carbon Americas ........................... Flat Carbon Europe ...............................

Long Carbon Americas and Europe .............

AACIS .................................................. Stainless Steel(3) .................................... AM3S(3) .................................................

11,241 3,676 7,676 9,909 N/A N/A

17,585 14,366 13,120 14,388 3,261 5,221

56 291 71 45 N/A N/A

49 175 73 60 N/A N/A

7 26 13 (6) N/A N/A

(1) Amounts are prior to inter-company eliminations and include non-steel sales. (2) Includes results of operations of Mittal Steel USA ISG Inc. from April 15, 2005, Mittal Steel Kryviy Rih from November 26, 2005 and Arcelor from August 1, 2006. (3) The results of the Stainless Steel and AM3S segments correspond solely to the operations of Arcelor, whose results are included from August 1, 2006. Consequently, there are no comparable business operations for the Stainless Steel and AM3S segments for 2005.

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The following table provides a summary of sales at Mittal Steel by operating segment for the year ended December 31, 2006 as compared to the year ended December 31, 2005, excluding the results of operations of Arcelor, Mittal Steel USA ISG Inc. and Mittal Steel Kryviy Rih:
Sales for the Year ended December 31(1) Changes in Average Steel Selling Price (%)

2005 (in $ millions)

2006 (in $ millions)

Sales (%)

Steel Shipments (%)

Segment Flat Carbon Americas ........................... Flat Carbon Europe ...............................

Long Carbon Americas and Europe .............

AACIS .................................................. Stainless Steel(2) .................................... AM3S(2) .................................................

5,340 3,676 7,076 9,743 N/A N/A

5,005 4,198 8,174 11,614 N/A N/A

(6) 14 16 19 N/A N/A

(1) 3 14 10 N/A N/A

0 6 7 5 N/A N/A

(1) Amounts are prior to inter-company eliminations and include non-steel sales. (2) The results of the Stainless Steel and AM3S segments correspond solely to the operations of Arcelor, whose results are included from August 1, 2006. Consequently, there are no comparable business operations for the Stainless Steel and AM3S segments for 2005.

Mittal Steels sales more than doubled to $58.9 billion for the year ended December 31, 2006 from $28.1 billion for the year ended December 31, 2005, primarily due to the inclusion of Arcelor, Mittal Steel USA ISG Inc. and Mittal Steel Kryviy Rih. Excluding the effects of these acquisitions, Mittal Steels sales increased 14% to $24.5 billion for the year ended December 31, 2006 from $21.5 billion for the year ended December 31, 2005. This increase was a result of increases in both shipments and average steel selling prices. Mittal Steels steel shipments nearly doubled to 78.9 million tonnes for the year ended December 31, 2006 from 44.6 million tonnes for the year ended December 31, 2005, primarily due to the inclusion of Arcelor, Mittal Steel USA ISG Inc. and Mittal Steel Kryviy Rih. Excluding the effects of these acquisitions, steel shipments increased 7% to 38.0 million tonnes for the year ended December 31, 2006 from 35.3 million tonnes for the year ended December 31, 2005. Market demand for Mittal Steels products remained strong in the Long Carbon Americas and Europe and AACIS segments, stable in Flat Carbon Europe and weak in Flat Carbon Americas where shipments decreased by 1% due to the weak market environment in North America. Average steel selling prices increased 14% for the year ended December 31, 2006 as compared to the year ended December 31, 2005. Excluding the effects of the acquisitions of Arcelor, Mittal Steel USA ISG Inc. and Mittal Steel Kryviy Rih, average steel selling price increased 5% for the year ended December 31, 2006 as compared to the year ended December 31, 2005. Average steel selling prices were higher in all segments except Flat Carbon Americas where average steel selling prices declined marginally. Flat Carbon Americas Sales in the Flat Carbon Americas segment increased 56% to $17.6 billion for the year ended December 31, 2006 from $11.2 billion for the year ended December 31, 2005, primarily due to the inclusion of Arcelor and Mittal Steel USA ISG Inc. Excluding the effects of these acquisitions, sales decreased 6% to $5.0 billion for the year ended December 31, 2006 from $5.3 billion for the year ended December 31, 2005. The decrease was primarily due to the marginal reduction of average steel selling prices, lower steel shipments and lower non-steel revenues. Total steel shipments in the Flat Carbon Americas segment increased 49% to 24.0 million tonnes for the year ended December 31, 2006 from 16.2 million tonnes for the year ended December 31, 2005, primarily due to the acquisitions of Arcelor and Mittal Steel USA ISG Inc. Excluding the effects of these acquisitions, steel shipments decreased by 1% to 7.8 million tonnes for the year ended December 31, 2006 as compared to 7.9 million tonnes for the year ended December 31, 2005. This decrease was primarily due to the weak market environment for Mittal Steels products, in particular in the United States. 83

Average steel selling prices in the Flat Carbon Americas segment increased 7% for the year ended December 31, 2006, as compared with the year ended December 31, 2005, primarily due to the acquisitions of Arcelor and Mittal Steel USA ISG Inc with higher average steel selling prices. Excluding the effects of these acquisitions, average steel selling prices for the year ended December 31, 2006 were marginally lower as compared with the year ended December 31, 2005. Flat Carbon Europe Sales in the Flat Carbon Europe segment nearly quadrupled to $14.4 billion for the year ended December 31, 2006 from $3.7 billion for the year ended December 31, 2005, primarily due to the inclusion of Arcelor. Excluding the effects of this acquisition, sales increased 14% to $4.2 billion for the year ended December 31, 2006 from $3.7 billion for the year ended December 31, 2005. This increase was primarily due to a 6% increase in average steel selling prices and 3% increase in total steel shipments as the demand for Mittal Steels products was strong in central and Eastern Europe. Total steel shipments in the Flat Carbon Europe segment increased 175% to 17.4 million tonnes for the year ended December 31, 2006 from 6.3 million tonnes for the year ended December 31, 2005, primarily due to the inclusion of Arcelor. Excluding the effects of this acquisition, steel shipments increased 3% to 6.5 million tonnes for the year ended December 31, 2006 from 6.3 million tonnes for the year ended December 31, 2005. This increase was a result of generally stronger demand for Mittal Steels products in central and Eastern Europe. Average steel selling prices in the Flat Carbon Europe segment increased 26% for the year ended December 31, 2006, as compared with the year ended December 31, 2005, primarily due to the inclusion of Arcelor. Excluding the effects of this acquisition, average selling prices increased 6% from 2005 to 2006. This increase was primarily due to the ability to pass along to customers certain increases in the input costs and improved market environment for Mittal Steels products. Long Carbon Americas and Europe Sales in the Long Carbon Americas and Europe segment nearly doubled to $13.1 billion for the year ended December 31, 2006 from $7.7 billion for the year ended December 31, 2005, primarily due to the acquisitions of Arcelor and Mittal Steel USA ISG Inc. Excluding the effects of these acquisitions, sales increased 16% to $8.2 billion for the year ended December 31, 2006, from $7.1 billion for the year ended December 31, 2005. This increase was primarily due to a 14% increase in shipments and a 7% increase in average steel selling prices. Total steel shipments in the Long Carbon Americas and Europe segment increased 73% to 17.0 million tonnes for the year ended December 31, 2006 from 9.8 million tonnes for the year ended December 31, 2005, primarily due to the acquisitions of Arcelor and Mittal Steel USA ISG Inc. Excluding the effects of these acquisitions, shipments increased 14% to 10.5 million tonnes for the year ended December 31, 2006 from 9.2 million tonnes for the year ended December 31, 2005. This increase was primarily due to an improved market demand for Mittal Steels products, particularly wire rod and bars. Average steel selling prices in the Long Carbon Americas and Europe segment increased 13% for the year ended December 31, 2006 as compared to the year ended December 31, 2005, primarily due to the acquisitions of Arcelor and Mittal Steel USA ISG Inc. Excluding the effects of these acquisitions, average steel selling prices increased 7% from 2005 to 2006. This increase was primarily due to a strong demand, especially from the construction industry, and the ability to pass along increased scrap prices to customers. AACIS Sales in the AACIS segment increased 45% to $14.4 billion for the year ended December 31, 2006 from $9.9 billion for the year ended December 31, 2005, primarily as a result of the inclusion of Arcelor and Mittal Steel Kryviy Rih. Excluding the effects of these acquisitions, sales increased 19% to $11.6 million for the year ended December 31, 2006 as compared with $9.7 billion for the year ended December 31, 2005. This increase was primarily due to a 10% increase in shipments and a 5% increase in average steel selling prices. Total steel shipments in the AACIS segment increased 60% to 19.7 million tonnes for the year ended December 31, 2006 from 12.3 million tonnes for the year ended December 31, 2005, primarily due to the inclusion of Arcelor and Mittal Steel Kryviy Rih. Excluding the effects of these acquisitions, steel shipments 84

increased 10% to 13.1 million tonnes for the year ended December 31, 2006 from 11.9 million tonnes for the year ended December 31, 2005. This increase was primarily the result of strong demand for Mittal Steels products, particularly in the long products division of the CIS, Middle East and African countries. Average steel selling prices in the AACIS segment decreased 6% for the year ended December 31, 2006 as compared to the year ended December 31, 2005, primarily due to the inclusion of Arcelor and Mittal Steel Kryviy Rih, the latter of which had lower average selling prices, being primarily an exports-based business. Excluding the effects of these acquisitions, average steel selling prices increased 5% for the year ended December 31, 2006 as compared to the year ended December 31, 2005. This increase was primarily due to a strong market environment for Mittal Steels products in the CIS, Middle East and African countries, itself reflecting increased activity in the construction and infrastructure sectors, which was offset in part by a price decrease for flat products as a result of Chinese steel producers satisfying their local demand and consequently turning China into a net steel exporter in 2006. Stainless Steel The results of the Stainless Steel segment correspond solely to the operations of Arcelor, whose results are included from August 1, 2006. In the Stainless Steel segment, sales were $3.3 billion and shipments were 0.9 million tonnes for the year ended December 31, 2006. AM3S The results of the AM3S segment correspond solely to the operations of Arcelor, whose results are included from August 1, 2006. Sales in the AM3S segment were $5.2 billion for the year ended December 31, 2006. Operating Income The following table provides a summary of the operating income and operating margin of Mittal Steel for the year ended December 31, 2006, as compared with the year ended December 31, 2005:
Operating Income Year ended December 31 2005 (in $ millions) 2006 (in $ millions) Operating Margin 2005 (%) 2006 (%)

Segment(1) Flat Carbon Americas ........................... Flat Carbon Europe ............................... Long Carbon Americas and Europe ...... AACIS .................................................. Stainless Steel(2) .................................... AM3S(2) .................................................

1,289 367 641 2,335 N/A N/A

1,904 959 1,805 2,584 363 174

11 10 8 24 N/A N/A

11 7 14 18 11 3

(1) Includes results of operations of Mittal Steel USA ISG Inc. from April 15, 2005, Mittal Steel Kryviy Rih from November 26, 2005 and Arcelor from August 1, 2006. (2) The results of the Stainless Steel and AM3S segments correspond solely to the operations of Arcelor, whose results are included from August 1, 2006. Consequently, there are no comparable business operations for the Stainless Steel and AM3S segments for 2005.

85

The following table provides a summary of the operating income and operating margin of Mittal Steel for the year ended December 31, 2006, as compared with the year ended December 31, 2005, excluding results of operations of Arcelor, Mittal Steel USA ISG Inc. and Mittal Steel Kryviy Rih:
Operating Income Year ended December 31 2005 (in $ millions) 2006 (in $ millions) Operating Margin 2005 (%) 2006 (%)

Segment Flat Carbon Americas ........................... Flat Carbon Europe ............................... Long Carbon Americas and Europe ...... AACIS .................................................. Stainless Steel(1) .................................... AM3S(1) .................................................

869 367 624 2,333 N/A N/A

632 532 1,129 1,883 N/A N/A

16 10 9 24 N/A N/A

13 13 14 16 N/A N/A

(1) The results of the Stainless Steel and AM3S segments correspond solely to the operations of Arcelor, whose results are included from August 1, 2006. Consequently, there are no comparable business operations for the Stainless Steel and AM3S segments for 2005.

Flat Carbon Americas Operating income for the year ended December 31, 2006 for the Flat Carbon Americas segment increased 48% to $1.9 billion as compared with $1.3 billion for the year ended December 31, 2005. Excluding the effects of the acquisitions of Arcelor and Mittal Steel USA ISG Inc., operating income decreased 27% to $0.6 billion for the year ended December 31, 2006, as compared with $0.9 billion for the year ended December 31, 2005. This decrease in operating income was primarily the result of higher costs of raw materials; particularly iron ore, alloys, coke and scrap, as well as planned stoppages at various U.S. plants to partly address the excess inventory as of December 31, 2006. Flat Carbon Europe Operating income for the year ended December 31, 2006 for the Flat Carbon Europe segment nearly tripled to $959 million as compared with $367 million for the year ended December 31, 2005. Excluding the effects of the acquisition of Arcelor, operating income increased 45% to $532 million for the year ended December 31, 2006 as compared with $367 million for the year ended December 31, 2005. The increase was primarily due to higher average steel selling prices and steel shipments, offset in part by increased input costs namely iron ore and scrap. Long Carbon Americas and Europe Operating income for the year ended December 31, 2006 for the Long Carbon America and Europe segment increased 182% to $1.8 billion, as compared with $0.6 billion for the year ended December 31, 2005. Excluding the effects of the acquisitions of Arcelor and Mittal Steel USA ISG Inc., operating income increased 81% to $1.1 billion for the year ended December 31 from $0.6 billion for the year ended December 31, 2005. The increase in operating income was primarily the result of increased average steel selling prices and increased shipment volumes which were offset in part by increased input costs, particularly iron ore and scrap. AACIS Operating income for the year ended December 31, 2006 for the AACIS segment increased 11% to $2.6 billion; as compared with $2.3 billion for the year ended December 31, 2005. Excluding the effects of the acquisitions of Arcelor and Mittal Steel Kryviy Rih, operating income decreased to $1.9 billion for the year ended December 31, 2006, as compared with $2.3 billion for the year ended December 31, 2005. The decrease in operating income was primarily due to steep increase in the costs of raw materials, in particular iron ore, alloys, coke and scrap as well as increases in wages and lower shipment volumes at Mittal Steel Temirtau due to operational problems. This was partly offset by higher selling prices.

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Stainless Steel Operating income for the year ended December 31, 2006 for the Stainless Steel segment was $363 million. AM3S Operating income for the year ended December 31, 2006 for the AM3S segment was $174 million. Financing Costs Net financing costs was 85% higher for the year ended December 31, 2006, at $654 million, as compared with $353 million for the year ended December 31, 2005. Interest expense increased primarily due to the inclusion of Arcelor and financing for Arcelor as well as a non-cash charge of $367 million relating to the 2017 convertible bonds (the OCEANEs). As of March 14, 2006, Arcelor irrevocably waived its cash settlement option included in the OCEANEs. Consequently, a net financing cost of $367 million (approximately 296 million) was accounted for in accordance with the last fair valuation of the conversion option. These increases were partly offset by a gain of $450 million resulting from the unwinding of a currency hedge entered into in connection with Arcelors financing of its acquisition of Dofasco, due to the weakening of the Canadian dollar against the Euro. Income Tax Mittal Steel recorded a consolidated current tax expense of $1,267 million for the year ended December 31, 2006 as compared to $663 million for the year ended December 31, 2005. Consolidated deferred tax benefit of $(158) million for the year ended December 31, 2006, as compared to an expense of $218 million for the year ended December 31, 2005. The effective tax rate decreased to 15.4% for the year ended December 31, 2006, as compared to 18.8% for the year ended December 31, 2005, on income before taxes of $7,195 million and $4,676 million, respectively. Several factors have contributed to movements of the effective tax rate. The increase in change in measurement of deferred tax assets primarily caused by the recognition of deferred tax assets related to tax carry forwards attributable to Mittal Steels French operating subsidiaries has decreased the effective tax rate. Further decrease was caused by the favorable impact of foreign currency translations resulting from the depreciation of the U.S. dollar against local currencies. A tax deduction related to governmental incentives granted to one of Mittal Steels operating subsidiary in Brazil along with tax credits related to capital gains reinvested in fixed assets and research and development in Mittal Steels Spanish operating subsidiaries have also contributed to such decrease. Mittal Steel Temirtau and the Government of Kazakhstan signed an agreement that fixed its corporate income tax payments for the years 2005 through 2009. Under this agreement, Mittal Steel Temirtau is entitled to lower taxes based on certain capital expenditure programs. As of December 31, 2006, Mittal Steel Temirtau had fulfilled the requirement of capital investments. At Mittal Steel Lzaro Crdenas, the Mexican federal court approved a petition in 2006 to utilize $668 million loss against operating income. Since the loss was incurred in 2004 and it was denominated in Mexican Pesos, fluctuations in currency exchange rate along with annual inflationary adjustments, resulted in an increase in the U.S. dollar equivalent value of the loss from $668 million to $729 million. Accordingly, a deferred tax asset of $211 million was recognized in 2006. For additional information related to Mittal Steels income taxes see Note 19 to the Mittal Steel Consolidated Financial Statements. Minority Interest Minority interest in income of subsidiaries was $860 million for the year ended December 31, 2006, as compared with $494 million for the year ended December 31, 2005. Higher minority interest is a function of higher income for the year ended December 31, 2006, as compared with the year ended December 31, 2005. This primarily consisted of the shares of minority shareholders in the net income of Arcelor, Mittal Steel South Africa, Mittal Steel Ostrava, Mittal Steel Kryviy Rih, Mittal Steel Annaba and Mittal Steel Poland. 87

Net Income Mittal Steels net income for the year ended December 31, 2006 increased to $5,226 million from $3,301 million for the year ended December 31, 2005, for the reasons discussed above. Year Ended December 31, 2005 Compared to Year Ended December 31, 2004 Acquisitions and Divestments The following acquisitions had a significant effect on Mittal Steels results of operations during the period: the acquisition of Mittal Steel Kryviy Rih, whose results of operations were included in the consolidated results of operations from November 26, 2005; the acquisition of Mittal Steel USA ISG Inc., whose results of operations were included in the consolidated results of operations from April 15, 2005; the acquisition of Mittal Steel Zenica, whose results of operations were included in the consolidated results of operations from December 10, 2004; the acquisition of RZR Ljubija, whose results of operations were included in the consolidated results of operations from August 12, 2004; the acquisition of Mittal Steel Skopje, whose results of operations were included in the consolidated results of operations from May 7, 2004; the acquisition of Mittal Steel Hunedoara, whose results of operations were included in the consolidated results of operations from April 5, 2004; the acquisition of Mittal Steel Poland, whose results of operations were included in the consolidated results of operations from March 5, 2004; and the acquisition of a controlling interest in Mittal Steel South Africa, whose results of operations were included in the consolidated results of operations from June 9, 2004.

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Results of Operations Sales, Steel Shipments and Average Selling Prices The following table provides a summary of sales at Mittal Steel by operating segment for the year ended December 31, 2005 as compared to the year ended December 31, 2004. There are no comparable business operations for the Stainless Steel and AM3S segments for 2005 and 2004 as these segments correspond solely to the operations of Arcelor. Sales for the Year ended December 31(1) Changes in
Average Steel Selling Price (%)

2004 (in $ millions)

2005 (in $ millions)

Sales (%)

Steel Shipments (%)

Segment(2) Flat Carbon Americas ........................... Flat Carbon Europe ............................... Long Carbon Americas and Europe ...... AACIS ..................................................

5,438 3,608 7,894 7,544

11,241 3,676 7,676 9,909

107 2 (3) 31

80 (18) 2 40

21 6 6 4

(1) Amounts are prior to inter-company eliminations and include non-steel sales. (2) Includes results of operations of Mittal Steel Poland from March 5, 2004, Mittal Steel Zenica from December 10, 2004, Mittal Steel Hunedoara from April 5, 2004, Mittal Steel Skopje from May 7, 2004, Mittal Steel South Africa from June 9, 2004, Ljubija Mines from August 12, 2004, Mittal Steel USA ISG Inc. from April 15, 2005 and Mittal Steel Kryviy Rih from November 26, 2005.

The following table provides a summary of sales at Mittal Steel by operating segment for the year ended December 31, 2005 compared to the year ended December 31, 2004 excluding the effects of the acquisitions as these segments correspond solely to the operations of Arcelor.
Sales for the Year ended December 31(1) Changes in Average Steel Selling Price (%)

2004 (in $ millions)

2005 (in $ millions)

Sales (%)

Steel Shipments (%)

Segment(2) Flat Carbon Americas ........................... Flat Carbon Europe ...............................

Long Carbon Americas and Europe .............

AACIS ..................................................

5,438 2,558 5,325 5,356

5,340 2,712 4,976 5,509

(2) 6 (7) 3

(12) (1) (18) (8)

10 6 13 9

(1) Amounts are prior to inter-company eliminations and include non-steel sales.

Mittal Steels sales increased 36% to $28.1 billion for the year ended December 31, 2005 as compared to $20.6 billion for the year ended December 31, 2004, primarily due to the inclusion of Mittal Steel USA ISG Inc., Mittal Steel Kryviy Rih, Mittal Steel Poland, Mittal Steel Skopje, Mittal Steel Hunedoara, Mittal Steel Zenica, Ljubija Mines and Mittal Steel South Africa. Excluding the effects of these acquisitions, Mittal Steels sales decreased to $14.2 billion for the year ended December 31, 2005, as compared to $14.8 billion for the year ended December 31, 2004. This decrease was primarily due to a 10% reduction in shipments that was partly offset by an increase in average steel selling prices. The steel market softened in 2005 as compared to 2004. Mittal Steels shipments increased 27% to 44.6 million tonnes for the year ended December 31, 2005 from 35.1 million tonnes for the year ended December 31, 2004, primarily due to the inclusion of Mittal Steel USA ISG Inc., Mittal Steel Kryviy Rih, Mittal Steel Poland, Mittal Steel Skopje, Mittal Steel Hunedoara, Mittal Steel Zenica, Ljubija Mines and Mittal Steel South Africa. Excluding the effects of these acquisitions, shipments 89

decreased 11% to 23.6 million tonnes for the year ended December 31, 2005 from 26.5 million tonnes for the year ended December 31, 2004, primarily as a result of an 18% reduction in shipments in the Long Carbon Americas and Europe segment and a 12% reduction in shipments in the Flat Carbon Americas segment. The steel market softened in the Long Carbon and Flat Carbon Americas segments in particular, following a strong 2004. Average steel selling prices increased 10% for the year ended December 31, 2005, as compared to the year ended December 31, 2004. Excluding the effects of the acquisitions of Mittal Steel USA ISG Inc., Mittal Steel Kryviy Rih, Mittal Steel Poland, Mittal Steel Skopje, Mittal Steel Hunedoara, Mittal Steel Zenica, Ljubija Mines and Mittal Steel South Africa, average steel selling price increased 10% for the year ended December 31, 2005, as compared to the year ended December 31, 2004. This increase was primarily a result of Mittal Steels ability to pass along to customers the steep increase in the cost of raw materials. Flat Carbon Americas Sales in the Flat Carbon Americas segment more than doubled to $11.2 billion for the year ended December 31, 2005 from $5.4 billion for the year ended December 31, 2004. Excluding the effects of the acquisition of Mittal Steel USA ISG Inc., sales decreased 2% to $5.3 billion for the year ended December 31, 2005 from $5.4 billion for the year ended December 31, 2004, primarily due a 12% reduction in shipments which was offset in part by a 10% increase in average steel selling prices. Total steel shipments in the Flat Carbon Americas segment increased 80% to 16.2 million tonnes for the year ended December 31, 2005 from 9.0 million tonnes for the year ended December 31, 2004. Excluding the effects of the acquisition of Mittal Steel USA ISG Inc., shipments decreased 12% to 7.9 million tonnes for the year ended December 31, 2005 from 9.0 million tonnes for the year ended December 31, 2004. This decrease was primarily due to reduced shipments at the North American and Mexican operations due to a softening of demand. Average steel selling prices in the Flat Carbon Americas segment increased 21% for the year ended December 31, 2005, as compared with the year ended December 31, 2004. Excluding the effects of the acquisition of Mittal Steel USA ISG Inc., average steel selling price increased 10% from 2005 to 2006. This increase was primarily a result of Mittal Steels ability to pass along to customers part of the steep increase in the cost of raw materials. Flat Carbon Europe Sales in the Flat Carbon Europe segment increased 2% to $3.7 billion for the year ended December 31, 2005 from $3.6 billion for the year ended December 31, 2004. Excluding the effect of acquisitions made in 2005, sales increased 6% to $2.7 billion for the year ended December 31, 2005 from $2.6 billion for the year ended December 31, 2004. This increase was primarily due to a 6% increase in average steel selling prices that was partly offset by a decrease in steel shipments. Total steel shipments in the Flat Carbon Europe segment decreased 18% to 6.3 million tonnes for the year ended December 31, 2005 from 7.7 million tonnes for the year ended December 31, 2004. Excluding the effects of the acquisition of Mittal Steel Poland, total steel shipments remained flat at 4.5 million tonnes for the year ended December 31, 2004 as compared to the year ended December 31, 2005. Average steel selling prices in the Flat Carbon Europe segment increased 6% for the year ended December 31, 2005 as compared with the year ended December 31, 2004. Excluding the effects of the acquisition of Mittal Steel Poland, average steel selling price increased 6% primarily as a result of Mittal Steels ability to pass along to customers part of the steep increase in the cost of raw materials. Long Carbon Americas and Europe Sales in the Long Carbon Americas and Europe segment decreased 3% to $7.7 billion for the year ended December 31, 2005, as compared with $7.9 billion for the year ended December 31, 2004. Excluding the acquisitions of Mittal Steel USA ISG Inc., Mittal Steel Poland and Mittal Steel Hunedoara, sales decreased 7% to $5.0 billion for the year ended December 31, 2005, as compared with $5.3 billion for the year ended December 31, 2004. This decrease was primarily due to an 18% reduction in shipments offset in part by a 13% increase in average steel selling prices. 90

Total steel shipments in the Long Carbon Americas and Europe segment increased 2% to 9.8 million tonnes for the year ended December 31, 2005 as compared with 9.6 million tonnes for the year ended December 31, 2004, primarily due to the acquisitions of Mittal Steel USA ISG Inc., Mittal Steel Poland and Mittal Steel Hunedoara. Excluding the effects of these acquisitions, shipments decreased 18% to 6.3 million tonnes for the year ended December 31, 2005, as compared with 7.7 million tonnes for the year ended December 31, 2004. This decrease was primarily due to weak demand and production cut backs as a result of a steep increase in the input costs. Average steel selling prices in the Long Carbon Americas and Europe segment increased 6% for the year ended December 31, 2005 compared to the year ended December 31, 2004. Excluding the effects of the acquisitions of Mittal Steel USA ISG Inc., Mittal Steel Poland and Mittal Steel Hunedoara, average steel selling price increased by 13% for the year ended December 31, 2005 compared to the year ended December 31, 2004. This increase in average selling price was primarily a result of Mittal Steels ability to pass along to customers part of the steep increase in the cost of raw materials. AACIS Sales in the AACIS segment increased 31% to $9.9 billion for the year ended December 31, 2005 as compared with $7.5 billion for the year ended December 31, 2004, primarily due to the effect of acquisitions made in 2005. Excluding these acquisition, sales increased 3% to $5.5 billion for the year ended December 31, 2005 as compared with $5.4 billion for the year ended December 31, 2004, primarily due to 9% increase in average steel selling prices that was offset in part by a 8% decrease in shipments. Total steel shipments in the AACIS segment increased 40% to 12.3 million tonnes for the year ended December 31, 2005 as compared with 8.8 million tonnes for the year ended December 31, 2004 primarily due to the effect of acquisitions made in 2005. Excluding these acquisitions, steel shipments decreased 8% to 4.9 million tonnes for the year ended December 31, 2005 as compared with 5.3 million tonnes for the year ended December 31, 2004, primarily due to softer market conditions resulting in particular from weaker demand in China. Average steel selling prices in the AACIS segment increased 4% for the year ended December 31, 2005 as compared to the year ended December 31, 2004 primarily due to the effect of acquisitions made in 2005. Excluding these acquisition, average steel selling price increased 9% for the year ended December 31, 2005 as compared with the year ended December 31, 2004, primarily a result of Mittal Steels ability to pass along to customers part of the steep increase in the cost of raw materials. Operating Income The following table provides a summary of the operating income and operating margin of Mittal Steel for the year ended December 31, 2005, as compared with the year ended December 31, 2004:
Operating Income Year ended December 31 2004 (in $ millions) 2005 (in $ millions) Operating Margin 2004 (%) 2005 (%)

Segment Flat Carbon Americas ........................... Flat Carbon Europe ............................... Long Carbon Americas and Europe ...... AACIS ..................................................

1,327 866 1,423 2,022

1,289 367 641 2,335

24 24 18 27

11 10 8 24

(1) Amounts are prior to inter-company eliminations and include non-steel sales. (2) Includes results of Mittal Steel Poland from March 5, 2004, Mittal Steel Zenica from December 10, 2004, Mittal Steel Hunedoara from April 5, 2004, Mittal Steel Skopje from May 7 2004, Mittal Steel south Africa from June 9, 2004, Ljubija Mines from August 12, 2004, Mittal Steel USA ISG Inc. from April 15, 2005 and Mittal Steel Kryviy Rih from November 26, 2005.

The following table provides a summary of operating income and operating margin at Mittal Steel by operating segment for the year ended December 31, 2005 compared to the year ended December 31, 2004 91

excluding acquisitions. There are no comparable business operations for the Stainless Steel and AM3S segments for 2005 and 2004 as these segments correspond solely to the operations of Arcelor.
Operating Income Year ended December 31 2004 (in $ millions) 2005 (in $ millions) Operating Margin 2004 (%) 2005 (%)

Segment Flat Carbon Americas ........................... Flat Carbon Europe ............................... Long Carbon Americas and Europe ...... AACIS .................................................. Flat Carbon Americas

1,327 579 819 1,321

869 281 502 1,225

24 23 15 25

16 10 10 22

Operating income for the year ended December 31, 2005 for the Flat Carbon Americas segment remained flat at $1.3 billion as compared to the year ended December 31, 2004. Excluding the effects of the acquisition of Mittal Steel USA ISG Inc., operating income decreased to $0.9 billion for the year ended December 31, 2005, as compared with $1.3 billion for the year ended December 31, 2004. This decrease was primarily as a result of a steep increase in the cost of input and lower steel shipments which was partly offset by increase average steel selling prices. Flat Carbon Europe Operating income for the year ended December 31, 2005 for the Flat Carbon Europe segment decreased to $0.4 billion as compared with $0.9 billion for the year ended December 31, 2004. Excluding the acquisitions, operating income decreased to $0.3 billion for the year ended December 31, 2005, as compared with $0.6 billion for the year ended December 31, 2004. This decrease was primarily as a result of the steep increase in the cost of inputs and marginally lower steel shipments, which were partly offset by an increase in average steel selling prices. Long Carbon Americas and Europe Operating income for the year ended December 31, 2005 for the Long Carbon Americas and Europe segment decreased to $0.6 billion, as compared with $1.4 billion for the year ended December 31, 2004. Excluding the effect of acquisitions made in 2005, the operating income for the year ended December 31, 2005 decreased 39% to $0.5 billion as compared to $0.8 billion for the year ended December 31, 2004. The primary reason for the lower operating income was the steep increase in input costs and lower steel shipments, which were partly offset by increase average steel selling prices. AACIS Operating income for the year ended December 31, 2005 for the AACIS segment increased to $2.3 billion, as compared with $2.0 billion for the year ended December 31, 2004. Excluding the effects of acquisitions made in 2005, the operating income for the year ended December 31, 2005 decreased to $1.2 billion as compared to $1.3 billion for the year ended December 31, 2004. The primary reason for the lower operating income was the steep increase in input costs and lower shipments which were partly offset by an increase average steel selling prices. Financing Costs Net financing cost increased 65% to $353 million for the year ended December 31, 2005, as compared with $214 million for the year ended December 31, 2004. Interest expense increased primarily due to the increased borrowing for the acquisition of, and assumption of debt at, Mittal Steel USA ISG Inc. and Mittal Steel Kryviy Rih, as well as the increase in base interest rates which were partly offset by foreign exchange gains.

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Income Tax Mittal Steel recorded a consolidated current tax expense of $663 million in the year ended December 31, 2005 as compared to $636 million in the year ended December 31, 2004. Consolidated deferred tax expenses were $218 million in the year ended 2005, as compared to an expense of $331 million in 2004. The effective tax rate increased to 18.8% in the year ended December 31, 2005, as compared to 14.7% in the year ended December 31, 2004, on income before taxes of $4,676 million and $6,592 million, respectively. This increase in the aggregate tax rate is primarily due to the addition of newly acquired operating subsidiaries that have relatively high tax expenses. Several other factors discussed below have contributed to movements of the rate. The change in the measurement of deferred tax assets along with the increase in the permanent differences in comparison to the prior year has increased the effective tax rate. Further increase of the tax rate was due to the significant decrease in the benefit of the tax holiday resulting from the amendment of the Mittal Steel Galati share purchase agreement. Mittal Steel signed an amendment to the share purchase agreement leading to the termination of the five-year exemption to pay corporate income tax and other economic incentives previously provided to Mittal Steel Galati. This amendment has an impact beginning on January 1, 2005. Mittal Steel Temirtau and the Government of Kazakhstan signed an agreement that fixed its corporate income tax payments for the years 2005 through 2009. Under this agreement, Mittal Steel Temirtau is entitled to lower taxes based on certain capital expenditure programs. For additional information related to Mittal Steels income taxes see Note 19 to the Mittal Steel Consolidated Financial Statements. Minority Interest Minority interest in income of subsidiaries amounted to $494 million for the year ended December 31, 2005, as compared with $415 million for the year ended December 31, 2004. This primarily consisted of the shares of minority shareholders in the net income of Mittal Steel South Africa, Mittal Steel Ostrava, Mittal Steel Poland and Mittal Steel Annaba. Lower minority interest is a function of lower income for the year ended December 31, 2005, as compared with the year ended December 31, 2004. Net Income Mittal Steels net income for the year ended December 31, 2005 decreased to $3.3 billion as compared with $5.2 billion for the year ended December 31, 2004. This decrease was due to lower operating income, higher financing costs and a higher tax charge, partly offset by a lower minority interest, as discussed above. Liquidity and Capital Resources As of the date hereof ArcelorMittals principal sources of liquidity are cash generated from its operations, its credit lines at the corporate level and various working capital credit lines at its operating subsidiaries. In managements opinion, ArcelorMittals working capital is sufficient for its present requirements. Because ArcelorMittal is a holding company, it is dependent upon the earnings and cash flows of, and dividends and distributions from, its operating subsidiaries to pay expenses and meet its debt service obligations. Some of these operating subsidiaries have debt outstanding or are subject to acquisition agreements that impose restrictions or prohibitions on such operating subsidiaries ability to pay dividends. As of the date hereof Arcelors principal sources of liquidity are cash generated from its operations, its credit lines at the corporate level and various working capital credit lines at its operating subsidiaries. In managements opinion, Arcelors working capital is sufficient for its present requirements. As of December 31, 2006, Mittal Steels cash and cash equivalents, restricted cash and short-term investments amounted to $6.1 billion as compared to $2.1 billion as of December 31, 2005. In addition, Mittal Steel, including its operating subsidiaries, had available borrowing capacity under its various credit lines, including receivable factoring and securitization facilities, of $9.0 billion as of December 31, 2006 as compared to $1.9 billion as of December 31, 2005.

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As of December 31, 2006, Mittal Steels total debt, which includes long-term debt, short-term debt and borrowings under working capital facilities, was $26.6 billion as compared to $8.3 billion as of December 31, 2005. Most of the external debt is borrowed by the parent company on an unsecured basis. As of December 31, 2006, Mittal Steels external debt bore interest at varying levels based on a combination of fixed and variable interest rates. In addition, some of the debt of Mittal Steels operating subsidiaries is secured by liens on specified assets of the relevant subsidiary. Under some of the loan agreements and bonds outstanding, Mittal Steels operating subsidiaries are required to comply with certain financial covenants. As of December 31, 2006, Mittal Steels operating subsidiaries were in compliance with all such covenants. As of December 31, 2006, Mittal Steel had guaranteed $644 million of debt of its operating subsidiaries. As of March 9, 2007, Mittal Steel had guaranteed an additional $500 million of debt of its operating subsidiaries. In addition, as of December 31, 2006, Mittal Steel had guaranteed approximately $26 million of certain debts at its I/N Tek joint venture. Mittal Steels debt facilities and its guarantees have provisions whereby a default by any borrower within the Mittal Steel group could, under certain circumstances, lead to defaults under other Mittal Steel credit facilities. Any possible invocation of these cross default clauses could cause some or all of the other guaranteed debt to accelerate, creating severe liquidity pressures. A description of certain of the basic terms of Mittal Steels outstanding long-term debt as of December 31, 2006 is set forth in Note 14 to the Mittal Steel Consolidated Financial Statements. The following table summarizes the Mittal Steels credit facilities and receivables factoring and securitization facilities as of the dates indicated:
Limit As of December 31, 2006 As of December 31, 2005 Utilization As of December 31, 2006 As of December 31, 2005 Availability As of December 31, 2006 As of December 31, 2005

(in $ millions)

(in $ millions)

(in $ millions)

Credit Facilities Factoring and Securitization Financings

9,787 291

3,834 393

875 192

2,243 49

8,912 99

1,591 344

On April 1, 2006, Ispat Inland ULC redeemed $150 million of floating rate notes due April 1, 2010 and bearing interest at LIBOR plus 6.75%. The floating rate notes were redeemed at a price of 103% of the principal amount (the call premium of $4.5 million was expensed in the first quarter of 2006). On April 4, 2006, Mittal Steel signed a $200 million loan agreement with the European Bank for Reconstruction and Development for on-lending to Mittal Steel Kryviy Rih. The loan is to be used to help to upgrade technology, boost productivity and improve energy efficiency at Mittal Steel Kryviy Rih. The loan has a maturity of seven years and bears interest based on LIBOR plus a margin based on a ratings grid. Drawdown of this facility took place on May 10, 2006. On April 20, 2006, the United States Pension Benefit Guaranty Corporation converted the entire $35 million outstanding principal amount of a convertible note issued by ISG, plus accrued interest, into 1,268,719 class A common shares of Mittal Steel. On July 26, 2006, following the announcement of the final results of the offer for Arcelor, Standard & Poors lowered its long-term corporate credit rating on Mittal Steel from BBB+ to BBB and removed the rating from CreditWatch with negative implications. On July 31, 2006, Moodys confirmed the Baa3 ratings of Mittal Steel. On September 26, 2006, Fitch Ratings affirmed Mittal Steels Issuer Default and senior unsecured ratings at BBB and Short-term rating at F2 and removed the ratings from Rating Watch Negative. On November 30, 2006, Mittal Steel entered into a credit facility, which is comprised of a 12 billion term loan facility and a 5 billion revolving credit facility (the 17 Billion Facility). The proceeds of the term loan facility were used to refinance Mittal Steels 3 billion refinancing facility, 5 billion acquisition facility and 2.8 billion bridge facility, along with Arcelors 4 billion term loan facility and 3 billion revolving credit 94

facility. The 5 billion revolving credit facility has remained unutilized and is fully available to Mittal Steel, the proceeds of which may be used for general corporate purposes. The 17 Billion Facility is unsecured and provides for loans bearing interest at LIBOR or EURIBOR (based on the borrowing currency) plus a margin based on a ratings grid. As described above, Mittal Steels 3 billion refinancing facility, 5 billion acquisition facility and 2.8 billion bridge facility were repaid and subsequently cancelled on December 14, 2006. Arcelors 4 billion term loan facility, of which 3 billion was outstanding, was repaid and subsequently cancelled on December 14, 2006 and its 3 billion revolving credit facility was cancelled on December 5, 2006. On December 15, 2006 Mittal Steel redeemed Arcelors 3% 2017 bonds convertible and/or exchangeable into new and/or existing Arcelor shares (the OCEANEs) at a redemption price in cash equal to the principal amount of the OCEANEs plus accumulated interest, amounting to 0.27055 per OCEANE. Year Ended December 31, 2006 Compared to Year Ended December 31, 2005 Sources and Uses of Cash The following table presents a summary of cash flow of Mittal Steel:
Summary of Cash flow Year ended December 31, 2005 (in $ millions) 2006

Net Cash provided by operating activities ................................................ Net Cash provided by financing activities ................................................ Net Cash Provided by Operating Activities .............................................. Net cash used in investing activities

$3,874 (7,512 ) 3,349

$7,122 (8,576 ) 5,445

For the year ended December 31, 2006, cash flow from operations increased to $7,122 million as compared with $3,874 million for the year ended December 31, 2005, primarily due to higher net income from acquisitions, including the acquisitions of Arcelor, Mittal Steel Kryviy Rih and Mittal Steel ISG USA Inc. Net Cash Used in Investing Activities Net cash used in investing activities was $8,576 million, primarily due to the acquisition of net assets of subsidiaries, net of cash and capital expenditures. Acquisition of assets was primarily related to Arcelor. Capital expenditures in 2006 were $2,935 million as compared to $1,181 million in 2005. This was due in part to capital expenditures on: (a) a new continuous caster for slab production and hot strip mill, wire rod mill modernization and a new rolling mill at Mittal Steel Poland; (b) a new blast furnace, continuous caster construction, a heat recovery coke oven and an electrical steel capacity increase at Arcelor Brasil; (c) a new cold rolling and color coating mill at Mittal Steel Temirtau; (d) a new galvanizing line at Mittal Steel South Africa; and (e) melt shop upgrades at Carinox plant in Belgium. Net Cash Provided by Financing Activities Net cash provided by financing activities was $5,445 million for the year ended December 31, 2006, as compared to $3,349 million in 2005, primarily due to the net addition of loans from banks. The 2005 balance was reduced due to dividend payments to Richmond Investment Holdings Limited, the parent companys shareholder, which was a condition to Ispat Internationals acquisition of LNM Holdings. There were dividend payments to the shareholders of Mittal Steel as well to the shareholders of Mittal Steel South Africa. As of December 31, 2006, Mittal Steel had approximately $2.2 billion of scheduled debt amortization between 2007 and 2008.

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On February 2, 2007, Mittal Steel declared an interim dividend of $0.325 per share. The cash dividend was paid on March 15, 2007 to Euronext Amsterdam, Euronext Brussels, Euronext Paris, Luxembourg Stock Exchange and Spanish Exchange shareholders of record on February 27, 2007, and to NYSE shareholders of record on March 2, 2007. Mittal Steel USA Pension Funding Mittal Steel USA has made cash contributions to its pension plan of approximately $660 million from 1998 through December 31, 2006 including $61 million during 2006. For further details concerning Mittal Steels pension plans, please refer to Note 18 to the Mittal Steel Consolidated Financial Statements. Shareholders Equity Shareholders equity (excluding minority interest) increased to $42,127 million at December 31, 2006. Year Ended December 31, 2005 Compared to Year Ended December 31, 2004 Sources and Uses of Cash The following table presents a summary of cash flow of Mittal Steel:
Summary of Cash flow Year ended December 31, 2004 (in $ millions) 2005

Net Cash provided by operating activities ................................................ Net Cash used in investing activities......................................................... Net cash provided by (used in) financing activities .................................. Net Cash Provided by Operating Activities

$4,300 (656) (2,118)

$3,874 (7,512) 3,349

For the year ended December 31, 2005, cash flow from operations decreased to $3,874 million as compared with $4,300 million for the year ended December 31, 2004, primarily due to lower net income. Net Cash Used in Investing Activities Net cash used in investing activities was $7,512 million, primarily for the acquisition of net assets of subsidiaries, net of cash and capital expenditures. Acquisition of assets was primarily related to Mittal Steel Kryviy Rih. Capital expenditures in 2005 were $1,181 million as compared to $837 million in 2004. This was due in part to capital expenditures on: (a) construction of a hot-strip mill, modernization of a blast furnace and building of a coke oven battery and auxiliary facilities at Mittal Steel Poland; (b) modernization of two blast furnaces at Mittal Steel Galati; (c) construction of a new slab caster and converter shop at Mittal Steel Temirtau; and (d) step 2 of the continuous anneal line to hot dip galvanize conversion at Mittal Steel USA. Net Cash Provided by (Used in) Financing Activities Net cash provided by financing activities was $3,349 million as compared to $2,118 million used in financing activities in 2004, primarily due to the net addition of loans from banks, partly offset by dividend payments to Richmond Investment Holdings Limited, the parent companys shareholder, which was a condition precedent to Ispat Internationals acquisition of LNM Holdings. There were dividend payments to the shareholders of Mittal Steel as well to the shareholders of Mittal Steel South Africa. As of December 31, 2005, Mittal Steel had approximately $2.0 billion of scheduled debt amortization between 2006 and 2007 (without taking into account the impact of Mittal Steels offer to acquire Arcelor).

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Mittal Steel USA Pension Funding Mittal Steel USA has made cash contributions to its pension plan of approximately $600 million from 1998 through December 31, 2005, including $175 million during 2005. For further details concerning Mittal Steels pension plans, please refer to Note 18 to the Mittal Steel Consolidated Financial Statements. Shareholders Equity Shareholders equity (excluding minority interest) increased to $13,286 million at December 31, 2005. Research and Development, Patents and Licenses Costs relating to research and development, patents and licenses were not significant as a percentage of sales. Research and development costs expensed in 2005 and 2006 amount to $39 million and $96 million, respectively. Trend Information All of the statements in this Trend Information section are subject to and qualified by the information set forth under the Cautionary Statement Regarding Forward-Looking Statements. See also Operating and Financial Review and ProspectsKey Factors Affecting Results of Operations. Summary Presentation of Unaudited Results for the Six Months Ended June 30, 2007 Net income for the three months ended June 30, 2007, was $2.7 billion, or $1.97 per share, as compared with net income of $2.3 billion, or $1.62 per share, for the three months ended March 31, 2007. Net income in the second quarter 2007 was higher than first quarter 2007 primarily due to strong demand for our products, resulting in higher shipments and higher selling prices, offset in part by higher costs. Sales and operating income for the three months ended June 30, 2007, were $27.2 billion and $4.2 billion, respectively, as compared with $24.5 billion and $3.5 billion, respectively, for the three months ended March 31, 2007. Total steel shipments for the three months ended June 30, 2007, were 28.7 million metric tonnes as compared with 27.0 million metric tonnes for the three months ended March 31, 2007. Analysis of operations for Q207 v Q206 During 2006, the Companys operations have changed substantially, primarily following the merger with Arcelor which has been consolidated from August 1, 2006, and therefore, the Q207 and Q206 results are not comparable on a like-for-like basis. Sales for the three months ended June 30, 2007, were $27.2 billion as compared with $9.2 billion for the three months ended June 30, 2006. Depreciation for the three months ended June 30, 2007, was $1.1 billion as compared with $342 million for the three months ended June 30, 2006. Operating income for the three months ended June 30, 2007, increased to $4.2 billion as compared with $1.4 million for the three months ended June 30, 2006.

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Income from equity method investments for the three months ended June 30, 2007, was $195 million as compared with $13 million for the three months ended June 30, 2006. Net financing cost for the three months ended June 30, 2007, was $182 million as compared with $20 million for the three months ended June 30, 2006. Income tax expense for the three months ended June 30, 2007, was $1.1 billion as compared with $339 million for the three months ended June 30, 2006. The effective tax rate for the three months ended June 30, 2007 remained flat at 25.2% as compared with the three months ended June 30, 2006. Net income for the three months ended June 30, 2007, was $2.7 billion as compared with $897 million for the three months ended June 30, 2006. Analysis of operations for Q207 v Q107 Sales for the three months ended June 30, 2007, were $27.2 billion as compared with $24.5 billion for the three months ended March 31, 2007. Sales were higher in the second quarter due to higher shipment and higher average steel selling prices. The company enjoyed strong demand for its products in the second quarter as compared to the first quarter 2007. Depreciation for the three months ended June 30, 2007, was $1.1 billion as compared with $891 million for the three months ended March 31, 2007. Depreciation was higher in the second quarter due to an increase of plant, property and equipment, amortisation of intangibles recognised in purchase price allocations and alignment of definitions. Operating income for the three months ended June 30, 2007, increased to $4.2 billion as compared with $3.5 billion for the three months ended March 31, 2007. Income from investments for the three months ended June 30, 2007, was $195 million as compared with $154 million for the three months ended March 31, 2007. Net financing costs for the three months ended June 30, 2007, were $182 million as compared with $10 million for the three months ended March 31, 2007. Included in the net financing cost is net interest expense which increased by $33 million to $296 million for the three months ended June 30, 2007, as compared to $263 million for the three months ended March 31, 2007. Net financing costs for the three months ended June 30, 2007 include other gains such as Canadian dollar swap, foreign exchange and certain financial instruments. Income tax expense for the three months ended June 30, 2007, was $1.1 billion as compared with $934 million for the three months ended March 31, 2007. The effective tax rate for the three months ended June 30, 2007, was 25.2% as compared with 25.8% for the three months ended March 31, 2007. Minority interest during the three months ended June 30, 2007, was $497 million (of which Arcelor Brasil is $152 million) as compared with $436 million (of which Arcelor Brasil is $141 million) for the three months ended March 31, 2007. Net income for the three months ended June 30, 2007, increased to $2.7 billion as compared with $2.3 billion for the three months ended March 31, 2007.

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Liquidity and Capital Resources Arcelor Mittal's principal sources of liquidity are cash generated from its operations, its credit lines at the corporate level and various working capital credit lines at its operating subsidiaries. As of June 30, 2007, the Companys cash and cash equivalents, including restricted cash and short-term investments, amounted to $6.8 billion as compared to $8.3 billion at March 31, 2007. Net debt for the second quarter, which includes long-term debt plus short-term debt less cash and cash equivalents, restricted cash and short-term investments, increased by $4.5 billion to $23.2 billion. Gearing5 has increased from 35% to 42% and net debt to EBITDA ratio increased from 1.1x6 at March 31, 2007, to 1.2x at June 30, 2007. The increase in net debt was primarily due to the following: Acquisition of Sicartsa, Mexico: $1.5 billion Cash purchase of minority interests in Arcelor Brasil: $3.7 billion Share buy-back and dividend: $1.0 billion

The Company had total liquidity of $16.4 billion at June 30, 2007, consisting of cash and cash equivalents (including restricted cash and short-term investments of $6.8 billion), and available bank lines (including bank lines at the level of its operating subsidiaries) of $9.6 billion at June 30, 2007. Changes in current assets and current liabilities resulted in the use of cash during the three months ended June 30, 2007 of $587 million as compared to $653 million for the three months ended March 31, 2007, primarily due to an increase in trade accounts receivables and prepaid expenses, partly offset by an increase in trade payables. For the three months ended June 30, 2007, net cash provided by operating activities was $3.7 billion, as compared with $2.7 billion for the three months ended March 31, 2007. Capital expenditures during the three months ended June 30, 2007, increased to $1.3 billion as compared with $988 million for the three months ended March 31, 2007. Recent Developments On July 26, 2007, ArcelorMittal announced that it had reached an agreement with the Polish Government to acquire the outstanding 25.2% shares of ArcelorMittal Poland currently held by the Polish State and Treasury Ministry. ArcelorMittal has agreed to acquire each share at a price of Polish zloty (PLN) 6.5, valuing the remaining 25.2% of shares at approximately PLN 436 million (approx. $157 million). On July 20, 2007, ArcelorMittal, announced that it had reached a preliminary agreement to acquire two steel tube businesses from Vallourec. Vallourec Prcision Soudage (VPS) produces about 100,000 tonnes of welded steel tubes for application in the automotive industry from two sites in France. Also based in France, Vallourec Composants Automobiles Vitry (VCAV) specialises in the design and manufacturing of tubular components for the automotive industry. Combining them with ArcelorMittal's existing pipes and tubes business, will enable an even more complete product offering range to automotive customers.

5 6

Gearing is defined as net debt divided by total equity. Based on 1H07 annualized levels. 99

On July 19, 2007, ArcelorMittal announced that it had been formally granted concessions by the Republic of Senegal to develop mining, transportation and logistics activities in the Faleme region of South East Senegal. On July 10, 2007, ArcelorMittal announced the signing of a new European Works Council (EWC) agreement. This integrated ArcelorMittal EWC will replace the previous EWCs that existed in each of Arcelor and Mittal Steel. On June 5, 2007, Mittal Steel publicly announced the results of its tender offer for the shares it did not hold in Arcelor Brasil. In the aggregate, Mittal Steel acquired 29.5% of the total share capital and 89.7% of the free float of Arcelor Brasil as of June 5, 2007, thereby increasing its then 67.1% shareholding in Arcelor Brasil to 96.6%. Mittal Steel paid for the shares with $3.7 billion in cash and approximately 27.0 million Mittal Steel class A common shares, representing a total consideration of $5.4 billion. On June 15, 2007, Arcelor Brasil received confirmation from the CVM that its registration as a listed company had been cancelled and on June 21, 2007, Arcelor Brasil received confirmation from BOVESPA (the stock exchange of So Paulo, Brazil) that its securities could no longer be traded on the exchange. As of August 8, 2007, Mittal Steel had paid an additional $434 million in cash for additional shares of Arcelor Brasil. These purchases were made pursuant to the sell-out procedures under applicable Brazilian regulations that required that the remaining Arcelor Brasil shareholders have the opportunity to sell their shares to Mittal Steel for R$53.89 per share in cash (the same price offered to Arcelor Brasil shareholders in the all-cash option of the tender offer) plus an interest component from June 8, the date of the settlement of the all-cash option of the tender offer, until settlement of such sales. On August 8, 2007, a general Arcelor Brasil shareholders meeting was held which approved the redemption by Arcelor Brasil of the remaining shares of Arcelor Brasil not held by Mittal Steel. On August 17, 2007, Arcelor Brasil paid a total of $132.7 million in cash to the remaining shareholders and redeemed all the remaining shares of Arcelor Brasil for R$53.89 per share plus an interest component for the period from June 8, 2007, the date of the settlement of the all-cash option of the tender offer, until August 17, 2007, the date the funds were made available to the remaining shareholders. On August 20, 2007, Mittal Steel Brasil Participaes S.A., a wholly owned subsidiary of Mittal Steel that was incorporated in order to acquire the Arcelor Brasil shares in the context of the tender offer, was merged with and into Arcelor Brasil S.A. Following this merger, on August 31, 2007, Arcelor Brasil was merged into Belgo Siderurgia S.A., which was then renamed ArcelorMittal Brasil S.A. The combined entity is now 100% owned by ArcelorMittal subsidiaries.

Outlook for Third Quarter of 2007 The Company expects third quarter 2007 EBITDA to be between $4.7 to $4.9 billion, as compared with $4.4 billion in the third quarter of 2006. Total shipments, in the third quarter of 2007, are expected to decrease compared with the second quarter 2007 due to usual seasonal slowdown. In the Flat Carbon Americas segment EBITDA is expected to decrease slightly. EBITDA is also expected to decline in Flat Carbon Europe, Long Carbon Americas and Europe and AM3S segment due to seasonal activity slowdown. AACIS segment EBITDA is expected to remain stable. Stainless Steel EBITDA is expected to decline due to continuing market deterioration. Minority interest charge will be lower following the acquisition of Arcelor Brasil minority. The tax rate is expected to remain at approximately 25% for the year. In connection with the expected range of third quarter 2007 EBITDA as stated in the preceding paragraph, which was announced by Mittal Steel Company N.V. on August 1, 2007, ArcelorMittal (the legal successor of Mittal Steel Company N.V.) issued a prospectus supplement dated August 10, 2007 (which is a supplement to ArcelorMittal's prospectus dated June 29, 2007). The August 10, 2007 prospectus supplement is incorporated by reference into this prospectus. The August 10, 2007 prospectus supplement sets forth the principal assumptions upon which Mittal Steel Company N.V. based its expected range of third quarter 2007 EBITDA and contains a compilation report prepared by Deloitte Accountants B.V. ArcelorMittal confirms the previously announced expected range of third quarter 2007 EBITDA as of the date of this prospectus.

Off-Balance Sheet Arrangements Mittal Steel has no unconsolidated special purpose financing or partnership entities that are likely to create material contingent obligations. In addition, Mittal Steel is not contingently liable for the debt of any of its affiliates or joint ventures except debt attributable to I/N Tek, where Mittal Steel has guaranteed $26 million as of December 31, 2006 ($76 million as of December 31, 2005 for I/N Tek and I/N Kote). 100

For a discussion of receivables factoring arrangements for the year ended December 31, 2006 as compared to the year ended December 31, 2005, refer to Liquidity and Capital Resources above and Note 25 of the Mittal Steel Consolidated Financial Statements. Tabular Disclosure of Contractual Obligations Mittal Steel has various purchase commitments for materials, supplies and items of permanent investment incidental to the ordinary course of business. As of December 31, 2006, Mittal Steels management believes that these commitments are not in excess of current market prices and reflect normal business operations. Mittal Steel had outstanding, as of December 31, 2006, various long-term obligations that will become due in 2007 and beyond. These various purchase commitments and long-term obligations will have an effect on Mittal Steels future liquidity and capital resources. The table below shows, by major category of commitment and obligations outstanding as of December 31, 2006, Mittal Steels current estimate of their annual maturities (undiscounted).
Less than 1 year $3,693 108 201 8,146 662 1,173 37 2,542 16,596 More than 5 years $2,457 178 656 9,189 0 386 21 33 12,950

(amounts in $ millions) Long-Term Debt Obligationsscheduled repaymentsNote 14 to the Mittal Steel Consolidated Financial Statements..................... Operating Lease ObligationsNote 22 to the Mittal Steel Consolidated Financial Statements................................................... Environment Commitments(1) and asset retirement obligation Note 20 and Note 23 to the Mittal Steel Consolidated Financial Statements ......................................................................................... Purchase ObligationsNote 22 to the Mittal Steel Consolidated Financial Statements......................................................................... Funding Contribution to the pension and post-employment plans(2) Scheduled interest payments(3).......................................................... Other Long-Term Liabilities ............................................................ Acquisition/Investment CommitmentsNote 22 to the Mittal Steel Consolidated Financial Statements ......................................... Total ..................................................................................................

Total $25,338 564 1,275 31,274 662 3,768 506 3,297 66,747

1-3 years $8,854 175 248 9,584 0 1,580 166 388 20,996

4-5 years $10,334 103 189 4,355 0 628 281 334 16,224

(1) Mittal Steel may be subject to additional environmental liabilities not included in the table above. (2) The funding contributions to the pension and post retirement plans are presented for the following year and to the extent known. (3) In determining the future interest payments on its variable interest debt Mittal Steel used the interest rates applicable as of December 31, 2006.

Estimated payments for long-term obligations have been determined by Mittal Steel based on payment schedules for those long-term obligations where set payments exist. For long-term obligations with no set payment schedules, estimates have been made by Mittal Steel based on the most likely timing of cash payments based on the facts and circumstances that exist as of December 31, 2006. The actual timing of these future cash flows may differ due to events and circumstances that are out of the direct control of Mittal Steel. Also included are liabilities related to environmental matters, which are further discussed in Note 23 to the Mittal Steel Consolidated Financial Statements. For further details on commitments, please refer to Note 22 to the Mittal Steel Consolidated Financial Statements. Forward-Looking Statements All information that is not historical in nature and disclosed under Operating and Financial Review and Prospects is deemed to be a forward-looking statement. See Cautionary Statement Regarding ForwardLooking Statements. Quantitative and Qualitative Disclosures About Market Risk Mittal Steels primary market risk exposures are related to fluctuations in commodity prices, energy, interest rates and in currency exchange rates. Mittal Steel uses a variety of financial instruments to hedge these exposures. Mittal Steel does not hold or issue derivative financial instruments for trading purposes. The fair 101

value information presented below is based on the information available to management as of the date of the balance sheet. Although Mittal Steel is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of this annual report since that date, and therefore, the current estimates of fair value may differ significantly from the amounts presented below. The estimated fair values of certain financial instruments have been determined using available market information or other valuation methodologies that require considerable judgment in interpreting market data and developing estimates. The fair value estimates presented below are not necessarily indicative of the amounts that Mittal Steel could realize in the current market exchange.

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ARCELOR OPERATING AND FINANCIAL REVIEW The following disclosure relates to Arcelor S.A for the years ended December 31, 2004 and 2005 and the six months ended June 30, 2006. Arcelor S.A. has been consolidated into the financials results of Mittal Steel (the predecessor of ArcelorMittal) since August 1, 2006. The following discussion is qualified in its entirety by, and should be read in conjunction with, the more detailed information contained in Arcelors statutory annual reports for the years 2004, 2005 and 2006, and consolidated financial statements and related notes therein, which are incorporated by reference in this prospectus. Overview Key Factors Affecting the Business The steel industry has been highly cyclical and is affected significantly by general economic conditions and other factors such as worldwide production capacity, fluctuations in steel imports/exports and tariffs. Global Economic Environment The global economy recorded strong gross domestic product (GDP) growth in 2006, at 4.0% in real terms. This strong performance was due to a recovery in Euro area growth after five years of slow growth and a continuation of strong growth in emerging markets. The U.S. began to slow into the second half of 2006 as monetary policy tightening took effect, yet GDP growth at 3.3% remained strong. High oil prices continued to benefit the major oil-exporting countries of the Commonwealth of Independent States (CIS) and the Middle East, while high commodity prices supported growth in both Africa and Latin America. Eastern Europe benefited from the recovery in the Euro area, through increased exports; China and India continued to underpin strong GDP growth in emerging Asia of around 7.5% in 2006. Buoyed by increased investment and global trade, 2006 was also a year of strong manufacturing output, with global growth of 4.5%. Output was particularly strong in the mature economies. Germany saw a 6% growth in industrial production, and double-digit growth was recorded in the larger eastern European countries. China led the world, with manufacturing growth around 20% in 2006. Global monetary tightening began towards the end of 2006, in response to historically high global liquidity and a global increase in inflation, however, inflation continued to be relatively subdued, averaging 3.2% in the U.S. and 2.1% in the European Union (EU), in part due to emerging Asian economies continuing to exert downward pressure on prices and consumer goods in particular. The U.S. dollar averaged US$1.26 / El in 2006 weighed down by concerns over the U.S. current account deficit. Towards the end of the year, the U.S. dollar had fallen to a low of US$1.33 / El as the U.S. led the global slowdown and interest rate differentials moved against the currency. Growth in Steel Industry In 2006, world crude steel production totaled about 1,240 million tonnes, an increase of 8.6% compared to 2005. Regional trends contrasted sharply; most of this growth came from Chinese steelmakers (64%), which increased production by 17.7% to 419 million tonnes. As a result, China accounted for 33.7% of the total world production as opposed to 31% in 2005. Compared to 2005, steelmakers in the EU 15 and the U.S. were able to increase production volumes by 5.0% and 3.9% respectively.

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Worldwide Crude Steel Production: In millions of tonnes World EU 25 EU 15 EU 10 CIS North and Central America USA South America Brazil Asia China India Japan 2005 1,141.9 187.3 165.1 22.2 113.2 127.6 94.9 45.3 31.6 593.4 355.8 40.9 112.5 2006 1,239.9 198.6 173.4 25.2 119.7 131.5 98.6 45.3 30.9 665.7 418.8 44.0 116.2 2005/2006 +8.6 % +6.0 % +5.0 % +13.6 % +5.8 % +3.1 % +3.9 % 0.0 % -2.2 % +12.2 % +17.7 % +7.7 % +3.3%

Source: International Iron and Steel Institute (IISI), March 2007

In 2006, world steel demand was strong in developing countries. Steel demand was supported by strong economic growth, continuous growth in capital spending and a rising replenishment of stocks in the U.S. and European markets. Capital spending, which increased 6% year-on-year at the world level, was a major engine of world growth in 2006, largely due to growth in developing countries. High raw material and energy revenues have allowed developing economies, being large suppliers of these commodities, to finance large infrastructure projects, commercial buildings and industrial development. Capital spending growth in CIS reached 8.9%, 13% in China, 7.8% in India and 9.7% in Latin America during 2006. There was a clear acceleration of apparent steel consumption in 2006 in all main regions. Investment growth provided a boost for the manufacturing sector. This upsurge in activity, stronger orders and higher confidence in industry (in mature economies) supported robust steel demand during 2006. Apparent Steel Consumption (Finished steel products) 2006 % change over 2005 North America EU 25 China Asia (excluding China) CIS Latin & South America World Source: IISI, March 2007 estimates 11.1 % 11.2% 9.0 % 2.3 % 12.9 % 11.7 % 8.5 %

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In 2006, the steel industry experienced the effects of consolidation. More discipline among steel producers contributed to a strong reduction in supply due to a pro-active production cut by a more consolidated industry in the U.S. and in Europe. The U.S. and the EU 15 steel stock cycles amplitude was less dramatic compared with the huge overstocking of 2004 and the sharp destocking of 2005. A number of factors contributed to this including: Robust global GDP and industrial production growth environment; Growing steel demand in mature markets as well as booming emerging countries; Increasing use of advanced technologies in steel products; More services provided to the clients (distribution network/just-in-time deliveries, Research & Development (R&D), specific steel solutions); Greater widespread use of annual contracts with inherently less price variation; and More discipline due to steel market consolidation (production cuts when necessary).

Acquisitions and Divestitures Arcelor has grown through joint ventures and the acquisition of numerous steel-making facilities and other assets, which constituted major operating subsidiaries during portions of the periods described below. Arcelors principal joint ventures and acquisitions since the start of 2003, which affected its results during the period from 2003 through the first half of 2006, are summarized below. During 2004, Arcelor increased its holdings in CST (Companhia Sidertirgica de Tubaro - Brazil, Flat Carbon Steel) from 29.61% at December 31, 2003 to 73.34% at December 31, 2004 through a series of transactions with aggregate payments of E721 million. The remaining shares were acquired during 2005 in exchange for E167 million. On May 7, 2004, Arcelor obtained control of Acindar (Industria Argentina de Aceros S.A., Argentina, Long Carbon Steel), through its subsidiary Belgo-Mineira (Brazil, Long Carbon Steel), by increasing its participation from 20.40% to 66.06% for a purchase price of E116 million. Acindar, previously accounted for using the equity method, is fully consolidated from May 1, 2004. In October 2005, Arcelor obtained control of Acesita SA (Brazil, Stainless steel) by exercising put-call options included in the shareholders agreement of Acesita in exchange for E150 million. The last of these transactions was formalized on October 26, 2005. Following these acquisitions, Arcelor directly held 40.12% (including treasury shares) of the capital of Acesita (76.2% of the shares with voting rights). Acesita is fully consolidated from October 1, 2005. On August 31, 2005, Arcelor acquired control of the company Huta Warszawa (Poland, Long Carbon Steel) in exchange for E77 million. Huta Warszawa is fully consolidated from September 1, 2005. In March 2006, Arcelor acquired all of the outstanding common shares of Dofasco (Flat Carbon Steel, Canada) in exchange for CAD 5.6 billion (E 4.0 billion), in cash. Dofasco has been fully consolidated from March 1, 2006. On April 3, 2006, Arcelor transferred 89% of the shares of Dofasco to the Strategic Steel Stichting (S3), an independent foundation under Dutch law, thereby removing Arcelors ability to sell or otherwise dispose of such shares without S3s consent. In August of 2006, the boards of both Mittal Steel and Arcelor requested the directors of S3 to dissolve the foundation in order to allow the sale of Dofasco. On November 10, 2006, however, S3s directors unanimously decided not to dissolve the foundation and to retain the Dofasco shares, thereby continuing to prevent their sale.

Arcelor Business Sectors Over the periods covered by this review, Arcelor operated its businesses in four main sectors, Flat Carbon Steel, Long Carbon Steel, Stainless Steel and Alloys and Arcelor Steel Solutions and Services, or A3S, which were also its accounting segments. References to scope in this section mean the scope of the operations 105

of the Arcelor group, which may have increased or decreased over the periods presented due to acquisitions and consolidations or sales and disposals. Flat Carbon Steel Based principally upon an integrated industrial system (producing steel products from iron ore) the Flat Carbon Steel sector covers the full range of flat carbon steel products, including slabs, heavy plates, hot-rolled coils, cold-rolled coils and metallic and organic coated steel. These products are used in the automotive, household appliance, packaging, construction, civil engineering, mechanical engineering and processing industries. With mills located in Western Europe, Brazil and Canada, the sector is geographically close to its end users. For the six-month period ended June 30, 2006, the Flat Carbon Steels sector generated approximately 46% of consolidated revenues. Long Carbon Steel Arcelors sales in the Long Carbon Steel sector generally fall in the following three categories: commodity products (rolled), specialty products (rolled) and wiredrawn products. Rolled long products are primarily used in the construction, infrastructure and equipment markets and include light-and medium-weight beams, merchant steel, concrete reinforcing bars, sheet piles and heavy beams. Wiredrawn products have a variety of uses, including tire manufacturing (steel cord), agriculture (vine wire), manufacturing (galvanized wire for cable reinforcement) and construction (fibers). For the six-month period ended June 30, 2006, the Long Carbon Steel sector generated approximately 16% of consolidated revenues. Stainless Steel and Alloys Arcelor produces virtually the entire range of stainless steel and stainless steel alloy products. Arcelor produces flat stainless steel products, long stainless steel products and alloys, rolled stainless steel precision parts and flat nickel alloy products. Stainless steel is used in four specialist markets: household appliances, automotive (mainly in exhaust systems), construction and street furniture (facades and equipment) and industry (especially in the food, chemical and petroleum industries). Arcelor charged both a base price for stainless steel, which is fixed for standard quality stainless steel, and an alloy surcharge for certain alloys used in special types of stainless steel, such as authentic stainless steel. The alloy surcharge compensates Arcelor for the difference between the reference price (the historic price of certain metals used in stainless steel) and the average London Metals Exchange price of the antepenultimate and the penultimate months. This mechanism is used for nickel, chromium, molybdenum and titanium. For the six-month period ended June 30, 2006, the Stainless Steel and Alloys sector generated approximately 14% of consolidated revenues. Arcelor Steel Solutions and Services (A3S) This sector uses steel produced by the Arcelor group or purchased from third parties. A3S is organized by activity into five business units, each responsible for its own management and sales policy and its own operational result. The Arcelor Distribution unit acts as a multi-specialist business with service expertise and facilities in close proximity to customers. Its regional distribution network supplies small customers locally, while also meeting the complex needs of industrial major key accounts and following the worldwide development of multinational companies. Arcelor Steel Services Centres provides flat carbon steel processing and logistics for automotive and industrial markets. Arcelor International specializes in large-scale exports and trading. Arcelor Projects is involved in projects in piled foundations, marine works and waterfront structures, retainment, landfill and waste disposal. Arcelor Construction operates light steel-based solutions for cladding and roofing. For the six-month period ended June 30, 2006, the A3S sector generated approximately 20% of consolidated revenues.

Other Activities In addition to the above main business sectors, Arcelor has other business activities which are shown as Other Activities in the business sector reporting. These activities include, among others, the business of the Paul Wurth companies, which specialize in engineering plants and equipment for the steel and non-ferrous metal industries, Industeel, which specializes in plates, stainless steel and specialty steel and Circuit Foil, which 106

specializes in the production of extremely thin copper sheets used in the manufacturing of printed circuits. For the six-month period ended June 30, 2006, the Other Activities sector generated approximately 4% of consolidated revenues. Key Income Statement Line Items Arcelor generates revenues through the sale of steel products and services in its main business sectors described above. The main expense of the Arcelor group of companies is the raw materials used in the production of steel and related products. The main components of the raw materials and merchandise line item for 2005 are iron ore (20%), scrap (22%), solid fuels (25%) and raw materials for stainless steel (18%). Other external expenses include, among others, maintenance costs on steel mills and related buildings used in Arcelors business, freight costs for the transportation of finished steel products, energy costs (such as electricity, natural gas and petroleum used in steel production), expenses with respect to services provided by subcontractors and sales commissions. Staff costs are mainly made up of wages and salaries for employees of the Arcelor group and social charges, which include the contributions to defined contribution pension schemes, charges of the year in respect of provisions for early retirement, the employee profit-sharing scheme and the costs of equity-settled share based payments. Net financing costs primarily include interest income and interest charges along with the net foreign exchange result and dividends received and paid. The description of Other Expenses in the summary below picks up the material income statement line item expenses aside from raw materials. Critical Accounting Policies and Use of Judgments and Estimates The information regarding and analysis of Arcelors operational results and financial condition are based on figures contained in the Arcelor consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The preparation of these facial statements requires Arcelors management to make judgments in relation to certain estimates and assumptions used in the application of accounting policies. These judgments and estimates are made on the basis of available facts and are a normal part of the process of preparing financial statements. While the use of different assumptions and estimates could have caused the results to be different from those reported, Arcelor believes that the possibility of material differences between two periods is lessened because of the consistency in the application of such judgments. The accounting policies that Arcelor considers critical, in terms of the likelihood of a material impact arising from a change in the assumptions or estimates used in the application of the accounting policy in question, are outlined below. Business Combinations When an acquisition is completed by a series of successive transactions, each significant transaction is considered individually for the purpose of the determination of the fair value of the identifiable assets, liabilities and contingent liabilities acquired and hence the goodwill associated with the acquisition. This often results in positive or negative goodwill. Management often obtains appraisals and actuarial or other valuations in order to assist in determining the estimated fair value of assets acquired and liabilities assumed. Determining the assets and liabilities assumed requires significant judgment, often involving the use of significant estimates and assumptions, including future cash inflows and outflows, discount rates, asset lives, and market trends, among other items. This application of managements judgment and estimates to account for acquisitions could significantly affect Arcelors financial statements. Impairment of Long-Lived Assets Including Intangible Assets The carrying amounts of Arcelors assets, other than inventories, deferred tax assets and assets related to employee benefit plans are reviewed at each balance sheet date to determine whether there is any indication of 107

impairment. An impairment loss is recorded immediately where the carrying amount of an asset or a cashgenerating unit exceeds its recoverable amount. Impairment losses are recognized as an expense in the income statement. Arcelor continues to monitor both internal and external factors that could result in an impairment of long-lived assets. Goodwill arising from an acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over Arcelors interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cashgenerating units that are expected to benefit from the business combination in which the goodwill arose. Goodwill is reviewed for impairment annually at the cash generating unit level or whenever changes in circumstances indicate that the carrying amount may not be recoverable. The impairment analysis is principally based on an estimate of discounted future cash flows at the operating unit level. Impairment losses recognized for goodwill are not reversed. Deferred Tax Assets For each taxable entity, Arcelor uses the balance sheet liability method to calculate deferred taxes on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, as determined in accordance with the tax rules in force in the countries in which Arcelor conducts its operations. Deferred tax assets are also recognized for the estimated future effects of tax losses carried forward. Arcelor annually reviews the deferred tax assets in the different jurisdictions in which it operates to assess the possibility of realizing such assets based on projected earnings. Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which tax losses carried forward can be utilized. Therefore, taking into account the cyclical nature of the business, deferred tax assets may be recognized by companies that have incurred tax losses over the previous periods. Litigation Charges Since 2002, Arcelors Legal Affairs Department has prepared litigation reports at June 30 and December 31 of each year showing all existing litigation where the amounts at issue exceed 500,000. When a dispute becomes a present obligation (after taking into account all available evidence to determine if the obligation is likely), which will require an outflow of resources to be settled and in so far as there is a reliable estimate of the amount of the obligation, a provision is booked. This provision is kept until the end of the limitation period (legal if any) if no new fact arises, or until the end of the applicable lawsuit. Any unfavorable effect of a lower court ruling or a decision of a court of appeal should be translated in accounting terms even if an appeal or final appeal is lodged. If a favorable ruling is obtained in the lower court, the provision that was originally created should be kept if the other party appeals. In rare cases, it may be disputed whether certain events have occurred or whether those events result in a present obligation. In such a case, Arcelor determines whether a present obligation exists at the balance sheet date by taking account of all evidence, including, for example, the opinion of experts (internal or external lawyers, etc.). The evidence considered includes any additional evidence by events after the balance sheet date. Where it is more likely than not that a present obligation exists at the balance sheet date, Arcelor recognizes a provision. Otherwise, Arcelor discloses a contingent liability. Environment Arcelor generally estimates provisions related to environmental issues on a case-by-case basis, taking into account applicable legal requirements. A best estimate, based on available information, is calculated, provided that the available information indicates that the loss is probable and can be estimated in a sufficiently reliable manner. The term of the obligation must be reasonably fixed and the valuation of the obligation reasonably estimated. Examples of obligating events are: unlawful environmental damage, where a new regulation requires remediation of existing environmental damage or when the entity publicly accepts responsibility for rectification of environmental damage. Where details of a proposed new law have yet to be finalized, an obligation arises only when the legislation is virtually certain to be enacted as drafted.

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Operating Results Six Months Ended June 30, 2006 Compared to Six Months Ended June 30, 2005 Revenues During the six months ended June 30, 2006, Arcelors consolidated revenues were 19,830 million, compared to 16,778 million for the six months ended June 30, 2005, an increase of 18.2% or 8.6% at a comparable scope. This increase was largely the result of the acquisition and full consolidation of Huta Warszawa (Poland), Acesita (Brazil) and Dofasco (Canada) along with increases of total steel volumes shipped by 8.8% within the same scope over the six months ended June 2005. The following table provides a summary of revenues at Arcelor in its sectors for the six months ended June 30, 2006 compared to the six months ended June 30, 2005: Revenues for the Six months ended June 30, Sector 2006 (in EUR millions) Flat Carbon Steel Long Carbon Steel Stainless Steel and Alloys Arcelor Steel Solutions and Services 11,254 3,785 2,789 4,621 2005 (in EUR millions) 9,665 3,186 1,975 4,403 (%) 16.4 18.8 41.2 4.9 Changes in Revenues

Flat Carbon Steel Revenues in the Flat Carbon Steel sector for the six months ended June 30, 2006 were E11,254 million, compared to E9,665 million for the six months ended June 30, 2005, an increase of 16.4%. This increase was mainly due to the consolidation of Dofasco in March 2006, which contributed 1,413 million to revenues for the first half of 2006, along with increases in total volumes shipped compared to 2005. Total volumes shipped increased by 21% to 18,035 thousand tonnes from 14,893 tonnes for the first half of 2005. Without the increase in scope of operations, revenues would have increased 338 million, or 3.5%, compared to the same period in 2005 as they were negatively impacted by a decrease in average selling prices from July 2005. Long Carbon Steel Revenues in the Long Carbon Steel sector for the six months ended June 30, 2006 were 3,785 million, an increase of 18.8% compared to 3,186 million for the six months ended June 30, 2005. This increase resulted primarily from the full consolidation of Huta Warszawa in August 2005, the consolidation of Sonasid (Societe Nationale de Siddrurgie, S.A.) from June 1, 2006 and increased sales prices for long carbon steel which were partially offset by decreased revenues due to the divestment of the rods and bars mills in Spain and the small tubes mill in Argentina. Total volumes shipped increased by 13.0% to 7,022 thousand tonnes for the first half of the year compared to 6,216 thousand tonnes for the same period in 2005. On a comparable basis without accounting for changes in the scope of operations, revenues increased 885 million, or 27.8%, in the first half of 2006 compared to the first half of 2005.

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Stainless Steel and Alloys Revenues in the Stainless Steel and Alloys sector for the six months ended June 30, 2006 were E2,789 million, compared to 1,975 million for the six months ended June 30, 2005, an increase of 41.2% primarily due to the full consolidation of Acesita in October 2005. Without Acesita (which accounted for 560 million revenues in the period), consolidated revenues would have increased 12.9% compared to the same period in 2005. Shipped volumes amounted to 1,203 thousand tonnes for the first half of 2006 compared to 778 thousand tonnes in 2005 (with Acesita accounting for 352 thousand tonnes for the first six months of 2006). Increased demand over the period led to increased average base prices in the second quarter of 2006 (an increase of 16.5% in Europe and 12% in the U.S.). Additionally, increased prices for nickel, and thus larger alloy surcharges, also led to increased stainless steel prices, further impacting revenue. Arcelor Steel Solutions and Services (A3S) Revenues in the A3S sector for the six months ended June 30, 2006 were E4,621 million, compared to 4,403 million for the six months ended June 30, 2005, an increase of 4.9% primarily due to rising prices for long carbon steel and other steel products in the second quarter of 2006. Shipped volumes amounted to 7,409 thousand tonnes for the first half of 2006 compared with 6,865 thousand tonnes for the same period last year. Cost of Raw Materials and Merchandise During the six months ended June 30, 2006, Arcelors consolidated cost of raw materials and merchandise were E9,801 million, compared to E7,412 million for the six months ended June 30, 2005, an increase of 32.2%. The increased costs were due to the increased scope of Arcelors operations from the consolidation of Huta Warszawa, Acesita and Dofasco and increased prices for raw materials used in steel production. The cost of raw materials and merchandise were 49.4% of consolidated revenue for the first half of 2006 compared to 44.2% for the same period in 2005 as the group was unable to pass along all raw material cost increases to customers. Pushed by strong demand, mainly from China, steel raw material prices, such as iron ore and coal, saw worldwide rises during the two periods. Other Expenses During the six months ended June 30, 2006, Arcelors consolidated other external expenses, were E3,971 million an increase of 17.9%, compared to E3,367 million for the six months ended June 30, 2005 largely as a result of the scope change between the two periods resulting from the consolidation of Huta Warszawa, Acesita and Dofasco and increased energy and freight costs. Other external expenses consisted of approximately the same percentage of consolidated revenues (20%) for both the six months ended June 30, 2006 and 2005. During the six months ended June 30, 2006, Arcelor consolidated staff costs increased 12.0% to E2,810 million, compared to E2,508 million for the six months ended June 30, 2005, primarily due to increased headcount as a result of the consolidations of Huta Warszawa, Acesita and Dofasco. During the six months ended June 30, 2006, Arcelor consolidated depreciation and amortization expenses were E746 million, compared to 740 million for the six months ended June 30, 2005. Operating Results During the six months ended June 30, 2006, Arcelor consolidated operating results were E2,047 million, compared to E2,643 million for the six months ended June 30, 2005, a decrease of 22.6%. This reduction was largely attributable to increases in raw material costs over the period. Flat Carbon Steel Operating results in the Flat Carbon Steel sector for the six months ended June 30, 2006 were E1,071 million, compared to E1,964 million for the six months ended June 30, 2005, a decrease of 45.5%, primarily due to the strong increase of raw material prices which increased approximately 900 million compared to the first half of 2005. Due to consolidation adjustments relating to the purchase method of accounting for business combinations as required by IFRS 3, Business Combinations, as assets and liabilities were valued at fair market leading to higher costs of goods sold, Dofasco did not start to contribute positively to operating results until the third quarter of 2006.

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Long Carbon Steel Operating results in the Long Carbon Steel sector for the six months ended June 30, 2006 were E683 million, compared to E518 million for the six months ended June 30, 2005, an increase of 31.9%. This increase resulted partially from the full consolidation of Huta Warszawa from August 2005 of E6.7 million and continued contributions from assets in the Americas, which represented 58% of the increase, partially offset by increased prices for raw materials and costs of scrap metal in Europe, which increased by 13.7% over the period. Stainless Steel and Alloys Operating results in the Stainless Steel and Alloys sector for the six months ended June 30, 2006 almost tripled to E166 million, from E59 million for the six months ended June 30, 2005. This increase was principally due to the consolidation of Acesita, which had an impact of E124 million, higher revenues and continuous improvements in efficiency. Arcelor Steel Solutions and Services (A3S) Operating results in the Arcelor Steel Solutions and Services sector for the six months ended June 30, 2006 were E152 million, compared to 106 million for the six months ended June 30, 2005, an increase of 43.4%, primarily due to higher revenues. Because A3S generally has three months of inventories on hand, the higher costs in the first half of 2006 did not have as significant an impact as in other sectors. Financing Costs Net financing costs for the six months ended June 30, 2006 were E635 million, compared to 31 million for the six months ended June 30, 2005. This increase was primarily due to a charge in the first half of 2006 of E326 million that reflected the fair market value of the conversion right on the OCEANE 2017 notes before Arcelor irrevocably waived the option to redeem the instruments in cash. The fair value of the conversion right was impacted by the increase in the value of the underlying Arcelor shares in the first half of 2006 compared to the first half of 2005 in connection with the tender offer by Mittal Steel. Financing costs also included non-recurring costs in connection with the merger, including a compensation fee of 140 million. Share of Profits in Companies Accounted for Using the Equity Method The share in the profits of companies accounted for using the equity method amounted to 173 million, compared to E165 million for the ended June 30, 2005, an increase of 4.8%. This change was the result of the full consolidation of Acesita (which decreased results as it was no longer accounted for using the equity method), which was more than offset by strong results at the DHS group in Germany and other entities accounted for using the equity method of accounting. Tax Expenses Arcelor had a tax benefit of E57 million for the six months ended June 30, 2006, compared to tax expenses of E534 million for the six months ended June 30, 2005. The tax benefit for the six months ended June 30, 2006 primarily related to decreased operating results and the capitalization of previously unrecognized tax losses carried forward in Belgium for an amount of E285 million following the implementation of an internal restructuring launched at the end of the first quarter of 2006. Net Profit Arcelors net profit for the six months ended June 30, 2006 was E1,642 million, compared to E2,243 million for the six months ended June 30, 2005, a decrease of 26.8% due to the factors described above.

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Year Ended December 31, 2005 Compared to Year Ended December 31, 2004 Revenues During the year ended December 31, 2005 Arcelor consolidated revenues were E32,611 million, compared to E30,176 million for the year ended December 31, 2004 an increase of 8.1% or 3.9% at a comparable scope. This was mainly due to increased prices for long and flat carbon steel and the consolidation of CST, Acindar and Acesita, as well as the acquisition of Huta Warszawa in the second half of 2005, which were partially offset by decreased shipped volumes, particularly in Europe. Volume shipments fell by 3.4% overall. The following table provides a summary of revenues at Arcelor in its sectors for the year ended December 31, 2005 compared to the year ended December 31, 2004:

Revenues for the years ended December 31 Sector 2005 (in EUR millions) Flat Carbon Steel Long Carbon Steel Stainless Steel and Alloys Arcelor Steel Solutions and Services Flat Carbon Steel 16,060 6,618 4,028 8,656 2004 (in EUR millions) 16,139 6,221 4,577 8,267

Changes in Revenues

(%) 11.9 6.4 (12.0) 4.7

Revenues in the Flat Carbon Steel sector for the year ended December 31, 2005 were E18,060 million, compared to E16,139 million for the year ended December 31, 2004, an increase of 11.9%, or 3.3% on a comparable scope. CST, which was consolidated as of October 1, 2004, represented the main part of the scope effect. The 3.3% variation resulted from an increase in average selling prices over the period, which impacted revenues by 12.7%, partially offset by a decline in shipped volumes, which negatively impacted revenues by 9.4%. Shipped volumes totaled 28.1 million tonnes for the year ended December 31, 2005, including 4.4 million tonnes from CST, an 11.9% decrease compared to 31.9 million tonnes in 2004 (including 1.7 million tonnes from three months consolidation of CST), principally related to an 11.4% decrease in shipped volumes in Europe. Shipped volumes were cut intentionally as Arcelor sought to adjust supply available in response to decreased demand in the market in the second and third quarters of 2005. Long Carbon Steel Revenues in the Long Carbon Steel sector for the year ended December 31, 2005 were E6,618 million, compared to E6,221 million for the year ended December 31, 2004, an increase of 6.4% or 12.4% at a comparable scope. This change resulted partially from a 10.7% increase in average selling prices, driven primarily by a scrap surcharge mechanism implemented to pass on increases in scrap costs to customers. It was also impacted by an appreciation of the Brazilian real over the period, the currency in which South Americas sales of long carbon products are principally made, which accounted for E491 million of revenues in the sector, partially offset by shipped volume decreases of 1.9% on a comparable scope and 7.7% overall. Stainless Steel and Alloys Revenues in the Stainless Steel and Alloys sector for the year ended December 31, 2005 were 4,028 million, compared to E4,577 million for the year ended December 31, 2004, a decrease of 12.0% primarily due to the reorganization of the group which removed the heavy plates business unit from the Stainless Steel sector and consolidated Acesita from October 1, 2005. At comparable scope, revenues decreased by 0.4%. The limited decrease resulted from a sharp increase in alloy surcharges in the first three quarters of 2005, offsetting basic 112

sales prices (not including alloy surcharges) that averaged 20% less than in 2004. Shipped volumes fell by 25% compared to 2004 (9% at a comparable scope) to 1.6 million tonnes. Arcelor Steel Solutions and Services (A3S) Revenues in the A3S sector for the year ended December 31, 2005 were E8,656 million, compared to E8,267 million for the year ended December 31, 2004, an increase of 4.7%. At a comparable scope, revenues rose by 3.4%. This increase was primarily due to an increase in average selling prices over the period, which was partially offset by an 8.1% decrease in shipped volumes as shipped volumes were reduced as a result of a focus on price stability. Cost of Raw Materials and Merchandise During the year ended December 31, 2005, Arcelor consolidated costs of raw materials and merchandise were 15,991 million, compared to E14,759 million for the year ended December 31, 2004, an increase of 8.3% primarily due to increases in raw material prices, including iron ore (71.5% increase for Brazilian ore), coking coal (a doubling of the cost of free-on-board premium coal from Australia) and zinc (3month forward contract price increased by 31%). The cost of raw materials and merchandise represented approximately the same percentage of consolidated revenues (49%) for both periods. Other Expenses During the year ended December 31, 2005, Arcelor consolidated other external expenses, were E6,761 million, compared to E6,337 million for the year ended December 31, 2004, an increase of 6.7%, primarily due to increased scope, including the acquisition of Huta Warszawa and Acesita. During the year ended December 31, 2005, Arcelor consolidated staff costs were E4,899 million, compared to 4,748 million for the year ended December 31, 2004, an increase of 3.1%, primarily due to increased headcount. During the year ended December 31, 2005, Arcelor consolidated depreciation and amortization expenses were E1,294 million, compared to 1,225 million for the year ended December 31, 2004. Operating Results During the year ended December 31, 2005, Arcelor consolidated operating results were E4,376 million, compared to E3,314 million for the year ended December 31, 2004, an increase of 32.0%, primarily due to the consolidation of CST which contributed 46% of the increase and despite increases in raw material costs. Flat Carbon Steel Operating results in the Flat Carbon Steel sector for the year ended December 31, 2005 were E2,773 million, compared to E1,735 million for the year ended December 31, 2004, an increase of 59.8%, primarily due to the higher revenues described above along with operating efficiency improvements, partially offset by a sharp rise in raw material costs. Long Carbon Steel Operating results in the Long Carbon Steel sector for the year ended December 31, 2005 were 1,111 million, an increase of 2.9% compared to 1,080 million for the year ended December 31, 2004, but a 6.1% decrease at comparable scope due to increased costs of raw materials. The 2005 results also included nonrecurrent gains of E113 million, primarily due to the sale of a steel mill in Spain. Stainless Steel and Alloys Operating results in the Stainless Steel and Alloys sector for the year ended December 31, 2005 were E93 million, compared to E127 million for the year ended December 31, 2004, a decrease of 26.8% or 17.1% at comparable scope. This primarily resulted from the changes in scope as mentioned above and lower revenues in the core stainless market compared to the previous period due to lower average selling prices for stainless products.

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Arcelor Steel Solutions and Services Operating results in the Arcelor Steel Solutions and Services sector for the year ended December 31, 2005 were E254 million, compared to 398 million for the year ended December 31, 2004. This decrease was primarily due to procurement costs, which could not be directly passed on to customers. Financing Costs Net financing costs for the year ended December 31, 2005 were E254 million, compared to E521 million for the year ended December 31, 2004, a decrease of 51.3%. These changes were primarily due to increases in the foreign exchange result of E293 million which includes unrealized gains of E82 million relating to the revaluation of exchange options falling outside the scope of cash flow hedging, partially offset by banking charges and commissions of E48 million. Share of Profits in Companies Accounted for Using the Equity Method Share of profits in companies accounted for using the equity method amounted to E317 million for the year ended December 31, 2005, compared to E413 million for the year ended December 31, 2004, a decrease of 23.7% primarily due to the consolidation of CST under Arcelor, which had a negative impact of 130 million (since CST was no longer accounted for under the equity method), which was partially offset by strong results at DHS in Germany, which had a positive impact of 100 million, and other entities accounted for using the equity method. Tax Expenses Tax expenses for the year ended December 31, 2005 were E161 million, compared to 513 million for the year ended December 31, 2004, a decrease of 68.7% mainly due to deferred tax losses carried forward in an amount of E109 million and decreases in deferred tax liabilities related to variations in exchange rates. Net Profit Arcelors net profit for the year ended December 31, 2005 was 4,278 million, compared to E2,693 million for the year ended December 31, 2004, an increase of 58.8%, due to the reasons described above. Year Ended December 31, 2004 Compared to Year Ended December 31, 2003 Revenues During the year ended December 31, 2004 Arcelor consolidated revenues were 30,176 million, compared to E25,923 million for the year ended December 31, 2003 an increase of 16.4%, primarily due to higher average steel prices in the second half of 2004 and a 9.1% increase in volume shipments. The following table provides a summary of revenues at Arcelor in its sectors for the year ended December 31, 2004 compared to the year ended December 31, 2003: Revenues for the Year ended December 31, 2004 2003 (in EUR millions) 16,139 6,221 4,577 8,267 (in EUR millions) 13,994 4,381 4,280 7,954 Changes in Revenues

Sector

Flat Carbon Steel Long Carbon Steel Stainless Steel and Alloys Processing, Distribution and Trading*

(%) 15.3 42.0 6.9 3.9

*Referred to as Arcelor Steel Solutions and Services in the above summaries.

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Flat Carbon Steel Revenues in the Flat Carbon Steel sector for the year ended December 31, 2004 were E16,139 million, compared to 13,994 million for the year ended December 31, 2003, an increase of 15.3% or 12.6% on a comparable scope. The growth on a comparable scope was primarily related to increased average sales prices of 10% over the period, primarily in the second half of the year, and increased volumes shipped of 6.1%. The consolidation of CST in October 2004 represented a scope impact of 394 million. Long Carbon Steel Revenues in the Long Carbon Steel sector for the year ended December 31, 2004 were E6,221 million, compared to E4,381 million for the year ended December 31, 2003, an increase of 42.0%. This was primarily due to increased average steel prices of 34% over the period along with scope effects from the consolidation of Acindar in Argentina from May 2004. The consolidation of Acindar contributed to the revenue change for E394 million. Shipped volumes increased by 9.8% to 13.4 million tonnes (including Acindars deliveries). Average selling prices increased 34% compared to 2003 largely due to the imposition of the scrap surcharge system introduced at the end of 2003 to offset increases of the prices of the scrap raw material and pass these increases on to customers. Stainless Steel and Alloys Revenues in the Stainless Steel and Alloys sector for the year ended December 31, 2004 were 4,577 million, compared to E4,280 million for the year ended December 31, 2003, an increase of 6.9% or 14.5% on a comparable basis. This change was due to a general increase in average total sales prices, especially linked to the alloy surcharge (which more than doubled from E800 per ton on average in 2004 compared to E400 per ton in 2003) and scrap surcharge, which did not exist in 2003, while the average market base price only grew by 1%. These positive price effects were partially offset by an 11.0% decrease in the volume of shipments largely resulting from certain disposals in 2004 whose impact on revenue was estimated at E325 million. Arcelor Steel Solutions and Services (Processing, Distribution and Trading) Revenues in the Arcelor Steel Solutions and Services sector for the year ended December 31, 2004 were E8,267 million, compared to E7,954 million for the year ended December 31, 2003, an increase of 3.9%. This change mainly related to average selling price increases of 26.5%, which were partially offset by decreases in scope of 678 million resulting from disposals of certain businesses during 2004 and the end of 2003, whose impacts were fully felt in 2004, resulting in a 6.9% decrease in total volumes shipped. Cost of Raw Materials and Merchandise During the year ended December 31, 2004, Arcelor consolidated costs of raw materials and merchandise were 14,759 million, compared to 12,095 million for the year ended December 31, 2003, an increase of 22.0% primarily due to increases in the average prices of raw materials, including iron ore (15%), coking coal (30%) and zinc (26%) and increases in scope from the consolidation of CST and Acindar. The cost of raw materials and merchandise represented approximately 49% of consolidated revenues for the year ended December 31, 2004 and 47% of consolidated revenues for the same period in 2003.

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Other Expenses During the year ended December 31, 2004, Arcelor consolidated other external expenses were 6,337 million, compared to 6,307 million for the year ended December 31, 2003 mainly due to increased scope of operations. During the year ended December 31, 2004, Arcelor consolidated staff costs were 4,748 million, compared to E4,951 million for the year ended December 31, 2003, a decrease of 4.2%, primarily due to reduced staff count, notwithstanding the increased scope of operations. During the year ended December 31, 2004, Arcelor consolidated depreciation and amortization expenses were 1,225 million, compared to E1,601 million for the year ended December 31, 2003. This decrease was primarily the result of a significant impairment loss in the Stainless Steel sector in 2003 mainly as a result of the revaluation of assets to their fair market value at certain Arcelor subsidiaries. Operating Results During the year ended December 31, 2004, Arcelor consolidated operating results were E3,314 million, compared to E858 million for the year ended December 31, 2003. This increase was primarily due to increased revenues partially offset by higher raw material costs. The increased gross margin accounted for approximately 71% of the change in operating results. Flat Carbon Steel Operating results in the Flat Carbon Steel sector for the year ended December 31, 2004 were 1,735 million, compared to 843 million for the year ended December 31, 2003. This substantial increase was due to an increase in revenues and the full consolidation of CST, partially offset by increases in raw material costs. Long Carbon Steel Operating results in the Long Carbon Steel sector for the year ended December 31, 2004 were E1,080 million, compared to E313 million for the year ended December 31, 2003. This increase was due to the consolidation of Acindar in Argentina in May 2004, which contributed E189 million, and an increase in revenues on a comparable scope, without an equivalent increase in costs. Stainless Steel and Alloys Operating results in the Stainless Steel and Alloys sector for the year ended December 31, 2004 were E127 million, compared to an operating loss of 453 million for the year ended December 31, 2003. The result improved largely due to increased revenues mainly due to alloy surcharges which were not totally offset by increased costs and management gains from cost reduction programs, which together accounted for E246 million, or approximately 42.4% of the increase, along with the fact that there was a significant impairment loss of E324 million in 2003. Arcelor Steel Solutions and Services (Processing, Distribution and Trading) Operating results in the Arcelor Steel Solutions and Services sector for the year ended December 31, 2004 were E398 million, compared to E128 million for the year ended December 31, 2003. This increase was primarily due to the ability to pass on increases in raw material costs to customers, efficiency gains of approximately E11 million and a positive stock valuation effect due to increased prices, partially offset by a nonrecurring gain on the sale of a plastics division recognized in 2003 without a similar gain in 2004. Financing Costs Net financing costs for the year ended December 31, 2004 were 521 million, compared to E462 million for the year ended December 31, 2003, an increase of 12.7% primarily due to unrealized losses of 185 million relating to the revaluation of derivatives acquired in order to hedge the purchases of raw materials in 2005 partially offset by proceeds of approximately 52 million from the disposal of certain interests in subsidiaries. Share of Profits in Companies Accounted for Using the Equity Method Share of profits in companies accounted for using the equity method amounted to E413 million for the year ended December 31, 2004, compared to 140 million for the year ended December 31, 2004. This 116

substantial increase was primarily due to substantial gains at Acesita in Brazil equal to E58 million and increased profit and an increased ownership percentage at CST prior to full consolidation from October 1, 2004. Tax Expenses Tax expenses for the year ended December 31, 2004 were 513 million, compared to 135 million for the year ended December 31, 2003. This substantial increase in tax expenses was primarily due to a significant increase in the current tax in 2004, which resulted from increased results of operations. Net Profit Arcelors net profit for the year ended December 31, 2004 was 2,693 million, compared to E401 million for the year ended December 31, 2003. This substantial increase was due to the factors described above. Liquidity and Capital Resources Arcelors principal sources of liquidity during the period under review were cash generated from its operations and an E2,000 million commercial paper program to cover working capital requirements. At June 30, 2006 Arcelor cash and cash equivalents amounted to E3,356 million as compared to E4,645 million at December 31, 2005. Furthermore, at June 30, 2006 the Arcelor group had lines of credit from financial institutions totaling over 10,600 million (December 31, 2005: over E5,000 million). At June 30, 2006, 3,616 million of the 10,600 million limit was utilized. In addition to the credit facilities listed above, Arcelor may benefit from non-recourse sale of receivables for a total limit up to 2,000 million. At June 30, 2006, E1,789 million were drawn from this credit facility. As of June 30, 2006, Arcelors total debt, which includes long-term debt, short-term debt, dividends payable and borrowings under working capital facilities, was 10,246 million, compared to 5,964 million as at December 31, 2005. This increase mainly related to a 3,000 million loan by Credit Mutuel Group. As of June 30, 2006, Arcelors external debt bore interest at varying levels based on a combination of fixed and variable interest rates. A substantial amount of Arcelors external debt (approximately 80%) was denominated in Euro with approximately a further 13% denominated in U.S. dollars. Under some of the loan agreements and bonds outstanding, Arcelors subsidiaries are required to comply with certain financial covenants. As of June 30, 2006, Arcelors operating subsidiaries were in compliance with all such covenants. Arcelor Finance (a wholly owned subsidiary of Arcelor) has also guaranteed E114 million of debt of its operating subsidiaries and some of these guarantees have provisions whereby a default by one operating subsidiary could, under certain circumstances, lead to defaults at other operating subsidiaries. Any possible invocation of any of these guarantees could cause some or all of the other guaranteed debt to accelerate, creating severe liquidity pressures. Shareholders Equity Shareholders equity increased to 17,974 million at June 30, 2006 compared to 17,633 million at December 31, 2005, 14,728 million at June 30, 2005, 12,227 million at December 31, 2004 and 7,393 million at December 31, 2003. Cash Flows Six months ended June 30, 2006 For the six months ended June 30, 2006, cash flow from operating activities was 1,434 million principally reflecting profit after tax of E1,642 million for the period. Working capital increased by E516 million during the period, primarily due to an increase of trade receivables of 829 million due to seasonal and cyclical effects, partially offset by an increase of trade payables of E262 million and an increase of other payables of E257 million. Net cash used in investing activities was E5,317 million of which E4,021 million was used in connection with the acquisition of Dofasco and E1,053 million related to acquisitions of tangible and intangible assets (including 405 million as part of a capacity increase project for CST and 150 million for the relining of blast furnaces in certain European mills). 117

Net cash provided by financing activities was E2,408 million resulting from the E4 billion Term Loan Facility entered into in March 2006 of which 3,749 million was drawn down, reduced by the distribution of a gross dividend of 1,341 million. Six months ended June 30, 2005 Cash flow from operating activities was E2,004 million for the six months ended June 30, 2005 principally reflecting profit after tax of 2,243 million. Net cash used in investing activities was E894 million for the six months ended June 30, 2005 of which E728 million was used in connection with the acquisition of tangible and intangible assets. Net cash used in financing activities of E1,289 million was used in the payment of a gross dividend of 477 million and the servicing of borrowings of E824 million. Year ended December 31, 2005 For the year ended December 31, 2005, cash flow from operating activities was 4,464 million principally reflecting profit after tax of E4,278 million. Working capital increased by E615 million during the period, primarily due to an increase in inventories of E779 million resulting from higher average steel prices, partially offset by an increase of trade payables of E231 million. Net cash used in investing activities increased to E1,606 million of which a gain of approximately E656 million resulting from the disposal of subsidiary companies and financial assets was more than offset by the E2,070 million acquisition of tangible and intangible assets (including E480 million for an increase in capacity at CST and E300 million for the improvement of galvanizing lines, blast furnaces and a capacity increase at certain mills in France). For the year ended December 31, 2005, net cash used in financing activities was E2,389 million. The changes in cash flows used in financing activities primarily resulted from the repayment of borrowings of E2,086 million related to the Arcelor OCEANES (2017) and E260 million in connection with borrowings made by CST. Year ended December 31, 2004 Cash flow from operating activities was E3,205 million for the year ended December 31, 2004 principally reflecting profit after tax of E2,693 million. Working capital increased by 726 million during the period, primarily due to an increase of inventories E1,304 million, an increase in trade receivables of E504 million partially offset by an increase in trade payables of E649 million. For the year ended December 31, 2004, net cash used in investing activities was E1,382 million which primarily related to the E1,424 million acquisition of tangible and intangible assets, partially offset by E459 million of assets disposed of during the year including Thainox in Thailand and J&L Specialty Steel in the U.S. There was E354 million of net cash provided by financing activities for the year ended December 31, 2004 mainly coming from a capital increase of Arcelor of E1,136 million and proceeds from borrowings of E1,205 million partially offset by E1,578 repayment of borrowings (including E722 million for the servicing of loans of Arcelor Finance and E302 million for the early servicing of OCEANEs (2017)). Year ended December 31, 2003 For the year ended December 31, 2003, cash flow from operating activities was 2,502 million principally reflecting amortization and depreciation of E1,490 million, profit after tax of E401 million and a decrease in working capital of E641 million. Net cash used in investing activities was E1,109 million for the year ended December 31, 2003 primarily resulting from E1,327 million in acquisitions of tangible and intangible assets primarily made in the Flat Carbon Steel sector (E734 million), in the construction of the cold-rolled and galvanized steel coil processing unit at Vega do Sul in Brazil.

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Net cash used in financing activities was E686 million for the year ended December 31, 2003 primarily resulting from proceeds from borrowings of E1,891 million offset by repayment of borrowings of E2,444 million. Financial Instruments The Arcelor group uses financial instruments and derivatives to hedge its exposure to fluctuations in interest rates, currency exchange rates, the price of raw materials and energy and emission rights trading. The Arcelor group uses a variety of financial instruments in order to optimize its financial expenses and income. Interest rate swaps allow Arcelor to borrow long term at variable levels and to swap the rate of debt either from the start or during the term of the loan. Arcelor also uses futures contracts to hedge the rates paid on loans and in certain cases, the difference in the interest rates between two currencies. The Arcelor group uses forward purchases and sales of foreign currency and related derivatives to hedge foreign currency transactions for a majority of its subsidiaries. The Arcelor group is mainly exposed to variations in value arising from exchange rate fluctuations on raw materials, energy supply and freight costs. The general policy is to completely hedge exchange risks on transactions. At December 31, 2005 exchange rate derivatives qualifying as cash flow hedges under IAS 39 gave rise to a hedging reserve of E115 million. Arcelor uses financial instruments in order to reduce the volatility risk of certain raw materials and energy. Arcelor is exposed to risks on raw materials both via the purchase of its own raw materials and through sales contracts. At December 31, 2005, a hedging reserve of E12 million was integrated into shareholders equity resulting from financial instruments on raw materials and energy. Research and Development, Patents and Licenses, etc. Costs relating to research and development, patents and licenses were not significant as a percentage of sales. Research and development costs are fully expensed as incurred. Off-Balance Sheet Arrangements Arcelor has no unconsolidated special purpose financing or partnership entities that are likely to create material contingent obligations. In addition, Arcelor is not contingently liable for the debt of any of its affiliates or joint ventures except for certain guarantees on the debt of its subsidiaries as described above. Arcelor has various purchase commitments for materials, supplies and items of permanent investment incidental to the ordinary course of business. As of June 30, 2006, Arcelors management believed that these commitments were not in excess of current market prices and reflect normal business operations.

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BUSINESS The following disclosure relates to Mittal Steel Company N.V., which merged into its wholly-owned subsidiary ArcelorMittal on September 3, 2007, and its direct and indirect subsidiaries, including Arcelor. Since Arcelor forms a part of the ArcelorMittal group and, following the completion of this merger, will be the successor of ArcelorMittal, the (historical) narrative and financial disclosure in this prospectus is at certain places, including this section, based substantially or exclusively on the business and operations of Mittal Steel Company N.V. and its direct and indirect subsidiaries, including Arcelor. History and Development of ArcelorMittal and Mittal Steel ArcelorMittal Overview ArcelorMittal was incorporated on August 13, 2004 under the name Verger Investments S.A. It has been a wholly-owned subsidiary of Mittal Steel since April 24, 2007 and was renamed ArcelorMittal on April 26, 2007. ArcelorMittal has not conducted operations to date and will not have conducted any operations prior to the merger. Mittal Steel Overview Mittal Steel is the worlds largest and most global steel producer. In 2006, Mittal Steel increased its size significantly by acquiring Arcelor, which, at the time of its acquisition, was the worlds second-largest steel producer by production volume. On a pro forma basis after giving effect to its acquisition of Arcelor as if the acquisition occurred on January 1, 2006, Mittal Steel had sales of approximately $88.6 billion, steel shipments of approximately 110.5 million tonnes and an annual production capacity of approximately 138 million tonnes of crude steel for the year ended December 31, 2006. Mittal Steel is the largest steel producer in the Americas, Africa, and Europe, and it has a growing presence in Asia. Mittal Steel has steel-making operations in 26 countries on four continents, including 64 integrated, mini-mill and integrated mini-mill steel-making facilities. As of December 31, 2006, Mittal Steel had approximately 320,000 employees. Mittal Steel produces a broad range of high-quality finished and semi-finished carbon steel products. Specifically, Mittal Steel produces flat products, including sheet and plate, long products, including bars, rods and structural shapes, and stainless steel products. Mittal Steel sells its products primarily in local markets and through its centralized marketing organization to a diverse range of customers in approximately 187 countries, including the automotive, appliance, engineering, construction and machinery industries. Mittal Steel operates its business in six reportable operating segments: Flat Carbon Americas; Flat Carbon Europe; Long Carbon Americas and Europe; Asia, Africa and CIS; Stainless Steel; and Arcelor Mittal Steel Solutions and Services (trading and distribution). Mittal Steels steel-making operations have a high degree of geographic diversification. Approximately 35% of its steel is produced in the Americas, approximately 48% is produced in Europe and approximately 17% is produced in other countries, such as Kazakhstan, Algeria and South Africa. In addition, Mittal Steels sales are balanced both geographically and between developed and developing markets, which have different characteristics. Mittal Steel has access to high-quality and low-cost raw materials through its captive sources and longterm contracts. In 2006, on a pro forma basis after giving effect to the acquisition of Arcelor (assuming full production of iron ore at Dofasco for captive use), approximately 45% of Mittal Steels requirements of iron ore and approximately 9% of its coal requirements were supplied from its own mines or from long-term contracts at many of its operating units. Mittal Steel is actively developing its raw material self-sufficiency, including through recent initiatives to gain or expand access to iron ore sources in Liberia, Ukraine and Senegal. In addition, Mittal Steel is the worlds largest producer of direct reduced iron, or DRI, which is a scrap substitute used in the mini-mill steel-making process, with total production on a pro forma basis of approximately 9.3 million tonnes in 2006. Mittal Steels DRI production satisfies all of its mini-mill input requirements. Mittal Steel is one of the worlds largest producers of coke, a critical raw material derived from coal, and it satisfies approximately 76% of its coke needs. Mittal Steels facilities have good access to shipping facilities, including its eleven deep-water port facilities and its railway sidings.

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Mittal Steels pro forma net income for the twelve months ended December 31, 2006, after giving fullyear effect to its acquisition of Arcelor, was $8.0 billion, or $5.76 per share, as compared with pro forma net income of $8.3 billion, or $5.97 per share, for the year ended December 31, 2005. Mittal Steels net income for the year ended December 31, 2006 was $6.1 billion, or $5.29 per share, as compared with net income of $3.8 billion, or $4.80 per share, for the year ended December 31, 2005. As of December 31, 2006, Mittal Steel had shareholders equity of $50.2 billion, total debt of $26.6 billion and cash and cash equivalents, including restricted cash, of $6.1 billion. Mittal Steel is a successor to a business founded in 1989 by Mr. Lakshmi N. Mittal, the Chairman of the Board of Directors and Chief Executive Officer. It has experienced rapid and steady growth since then largely through the consistent and disciplined execution of a successful consolidation-based strategy. Mittal Steel made its first acquisition in 1989, leasing the Iron & Steel Company of Trinidad & Tobago. Some of the principal acquisitions since then include Thyssen Duisberg (Germany) in 1997, Inland Steel (USA) in 1998, Unimetal (France) in 1999, Sidex (Romania) and Annaba (Algeria) in 2001, Nova Hut (Czech Republic) in 2003, BH Steel (Bosnia), Balkan Steel (Macedonia), PHS (Poland) and Iscor (South Africa) in 2004, ISG (USA), Hunan Valin (China) and Kryvorizhstal (Ukraine) in 2005 and three Stelco Inc. subsidiaries (Canada) and Arcelor in 2006. Mittal Steel has proven expertise in acquiring companies and turning around under-performing assets and believes that it has successfully integrated its previous key acquisitions by implementing a best practice approach in operations and management to enhance profitability. Specifically, focused capital expenditure programs and implementation of improved management practices at acquired facilities have resulted in overall increases in production and shipment of steel products, reductions in production costs and increases in productivity. Mittal Steels aggregate capital expenditures for the years ended December 31, 2004, 2005 and 2006 were approximately $837 million, $1,181 million and $2,935 million, respectively. Mittal Steel has grown through joint ventures and the acquisition of numerous steel-making and other assets, which currently constitute its major operating subsidiaries. Mittal Steels principal joint ventures and acquisitions since the start of 2004, which affected its results during the 2004-2006 period, are summarized below. Investments and Acquisitions In March 2004, Mittal Steel acquired an approximately 69% interest in Mittal Steel Poland (which Mittal Steel has since increased to an approximately 74% interest) and made a commitment to purchase an additional 25% interest by December 2007. Mittal Steel Poland, located in Poland, is one of the largest steel producers in Central and Eastern Europe. In April 2004, Mittal Steel acquired an 80.9% interest in Mittal Steel Hunedoara, which Mittal Steel increased to an 86.6% interest as a result of a debt to equity swap. Mittal Steel Hunedoara, located in Romania, is a downstream steel products manufacturer. In April 2004, Mittal Steel entered into an arrangement with the Government of the Federation of Bosnia and Herzegovina, pursuant to which Mittal Steel acquired a 51% interest in the RZR Ljubija iron ore mines in Bosnia and Herzegovina. In May 2004, Mittal Steel acquired a 44.5% interest (which it has subsequently increased to an 88.5% interest) in Mittal Steel Skopje (CRM) a.d. Mittal Steel Skopje (CRM) a.d. is located near Skopje, Macedonia. In May 2004, Mittal Steel acquired a 56.8% interest (which it has subsequently increased to a 77.4% interest) in Mittal Steel Skopje (HRM) a.d. Mittal Steel Skopje (HRM) a.d. is located near Skopje, Macedonia. In December 2004, Mittal Steel acquired a 51% interest in Mittal Steel Zenica in Bosnia from the Government of the Federation of Bosnia and Herzegovina and from the Kuwait Consulting & Investment Co., which Mittal Steel increased to a 92% interest in December 2005. In conjunction with the acquisition of the controlling interest in Mittal Steel Zenica, Mittal Steel irrevocably committed to purchase the remaining 8% capital interest no later than 2009. Because these irrevocable commitments transfer operational and economic control of the remaining shares, it has been accounted for as an acquisition of the remaining shares, with a liability recorded equal to the fair value of the guaranteed payments. As of the acquisition date, Mittal Steels total effective ownership percentage in Mittal Steel Zenica was 100%. 121

In December 2004, Mittal Steel acquired LNM Holdings from Mittal Steel S..r.l., an entity wholly-owned by the Significant shareholder. Mittal Steel S..r.l. received 0.27931958 Mittal Steel class A common shares and 0.77068042 Mittal Steel class B common shares for each LNM Holdings common share, or, in the aggregate, 139,659,790 Mittal Steel class A common shares and 385,340,210 Mittal Steel class B common shares. On April 15, 2005, Mittal Steel acquired ISG (now part of Mittal Steel USA) for a purchase price of approximately $2.1 billion in cash and 60,891,883 class A common shares, representing an aggregate purchase price of $3.8 billion, including estimated transaction costs and the settlement of ISG stock options. Mittal Steel funded the cash portion of the acquisition through cash on hand and from drawings under the 2005 Credit Facility. As part of the acquisition, Mittal Steel assumed a collective bargaining agreement that reduced the number of job classifications from the over 30 found in historic labor agreements in the steel industry to five, eliminated previously restrictive work rules and made other productivity-enhancing changes. In September 2005, Mittal Steel announced that it had acquired a majority stake in Romportmet, a port facility located in Galati, Romania. Mittal Steel increased its shareholding in Romportmet to 90% through the acquisition of approximately 20 million shares. Mittal Steel purchased an additional 4.5% in December 2005. On September 28, 2005, Mittal Steel acquired 36.67% of Hunan Valin from Hunan Valin Iron & Steel Group Co., Ltd., or the Valin Group, for a total consideration of $338 million. Hunan Valin is listed on the Shenzhen Stock Exchange and is one of the ten largest steel-makers in China, with annual production capacity of 8.5 million tons. This investment provides Mittal Steel with an attractive platform for its future growth in the rapidly expanding Chinese market. As a result of publicly held outstanding convertible bonds being converted into shares, the shareholdings of both Mittal Steel and the Valin Group were diluted to 29.49% and 30.29%, respectively, as of January 20, 2006. Mittal Steel intends to make additional investments in the equity of Hunan Valin. On October 8, 2005, Mittal Steel announced that it had signed a Memorandum of Understanding with the Government of Jharkhand in India for the development of a mining and steel-making complex. Mittal Steel remains in discussion with the local authorities on this project. Following the successful completion of these discussions, Mittal Steel would undertake a Detailed Project Report (DPR) to identify the location of the steel plant, iron ore and coal mines and water sources. If the DPR is completed and found acceptable to both Mittal Steel and the Government of Jharkhand, Mittal Steel would enter into definitive agreements. On November 25, 2005, Mittal Steel acquired a 93% stake in Kryvorizhstal, the largest carbon steel long products producer in Ukraine, and associated iron ore and coal mining assets from the State Property Fund of Ukraine following a public auction, for a total consideration of approximately $4.9 billion. The transaction was financed from Mittal Steels own cash resources and credit lines. In 2006, Kryvorizhstal (since renamed Mittal Steel Kryviy Rih) had liquid steel production of 7.6 million tons and shipments of 6.9 million tonnes, and produced 17.6 million tonnes of iron ore. In 2006, Mittal Steel increased its interest in Mittal Steel Kryviy Rih to 93.77%. In November 2005, Mittal Steel purchased an additional 2% interest in Mittal Steel South Africa, raising Mittal Steels total shareholding in Mittal Steel South Africa to just over 52%. Mittal Steel South Africa is the largest steel producer in Africa. On February 1, 2006, Mittal Canada completed the acquisition of three subsidiaries of Stelco Inc. (Stelco). Mittal Canada acquired the Norambar Inc. and the Stelfil Lte plants located in Quebec and the Stelwire Ltd. plant located in Ontario for C$30 million (approximately $25 million) plus the assumption of C$28 million (approximately $23 million) in debt. The Norambar plant will complement Mittal Canadas facilities in Contrecur and Longueuil, boosting Mittal Canadas capacity by 625,000 tons of billets and 435,000 tons of bars and thereby strengthening its position as a major steel producer in Canada. Stelfil and Stelwire will add 250,000 tons of steel wire to Mittal Steels annual production capacity, providing a wider product mix to better meet its customers needs. On August 1, 2006, Mittal Steel acquired 91.9% of the share capital of Arcelor (on a fully diluted basis). Through subsequent transactions, Mittal Steel increased its ownership to 94.2% of the issued and outstanding shares of Arcelor and 19.9 million of Arcelors convertible bonds; the remaining convertible bonds were redeemed on December 15, 2006. 122

On September 25, 2006, the Comisso de Valores Mobiliros (the CVM), the Brazilian securities regulator, ruled that, as a result of Mittal Steels acquisition of Arcelor, Mittal Steel was required to carry out a public offer to acquire all the outstanding shares in Arcelor Brasil not owned by Arcelor or any other affiliate of Mittal Steel. Pursuant to the ruling, the value to be offered to Arcelor Brasils shareholders is to be determined on the basis of the value of the part of the overall consideration paid for Arcelor by Mittal Steel that was attributable to Arcelor Brasil. On April 17, 2007, the CVM granted registration of the offer, which opened on April 27, 2007 and closed on June 4, 2007. The consideration to be offered per Arcelor Brasil share was R$10.82 in cash and 0.3568 Mittal Steel class A common shares, subject to certain adjustments. On June 5, 2007, Mittal Steel publicly announced the results of the tender offer. In the aggregate, Mittal Steel acquired 29.5% of the total share capital and 89.7% of the free float of Arcelor Brasil as of June 5, 2007, thereby increasing its current 67.1% shareholding in Arcelor Brasil to 96.6%. Mittal Steel paid for the shares with $3.7 billion in cash and approximately 27.0 million Mittal Steel class A common shares, representing a total consideration of $5.4 billion. As required by Brazilian regulations, beginning on June 5, 2007 and ending at the latest on September 4, 2007, the remaining shareholders in Arcelor Brasil may sell their shares to Mittal Steel for R$53.89 per share (the same price offered to the Arcelor Brasil shareholders accepting the cash option of the offer) as adjusted pursuant to applicable law. As soon as Mittal Steel receives from the CVM confirmation that Arcelor Brasils registration as a listed company has been cancelled, Mittal Steel will cause a general Arcelor Brasil shareholders meeting to be held in order to approve the redemption of the remaining shares. The redemption price will be equal to R$53.89 per share. Mittal Steel therefore expects that it will subsequently acquire the 21.9 million Arcelor Brasil shares that remained outstanding after the closing of the tender offer, which are valued at approximately $0.6 billion. On December 11, 2006, the Government of Liberia and Mittal Steel announced that they had successfully concluded the review of the Mining Development Agreement that they had entered into in August 2005. The conclusion of the review was formalized in an amendment to the agreement that was signed on December 28, 2006. The amendment raises Mittal Steels investment to approximately $1 billion and confirms the parties commitment to the project. The agreement gives Mittal Steel access to iron ore deposits in Western Liberia, and Mittal Steels investment will cover development of the mines, related railway and port infrastructure and provides means for community development. On December 20, 2006, Mittal Steel announced the acquisition of Sicartsa, a Mexican integrated steel producer, from Grupo Villacero for an enterprise value of approximately $1.4 billion. Sicartsa, with production facilities in Mexico and Texas, is a fully-integrated producer of long steel, with an annual production capacity of approximately 2.7 million tonnes. Sicartsas wholly-owned mine is linked directly to the plant via a slurry pipeline. Mittal Steel expects its acquisition of Sicartsa to generate approximately $80 million of industrial synergies in addition to $50 million of commercial, procurement and selling, general and administrative synergies. Sicartsa is sharing its production site with Mittal Steel Lzaro Crdenas. Prior to its privatization in 1991, which led to its separation into two entities, the Lzaro Crdenas steelworks operated as a single integrated site producing both flat and long carbon products. Mittal Steel Lzaro Crdenas is Mexicos largest steel producer and slab exporter. The plant has a capacity of 4 million tonnes per year. On December 20, 2006, Mittal Steel also entered into a 50/50 commercial joint venture with Grupo Villacero to distribute and trade Mittal Steel long products in Mexico and in the southwest United States. On December 21, 2006, Mittal Steel announced that it had signed a Memorandum of Understanding with the Government of the State of Orissa in India to set up a steel-making operation in the Keonijhar District. Mittal Steel intends to undertake a DPR based on the needs of the steel plant. This would include captive mining facilities, captive power supply, water supply infrastructure and other facilities as required, including setting up townships for its employees. Should the DPR lead to implementation, it is currently anticipated that the project would entail an investment of approximately Rs 40,000 crores (approximately US$9 billion). The intention is to build an integrated steel plant with a total annual capacity of 12 million tonnes. The project would be developed in two phases of 6 million tonnes each. It is expected that the first phase would be completed within 48 months from the date of submission of the DPR and the second phase within a further 54 months after the completion of the first phase.

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Divestments On January 26, 2006, Mittal Steel and ThyssenKrupp AG entered into a letter agreement which provided that if Mittal Steel was successful in its tender offer for Arcelor and was able to exert management control with the ability to sell Dofasco, Mittal Steel would cause Arcelor to sell Dofasco to ThyssenKrupp. During March and April 2006, Arcelor acquired 100% of the shares of Dofasco. On April 3, 2006, Arcelor transferred 89% of the shares of Dofasco to the Strategic Steel Stichting (S3), an independent foundation under Dutch law, thereby removing Arcelors ability to sell or otherwise dispose of such shares without S3s consent. On June 25, 2006, Mittal Steel and Arcelor agreed to the terms of a recommended offer, pursuant to which Mittal Steel has acquired approximately 94% of the share capital of Arcelor. On August 1, 2006, the U.S. Department of Justice (the DOJ) announced that it had concluded that the acquisition by Mittal Steel of Arcelor was likely to lessen substantially competition in the market for tin mill products in the Eastern United States and filed in the U.S. District Court in Washington, D.C. a consent decree that Mittal Steel had previously signed with the DOJ on May 11, 2006. The consent decree required the divestiture of Dofasco or, if Mittal Steel were unable to sell Dofasco, the divestiture of either Mittal Steels Sparrows Point facility in Maryland or Mittal Steels Weirton facility in West Virginia. The consent decree provided that the DOJ in its sole discretion would choose which plant would be sold. The consent decree also included a Hold Separate Stipulation and Order, which provided that Dofasco would be maintained as a separate business, independent of the other businesses of Mittal Steel and Arcelor, until Dofasco was divested or the DOJ made its selection of the alternative plant to be divested. After the consent decree was filed in court, the boards of both Mittal Steel and Arcelor requested the directors of S3 to dissolve the foundation in order to allow the sale of Dofasco. On November 10, 2006, however, S3s directors unanimously decided not to dissolve the foundation and to retain the Dofasco shares, thereby continuing to prevent their sale. On December 22, 2006, ThyssenKrupp initiated summary legal proceedings against Mittal Steel in the District Court in Rotterdam alleging that Mittal Steel had breached the letter agreement by failing to cause Arcelor to initiate litigation against S3 to force S3 to transfer the Dofasco shares to Arcelor so as to permit their sale to ThyssenKrupp. The suit sought, among other things, a court order directing Mittal Steel to cause Arcelor to commence summary proceedings in the Dutch courts to force S3 to return the Dofasco shares to Arcelor. On January 23, 2007, the District Court in Rotterdam denied ThyssenKrupps petition for an order. The time for ThyssenKrupp to appeal the Rotterdam District Courts order has expired.

Recent Developments In January 2007, Mittal Steel sold Travi e Profilati di Pallanzeno (TPP) and its 49.9% stake in San Zeno Acciai to Duferco for an enterprise value of 117 million. Such divestment was pursuant to a commitment made to the European Commission in connection with Mittal Steels acquisition of Arcelor. In 2006, TPP generated sales of approximately 190 million with an annual production of approximately 500,000 tonnes of long carbon steel products. On January 19, 2007, Mittal Steel announced that it had agreed to sell Huta Bankowa Splka z.o.o. (Huta Bankowa) to Alchemia SA Capital Group for an enterprise value of approximately 37 million (approximately $48 million). Such divestment was pursuant to a commitment made to the European Commission in connection with Mittal Steels acquisition of Arcelor. Huta Bankowa, a wholly-owned subsidiary of ArcelorMittal, is located in Dabrowa Gornicza in southern Poland. The transaction is expected to close in 2007, subject to European Commission approval and applicable antitrust clearances. On February 14, 2007, Mittal Steel signed a joint venture agreement with the Bin Jarallah Group of companies for the design and construction of a seamless tube mill in Saudi Arabia. This facility will be located in Jubail Industrial City, north of Al Jubail on the Persian Gulf. The mill will have a capacity of 500,000 tonnes per year. Construction is planned to commence at the end of the first quarter of 2008 and to be completed by the fourth quarter of 2009. ArcelorMittal (as successor to Mittal Steel) will hold a 51% interest in the company established for this project, with the Bin Jarallah Group holding the remaining 49%. On February 23, 2007, Mittal Steel announced that it had signed agreements with the State of Senegal in West Africa to develop iron ore mines in the Faleme region of South East Senegal. The project is expected to require an investment of approximately $2.2 billion. The project is an integrated mining project that will encompass the development of the mine, the building of a new port near Dakar and the development of 124

approximately 750 kilometers of rail infrastructure to link the mine with the port. Mittal Steel expects the mine to produce approximately 750 million tonnes of iron ore. Mittal Steel expects to commence production of the mines in 2011. The agreements will become effective upon the fulfillment of certain conditions by the State of Senegal. On March 2, 2007, Mittal Steel was included in the AEX index and the FTSE4Good Index Europe indexes. On September 18, 2006, Mittal Steel was included in the CAC 40 index. On March 2, 2007, Mittal Steel announced that 385,340,210 Mittal Steel class B common shares owned by Mittal Investments S..r.l. had been converted into 385,340,210 Mittal Steel class A common shares. This conversion had no impact on the total number of shares (1,392,308,490 shares, consisting of 1,320,158,490 class A common shares and 72,150,000 class B common shares). On March 5, 2007, Mittal Steel sold Stahlwerk Thringen GmbH (SWT) to Grupo Alfonso Gallardo for an enterprise value of 591 million (approximately $768 million). Such divestment was pursuant to a commitment made to the European Commission in connection with Mittal Steels acquisition of Arcelor. SWT, which was a wholly-owned subsidiary of Mittal Steel, is located at Unterwellenborn, Thringen, Germany. In 2005, SWTs sales were approximately 400 million. SWT employs approximately 700 people and produces steel sections of up to 550 millimeters in width used in building and construction. On March 16, 2007, Mittal Steel announced that it was investing in a new steel service center in Krakow, Poland. Incorporating two de-coiling lines and a slitting line, this facility will have a processing capacity of 450,000 tons per year and will strengthen Mittal Steels network of steel service centers in Poland. Operation is expected to commence in the fall of 2007. On March 16, 2007, Mittal Steel announced that it had signed a definitive agreement with Noble International, Ltd. (Noble) for the combination of their laser-welded tailored blanks businesses. In exchange for its laser-welded blanks business in western and eastern Europe, China, India and the United States, Mittal Steel will receive $300 million from Noble, including $131,250,000 in a combination of cash, a Noble note and the assumption of certain financial obligations, and 9,375,000 shares of Noble common stock. Mittal Steel and Noble are also seeking to include in the transaction the tailored blanks business of Powerlasers, a unit of Dofasco, for additional consideration of approximately $50 million, subject to the approval of the trustees of Dofasco. Upon completion of the transaction, which is expected to occur in June 2007, Mittal Steel will become the largest shareholder of Noble, with approximately 40% of its issued and outstanding common shares and four of the nine seats on its Board of Directors. On June 5, 2007, Mittal Steel publicly announced the results of its tender offer for the shares it did not hold in Arcelor Brasil. In the aggregate, Mittal Steel acquired 29.5% of the total share capital and 89.7% of the free float of Arcelor Brasil as of June 5, 2007, thereby increasing its then 67.1% shareholding in Arcelor Brasil to 96.6%. Mittal Steel paid for the shares with $3.7 billion in cash and approximately 27.0 million Mittal Steel class A common shares, representing a total consideration of $5.4 billion. On June 15, 2007, Arcelor Brasil received confirmation from the CVM that its registration as a listed company had been cancelled and on June 21, 2007, Arcelor Brasil received confirmation from BOVESPA (the stock exchange of So Paulo, Brazil) that its securities could no longer be traded on the exchange. On July 10, 2007, ArcelorMittal announced the signing of a new European Works Council (EWC) agreement. This integrated ArcelorMittal EWC will replace the previous EWCs that existed in each of Arcelor and Mittal Steel. On July 19, 2007, ArcelorMittal announced that it had been formally granted concessions by the Republic of Senegal to develop mining, transportation and logistics activities in the Faleme region of South East Senegal. On July 20, 2007, ArcelorMittal, announced that it had reached a preliminary agreement to acquire two steel tube businesses from Vallourec. Vallourec Prcision Soudage (VPS) produces about 100,000 tonnes of welded steel tubes for application in the automotive industry from two sites in France. Also based in France, Vallourec Composants Automobiles Vitry (VCAV) specialises in the design and manufacturing of tubular components for the automotive industry. Combining them with ArcelorMittal's existing pipes and tubes business, will enable an even more complete product offering range to automotive customers.

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On July 26, 2007, ArcelorMittal announced that it had reached an agreement with the Polish Government to acquire the outstanding 25.2% shares of ArcelorMittal Poland currently held by the Polish State and Treasury Ministry. ArcelorMittal has agreed to acquire each share at a price of Polish zloty (PLN) 6.5, valuing the remaining 25.2% of shares at approximately PLN 436 million (approx. $157 million). As of August 8, 2007, Mittal Steel had paid an additional $434 million in cash for additional shares of Arcelor Brasil. These purchases were made pursuant to the sell-out procedures under applicable Brazilian regulations that required that the remaining Arcelor Brasil shareholders have the opportunity to sell their shares to Mittal Steel for R$53.89 per share in cash (the same price offered to Arcelor Brasil shareholders in the all-cash option of the tender offer) plus an interest component from June 8, the date of the settlement of the all-cash option of the tender offer, until settlement of such sales. On August 8, 2007, a general Arcelor Brasil shareholders meeting was held which approved the redemption by Arcelor Brasil of the remaining shares of Arcelor Brasil not held by Mittal Steel. On August 17, 2007, Arcelor Brasil paid a total of $132.7 million in cash to the remaining shareholders and redeemed all the remaining shares of Arcelor Brasil for R$53.89 per share plus an interest component for the period from June 8, 2007, the date of the settlement of the all-cash option of the tender offer, until August 17, 2007, the date the funds were made available to the remaining shareholders. On August 20, 2007, Mittal Steel Brasil Participaes S.A., a wholly owned subsidiary of Mittal Steel that was incorporated in order to acquire the Arcelor Brasil shares in the context of the tender offer, was merged with and into Arcelor Brasil S.A. Following this merger, on August 31, 2007, Arcelor Brasil was merged into Belgo Siderurgia S.A., which was then renamed ArcelorMittal Brasil S.A. The combined entity is now 100% owned by ArcelorMittal subsidiaries.

Business Overview Competitive Strengths Mittal Steel believes that the following factors contribute to its success in the global steel industry: Scale and scope of operations. Mittal Steel is the worlds largest steel producer. It has an annual production capacity of approximately 138 million tonnes of crude steel for the year ended December 31, 2006, and in 2006 it shipped approximately 110.5 million tonnes of steel on a pro forma basis. It is the largest producer of steel in the Americas, Africa and Europe, and it has a growing presence in Asia. In 2006, Mittal Steel significantly increased its size by acquiring Arcelor, which was the worlds second-largest steel producer by production volume at that time. Mittal Steel has operations in each country party to the North American Free Trade Agreement, or NAFTA, and in many member states of the European Union, which facilitates the free trade of goods between such countries. In addition, certain of its operating units have access to markets experiencing above average growth in steel consumption. The combination of Mittal Steels local, regional and international distribution provides it with a global manufacturing and marketing presence, and it uses its scale and global presence to achieve significant cost savings and operational efficiencies in production, procurement and marketing. Integrated business model focused on low-cost production. Mittal Steel believes that its access to relatively low-cost raw materials, efficient use of steel-making facilities, global procurement strategy and implementation of overall company-wide knowledge management practices make it one of the lowest cost steel producers in each of the regions in which it operates. Many of Mittal Steels operating units are strategically well located to access low-cost raw materials, such as iron ore in Kazakhstan, Mexico, Brazil and Ukraine, and natural gas in Trinidad and Tobago. Mittal Steels operations also have strong vertical integration as a result of its captive sources of raw materials, such as iron ore, coal and coke, and its access to owned infrastructure, such as deep-water port facilities and railway sidings. Mittal Steel believes that its degree of raw material integration provides it with a competitive advantage through its ability to better monitor the quality of its raw materials and through reduced exposure to the volatility of raw material spot market prices. Mittal Steels downstream integration through AM3S enables it to service its markets and customers more directly. In addition, Mittal Steel seeks to maximize operational efficiencies by implementing strict cost management and targeting capital investments to achieve lower costs of production at each of its facilities. As a result, Mittal Steel believes that it is well positioned to manage the cyclicality of the steel industry. Diverse product portfolio and strong customer relationships. Mittal Steel produces a diversified portfolio of products to meet a wide range of customer needs across all steel consuming industries, including the automotive, appliance, engineering, construction and machinery industries. Mittal Steel sells its products in local markets and through its centralized marketing organization to customers in approximately 187 countries. Mittal Steel believes that its diversified product offering enables it to build strong relationships with its 126

customers, which include many of the worlds major automobile and appliance manufacturers. Mittal Steels research and development facilities in North America and Europe help to strengthen its relationship with its customers as it works with them to meet their evolving product needs. Proven expertise in steel acquisitions and turnarounds. Mittal Steels senior management team has proven expertise in successfully acquiring and integrating operations and turning around underperforming assets within tight timeframes. Mittal Steel utilizes a disciplined approach to investing and has teams from different business units across the company responsible for evaluating any new asset, conducting due diligence and monitoring integration and post-acquisition performance. Since its inception in 1989, Mittal Steel has grown through a series of acquisitions and by improving the operating performance and financial management at the facilities that it has acquired. In particular, Mittal Steel seeks to improve acquired businesses by eliminating operational bottlenecks, addressing any historical under-investments and increasing acquired facilities capability to produce higher quality steel. Mittal Steel introduces focused capital expenditure programs, implements company-wide best practices, balances working capital, ensures adequate management resources and introduces safety and environmental improvements at acquired facilities. Mittal Steel believes that these operating and financial measures have reduced conversion costs of production, increased productivity and improved the quality of steel produced at these facilities. Business improvement through company-wide knowledge management program. Knowledge sharing and implementing best practices is an integral part of Mittal Steels management philosophy. Through its global Knowledge Management Program (KMP), Mittal Steel shares, develops and utilizes its knowledge and experience across its facilities to accelerate improvement in business performance. The KMP covers all key functional areas, such as procurement, marketing and health and safety, as well as the main steps in steel production and processing. The KMP includes ongoing detailed benchmarking, regular technical meetings and information-sharing at the corporate, regional and operating levels and inter-plant expert and operational support to drive performance improvement. The KMP enables each business unit to benefit from the scale and reach of Mittal Steels global presence and to have access to the best practices and experience within the company. Mittal Steel believes that the KMP provides a differentiating advantage to its business performance by continuously contributing to reduced procurement and conversion costs and enhanced productivity and profitability. Research and Development. Mittal Steels research and development facilities in Europe and North America help to strengthen its relationship with its customers as it works with them to meet their evolving product needs and developing new steel solutions. Mittal Steels research and development centers support its business units in process improvement and innovation to produce the best quality steel at the lowest cost and environmental impact. Mittal Steels expanded size has helped it to increase and strengthen the number of research partnerships in which it is involved with world-class scientific and technical universities. Common research work on projects dealing with automotive steel and manufacturing processes through the Global Strategic Alliance with Nippon Steel has continued. Strong financial profile. Mittal Steel believes that its strong financial position and cash flow generation, as illustrated by its corporate investment grade credit ratings, enable it to take advantage of acquisition and investment opportunities. Mittal Steel currently has corporate investment grade credit ratings of BBB from Standard & Poors, a division of The McGraw-Hill Companies, Inc., and from Fitch Ratings, and a senior implied rating of Baa3 from Moodys Investors Service Ltd. As of December 31, 2006, Mittal Steel had cash and cash equivalents (including short-term investments and restricted cash) of $6.1 billion and total debt of $26.6 billion. In addition, including its operating subsidiaries, Mittal Steel had available borrowing capacity of $9.0 billion at December 31, 2006. Experienced management team led by Mittal Steels founder, Mr. Lakshmi N. Mittal. Mittal Steel is led by Mr. Lakshmi N. Mittal, Chairman of the Board of Directors and Chief Executive Officer and founder of the Mittal Steel, who is supported by a strong and experienced central and local management team. Business Strategy Mittal Steels success has been built on a consistent strategy that emphasizes size and scale, vertical integration, product diversity, continuous growth in higher value products and a strong customer focus. ArcelorMittal intends to continue to play a leading role in the consolidation of the global steel industry and to be the global leader in the steel industry. Key elements of Mittal Steels and ArcelorMittals strategy are to:

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Consolidate our leadership position in high quality products into a global customer platform. Mittal Steel has established a reputation for producing high quality steel products for the most demanding applications. ArcelorMittal intends to continue to partner with its key customers in research and development activities and in assisting them in their product design initiatives to ensure that it remains a supplier of preference for them. Customers for high quality steel products, which today are primarily based in mature economies, are becoming increasingly global and expanding their capacities in developing countries to serve rising local demand. These globalizing customers value a suppliers ability to deliver worldwide the same products of consistent quality. We will continue to invest in our assets and capabilities in emerging economies in order to meet the needs of these markets. In regions where we have a relatively limited presence (such as China and India), we will look at acquisition opportunities or greenfield possibilities to complete our global footprint. Utilize our existing geographic diversification and strong position in high quality products in mature economies to capture future growth in Brazil, Russia, India, China, Eastern Europe and Turkey (BRICET) countries. Worldwide steel demand is driven by growth in developing economies, namely BRICET countries. Mittal Steels acquisition strategy over recent years has given it a leading position in Africa, Central and Eastern Europe, South America and Central Asia to benefit from this growth. Mittal Steel is also building its presence in China and India. As these economies develop, local customers will require increasingly advanced steel products as market needs change. ArcelorMittal will continue to transfer capability for higher quality products from its operations in developed markets to its operations in developing markets to enable it to grow with these changing needs. Maintain a high degree of product diversification. A global steel producer must be able to meet the needs of different markets. Steel consumption and product requirements clearly differ between mature economy markets and developing economy markets. Steel consumption in mature economies is weighted towards flat products and a higher value-added mix, while developing markets utilize a higher proportion of long products and commodity grades. To meet these diverse needs, we plan to maintain a high degree of product diversification. We also plan to seek opportunities to increase the proportion of our product mix consisting of higher value added products. Maintaining strong, long-term customer relationships. ArcelorMittal intends to continue to focus on the development and maintenance of long-term relationships with Mittal Steels customers. Mittal Steel has entered into long-term framework agreements with key customers, in particular in the flat steel segment. For example, Mittal Steel provides just-in-time inventory management for its leading U.S. and European, based automotive industry clients. With more than 25% of the worldwide market share of flat steel sheets for the automotive industry, Mittal Steel is a strategic partner for the major original equipment manufacturers (OEMs) and develops a capability to build long-term relationships with them based on long-term contracts, early vendor involvement, contributions to global OEM platforms and common value-creation programs. The global industrial footprint of Mittal Steel, combined with a capability to deploy the same standards on different continents, allows Mittal Steel to assist the major OEMs in their international developments. Achieve cost leadership and operational excellence across the product range. Cost leadership is essential in the steel industry. To maintain this, we intend to utilize our scale and global presence to achieve greater production efficiencies, operational synergies and cost savings across our business. Specifically, we plan to: Develop and maintain a cost-competitive supply base. Our size and geographic scope give us access to local, regional and global suppliers and enable us to continue to develop and secure high quality and cost competitive supplies. We plan to pursue these opportunities by adopting global and regional commercial procurement strategies and by executing these strategies on either a local or centralized basis as appropriate. Maximize the operational efficiency and effectiveness of our plants. We plan to continue to invest in technology and process development in order to lower production costs and improve performance. We utilize and adapt a wide range of steel-making technologies, depending upon local conditions, for raw material and energy supplies. In addition, we seek to protect and enhance our competitiveness through our knowledge management and continuous improvement programs and by looking for opportunities for facility optimization and specialization on a product basis. 128

Practice capital management discipline. The steel industry is capital intensive. Therefore, we promote capital management discipline to improve our capital efficiency. We plan to continue to focus our capital expenditure programs on eliminating production bottlenecks and improving product capabilities to meet the requirements for higher value-added products. Where appropriate, we utilize our in-house design, engineering and fabrication capabilities to reduce the capital cost of projects. Continue to invest in low-cost semi-finished capacity. Mittal Steel has some of the most costcompetitive steel-making operations in the world at its facilities in South Africa, Brazil, Ukraine and Kazakhstan. We intend to increase capacity at these facilities, which can advantageously supply slabs and other semi-finished products to downstream facilities in North America and Europe.

Maintain a high level of vertical integration to hedge against price fluctuations of raw materials. Upstream integration allows steel companies to hedge against supply-side constraints and price fluctuations for key raw materials. We intend to increase selectively our access to and ownership of low-cost raw material supplies, particularly in locations adjacent to or accessible from our steel plant operations. Enhance our research and development leadership to drive innovation and growth. We intend to continue to invest in our research and development capabilities to ensure we can develop and deliver the highend products that our key customers require. As we grow, the investment in our research and development activities becomes leveraged over a larger asset base. This should allow further investment in order to accelerate innovation. As part of our research and development strategy, we intend to continue to promote and develop our relationships with public research institutes and universities. Own and manage distribution channels in key geographic regions. Downstream integration is a key element of our strategy to build a global customer franchise. In high-value products, downstream integration allows steel companies to be closer to the customer and capture a greater share of value-added activities. As our key customers globalize, we intend to invest in value-added downstream operations, such as steel service centers and downstream operations, such as our building and construction support unit services serving the construction industry. In addition, we intend to continue to develop our distribution network in selected geographic regions. These downstream and distribution activities should allow us to benefit from better market intelligence and better manage inventories in the supply chain to reduce volatility and improve working capital management. Build a world-class organization to implement the strategy. We intend to build the worlds most admired steel institution with leading management, social, human resources and corporate sustainability policies. In doing so, we plan to attract, develop and retain the best possible management talent. We intend to maintain an open and performance-oriented culture designed to encourage managers at all levels to act like entrepreneurs, to assume accountability, to make decisions in the best interest of ArcelorMittal and to support one another in all efforts to improve continuously. Business Overview Mittal Steel has a high degree of geographic diversification relative to other steel companies. During 2006, Mittal Steel shipped its products to customers in approximately 187 countries, with its largest markets in the Flat Carbon Europe and Flat Carbon Americas segments. Mittal Steel conducts its business through its operating subsidiaries. Many of these operations are strategically located with access to on-site deep water port facilities, which allow for cost-efficient import of raw materials and export of steel products. As of December 31, 2006, Mittal Steel had approximately 320,000 employees. Prior to its acquisition of Arcelor in August 2006, Mittal Steel reported the results of its operations based on their geographic location (America, Europe and Asia/Africa). Following the acquisition, Mittal Steel restructured its operations to align them with the structure in place at Arcelor and the new management structure. Mittal Steel now reports its operations in six operating segments: Flat Carbon Americas, Flat Carbon Europe, Long Carbon Americas and Europe, Asia, Africa and CIS (AACIS), Stainless Steel and AM3S (trading and distribution).

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The following table sets forth selected financial data by operating segment:
Flat Carbon Americas Flat Carbon Europe Asia, Africa and CIS Stainless Steel

(Amounts in $ millions)

Long

AM3S

Consolidate

Year ended December 31, 2004 Sales ................................................ Operating income............................ Depreciation and amortization ........ Capital expenditures........................ Total assets at December 31, 2004.. Year ended December 31, 2005 Sales ................................................ Operating income............................ Depreciation and amortization ........ Capital expenditures........................ Total assets at December 31, 2005.. Year ended December 31, 2006 ...... Sales ................................................ Operating income............................ Depreciation and amortization ........ Capital expenditures........................ Total assets at December 31, 2006..

$5,438 1,327 131 94 3,778 11,241 1,289 283 304 11,180 17,585 1,904 658 759 17,160

$3,608 866 135 144 3,091 3,676 367 174 190 3,028 14,366 959 618 818 26,586

$7,894 1,423 178 154 6,081 7,676 641 226 206 10,283 13,120 1,805 385 577 21,221

$7,544 2,022 214 478 7,260 9,909 2,335 318 479 13,158 14,388 2,584 447 537 15,947

3,261 363 89 61 4,775

5,221 174 39 62 3,995

$20,612 5,514 734 837 21,693 28,132 4,729 1,113 1,181 33,867 58,870 7,499 2,296 2,935 112,166

The following table sets forth selected financial data by geographic region:
(Amounts in $ millions) Americas Europe Asia & Africa Consolidated

Year ended December 31, 2004 Sales .............................................................................................. Operating income.......................................................................... Depreciation and amortization ...................................................... Capital expenditures...................................................................... Total assets at December 31, 2004................................................ Year ended December 31, 2005 Sales .............................................................................................. Operating income.......................................................................... Depreciation and amortization ...................................................... Capital expenditures...................................................................... Total assets at December 31, 2005................................................ Year ended December 31, 2006 Sales .............................................................................................. Operating income.......................................................................... Depreciation and amortization ...................................................... Capital expenditures...................................................................... Total assets at December 31, 2006................................................

$6,560 1,583 185 130 7,870 12,467 1,676 341 335 24,204 22,798 2,612 808 1,375 39,482

$9,905 1,965 297 289 38,106 9,762 933 312 391 46,092 29,156 3,141 1,174 1,588 142,802

$6,061 2,035 191 498 9,327 7,683 2,219 273 455 9,738 9,987 1,664 310 369 13,703

$20,612 5,514 734 837 21,693 28,132 4,729 1,113 1,181 33,867 58,870 7,499 2,296 2,935 112,166

See also Note 24 to the Mittal Steel Consolidated Financial Statements. Products Mittal Steel has a high degree of product diversification relative to other steel companies. Its plants manufacture a broad range of finished and semi-finished steel products of different specifications, including many difficult and technically sophisticated products that it sells to demanding customers for use in high-end applications.

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Mittal Steels principal products include: direct reduced iron; semi-finished flat products such as slabs; finished flat products such as plates, hot- and cold-rolled sheets and hot-dipped and electrogalvanized sheets and tinplate; semi-finished long products such as blooms and billets; finished long products such as bars, wire-rods, structural sections, rails and wire-products; seamless and welded pipes and tubes; and stainless steel products.

Steel-making Process Historically, primary steel producers have been divided into integrated and mini-mill producers. Over the past few decades, a third type of steel producer has emerged that combines the strengths of both the integrated and the mini-mill processes. These producers are referred to as integrated mini-mill producers. Integrated Steel-making In integrated steel production, coal is converted to coke in a coke oven, and then combined in a blast furnace with iron ore and limestone to produce pig iron, which is subsequently combined with scrap in a converter, which is generally a basic oxygen or tandem furnace, to produce raw or liquid steel. Once produced, the liquid steel is metallurgically refined and then transported to a continuous caster for casting into a slab, which is then further shaped or rolled into its final form. Various finishing or coating processes may follow this casting and rolling. Recent modernization efforts by integrated steel producers have focused on cutting costs through eliminating unnecessary production steps, reducing manning levels through automation, and decreasing waste generated by the process. In recent years, integrated steel production has declined as a proportion of total steel production due to the high costs of building, operating and maintaining integrated steel operations, including lost production time associated with periodic blast furnace relinings. This reduction in integrated production capacity has increased the market share of the remaining producers of the highest value-added products that require the cleanest steel. Mini-Mills A mini-mill employs an electric arc furnace to directly melt scrap and/or scrap substitutes such as direct reduced iron, thus entirely replacing all of the steps up to and including the energy-intensive blast furnace. A mini-mill incorporates the melt shop, ladle metallurgical station, casting, and rolling into a unified continuous flow. Mini-mills are generally characterized by lower costs of production and higher productivity than integrated steel-makers. These attributes are due in part to the lower capital costs and lower operating costs resulting from the streamlined melting process and more efficient plant layouts of mini-mills. The quality of steel produced by mini-mills is primarily limited by the quality of the metallic raw materials used in liquid steelmaking, which in turn is affected by the limited availability of high-quality scrap or virgin ore-based metallics for use in the electric arc furnaces. Mini-mills are substantially dependent on scrap, which in recent years has been characterized by price volatility, generally rising prices and limited availability from time to time. Integrated Mini-Mills Integrated mini-mills are mini-mills that produce their own metallic raw materials consisting of highquality scrap substitutes, such as direct reduced iron. Unlike most mini-mills, integrated mini-mills are able to produce steel with the quality of an integrated producer, since scrap substitutes, such as direct reduced iron, are derived from virgin iron ore, which has fewer impurities. The internal production of scrap substitutes as the primary metallic feedstock provides integrated mini-mills with a competitive advantage over traditional scrapbased mini-mills by insulating the integrated mini-mills from their dependence on scrap, which is generally more expensive and has been subject to price volatility, generally rising prices and limited availability from time to time. The internal production of metallic feedstock also enables integrated mini-mills to reduce handling and 131

transportation costs. The high percentage use of scrap substitutes such as direct reduced iron also allows the integrated mini-mills to take advantage of periods of low scrap prices by procuring a wide variety of lower-cost scrap grades, which can be blended with the higher-purity direct reduced iron charge. Because the production of direct reduced iron involves the use of significant amounts of natural gas, integrated mini-mills are more sensitive to the price of natural gas than are mini-mills using scrap. Key Products Steel-makers primarily produce three types of steel products, flat products and long products and stainless steel. Flat products, such as sheet or plate, are produced from slabs. Long products, such as bars, rods and structural shapes, are rolled from blooms and/or billets. Stainless steel products include austenitic stainless, ferritic stainless and martensitic stainless. Flat Products Slab. A slab is a semi-finished steel product obtained by the continuous casting of steel or rolling ingots on a rolling mill and cutting them into various lengths. A slab has a rectangular cross-section and is used as a starting material in the production process of other flat products (for example, hot-rolled sheet). Hot-Rolled Sheet. Hot-rolled sheet is minimally processed steel that is used in the manufacture of various non-surface critical applications, such as automobile suspension arms, frames, wheels, and other unexposed parts in auto and truck bodies, agricultural equipment, construction products, machinery, tubing, pipe and guard rails. All flat-rolled steel sheet is initially hot-rolled, a process that consists of passing a cast slab through a multi-stand rolling mill to reduce its thickness to less than 12 millimeters. Flat-rolled steel sheet that has been wound is referred to as coiled. Cold-Rolled Sheet. Cold-rolled sheet is hot-rolled sheet that has been further processed through a pickle line, which is an acid bath that removes scaling from steels surface, and then successively passed through a rolling mill without reheating until the desired gauge, or thickness, and other physical properties have been achieved. Cold-rolling reduces gauge and hardens the steel and, when further processed through an annealing furnace and a temper mill, improves uniformity, ductility and formability. Cold-rolling can also impart various surface finishes and textures. Cold-rolled steel is used in applications that demand higher surface quality or finish, such as exposed automobile and appliance panels. As a result, the prices of cold-rolled sheet are higher than the prices of hot-rolled sheet. Typically, cold-rolled sheet is coated or painted prior to sale to an end-user. Coated Sheet. Coated sheet is generally cold-rolled steel that has been coated with zinc, aluminum or a combination thereof to render it corrosion-resistant and to improve its paintability. Hot-dipped galvanized, electro-galvanized and aluminized products are types of coated sheet. These are also the highest value-added sheet products because they require the greatest degree of processing and tend to have the strictest quality requirements. Coated sheet is used for many applications, often where exposed to the elements, such as automobile exteriors, major household appliances, roofing and siding, heating and air conditioning equipment, air ducts and switch boxes, as well as in certain packaging applications, such as food containers. Plates. Plates are produced by hot-rolling either reheated slabs or ingots. The principal end uses for plates include various structural products such as for bridge construction, storage vessels, tanks, shipbuilding, line pipe, industrial machinery and equipment. Tinplate. Tinplate is a light-gauge, cold-rolled, low-carbon steel usually coated with a micro-thin layer of tin. Tinplate is usually between 0.14 millimeters and 0.84 millimeters thick and offers particular advantages for packaging, such as strength, workability, corrosion resistance, weldability and ease in decoration. Food and general line steel containers are made from tinplate. Long Products Billets/Blooms. Billets and blooms are semi-finished steel products. Billets generally have square cross-sections up to 155 millimeters by 155 millimeters, and blooms generally have square cross-sections greater than 155 millimeters by 155 millimeters. These products are either continuously cast or rolled from ingots and are used for further processing by rolling to produce finished products like bars and wire rod sections.

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Bars. Bars are long steel products that are rolled from billets. Merchant bar and reinforcing bar (rebar) are two common categories of bars. Merchant bars include rounds, flats, angles, squares, and channels that are used by fabricators to manufacture a wide variety of products such as furniture, stair railings, and farm equipment. Rebar is used to strengthen concrete in highways, bridges and buildings. Special Bar Quality (SBQ) Steel. SBQ steel is the highest quality steel long product and is typically used in safety-critical applications by manufacturers of engineered products. SBQ steel must meet specific applications needs for strength, toughness, fatigue life and other engineering parameters. SBQ steel is the only bar product that typically requires customer qualification and is generally sold under contract to long-term customers. End-markets are principally the automotive, heavy truck and agricultural sectors, and products made with SBQ steel include axles, crankshafts, transmission gears, bearings and seamless tubes. Wire Rods. Wire rod is ring-shaped coiled steel with diameters ranging from 5.5 to 42 millimeters. Wire rod is used in the automotive, construction, welding and engineering sectors. Wire Products. Wire products include a broad range of products produced by cold reducing wire rod through a series of dies to improve surface finish, dimensional accuracy and physical properties. Wire products are used in a variety of applications such as fasteners, springs, concrete wire, electrical conductors and structural cables. Seamless Tube. Seamless tubes have outer dimensions of approximately 25 to 508 millimeters. They are produced by piercing solid steel cylinders in a forging operation in which the metal is worked from both the inside and the outside. The final product is a tube with uniform properties from the surface through the wall and from one end to the other. Welded Pipes and Tubes. Welded pipes and tubes are manufactured from steel sheet that is bent into a cylinder and welded either longitudinally or helically. Structural Sections. Structural sections or shapes is the general term for rolled flanged shapes with at least one dimension of their cross-section of 80 millimeters or greater. They are produced in a rolling mill from reheated blooms or billets. Structural sections include wide-flange beams, bearing piles, channels, angles and tees. They are used mainly in the construction industry and in many other structural applications. Rails. Rails are hot-rolled from a reheated bloom. They are used mainly for railway rails but they also have many industrial applications, including rails for construction cranes. Stainless Steel Stainless steel is steel with a carbon content less than or equal to 1.2%, together with a chromium content of at least 10.5%, possibly with additional alloying elements. The alloying elements most commonly used in stainless steels are chromium, nickel, molybdenum, titanium, niobium, manganese, nitrogen, copper, silicon, aluminum and vanadium. The addition of other elements provides further advantages, such as: resistance to corrosion in highly aggressive media; resistance to oxidation at high temperatures; toughness and ductility at very low temperatures; high mechanical strength; and fabricability (including drawing, bending, hydroforming, welding and brazing). The following are main classifications of stainless steel: Austenitic stainless steel is the most widely used grade and is characterized as non-magnetic and typically contains 19% chromium, as well as nickel, which increases its corrosion resistance; Ferritic stainless steel is a grade characterized as being magnetic with low carbon content and chromium content of 13-17%; Martensitic stainless steel is a grade characterized as being magnetic and has a 12% chromium content and a moderate carbon content; and Duplex 318 series stainless steel is a grade characterized as having greater strength and corrosion resistance properties than other grades.

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Direct Reduced Iron Direct reduced iron is produced by removing the oxygen from iron ore without melting it. Direct reduced iron is used as feedstock for electric arc furnaces and is a high-quality substitute for scrap. In 2006, Mittal Steel was the worlds largest producer of direct reduced iron, with total production of 9.3 million tonnes. Direct reduced iron enables Mittal Steel to control the quality and consistency of its metallic input, which is essential to ensure uniform high quality of the finished products. Direct reduced iron has historically given Mittal Steel a cost advantage compared to scrap. Raw Materials and Energy Our principal inputs are iron ore, coal, coke, scrap, hot metal, alloys, energy and industrial gases. Our strategy to procure raw materials comprises: pursuing the lowest prices available and lowest cost of ownership through aggregated purchasing and supply chain optimization; acquiring captive sources of certain raw materials, in particular iron ore and coal; exploiting our global purchasing reach; and leveraging local cost advantages on a global scale.

Mittal Steel sources significant portions of its iron ore needs from its own mines. Its mines are located in Algeria, Bosnia, Brazil, Canada, Kazakhstan, Mexico, Ukraine and the United States. There are also mines under development in Liberia, Mexico and Senegal. Mittal Steel expects to increase its iron ore self-sufficiency by expanding its iron ore production capacity at its existing operations, including Mexico and the Ukraine. Mittal Steel also has in place a few structural relationships providing a long-term source of iron ore. Together, these sources generated 45% of Mittal Steels iron ore needs in 2006 (on a pro forma basis after giving effect to the acquisition of Arcelor and assuming full production of iron ore at Dofasco for captive use). Mittal Steel also enters into long-term purchase agreements with certain iron ore suppliers to meet a substantial portion of its iron ore needs. Mittal Steels principal international suppliers include Companhia Vale do Rio Doce and MineraAoes Brasileiras Reunidas S.A. in Brazil, Shougang Hierro Peru S.A. in Peru and Corporacion Venezolana de Guyana in Venezuela. These contracts generally provide for the purchase prices to be negotiated annually based on market prices. Mittal Steel sources the balance of its iron ore requirements through short-term contracts. Mittal Steel has its own coke-making facilities in the United States, Poland, Kazakhstan, South Africa, Romania, Ukraine and the Czech Republic. While Mittal Steel meets most of its own coke requirements, certain of Mittal Steels operating subsidiaries buy coke from other sources to optimize cost savings from transport efficiencies, and certain of its subsidiaries also sell excess coke at market prices to third parties. In the United States Mittal Steel sources approximately 2 million tonnes of coke from outside sources in the United States, as Mittal Steel has access to both inland and coastal waterway systems that enable it to transport more easily its coke requirements. Mittal Steel USA produces approximately 30% of its coke requirement in its own batteries. An additional 45% is provided by long -term contracts from dedicated coke batteries owned by third parties. These contracts provide formula-priced coke independent of changes in the coke market. Part of this third-party coke comes from environmentally friendly Jewell-Thompson design. The siting of the batteries gives flexible and low-cost delivery to the Mittal Steel USAs mills. The residual coke requirement is filled by a mix of domestic contracts and foreign spot market purchases, which allow it to match its coke purchases with planned consumption. Mittal Steel also has coal mines in Kazakhstan that supply all the coal requirements for its operations in Kazakhstan and a portion of its coal requirements at its Ukrainian and Romanian plants.

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Mittal Steel procures the majority of its scrap requirements locally to optimize transport costs, or under short-term contracts. At its U.S. operations, there are no scrap contracts available as all purchases must be made in the spot market. Mittal Steel generally procures its electricity requirements from local, regulated utility companies at prices fixed by either contract or tariff. Many of its electricity contracts for its European operations are longterm. In the United States and at the Dunkirk, France and SIDMAR (Belgium) plants, however, a significant portion of its electricity requirements is also purchased from onsite generation owned by third parties. These cogeneration facilities utilize waste gases from Mittal Steels blast furnaces to supplement its electrical power requirements and control its energy costs. Mittal Steel procures much of its natural gas requirements for its U.S. operations from the natural gas spot market or through short-term contracts entered into with local suppliers of natural gas with prices fixed by either contract or tariff based on spot market prices. For a number of its European operations, Mittal Steel sources its natural gas requirements under long-term contracts that provide protection from volatility in natural gas prices. Mittal Steel procures its industrial gas requirements under long-term contracts with various suppliers in different geographical regions. Shipping Mittal Shipping Limited (Mittal Shipping) provides ocean transportation solutions to Mittal Steels manufacturing subsidiaries and affiliates. Mittal Shipping arranges transport for raw materials, such as iron ore, coal, coke and scrap, and for semi-finished and finished products. It has an office in London, a key hub of the global shipping business. Mittal Shipping arranged transportation for approximately 32 million tonnes of cargo in 2006. In addition to using Mittal Shipping, Mittal Steel also uses third-party shipping companies for its raw materials and finished products transport needs. Mittal Steel has at its disposal dry cargo vessels (either owned or chartered), used mainly in transporting its cargo. Mittal Steel has partnerships and joint ownership with reputable shipping companies and shipping pools. Mittal Steel is involved in setting and implementing a strategy to limit exposure to the volatility of the shipping market by various hedging actions, including a mix of short- and long-term charters. With regard to third-party shipping companies, Mittal Steel has historically limited its exposure to the volatility of the shipping market by entering into medium-to-long-term contracts with shipping companies for the greater part of its raw materials third-party shipping needs, filling the remainder on the spot market. With respect to its finished products third-party shipping needs, Mittal Steel has historically relied to a greater extend on spot contracts, as there are a greater number of shipping companies able to transport finished products. Purchasing Mittal Steel is implementing a process of centralizing its major procurement requirements, including in the areas of raw materials and energy, shipping, industrial services, industrial equipment and facility construction. In doing so, Mittal Steel seeks to benefit from economies of scale in a number of ways, including by establishing long-term relationships with suppliers that sometimes allow for advantageous pricing of inputs, centralizing its knowledge of the functioning of the markets for its inputs, and deploying specialized technical knowledge where required for the acquisition of industrial services and plant equipment and facilities. Marketing Mittal Steels marketing strategy focuses on optimizing product mix profitability, developing in priority the domestic and natural markets of our business units, providing reliable product quality and delivery and efficient customer service. With the support of its research centers, Mittal Steel works with its customers on product development to meet their present and future requirements while utilizing Mittal Steels assets in the most efficient and profitable manner. Mittal Steel focuses its efforts on providing solutions to its customers to reduce their costs and to become their preferred supplier of high-quality steel products. 135

The majority of Mittal Steels products are sold directly to customers through its own sales force. A portion is sold through intermediate international traders. Insurance Mittal Steel maintains insurance on property and equipment in amounts believed to be consistent with industry practices. Mittal Steels insurance policies cover physical loss or damage to its property and equipment on a reinstatement basis arising from a number of specified risks and certain consequential losses, including business interruption arising from the occurrence of an insured event under these policies. Arcelor maintains similar coverage, which will be consolidated under the combined companys policies upon renewal. Under these policies, damages and losses caused by certain natural disasters, such as earthquakes, floods and windstorms, are also covered. The coverage for Arcelors plants is similar for that of Mittal Steels plants. Because Arcelors property and equipment are regarded as only slightly exposed to natural hazards, Arcelor self-insures against the risks of natural hazards to the extent it is not required by applicable law to do so. Arcelor attempts to limit the amount it self-insures to reasonable levels. In addition, each of Mittal Steels operating subsidiaries also maintains various other types of insurance, such as workmens compensation and marine insurance. Intellectual Property Mittal Steel owns and maintains a patent portfolio covering processes and steel products, including uses and applications thereof that it conceives of, develops and implements in territories throughout the world. Such patents and inventions are primarily in relation to metals with new or enhanced properties and new and more cost-efficient technologies. Mittal Steel also owns trademarks, registered and unregistered, in relation to the names and logos of its companies and the brands of its products. Mittal Steel has policies and systems in place to monitor and protect the confidentiality of its know-how and proprietary information. Mittal Steel has a number of industrial partnership agreements for the joint development of products and processes, and intellectual property relating to such partnerships may be jointly owned. In addition, Mittal Steel uses a number of patents and software under license. Government Regulations See Risk Factors and Legal Proceedings. Mittal Steels operations are subject to various regulatory regimes in the regions in which it conducts its operations. The following is a discussion of the principal features of selected regulatory regimes that are or are likely to affect its operations. Environmental Laws and Regulations Mittal Steels operations are subject to a broad range of laws and regulations relating to air emissions, wastewater storage, treatment and discharges, the use and handling of hazardous or toxic materials, waste disposal practices, the remediation of environmental contamination, and other aspects of the protection of human health and environment at its multiple locations and operating subsidiaries. As the environmental laws and regulations in the United States, the European Union and other jurisdictions continue to become more stringent, Mittal Steel expects to expend substantial amounts to achieve or maintain ongoing compliance. Mittal Steel has established corporate environmental guidelines requiring each of its business units to comply with all applicable environmental laws and regulations. Compliance with environmental laws and regulations and monitoring changes to them are addressed primarily at the business unit level. In addition to capital investments required for additional controls and other improvements Mittal Steel has reserves of approximately $830 million for environmental remedial activities and liabilities. United States In the United States, environmental laws and regulations include the Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act (RCRA), Comprehensive Environmental Response, Compensation and Liability Act, also known as Superfund, the Safe Drinking Water Act, the Toxic Substances Control Act, and the Occupational Safety and Health Act, as well as state and local environmental programs. Under the Clean Air Act, for example, several of Mittal Steel USAs facilities are subject to new regulations requiring the application of maximum achievable control technology to reduce hazardous air pollutant emissions from integrated iron and steel manufacturing units. Mittal Steel USA anticipates completing installation of these 136

controls within the applicable time requirements during 2007 at a cost of approximately $20 million. Several of Mittal Steel USAs facilities are subject to revised effluent regulations issued in 2002 under the Clean Water Act, and compliance with such regulations will be required as new discharge permits are issued for continued operation. Mittal Steel USA also anticipates spending approximately $88 million over the next 40 years, including $7 million during 2007, to address the removal and disposal of polychlorinated biphenyls (PCB) equipment and asbestos material encountered during the operation of its facilities. Mittal Steel is also conducting, or has liability for, significant remedial activities at various facilities. In some cases, soil or groundwater contamination requiring remediation is present at Mittal Steels current facilities; in other cases, it is present at former facilities or third-party waste disposal sites. All of Mittal Steel USAs major operating and inactive facilities are or may be subject to a corrective action program or other laws and regulations relating to environmental remediation, including projects relating to the reclamation of industrial properties, also known as Brownfield Projects. Superfund and analogous U.S. state laws can impose liability for the entire cost of cleanup at a site upon current or former site owners or operators or parties who sent hazardous materials to the site, regardless of fault or the lawfulness of the activity that caused the contamination. Mittal Steel USA is a potentially responsible party at several state and federal Superfund sites. Mittal Steel USA could incur additional costs or liabilities at these sites if additional cleanup is required, private parties sue for personal injury or property damage, or other responsible parties sue for reimbursement of costs incurred to clean up sites. Mittal Steel USA could also be named a potentially responsible party at other sites if its hazardous materials or those of its predecessor were disposed of at a site that later becomes a Superfund site. European Union For our operations in the European Union, significant EU Directives and regulations applicable to our production units include Directive 96/61/EC of September 24, 1996 concerning integrated pollution prevention and control (the IPPC Directive), which applies common rules for permitting and controlling industrial installations; this directive is completed by E-PRTR regulation (EC) N 166/2006 (European Pollutant Release and Transfer Register) of January 18, 2006 implementing the yearly reporting on release of pollutants and offsite transfer of waste; Directive 2004/35/EC of April 21, 2004 on environmental liability with regard to the prevention and remedying of environmental damage (or Environmental Liability Directive), which provides for a program to establish liability for remediation of damage to and contamination of the environment; Regulation (EC) N 1013/2006 of June 14, 2006 on shipments of waste; and Directive 2003/87/EC of October 13, 2003, as amended by Directive 2004/101/EC (or Emissions Trading Directive), which established a program under which EU member states are allowed to trade greenhouse gas emission allowances within the European Union, subject to certain conditions. The following EU Directives on environmental quality standards are also significant: Directive 1999/30/EC of April 22, 1999, 2000/69/EC of November 16, 2000, 2002/3/EC of February 12, 2002 and 2004/107/EC of December 15, 2004 relating to limit values and target values for pollutants in ambient air; and Directive 2001/81/EC of October 23, 2001 on national emission ceilings for certain pollutants. During the next several years, Mittal Steel anticipates that its capital investments for environmental matters will relate primarily to installations of additional air emission controls and to requirements imposed in the course of renewal of permits and authorizations, including those pursuant to the IPPC Directive. EU Directives applicable to our products include those relating to waste electrical and electronic equipment (Directive 2002/96/EC of January 27, 2003), end-of-life vehicles (Directive 2000/53/EC of September 18, 2000) and packaging and packaging waste (Directive 2004/12/EC of February 11, 2004); and REACH regulation (EC) N 1907/2006 (for Registration, Evaluation, Authorization and Restriction of Chemicals), adopted on December 18, 2006, which controls the chemical substances manufactured in or imported into the EU market in volumes over one tonne per year and is scheduled to come into effect in June 2007. In particular, Mittal Steel is subject to the Emissions Trading Directive, which is the EUs central instrument for achieving the EU member states commitments under the Kyoto Protocol by providing a European emissions trading system (ETS) for CO2 emissions. The ETS covers more than 10,000 installations across the EU, including combustion plants, oil refineries, coke ovens, iron and steel plants, and factories making cement, glass, lime, brick, ceramics, and pulp and paper. At the heart of the ETS is the common trading currency of emission allowances. One allowance gives the holder the right to emit one tonne of CO2. For each trading period under the ETS, EU member states draw up national allocation plans that determine how many emission allowances each installation will receive. Companies that keep their emissions below the level of their allowances can sell their excess allowances. Companies that do not keep their emissions below the level of their 137

allowances must either reduce their emissions, such as by investing in more efficient technology or using less carbon-intensive energy sources, or buy the extra allowances that they need on the open market. The allowances available to Mittal Steel and Arcelor are expected to cover their needs for the 20062007 trading period. In 2004, Arcelor initiated a legal action before the European Court of First Instance against the Emissions Trading Directive. Arcelor sought an order finding the Emissions Trading Directive to be partially void and providing compensation for the damages that it may suffer. Subsequently, national legal actions relating to exclusion from the emissions trading system were initiated in France, Belgium, Spain and Luxembourg, and national legal actions relating to the allocation of CO2 allowances were initiated in Germany. National proceedings have advanced furthest in France, where the Conseil dEtat has sought a preliminary ruling before the European Court of Justice. In Luxembourg, the court proceeding has been suspended until the judgment of the European Court of First Instance is rendered. In Spain, a request has been submitted to the Spanish Supreme Court to suspend proceedings until the judgment of the European Court of First Instance has been rendered. Arcelor intends to request a suspension of proceedings before the European Court of First Instance in order to await the preliminary ruling of the European Court of Justice. Other Jurisdictions Increasingly stringent environmental laws and regulations also have been issued in other jurisdictions. South Africa A new Waste Management Bill was published in September 2006 placing a strong focus on avoidance, minimization at source, re-use, recycling and remediation of contaminated land. This Bill is expected to become an Act during 2007, and new disposal permits will be issued in terms of this Act. The new Air Quality Act is still in a phase of partial implementation, and strict ambient standards (based on European Union standards) have been published. New air pollution permits based on best available technology worldwide will be issued in 2007. Ukraine A new air regulation (No. 309) was published in Ukraine on June 27, 2006. The new regulation will significantly toughen the emission limits of 140 compounds for all types of plants. Priority pollutants are particulate matter, sulphur dioxide, nitrogen dioxide and carbon monoxide. Brazil A new federal resolution by CONAMA, the Brazilian National Environmental Council, published on April 6, 2006, sets forth guidelines for the environmental compensation plan pursuant to Law no. 9.985, of July 18, 2000. CONAMA resolution No. 382/2006, published on January 2, 2007, imposes more stringent limits on the steel industry for dust, sulphur dioxide and nitrogen oxide. Algeria An Executive Decree dated April 15, 2006 regarding atmospheric emissions and pollutants in effluent waters will require units exceeding regulatory values to comply before 2011. For further details regarding specific environmental proceedings involving Mittal Steel, including a description of the more significant remediation sites, see Legal Proceedings and Note 23 to the Mittal Steel Consolidated Financial Statements. Foreign Trade Mittal Steel has manufacturing operations in many countries and has worldwide sales. In 2006, more than 16 countries (treating the EU as one country) had one or more trade remedies in place affecting various steel products. In a number of these markets (such as Canada, the United States, the EU, Mexico and South Africa), Mittal Steel has manufacturing operations and hence may be a beneficiary of trade actions intended to address trade problems consistent with World Trade Organization, or WTO, regulation. In other situations, particular 138

operations of Mittal Steel may be a respondent in one or more trade cases and its products subject to duties or other restrictions. Furthermore, some governments also have bilateral agreements with non-WTO members, which can affect export volumes of steel products into particular markets which are WTO members. Under international agreement and the domestic trade law of many countries, remedies are available to domestic industries where imports are dumped or subsidized and such imports cause material injury to a domestic industry. Although there are differences in how the remedies are assessed, such laws typically have common features established in accordance with WTO standards. Dumping involves selling for export a product at a price lower than that at which the same or similar product is sold in the home market of the exporter, or where the export prices are lower than a value that typically must be at or above the full cost of production. Subsidies from governments (including, among other things, grants and loans at artificially low interest rates) under certain circumstances are similarly actionable. The remedy available is an antidumping duty order or suspension agreement where injurious dumping is found and a countervailing duty order or suspension agreement where injurious subsidization is found. A duty equal to the amount of dumping or subsidization is imposed on the importer of the product. Such orders and suspension agreements do not prevent the importation of product, but rather require either that the product be priced at a non-dumped level or without the benefit of subsidies or that the importer pay the difference between such dumped or subsidized price and the actual price to the government as a duty. All WTO members are required to review antidumping duty and countervailing duty orders and suspension agreements every five years to determine if they should be maintained, revised or revoked. This requires a review of whether the dumping or subsidization is likely to continue or recur if the order/suspension agreement is revoked and whether a domestic industry in the country is likely to suffer the continuation or recurrence of material injury within the reasonably foreseeable future if the orders are revoked. If the government finds both dumping or subsidization and material injury are likely to continue or recur, then the orders are continued. Each year there typically are a range of these so-called sunset reviews affecting various countries of interest to Mittal Steel. Exports of steel products manufactured by Mittal Steel Temirtau require licenses from the Ministry of Industry and Trade of the Republic of Kazakhstan. Mittal Steel Annaba is required to domicile, or submit for registration, export contracts with the Central Bank of Algeria. State Aid Under European Community law, any form of state aid (non-commercial state support including, for example, cash payments or the exemption from taxes) is generally prohibited unless approved by the European Commission (article 87 and 88 EC Treaty). Aid that has been granted contrary to European Community law must in general be recovered from the aid beneficiary by the member state that granted it. The general state aid rules of the European Community are applicable to steel products, and there are specific rules applicable to the steel industry. Mittal Steels operating subsidiaries located in the European Union are subject to state aid rules. Before the recent enlargement of the European Community in 2004, the European Community and its member states had concluded Europe Agreements with certain Central and Eastern European countries with a view of facilitating the subsequent accession of these countries to the European Union. These agreements contain rules that extended the substantive state aid rules to such future member states. However, the Europe Agreements provided for separate state aid rules for the steel sector, which allowed, under specific conditions and for a limited period of time, aid for the restructuring of the national steel industry of the Central or Eastern European country. The regime governing public aid to the steel sector under the Europe Agreements was further implemented, and to some extent modified, as part of the transitional arrangements that were negotiated in the framework of the accession of ten Central or Eastern European countries (including the Czech Republic and Poland) to the European Union on May 1, 2004, and Romanias accession to the European Union on January 1, 2007. The transitional arrangements became part of the respective treaty of accession to the European Union. The transitional arrangements for each of the Czech Republic, Poland and Romania allow restructuring aids granted prior to the date of accession to certain steel undertakings (known as benefiting companies) if certain conditions are met. In particular, they impose restrictions on benefiting companies, the total amounts of aid (including limits for each benefiting company), and the time periods during which such aid can be granted, and require certain capacity reductions for finished products to be achieved within a specific time-frame. Moreover, the transitional arrangements provide that restructuring aid to benefiting companies is subject to 139

national restructuring plans and individual business plans approved by the Council of Ministers of the European Union. Benefiting companies are also subject to certain rules concerning the merger with, or the taking-over of assets of, non-benefiting companies. Certain of Mittal Steels operating subsidiaries located in Central and Eastern EuropeMittal Steel Ostrava (former Nova Hut a.s.), Valcovny Plechu Frydek Mystek, Mittal Steel Poland (former Polskie Huty Stali S.A.), Mittal Steel Galati (former Ispat Sidex Galati), Mittal Steel Hunedoara (former Siderurgica Hunedoara) and Arcelor Huta Warszawaare benefiting companies subject to these transitional arrangements. Foreign Exchange Mittal Steels South African operations are subject to exchange controls that are enforced by the South African Central Bank. Prior approval is required for foreign funding, hedging policies and offshore investments. Import payments are monitored by the Central Bank, and export receipts are subject to certain restrictions relating to the tenure for which these receipts may be held in foreign currencies. These restrictions have historically not had a significant impact on the operations of Mittal Steel South Africa. The purchase and sale of foreign currency by Kazakh residents (including individuals and legal entities) is restricted by the National Bank of Kazakhstan. Purchases and sales of foreign currency may be conducted only by residents through authorized banks or other authorized organizations. Payments in routine currency operations may be made by residents of Kazakhstan to non-residents through authorized banks without restriction. Such routine currency operations include import/export settlements with payment within 180 days; short-term loans with terms of less than 180 days; dividends, interest and other income from deposits, investments, loans and other operations; and non-commercial transactions such as wages, pensions and alimony. Operations involving the movement of capital from residents to non-residents require a license from the National Bank of Kazakhstan, and transactions involving the movement of capital from non-residents to residents must be registered with the National Bank of Kazakhstan. Licenses are issued on a case-by-case basis and are valid only for a single transaction. These transactions include payments for exclusive rights to intellectual property; payments for rights to immovable property; settlements for import/export transactions and loans having terms of more than 180 days; and international transfers of pension assets and insurance and re-insurance contracts of an accumulative nature. Transactions in which Mittal Steel Temirtau engages and which are subject to licensing or registration requirements are being complied with, and there is no violation of National Bank of Kazakhstan rules for any transaction. The Algerian foreign currency market is regulated by the Central Bank of Algeria. Exchange control regulations do not permit capital account convertibility with a few exceptions involving Algerian companies investing in overseas projects. Currency outflows on current account, while freely permitted for the import of goods, are subject to controls for payments for service contracts. Dividend repatriation is permitted on overseas capital investments. Algerian companies are restricted from investing their cash surplus overseas. All overseas remittances have to be made through the Central Bank. Exporters are permitted to retain 50% of their proceeds in foreign currency accounts out of which 20% can be utilized freely and the balance can be utilized with certain restrictions. Hedging of currencies is tightly regulated and restricted. Ukraine has an extensive legislative framework in the area of currency control and financial instruments that governs all aspects of transactions in local and foreign currency. The main regulatory body of the government is the National Bank of Ukraine (NBU), which has wide regulatory powers in this field. The NBU maintains the hryvnia in a narrow range against the U.S. dollar. Export of capital from Ukraine, offshore investments, and purchases of foreign currency by Ukrainian companies are heavily regulated and may be done provided the grounds for such types of transactions are in line with the requirements and within the limits provided by NBU regulations. In Brazil, all foreign exchange transactions are carried out on a single foreign exchange market. Foreign currencies may be purchased or sold only through Brazilian financial institutions authorized to operate in such market and are subject to registration with the Central Bank of Brazils electronic system. Foreign exchange rates are freely negotiated, but may be influenced by Central Bank intervention. The Central Bank of Brazil allows the real/U.S. dollar exchange rate to float freely, although it has intervened occasionally to control unstable movements in foreign exchange rates. Exchange controls on foreign capital and international reserves are administrated by the Central Bank of Brazil. Foreign exchange policy is formulated by the National Monetary Council. Trade policy is implemented by the Ministry of Development, Industry and Foreign Trade through the Secretariat of Foreign Trade. 140

Organizational Structure Corporate structure ArcelorMittal is a holding company with no business operations of its own. All of ArcelorMittals significant operating subsidiaries are indirectly owned by ArcelorMittal through intermediate holding companies. Arcelor is a first-tier subsidiary of ArcelorMittal. The following chart represents the current operational structure, including ArcelorMittals significant operating subsidiaries, and not the legal or ownership structure of ArcelorMittal.

141

ArcelorMittal S.A.

94.24%

Arcelor S.A.

Flat Carbon Americas

Flat Carbon Europe

Long Carbon America and Europe AACIS Stainless Steel

AM35

CST

Dofasco

Arcelor Compacta Bizkaia Arcelor Atlantique & Lorraine Acindar ArcelorMittal Bergara ArcelorMittal Annaba ArcelorMittal Kryviy Rih

Acesita

Ugine & ALZ Belgium

ArcelorMittal Auto Processing France

Arcelor Construction France

Mittal Steel Lazaro Crdenas Arcelor Huta Warszawa ArcelorMittal Madrid Mittal Steel Liberia Mittal Steel South Africa

ArcelorMittal USA

ArcelorMittal Bremen

ArcelorMittal Eisenhttenstadt

Ugine & ALZ France

Arcelor International America

PUM Service Acier

Arcelor Espaa

Arcelor Mditerane ArcelorMittal Olaberra Arcelor Profil Luxembourg Mittal Steel Temirtau

Sonasid

Raven Schfer

Arcelor Piombino Arcelor Rodange Belgo

Arcelor Steel Belgium

Cockerill Sambre Mittal Canada

Industeel Belgium

Mittal Steel Hamburg

Industeel France

ArcelorMittal Galati

Mittal Steel Hochfeld

ArcelorMittal Point Lisas

ArcelorMittal Ostrava

Mittal Steel Poland

Mittal Steel Ruhrort

ArcelorMittal USA

142

The following table identifies by operating segment each significant operating subsidiary of ArcelorMittal, including its registered office, country of incorporation and ArcelorMittals percentage ownership thereof. Flat Carbon Americas Companhia Siderrgica de Tubaro S.A. Av. Brigadeiro Eduardo Gomes, 930 Jardim Limoeiro 29163-970 Serra Espirito Santo Brazil 1330 Burlington Street East L8N 3J5 Hamilton, Ontario Canada Fco. J. Mujica No. 1-B Apartado Postal No. 19-A C.P. 60950 Cd. Lzaro Crdenas, Michoacan Mexico 1 South Dearborn Chicago, IL 60603 USA 67.41%

Dofasco Inc.

100%

Mittal Steel Lzaro Crdenas S.A. de C.V.

100%

ArcelorMittal USA Inc.

100%

Flat Carbon Europe Aceria Compacta de Bizkaia, S.A. 6, Chavarri 48910 Sestao Vizcaya Spain 1 5, rue Luigi Cherubini 93200 St Denis France Auf Den Delben 35 D-28237 Bremen Germany Werkstr. 1 D-1 5890 Eisenhttenstadt Brandenburg Germany Residencia La Granda 33418 Gozon Asturias Spain 99.72%(1)

Arcelor Atlantique et Lorraine SAS

100%

ArcelorMittal Bremen GmbH

99.88%

ArcelorMittal Eisenhttenstadt GmbH

100%

Arcelor Espaa S.A.

99.72%

Arcelor Mditerrane SAS

1 5, rue Luigi Cherubini 93200 St Denis France 143

100%

Arcelor Steel Belgium N.V.

Avenue de lYser, 24 1040 Brussels Belgium Via S.Egidio nr.16 50123 Firenze Italy Rue Trasenster, 21 4102 Seraing Belgium Rue de Chtelet, 266 6030 Charleroi Belgium 1 5, rue Luigi Cherubini 93200 St Denis France Strada Smardan nr. 1 Galati Romania Vratimovska 689 707 02 Ostrava-Kunice Czech Republic Ul. Chorzowska 50 40-121 Katowice Poland

99.82%

Arcelor Piombino S.p.a.

99.79%

Cockerill Sambre S.A.

100%

Industeel Belgium S.A.

100%

Industeel France S.A.

100%

ArcelorMittal Galati S.A.

99.65%

ArcelorMittal Ostrava a.s.

84.47%(1)(2)

Mittal Steel Poland S.A.

99.48%(1)(3)

Long Carbon Americas and Europe Acindar Industria Argentina de Aceros S.A. 2739, Estanislao Zeballos B1643 AGY Buenos Aires Argentina 6, C/Ibarra 20570 Bergara Spain UL.Kasprowicza 132 01-949 Warszawa Poland Ctra. De Toledo KM 9,200 28021 Madrid Spain Carretera Nacional Madrid Irun S/N 20212 Olaberra Spain 44.38%(5)(7)

ArcelorMittal Bergara, S.A.

99.72%

Arcelor Huta Warszawa Sp.z.o.o.

100%

ArcelorMittal Madrid, S.L.

99.72%

ArcelorMittal Olaberra, S.L.

99.72%

144

Arcelor Profil Luxembourg S.A.

66, rue de Luxembourg 4221 Esch sur Alzette Luxembourg 1, rue de lIndustrie BP 24 4801 Rodange Luxembourg 1115, avenida Carandai 24 Andar 30130-915 Belo Horizonte- MG Brazil 4000, route des Aciries Contrecoeur Qubec J0L 1C0 Canada Dradenaustrasse 33 D-21129 Hamburg Germany Wrthstrasse 125 D-47053 Duisburg Germany Vratimovska 689 707 02 Ostrava-Kunice Czech Republic Mediterranean Drive Point Lisas Couva Trinidad and Tobago Ul. Chorzowska 50 40-121 Katowice Poland Vohwinkelstrasse 107 D-47137 Duisburg Germany 1 South Dearborn Chicago, IL 60603 USA

99.82%

Arcelor Rodange S.A.

79.70%(8)

Belgo Siderurgia S.A.

67.41%

Mittal Canada Inc.

100%

Mittal Steel Hamburg GmbH

100%

Mittal Steel Hochfeld GmbH(4)

100%

ArcelorMittal Ostrava a.s.

84.47%(1)(2)

ArcelorMittal Point Lisas Ltd.

100%

Mittal Steel Poland S.A.

99.48%(1)(3)

Mittal Steel Ruhrort GmbH(4)

100%

ArcelorMittal USA Inc.

100%

145

AACIS ArcelorMittal Annaba Spa Sidi Amar El-Hadjar Complex B.P. 2055 Annaba 23000 Algeria 1 Ordzhonikidze Street Kryviy Rih 50095 Dnepropetrovsk Oblast Ukraine 401, Ocean View Apartments, UN Drive, Monrovia Liberia Main Building, Room N3/5 Delfos Boulevard Vanderbijlpark, 1911 South Africa Republic Ave., 1 101407 Temirtau Karaganda Region Republic of Kazakhstan Route Nationale n 2 Km 18 BP 551 Al Aarroui Morocco Avenida Joao Pinheiro, 580 Centro 30130-180 Belo Horizonte Minas Gerais Brazil Avenue de lYser, 24 1040 Brussels Belgium 1 5, rue Luigi Cherubini 93200 St Denis France 70%

ArcelorMittal Kryviy Rih

93.77%

Mittal Steel Liberia Limited

70%

Mittal Steel South Africa Ltd.

52%

JSC Mittal Steel Temirtau

100%

Socit Nationale de Sidrurgie, S.A.

32.34%(6)

Stainless Steel Acesita S.A. 57.32%(9)

Ugine & Alz Belgium N.V.

99.82%

Ugine & Alz France S.A.

100%

146

AM3S

ArcelorMittal Auto Processing France SAS

Route de Saint Leu dEsserent 60160 Montataire France Immeuble Herms 20, rue Jacques Daguerre 92500 Rueil Malmaison France 350 Hudson Street 4th floor New York, New York 10014 USA 1 & 3, place Max Rousseaux 51076 Reims Cedex France Gutenbergstrasse 11 D-33790 Halle Germany

100%

Arcelor Construction France S.A.

100%

Arcelor International America, LLC

100%

Produits dUsines Mtallurgiques Pum-Station Service Acier S.A. Raven Schfer GmbH

100%

100%

(1) Represents the percentage of shares to which Mittal Steel has title or that are subject to an executed agreement providing for their transfer to Mittal Steel at a fixed price and future date. (2) Actual voting power: 85.46% (3) Actual voting power: 73.73% (4) Mittal Steel Ruhrort and Mittal Steel Hochfeld are together referred to as Mittal Steel Duisburg. (5) Acindar Industria Argentina de Aceros S.A. is controlled by Arcelor Brazil, a subsidiary of Mittal Steel. (6) Socit Nationale de Sidrurgie, S.A. is controlled by Nouvelles Sidrurgies Industrielles, a subsidiary of Mittal Steel. (7) Actual voting power: 66.33%. (8) Actual voting power: 80.47%. (9) Actual voting power: 95%.

Operating Segments ArcelorMittal operates its business in the following six operating segments: Flat Carbon Americas; Flat Carbon Europe; Long Carbon Americas and Europe; Asia, Africa and CIS; Stainless Steel; and AM3S.

Within its corporate headquarters and, where appropriate, segment or regional management there are specialized and experienced executives in fields such as finance, mergers and acquisitions, marketing, 147

procurement, operations, shipping, human resources, communications, internal assurance, health and safety, information technology, strategic planning, performance enhancement, technology and law. Flat Carbon Americas produces slabs, hot-rolled coil, cold-rolled coil, coated steel products and plate. These products are sold primarily to customers in the following industries: distribution and processing; automotive; pipe and tubes; construction; packaging; and appliances. In Flat Carbon Americas, production facilities are located at ten integrated and mini-mill sites located in four countries. In 2006, shipments from Flat Carbon Americas totaled 24.0 million tonnes. Flat Carbon Europe produces hot-rolled coil, cold-rolled coil, coated products, tinplate, plate and slab. These products are sold primarily to customers in the automotive, general industry and packaging industries. In Flat Carbon Europe, production facilities are located at 14 integrated and mini-mill sites located in eight countries. In 2006, shipments from Flat Carbon Europe totaled 17.4 million tonnes. Long Carbon Americas and Europe produces sections, wire rod, rebars, billets, blooms and wire drawing. In Long Carbon Americas, production facilities are located at ten integrated and mini-mill sites located in six countries, while in Long Carbon Europe production facilities are located at 16 integrated and mini-mill sites in 12 countries. In 2006, shipments from Long Carbon Americas and Europe totaled approximately 17.0 million tonnes. Asia, Africa and CIS produces a combination of flat and long products and pipes and tubes. It has nine flat and long production facilities in seven countries. In 2006, shipments from Asia, Africa and CIS totaled approximately 19.7 million tonnes, with shipments having been made worldwide. Stainless Steel produces flat and long stainless steel and alloy products from its plants in Europe and South America. In the Americas, production facilities are located at one integrated site located in one country, while in Europe production facilities are located at four mini-mill sites in two countries. The products produced by Stainless Steel are sold to customers primarily in the following industries: domestic appliances and household equipment; automotive; construction; and general industry. In 2006, shipments from Stainless Steel totaled approximately 0.9 million tonnes. Arcelor Mittal Steel Solutions and Services (AM3S) is primarily an in-house trading and distribution arm of Mittal Steel. It also provides value-added and customized steel solutions through further steel processing to meet specific customer requirements. Property, Plant and Equipment Mittal Steel Mittal Steels principal operating subsidiaries are grouped into six segments, and Mittal Steel has production facilities in twenty-six countries in North and South America, Europe, Asia and Africa. All of its operating subsidiaries are substantially owned by Mittal Steel through intermediate holding companies. Unless otherwise stated, Mittal Steel owns all of the assets described in this section. See also Legal Proceedings.

148

Production Facilities of Mittal Steel The following table sets forth a general description of Mittal Steels principal production units:
Capacity (in million tonnes per year) Production in 2006 (in million tonnes)(1)(2)

Facility

Number of Facilities

Coke Plant....................................................................... Sinter Plant...................................................................... Blast Furnace .................................................................. Basic Oxygen Furnace (including Tandem Furnace)...... DRI Plant ........................................................................ Electric Arc Furnace ....................................................... Continuous Caster - Bloom / Billet ................................. Breakdown Mill (Blooming / Slabbing Mill).................. Billet Rolling Mill........................................................... Heavy Section Mill ......................................................... Medium Section Mill ...................................................... Light Section Mill ........................................................... Bar Mill........................................................................... Rail Mill .......................................................................... Wire Rod Mill ................................................................. Continuous Caster Slabs .............................................. Hot Rolling Mill.............................................................. Cold Rolling Mill (Z mill) .............................................. Pickling Line................................................................... Tandem Mill.................................................................... Annealing Line................................................................ Skin Pass Mill ................................................................. Hot Dip Galvanizing Line............................................... Electro Galvanizing Line ................................................ Tinplate Mill ................................................................... Tin Free Steel (TFS) ....................................................... Color Coating Line.......................................................... Plate Mill......................................................................... Seamless Pipes ................................................................ Welded Pipes ..................................................................

63 36 64 71 14 55 41 8 6 4 12 7 26 3 22 55 37 19 58 41 54 42 62 15 17 1 17 9 6 7

35.6 106.9 104.6 111.3 11.8 40.2 35.1 17.0 8.5 2.9 6.7 4.5 8.2 1.0 14.0 96.1 90.0 2.1 53.1 42.3 20.2 23.7 20.9 2.6 4.6 0.5 2.6 6.7 1.1 0.7

31.1 93.0 85.0 89.8 9.4 31.9 26.1 9.8 3.0 2.1 5.8 4.4 5.8 0.7 11.5 79.3 67.8 1.6 35.3 31.1 12.7 14.5 16.6 1.9 3.1 0.2 1.9 5.0 0.7 0.5

(1) Production facility details include the production numbers for each step in the steel-making process. Output from one step in the process is used as input in the next step in the process. Hence, the summation of production numbers does not equal the quantity of saleable finished steel products. (2) 2006 production figures are based on annual production as if acquisitions had occurred on January 1, 2006.

149

Flat Carbon Americas Mittal Steels Flat Carbon Americas segment has production facilities in both North and South America, including the United States, Canada, Brazil and Mexico. The following two tables set forth a general description of Mittal Steels principal production locations and production units in the Flat Carbon Americas segment: Production Locations Flat Carbon Americas
Unit Country Locations Type of Plant Products

Cleveland Warren Columbus Coatings Hennepin IH I/N Tek and I/N Kote Riverdale Burns Harbor Coatesville Conshohocken Lackawanna Weirton Sparrows Point Gary Plate Double G Lzaro Crdenas CST Vega do Sul Dofasco

USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA Mexico Brazil Brazil Canada

Cleveland, OH Warren, OH Columbus, OH Hennepin, IL East Chicago, IN New Carlisle, IN Riverdale, IL Burns Harbor, IN Coatesville, PA Conshohocken, PA Lackawanna, NY Weirton, WV Sparrows Point, MD Gary, IN Jackson, MS Lzaro Crdenas Vitoria So Francisco do Sul Hamilton

Integrated Coke making Downstream Downstream Integrated Downstream Integrated Integrated Mini-mill Downstream Downstream Downstream Integrated Downstream Downstream Mini-mill Integrated Downstream Integrated, Mini-mill

Flat Coke Flat Flat Flat Flat Flat Flat Flat Flat Flat Flat Flat Flat Flat Flat Flat Flat Flat

150

Production Facilities Flat Carbon Americas Number of Facilities 6 6 16 23 2 9 3 1 2 1 1 22 11 18 10 8 14 19 1 4 1 1 6 Capacity (in million tonnes per year) 6.3 13.3 32.4 36.6 4.1 9.3 2.6 0.7 0.7 0.3 0.7 41.3 34.9 21.4 15.8 10.1 12.3 7.4 0.2 1.3 0.5 0.3 3.2 Production in 2006 (in million tonnes)(1)(2) 6.3 14.1 27.5 29.2 3.9 7.8 1.2 0.4 0.4 0.3 0.4 34.8 25.6 13.7 10.0 5.8 6.7 4.5 0.0 0.7 0.2 0.3 2.9

Facility Coke Plant......................................................................... Sinter Plant........................................................................ Blast Furnace .................................................................... Basic Oxygen Furnace (including Tandem Furnace)........ DRI Plant .......................................................................... Electric Arc Furnace ......................................................... Continuous Bloom / Billet Caster ..................................... Breakdown Mill (Blooming / Slabbing Mill).................... Bar Mill............................................................................. Rail Mill ............................................................................ Wire Rod Mill ................................................................... Continuous Caster Slabs ................................................ Hot Rolling Mill................................................................ Pickling Line..................................................................... Tandem Mill...................................................................... Annealing Line.................................................................. Skin Pass Mill ................................................................... Hot Dip Galvanizing Line................................................. Electro Galvanizing Line .................................................. Tinplate Mill ..................................................................... Tin Free Steel (TFS) ......................................................... Color Coating Line............................................................ Plate Mill...........................................................................

(1) Production facility details include the production numbers for each step in the steel-making process. Output from one step in the process is used as input in the next step in the process. Hence, the summation of production numbers does not equal the quantity of saleable finished steel products. (2) 2006 production figures are based on annual production as if acquisitions had occurred on January 1, 2006.

Mittal Steel USA Mittal Steel USA has 14 major production facilities consisting of five integrated steel-making plants, one basic oxygen furnace/compact strip mill, four electric arc furnace plants and four finishing plants. Mittal Steel USA owns all or substantially all of each plant. Mittal Steel USA also owns interests in various joint ventures that support these facilities, as well as numerous raw material, railroad and transportation assets. Mittal Steel USAs main operations include integrated steel-making plants at Indiana Harbor, Burns Harbor, Cleveland, Sparrows Point and Riverdale. The steel-making operation at the Weirton, West Virginia facility was idled in 2006. The four electric arc furnace plants are located at Coatesville, Steelton, Georgetown, and the Indiana Harbor Bar operations. The four finishing plants are located at Conshohocken, Lackawanna, Hennepin and Columbus Coatings. The Cleveland plant covers an area of approximately 4.9 square kilometers and the Sparrows Point plant covers an area of approximately 12.5 square kilometers. 151

Mittal Steel USAs two Indiana Harbor facilities produce hot-rolled sheet, cold-rolled sheet, hot dip galvanized sheet and bar products for use in automotive, appliance, service center, tubular, strip converters and contractor applications. The Indiana Harbor West plant covers an area of approximately 4.9 square kilometers and the Indiana Harbor East plant covers an area of approximately 7.7 square kilometers. Mittal Steel USAs Burns Harbor facility produces hot-rolled sheet, cold-rolled sheet, hot dip galvanized sheet and steel plate for use in automotive, appliance, service center and construction and shipbuilding applications. The Burns Harbor plant covers an area of approximately 15.3 square kilometers. Mittal Steel USA operates a number of facilities on the Cuyahoga River in Cleveland, Ohio including blast furnaces, slab casters, ladle metallurgy and vacuum degassing facilities, a hot-strip mill, cold reducing mill, temper mill, a batch anneal shop and a hot dip galvanizing line. In addition, Mittal Steel USAs regional coke battery, the Warren Coke Battery, is able to supply approximately 40% of the Cleveland facilities coke needs. Mittal Steel USAs Weirton, West Virginia facility is a significant producer of tin mill products. Mittal Steel USAs Georgetown, South Carolina plant produces high-quality wire rod products, which are used to make low carbon fine wire drawing, wire rope, tire cord, high-carbon machinery and upholstery springs. Mittal Steel USA also owns interests in various joint ventures that support its facilities, as well as raw material (including iron ore) and railroad assets, including (i) I/N Tek, a partnership in which a subsidiary of Mittal Steel USA owns a 60% interest, with a 1.7 million tonnes annual production capacity cold-rolling mill on approximately 200 acres of land (which it owns in fee) near New Carlisle, Indiana; (ii) I/N Kote, a partnership in which a subsidiary of Mittal Steel USA owns a 50% interest with a one million tonne annual production capacity steel galvanizing facility on approximately 25 acres of land, which it owns in fee, located adjacent to the I/N Tek site; (iii) PCI Associates (PCI), a partnership in which a subsidiary of Mittal Steel USA owns a 50% interest with a pulverized coal injection facility on land located within the Indiana Harbor Works (Mittal Steel USA leases PCI the land upon which the facility is located); and (iv) Hibbing Taconite Company, located in Hibbing, Minnesota, in which Mittal Steel USA owns a 62.3% interest, which has iron ore reserves and operates mines and a pelletizing plant. Mittal Steel USA also has research and development facilities in East Chicago, Indiana. Companhia Siderrgica de Tubaro Companhia Siderrgica de Tubaro (CST), a wholly-owned subsidiary of Arcelor Brasil S.A., is located in Esprito Santo, Brazil. CST operates an integrated steel mill for the production and sale of iron and steel products, mainly slabs and semi-finished steel plates for export. CST is strategically located and has infrastructure including a well-equipped road and railway system, as well as a port complex that includes the Praia Mole Marine Terminal. CSTs plant covers an area of approximately 13.7 square kilometers. CSTs steel-making plant is composed of a coke plant comprising three batteries, a sinter plant machine, two blast furnaces, a steel-making shop comprising two oxygen furnace converters, two continuous casting for slab and a hot strip mill. In April 2003, CSTs shareholders approved new investments to increase steel production capacity to 7.5 million tonnes per year beginning in 2007, in order to compensate for steel slab production capacity which was redirected to supply the hot strip mill. Vega do Sul is a wholly-owned subsidiary of CST. Vega do Sul produces cold rolled coil and galvanized steel primarily for the automobile industry and, to a lesser degree, for the household appliances, construction, pipe and cold-formed shapes industries. Its facilities are located in So Francisco do Sul, in Santa Catarina, Brazil, and consist of a modern, state-of-the-art cold strip mill. Vega do Sul uses So Francisco do Sul Port to receive hot rolled coil, its main raw material, from CST. Mittal Steel Lzaro Crdenas Mittal Steel Lzaro Crdenas (MSLC) is the largest steel producer in Mexico. MSLC operates a pelletizer plant, two direct reduced iron plants; electric arc furnace-based steel-making plants and continuous casting facilities. MSLC has advanced secondary metallurgical capabilities, including ladle refining, vacuum degassing and calcium silicon injection, which permit it to produce higher quality slabs that are used for specialized steel applications in the automotive, line pipe manufacturing, shipbuilding and appliance industries. MSLC utilizes direct reduced iron as its primary metallic input for virtually all of its production.

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MSLCs production facilities are located on approximately 4.4 square kilometers adjacent to a major deep-water port in Lzaro Crdenas, in Michoacan, Mexico, through which most of its slabs are shipped for export and its raw materials are received. MSLCs principal product is slabs for the merchant market. MSLCs product line mainly caters to the high-end applications of its customers, including heat-treatment grades for plate manufacturing, oil country tubular goods and high chromium grade for oil exploration applications and for the gas transportation industry. Dofasco Dofasco is a leading North American steel solution provider and Canadas largest manufacturer of flat rolled steels. Its products include hot rolled, cold rolled, galvanized and tinplate as well as tubular products, and laser-welded blanks, a proprietary laminate. Dofasco supplies these products to the automotive, construction, packaging, manufacturing, pipe and tube and steel distribution markets. Dofascos Hamilton plant covers an area of approximately 3.1 square kilometers. Dofasco has nine wholly-owned operating subsidiaries: Dofasco USA Inc., Dofasco Marion Inc., Powerlasers Limited, Powerlasers Corporation, Dofasco de Mxico, S.A. de C.V., Dofasco Tubular Products Inc., Dofasco Tubular Products Corporation, Dofasco Shelby Inc. and Dofasco Elizabethtown Inc. Steel-making facilities are located at Dofascos Hamilton, Ontario plant and at its 50%-owned mini-mill facility, Gallatin Steel Company, located in Gallatin County, Kentucky. Products produced by Dofasco and its steel-related joint ventures and subsidiaries include: hot and cold rolled steels; galvanized, ExtragalTM and GalvalumeTM steel; prepainted steel; tinplate and chromium coated steels in coils, cut lengths and strip; iron ore concentrate and pellets; welded pipe and tubular steels; and laser welded steel blanks. Dofasco owns 98.7% of Quebec Cartier Mining and has a 28.6% ownership interest in Wabush Mines, each of which mines and processes iron ore for use in Dofascos steel-making operations and for sale to other steelmakers. Dofascos steel-making plant in Hamilton, Ontario is adjacent to water, rail and highway transportation. The plant has two material handling bridges, ore and coal docks, storage yards and handling equipment, three blast furnaces, of which two are currently operating, three coke plants comprising six batteries, one basic oxygen steel-making plant, one two-strand slab caster and a single strand slab caster, one twin shell electric arc furnace and two ladle metallurgy stations associated with steel-making, a hot strip rolling mill consisting, slitting facilities for hot rolled steel, cold rolling mill complex consisting of a coupled pickling line and tandem cold rolling mill, cold rolling mill complex consisting of a coupled pickling line and tandem cold rolling mill, one continuous, stand-alone pickle line, one electrolytic cleaning line, and shearing, coiling, slitting, rewind and inspection equipment related to the cold mills, four temper mills, three continuous annealing lines, 140 conventional and 16 high hydrogen bases for batch annealing and 16 bases for open coil annealing, five continuous galvanizing lines, one of which is capable of producing Galvalume steel and another of which is capable of producing Extragal steel (this line is 80%-owned by Dofasco), one continuous electrolytic tinning line, one continuous electrolytic tinning and chromium coating line, one coil preparation line and a tin plate packaging line and two tube mills. Flat Carbon Europe Mittal Steels Flat Carbon Europe segment has production facilities in Western and Eastern Europe, including Germany, Belgium, France, Spain, Italy, Luxembourg, Romania, Poland and the Czech Republic. The following two tables sets forth a general description of Mittal Steels principal production locations and production units in the Flat Carbon Europe segment:

153

Production Locations - Flat Carbon Europe

Unit Country Locations Type of Plant Products

Arcelor Bremen Lige Arcelor Atlantique Arcelor Lorraine ArcelorEisenhttenstadt Arcelor Espaa ArcelorMditerrane Arcelor Gent Arcelor Piombino Arcelor Sagunto Arcelor Dudelange Arcelor Packaging

Germany Belgium France France Germany Spain France Belgium Italy Spain Luxembourg Belgium, France, Spain Spain France, Belgium

Bremen Lige Dunkirk, Mardyck, Montataire, Desvres Florange, Mouzon Eisenhttenstadt Avils, Gijn Fos-sur-Mer, Saint-Chly Ghent, Geel, Genk Avellino Sagunto Dudelange, Giebel Lige, Basse-Indre, Florange, Aviles, Etxebarri Bilbao Charleroi, Le Creusot, Chateauneuf, SaintChamond Galati Krakow, Swietochlowice

Integrated Integrated Integrated Integrated Integrated Integrated Integrated Integrated Downstream Downstream Downstream Downstream

Flat Flat Flat Flat Flat Flat Flat Flat Flat Flat Flat Flat

ACB Industeel

Mini-mill Mini-mill

Flat Flat

Mittal Steel Galati Mittal Steel Poland

Romania Poland

Integrated Integrated

Flat, Long, Pipes and Tubes Flat

Production Facilities Flat Carbon Europe

Number of Facilities Capacity (in million tonnes per year) Production in 2006 (in million tonnes)(1)(2)

Facility

Coke Plant..................................................................... Sinter Plant.................................................................... Blast Furnace ................................................................ Basic Oxygen Furnace (including Tandem Furnace).... Electric Arc Furnace ..................................................... Continuous Bloom / Billet Caster ................................. Breakdown Mill (Blooming / Slabbing Mill)................ Billet Rolling Mill......................................................... Continuous Caster Slabs ............................................ Hot Rolling Mill............................................................ Pickling Line................................................................. Tandem Mill.................................................................. 154

20 15 24 18 5 3 3 1 22 15 26 21

11.9 53.7 39.8 41.0 2.6 1.6 0.7 2.5 38.4 36.6 23.3 20.2

11.0 44.7 32.7 34.1 2.0 0.2 0.6 0.2 33.0 30.6 15.4 17.2

Facility

Number of Facilities

Capacity (in million tonnes per year)

Production in 2006 (in million tonnes)(1)(2)

Annealing Line.............................................................. Skin Pass Mill ............................................................... Hot Dip Galvanizing Line............................................. Electro Galvanizing Line .............................................. Tinplate Mill ................................................................. Color Coating Line........................................................ Plate Mill....................................................................... Welded Pipes ................................................................

14 14 33 9 9 13 2 2

5.1 8.0 11.7 2.2 1.9 2.0 2.9 0.2

3.4 5.9 10.7 1.7 1.5 1.4 1.7 0.2

(1) Production facility details include the production numbers for each step in the steel-making process. Output from one step in the process is used as input in the next step in the process. Hence, the summation of production numbers does not equal the quantity of saleable finished steel products. (2) 2006 production figures are based on annual production as if acquisitions had occurred on January 1, 2006.

Flat Carbon Western Europe Arcelor Bremen Arcelor Bremen is situated on the bank of the River Weser in the north of Bremen. The plant covers an area of approximately seven square kilometers. Arcelor Bremen is a fully-integrated and highly automated plant with four million tonnes of crude steel production capacity. Arcelor Bremen has upstream and downstream facilities and contains one sinter plant, two blast furnaces, one steel shop with two basic oxygen converters, one vacuum degassing, one continuous slab caster and one hot strip mill upstream plant and downstream plant has one pickling line, a four-stand tandem mill, batch annealing and temper mills, and two hot dip galvanizing lines. Arcelor Bremen produces and sells a wide range of products, including slab, hot rolled, pickled, cold rolled and hot dip galvanized rolls to the automotive and primary transformation sector. Cockerill Sambre (Lige) Lige, which is located along the Meuse River, is divided into upstream facilities which are included into Cockerill Sambre and downstream facilities, which are now part of Arcelor Steel Belgium (ASB). Liges upstream facilities consist of two main plants: the Seraing-Ougre plant, which includes one coke plant, one sinter plant (DL5) and one blast furnace (HFB), and the Chertal plant, which includes a steel shop with two LD-AC converters (210T), ladle metallurgy with RH vacuum treatment, two continuous caster machines (one double strand and one single strand) and a hot strip mill. The downstream facilities, located in the south of Lige, comprise two pickling lines and two cold rolling mills (located in Tilleur), batch annealing furnaces and one continuous annealing line (located in Jemeppe), four hot dip galvanizing lines and two organic coating lines (located in the Flemalle/Ramet area), as well as three electrogalvanizing lines. Cockerill Sambre produces a large range of high-quality steel grades, from IF (Interstitial-free) steels for the automotive industry to deep drawing aluminum killed steels, tin plate low carbon specifications, the whole range of construction steels and micro-alloyed grades. A portion of its production is sent to Liges downstream facilities, with the remainder sold to Arcelor Construction France and to Condesa Group. Liges downstream facilities mainly produce higher added value products, for automotive, household electrical devices, the appliance and construction industries, general industrial applications and tin plate applications. 155

Arcelor Atlantique et Lorraine Arcelor Atlantique is part of Arcelor Atlantique et Lorraine, with four plants located in the north of France (Dunkirk, Mardyck, Montataire and Desvres). The Dunkirk plant covers an area of approximately 4.6 square kilometers. The Mardyck plant covers an area of approximately 2.6 square kilometers. The Desvres plant covers an area of approximately 0.1 square kilometers. The Montataire plant covers an area of approximately 0.7 square kilometers. Arcelor Atlantiques principal equipment consists of a coking plant, two sinter plants, three blast furnaces, three basic oxygen furnaces, four continuous slab casters, one hot strip mill, one pickling line, one coupled pickling and a cold rolling mill line, six hot dip galvanizing lines, one organic coating line and one laminated composite line. Arcelor Atlantique produces and markets a large range of products, including slabs, hot rolled, pickled, galvanized, color coated coils and composite products. Arcelor Atlantiques products are sold in France and Western Europe, principally for the automotive market. Arcelor Lorraine, consisting of the sites of Florange and Mouzon, is part of Arcelor Atlantique et Lorraine. The Florange site has upstream and downstream facilities mainly located along the Fensch River in Lorraine, France and covers an area of approximately 6.2 square kilometers and contains a coke plant, a sinter plant, two blast furnaces, a steel-making division with two bottom blowing oxygen converters, ladle furnace and tank degasser facilities, and one continuous slab caster and a hot strip mill for the upstream portion. The downstream plant of Florange has a high capacity coupled pickling-rolling line, the first in the world designed for this purpose, a continuous annealing line, batch annealing and temper mill, and three coating lines dedicated to the automotive market: a hot dip galvanizing line, an electro galvanizing line, and an organic coating line. The Mouzon site covers an area of approximately 0.9 square kilometers and has two hot dip coating lines for the production of zinc-aluminum coated products. The Florange and Mouzon sites produce and deliver a very large range of flat steel high-value finished products, including cold rolled, hot dip galvanized, electro galvanized, aluminized and organic coated material. Certain products are dedicated to the automotive market, such as Extragal, Galfan, Usibor (hot dip) and Bonazinc (organic coated), others to the appliances market, such as Solfer (cold-rolled) for enameling applications or high gloss (organic coated). More than 93% of total production is for the French and EU market.

156

Arcelor Eisenhttenstadt Arcelor Eisenhttenstadt is situated on the river Oder near the Polish border and 110 kilometers to southeast of Berlin. The plant covers an area of approximately 8.8 square kilometers. Arcelor Eisenhttenstadts principal equipment consists of one sinter plants, two blast furnaces, two basic oxygen furnaces, one continuous bloom caster, one continuous slab caster, one hot strip mill, two pickling lines, one tandem mill, two hot dip galvanizing lines and one organic coating line. Arcelor Eisenhttenstadt produces and sells a wide range of products, including hot-rolled, cold rolled, electrical and hot dip galvanized and organic coated rolls to automotive, distribution, metal processing, construction and appliances industry customers in Germany, Central and Eastern Europe. Arcelor Espaa Arcelor Espaa consists of two factories, Avils and Gijn, interconnected by an internal railway and covering an area of approximately 15.1 square kilometers. The two factories operate as a single integrated steel plant comprising coking facilities, sinter plants, blast furnaces, steel plants, hot-rolling mills and cold roll plants. The factories are also connected by rail to the two main ports in the region. Raw materials received at the port of Gijn are unloaded at Arcelor Espaas own dry-bulk terminal, which is linked to the iron making facilities by belt conveyors. Arcelor Espaa is connected to the rest of Arcelor factories in Spain by wide-gauge and narrow-gauge rail networks. Shuttle trains link the Arcelor Espaa facilities with the Arcelor Sagunto and Arcelor Etxebarri plants, which they supply with hot-rolled coils for subsequent processing into cold-rolled, galvanized and electrogalvanized sheet and tinplate. The Arcelor Sagunto plant covers an area of approximately 0.3 square kilometers. Arcelor Espaa operates two coking plants, two sinter plants, two blast furnaces with 11-meter diameter hearths, two steel plants, one of them for flats products, with two continuous casters for slab and other for long products, with two continuous caster for bloom and billet casters, a hot strip mill, a heavy plate mill, a wire rod mill and a rail mil. The cold roll plants include two pickling lines, two five stands cold tandem mills, annealing facilities for tinplate, tinning lines, two galvanizing lines and one organic coating line. Arcelor Espaa produces heavy plates, hot rolled, pickled and oiled, hot dip galvanized rolls to the automotive and other industries, organic coated and tin plates, rails and wire rods. Acelor Mditerrane Arcelor Mditerrane operates a flat carbon steel plant in Fos-sur-Mer, France. In addition, Arcelor Mditerrane also operates a downstream plant for electrical steels in Saint-Chly (300 kilometers north of Fossur-Mer). The Fos-sur-Mer plant is located 50 kilometers west of Marseilles on the Mediterranean Sea and covers an area of approximately 15 square kilometers. Arcelor Mditerranes principal equipment consists of one coke oven plant, one sinter plants, two blast furnaces, two basic oxygen furnaces, two continuous slab casters, one hot strip mill, one pickling line, one cold rolling mill and one continuous annealing line. Arcelor Mditerranes products include coils for direct transformation into wheels, pipes for energy transport, automotive construction and coils for downstream facilities for car bodies, construction and general industry applications. The Saint-Chly plant produces electrical steel, primarily for electrical motors. 60% of its products are shipped through a private dedicated wharf, partly through a shuttle system (coils for Sagunto and La Magona); 30% are shipped by rail and the rest by truck. Arcelor Steel Belgium (Arcelor Gent, Geel and Genk) Arcelor Gent, Geel and Genk are part of Arcelor Steel Belgium. Arcelor Gent is a fully integrated coastal steelworks which is located along the Ghent-Terneuzen canal, approximately 17 kilometers from the Terneuzen sea lock, which links the works directly with the North Sea. The canal is of the Panamax type and can accommodate ships of up to 65,000 tonnes. The Arcelor Gent plant covers an area of approximately 8.2 157

square kilometers. Arcelor Geel consists of an organic coating line and Arcelor Genk of an electrolytic galvanizing line. The Arcelor Genk plant covers an area of 0.2 square kilometers. Arcelor Gent, Geel and Genks principal equipment consists of one coke oven plant, two sinter plants, two blast furnaces, one basic oxygen furnace, two continuous slab casters, one hot strip mill, three pickling lines, two tandem mills, batch annealing furnaces, one continuous annealing line, three temper rolling mills, three inspection lines, three hot dip galvanizing lines and one organic coating line. Arcelor Gent produces flat steel products with high added value. A significant part of the production is coated, either by hot dip galvanizing, electrolytic galvanizing or organic coating. Arcelor Gents products are used in the automotive industry and in household appliances, tubes, containers, radiators and construction elements. Aceria Compacta de Bizkaia Aceria Compacta de Bizkaia (ACB) is located inside the Bilbao Port, in a 0.5 square kilometer property. Most of its raw materials arrive through an owned port situated adjacent to the melt shop. ACBs principal equipment consists of two electric arc furnaces, two continuous slab casters, one hot rolling mill and one pickling line. ACB is a major supplier of hot rolled coils to the Spanish market. Coils are supplied both hot rolled and pickled and oiled and the range of production includes cold forming and drawing steels, structural steels, cold for re-rolling, direct galvanization, dual phase, weather resistant and floor plate. The compact steel production equipment, including a seven-stand hot rolling mill, enables ACB to supply low thickness hot rolled coil down to 1.0 millimeter. Sales outside Spain represent 20% of total shipments, most in Western Europe. Industeel Belgium and Industeel France Industeels facilities consist of four plants: Industeel Belgium (IB), located in Charleroi, Belgium; Industeel Creusot (IC), located in Le Creusot, France; Industeel Loire (IL), located in Chateauneuf, France and Euroform, located in Saint-Chamond, France. Industeel also owns a research and development (R&D) center in Le Creusot, France. IB, IC and IL are heavy plate mills. Each plant is fully integrated, from melt shop to finishing facilities. IB and IC are designed to produce 5-150 millimeter thick special steel plates, including stainless steel products, while IL is dedicated to extra heavy gauge products (120-900 millimeter thick) in alloyed carbon steel. Euroform operates hot forming facilities, mainly to transform extra heavy gauge products received from IL. The R&D center is fully dedicated to special plate products development. Industeels principal equipment consists of three electric arc furnaces, two ingot casting, one continuous caster, three hot rolling mills, heat treating and finishing lines. Industeels plants in Belgium cover an area of approximately 0.4 square kilometers, and its plants in France cover an area of approximately 0.7 square kilometers. Industeel provides products for special steel niche markets, both in the form of alloyed carbon grades and in stainless steel. It mainly focuses on applications where tailor-made or added-value plates are needed. Industeels main product segments are stainless steel, process vessels steel, wear-resistant steel, cryogenics steel, mold steel, high-strength steel, jack-up rig elements, protection steel, clad plates, tool steel for oil and gas, chemistry and petrochemistry, wear resistant steel, assembly industries, process industries and construction inside and outside of Europe. Arcelor Piombino Arcelor Piombinos production facilities and headquarters are located in Piombino, Italy. It also has a production division in San Mango sul Calore in Avellino, Italy. Arcelor Piombino manufactures galvanized and organic coated steel products and has one pickling line, a full continuous four-stand tandem mill, four hot dip galvanizing lines and three organic coating lines, of which one is located in Avellino.

158

Arcelor Piombinos products are sold to European customers, primarily in the distribution, appliance and construction industries. Flat Carbon Eastern Europe Mittal Steel Poland Mittal Steel Poland is the largest steel producer in Poland, with an annual production capacity of approximately 8.4 million tonnes of crude steel. The major operations of Mittal Steel Poland are based in Dabrowa Gornicza, Krakow, Sosnowiec and Swietochlowice, Poland. Mittal Steel Polands Dabrowa Gornicza, Krakow, Sosnowiec and Swietochlowice plants cover an area of 12.4, 15.1, 0.7 and 0.8 square kilometers, respectively. Mittal Steel Poland also has interests in a number of companies some of which operate rolling mills that engage in converting billets, slabs and other semi-finished products into a range of finished products, and one company which produces and supplies coke to other Mittal Steel subsidiaries. Mittal Steel Poland produces a wide range of steel products, including both long products and flat products. Its product range includes slabs, billets, blooms, sections, rails, hot-rolled sheets and strips, cold-rolled sheets and strips, galvanized sheets, welded tubes, wire-rods and other wire products and coated sheets. More than 50% of Mittal Steel Polands products are sold in the domestic Polish market, while the remainder is exported, primarily to customers located in other member states of the EU. Mittal Steel Polands primary customers are in the construction, engineering, transport, mining and automotive industries. Mittal Steel Polands principal equipment consists of thirteen coke oven batteries, two sinter plants, five (four operational) blast furnaces, six basic oxygen furnaces, two continuous casters for blooms and billets, one continuous casters for slabs, one breakdown mill (bloom and slabs) one billet mill, one hot rolling mill, one cold rolling mill, one heavy section mill, one medium section mill, three galvanizing lines, two color coating lines, one wire rod mill, one pipe / tube mill and one cold rolling mill for narrow strips. Mittal Steel Galati Mittal Steel Galatis principal equipment consists of six coke oven batteries (five operational), two sintering plants, five blast furnaces, six basic oxygen furnaces, four continuous slab casters, five continuous bloom casters (three operational), one billet mill, two heavy plate mils, one hot strip mill, one cold rolling mill, one hot dip galvanizing line and one welded pipe plant. Mittal Steel Galatis plant covers an area of approximately 15.9 square kilometers. Mittal Steel Galati produces slabs, billets, plates, hot rolled, cold rolled and galvanized sheet and large diameter longitudinally welded pipes. Approximately 31% of its products are sold in Romania. In connection with its acquisition by Mittal Steel in 2001, Mittal Steel Galati agreed with the Romanian Government to make capital expenditures of approximately $251 million from November 2001 through December 2006, of which $76 million is to be used for environmental projects, as well as a further $100 million in capital expenditures from 2007 through 2011. These investments are secured by a pledge of a portion of Mittal Steels shares in Mittal Steel Galati.

159

Mittal Steel Ostrava See Long Carbon Europe. Long Carbon Mittal Steels Long Carbon segment has production facilities in North and South America and Europe, including the United States, Canada, Brazil, Trinidad, Spain, Germany, France, Luxembourg, Italy, Poland, Romania and the Czech Republic. The following two tables set forth a general description of Mittal Steels principal production locations and production units in the Long Carbon segment: Production Locations Long Carbon
Unit Country Locations Type of Plant Products

Travi e Profilati diPallanzeno Arcelor Thringen Arcelor ProfilLuxembourg SA Aceralia LargosVerina Carril &Alambron Arcelor Madrid SL Arcelor Olaberra Arcelor Bergara Arcelor LaminadosZaragoza, SA Arcelor Rodange Arcelor HutaWarszawa Arcelor Zumrraga Mittal Steel Europe Mittal Steel Europe Mittal SteelTrfileurope Mittal SteelHunedoara Mittal Steel Ostrava Mittal Steel Poland Mittal Steel Canada Mittal Steel USA Mittal Steel USA Mittal Steel USA

Italy Germany Luxembourg Spain Spain Spain Spain Spain

Pallanzeno Unterwellenborn Esch-Belval Differdange Gijon Madrid Olaberra Bergara Saragossa

Downstream Mini-mill Mini-mill Downstream Mini-mill Mini-mill Mini-mill Mini-mill

Long / Sections Long / Sections Long / Sections, Sheet Piles Long / Rails, Wire Rod Long / Sections Long / Sections Long / Sections Long / Light Bars and Angles Long / Sections, Rails, Rebars Long / Bars Long / Bars, Wire rods Long / Wire Rods Long / Billets, Wire Rod Long / Wire Drawing Long / Sections, Wire Rod Long / Sections, Wire Rod Long / Sections, Wire Rod Long / Wire Rod / Bars Long / Rail Long / Wire Rod Long / Bar

Luxembourg Poland Spain Germany Germany Luxembourg Romania Czech Republic Poland Canada USA USA USA

Esch Schifflange, Rodange Warsaw Zumrraga Hamburg Ruhrort, Hochfeld Shifflange Hunedoara Ostrava Dabrowa Gornica, Sosnowiec Contrecoeur East, West Steelton, PA Georgetown, SC Indiana Harbor Bar, IN 160

Mini-mill Mini-mill Mini-mill Mini-mill Mini-mill Downstream Mini-mill Integrated Integrated Mini-mill Mini-mill Mini-mill Mini-mill

Unit

Country

Locations

Type of Plant

Products

Mittal Steel PointLisas Belgo Belgo Belgo Arcelor Belgo re Drawing

Trinidad Brazil Argentina Brazil Costa Rica Luxembourg, USA, Austria, Hungary, Poland, UK, Brazil, Canada, Costa Rica, Argentina

Point Lisas Jao Monlavade Villa Constitucion Juiz de Fora, Piracicaba, Vitoria Costa Rica Bissen, Bettembourg, Arkansas, Szengotthard, Sycow, Sheffield, BBA, BMB, BBN, Montreal, Contagem, Vespasiano, Ferra de Santana, La Tablada

Mini-mill Integrated Integrated Mini-mill Downstream Downstream

Long / Wire Rod Long / Wire Rod Long / Wire Rod / Bar Long / Bar / Wire Rod Long / Wire Rod Long / Wire Drawing

Production Facilities Long Carbon Facility Number of Facilities Capacity (in million tonnes per year) Production in 2006(in million tonnes)(1)(2) 5.4 10.7 7.8 9.6

Coke Plant Sinter Plant Blast Furnace Basic Oxygen Furnace (including Tandem Furnace) DRI Plant Electric Arc Furnace Continuous Caster - Bloom / Billet Breakdown Mill (Blooming / Slabbing Mill) Billet Rolling Mill Heavy Section Mill Medium Section Mill Light Section Mill Bar Mill Rail Mill Wire Rod Mill Continuous Caster - Slabs Hot Rolling Mill Pickling Line Tandem Mill

13 4 7 11

6.1 13.2 9.6 11.2

6 24 30 2 3 4 10 1 18 2 14 1 2 3 4

6.2 19.6 26.5 5.6 3.7 2.9 6.1 0.6 6.1 0.7 9.3 2.3 2.0 0.7 0.6 161

4.1 16.1 21.9 1.2 1.1 2.1 5.3 0.5 3.9 0.4 7.3 1.9 1.4 0.7 0.4

Unit

Country

Locations

Type of Plant

Products

Annealing Line Skin Pass Mill Hot Dip Galvanizing Line Electro Galvanizing Line Seamless Pipes Welded Pipes

6 1 3 3 2 2

0.5 0.2 0.0 0.1 0.3 0.2

0.5 0.1 0.0 0.1 0.3 0.2

(1) Production facility details include the production numbers for each step in the steel-making process. Output from one step in the process is used as input in the next step in the process. Hence, the summation of production numbers does not equal the quantity of saleable finished steel products. (2) 2006 production figures are based on annual production as if acquisitions had occurred on January 1, 2006.

Long Carbon Americas Mittal Steel USA See Flat Carbon Americas. Mittal Canada Mittal Canada is the largest mini-mill in Canada. Mittal Canada has eight major production facilities. Mittal Canadas main operations include the Contrecoeur East site with two DRI plants, one steel plant operating two electric arc furnaces, a rod mill and a flat roll mill. The Contrecoeur West site operates one steel plant with one electric arc furnace and a bar mill. Mittal Canada also operates a second bar mill and a pipe mill in the Montreal area. It is engaged in further downstream production with four wire drawing mills, two in the Montreal area, one in Hamilton, Ontario and one in Detroit, Michigan, USA. Mittal Canadas Contrecoeur East operations are capable of producing, billets, slabs, hot-rolled sheets, cold-rolled sheets, rod and bar products. Mittal Canada has two DRI plants with a total production capacity of 1.5 million tonnes. The Contrecoeur West operations produce billets and bar products. Mittal Canada produces a wide range of products with a focus on niche and value-added products. These products include hot, cold and galvanized sheets, wire rods, wire products, bar and pipe products primarily sold in Canada and the United States. Mittal Canada principally serves the automotive, appliance, transportation, machinery and construction industries. Mittal Steel Point Lisas Limited Mittal Steel Point Lisas, located in Trinidad, is the largest steelmaker in the Caribbean, based on 2006 shipments. Its facilities are located on approximately 1.1 square kilometers at the Point Lisas Industrial Complex in Point Lisas. Mittal Steel Point Lisas principal production facilities are three direct reduced iron plants, two electric arc furnaces, two continuous casters for billets and one wire rod mill. Mittal Steel Point Lisas production facilities are located adjacent to a dedicated deep-water dock facility near the waterfront of the Gulf of Paria. In 2006, Mittal Steel Point Lisas exported substantially all of its wire rod shipments, primarily to steel manufacturers in South and Central America, the Caribbean and the United States. Mittal Steel Point Lisas is also a significant producer, exporter, and user of DRI. Mittal Steel Point Lisas receives its raw material imports and ships its steel products through a deep-water port facility within its production complex.

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Belgo and Acindar Belgos steel production facilities include one integrated plant (Joo Monlevade plant in Brazil), one semi-integrated steel plant, Acindar (Villa Constitucin plant in Argentina), three mini-mills (the Juiz de Fora, Piracicaba and Vitria plants in Brazil), nine wire plants and three plants that produce transformed steel products. In addition, Belgo, through its subsidiary CAF Santa Barbara, produces charcoal from eucalyptus reforestation operations that is used to fuel its furnaces in Juiz de Fora and/or to exchange for pig iron with local producers, and through the jointly controlled entity Guilman Amorin, produces energy used to supply the Joo Monlevade plant. Belgo covers an area of approximately 1,322 square kilometers, including production plants and forested areas in Brazil. Belgos long-rolled products are mainly directed at the civil construction sector and to the industrial manufacturing sector. Long-rolled products used in the construction sector consist primarily of merchant bars and rebars for concrete reinforcement. Long-rolled products for the industrial manufacturing sector consist principally of bars and wire rods. Wire rods produced by Belgo are either consumed by Belgos subsidiaries, which further process them to manufacture higher value-added wire products and transformed steel products, or sold directly to third parties, such as other wire product manufacturers or customers in the tire, automotive, welding and appliance businesses. Belgos wire steel products are value-added products with higher margins. Belgos subsidiary Belgo Bekaert Arames Ltda. and the wire steel division of Acindar manufacture wire products that are consumed mainly by agricultural and industrial end-users and are sold at retail stores. These wire steel products include barbed and fence wire, welding wire and fasteners. Wire products produced by Belgos subsidiary BMB Belgo-Mineira Bekaert Artefatos de Arame Ltda. consist of steel cords that are consumed by the tire industry and hose wire that is used to reinforce hoses. Belgos transformed steel products are produced mainly by the cold drawing of low carbon wire rods. Belgos transformed steel products for the civil sector include welded mesh, trusses, annealed and nails. In addition, Belgo also processes wire rods to produce drawn bars at its Sabar facility sold to customers in the automotive industrial sector. Long Carbon Europe Mittal Steel Europe (Hamburg and Duisburg) Mittal Steel Europes principal steel-making operations are in Hamburg and Duisburg in Germany. The Duisburg plant covers an area of approximately 1.9 square kilometers and the Hamburg plant covers a leased area of approximately 0.6 square kilometers. Mittal Steel Europes principal production facilities currently in operation are one direct reduced iron plant, one electric arc furnaces, two converter shops, three continuous caster, one billet rolling mill and two wire rod mills. Mittal Steel Europes principal products are wire rods, bars, billets and blooms. Over 80% of Mittal Steel Europes products are sold in European markets, while the remainder is exported, primarily to the United States and Asia. Mittal Steel Europe ships its products primarily to customers in the construction, engineering and automotive industries. Mittal Steel Europe meets its iron ore requirements largely from suppliers in Brazil and Canada. It has long-term contracts for pig iron supply to Mittal Steel Ruhrort. Mittal Steel Europe sources scrap mainly from the Western European and Baltic markets. In February 2005, Mittal Steel Ruhrort signed an agreement, with ThyssenKrupp Stahl AG for the purchase of 1.3 to 1.5 million tonnes of hot metal each year for a 20-year term beginning October 2007. This agreement extended an existing supply agreement between the parties under which Mittal Steel Ruhrort agreed to purchase from ThyssenKrupp Stahl AG 1.3 million tonnes of hot metal each year until September 2007.

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Mittal Steel Poland See Flat Carbon Europe. Mittal Steel Ostrava Mittal Steel Ostravas production facilities are located in Ostrava, Czech Republic. The majority of its facilities are wholly-owned. Mittal Steel Ostravas principal production facilities currently in operation are three coke oven batteries, two sinter plants, four blast furnaces, four open hearth tandem furnaces, three continuous casters, one hot strip mill, two section mills, one wire rod mill, two seamless tube mills, one spiral welding shop and one power plant. The 2003 sale of Mittal Steel Ostrava by the government of the Czech Republic was part of an initiative to restructure the Czech steel industry. Mittal Steel made capital expenditure commitments totaling $243 million over 10 years (including $20 million for environmental improvements), including $135 million from 2003 through 2007. Mittal Steel has made capital expenditures of $99 million as of December 31, 2006 towards this commitment. Upon the acquisition, Mittal Steel rescheduled the debt obligations of Mittal Steel Ostrava with a consortium of Czech and international banks led by the International Finance Corporation. In connection with the acquisition, Mittal Steel Ostrava also committed to follow the medium-term restructuring plan approved by the European Commission. This plan includes certain reductions in capacity and employment levels. Mittal Steel Ostrava produces mostly long products. Approximately 43% of Mittal Steel Ostravas production is sold in the domestic market, and the remainder is sold primarily to customers in other European countries. Mittal Steel Ostrava sells most of its production directly to end users, primarily in the engineering, automotive and construction industries, as well as to stockists (small-lot resellers). The significant downstream subsidiaries of Mittal Steel Ostrava are Jakl Karvina a.s. (wholly-owned), Valcovny Plechu a.s. (wholly-owned) and Nova Hut-Valcovna za Studena, spol s.r.o. (wholly-owned). Jakl Karvina a.s. has an annual capacity of 255,000 tonnes of welded pipes. Valcovny Plechu, a.s. has an annual capacity of 210,000 tonnes of cold rolled products. Nova Hut-Valcovna za Studena, spol s.r.o. has an annual capacity of 42,000 tonnes of cold rolled strips. Arcelor Profil Luxembourg Arcelor Profil Luxembourg has two facilities located in Esch Belval and Differdange, Luxembourg. The Differdange plant covers an area of approximately 1.2 square kilometers, and the Belval plant covers an area of approximately 1.1 square kilometers. Arcelor Profil Luxembourgs principal production facilities currently in operation are two electric arc furnaces, two long section rolling mills and one sheet piles rolling mill. Arcelor Profil Luxembourg produces a wide range of sections and sheets piles. Arcelor Rodange Arcelor Rodange has two facilities located in Esch Schifflange with an electric arc furnace, a continuous caster and Rodange-2 hot rolling mills. Arcelor Rodange is owned by Arcelor Profil Luxembourg (80%) and third parties (20%). The Rodange plant covers an area of approximately 0.5 square kilometers and the Esch Schifflange plant covers an area of approximately 0.4 square kilometers. Arcelor Rodange manufactures special sections, crane rails, rebars and special rebars, mining support, sections, track shoes, special car building sections, hot rolled collector bars, and cutting edges, cross hearts, tie plates, metro contact and guide bars and square bars. Arcelor Huta Warszawa Arcelor Huta Warszawa, a wholly-owned subsidiary of Arcelor Holding Srl (Luxembourg), is located in Warsaw, Poland. Arcelor Huta Warszawa produces long products. Its unit has an electric arc furnace, a continuous caster, a blooming mill and three section mills. 164

Arcelor Huta Warszawa produces special quality bars. Beginning in the third quarter of 2007, Arcelor Huta Warszawa will produce rebars of from 8 millimeters to 40 millimeters in diameter, flat bars of from 25 to 150 millimeters in diameter, equal angles of from 30 to 80 millimeters in diameter and round plain bars of from 10 millimeters to 50 millimeters in diameter. Arcelor Olaberra Arcelor Olaberra is located in northeastern Spain. It produces long products. Its unit has an electric arc furnace, continuous caster and a hot rolling mill, and produces sections of between 6.0 meters and 24.1 meters in length. Arcelor Bergara Arcelor Bergara is located in northeastern Spain. It produces long products. Its unit has an electric arc furnace, continuous caster and a hot rolling mill. Its unit produces steel sections of between 6.0 meters and 18.3 meters in length. Arcelor Madrid Arcelor Madrid is located 15 kilometers south of Madrid. It produces long products. It has an electric arc furnace, continuous caster and a hot rolling mill. It manufactures steel sections of between 9.0 meters and 18.3 meters in length. AACIS Mittal Steels AACIS segment has production facilities in Europe, Asia and Africa, including Kazakhstan, Ukraine, South Africa, Algeria, Macedonia, Bosnia and Herzegovina and Morocco. The following two tables set forth a general description of Mittal Steels principal production locations and production: Production Locations - AACIS
Unit Country Locations Type of Plant Products

Mittal SteelTemirtau Mittal Steel Kryviy Rih Mittal Steel South Africa

Kazakhstan Ukraine South Africa

Karaganda Kryviy Rih Vanderbijlpark, Saldanha, Newcastle, Vereeniging Annaba Skopje Zenica Nador, Jorf, Lasfar Roman, Ostrava, Vereeniging, Annaba, Krakow, Iasi, Galati, Contrecoeur, Temirtau

Integrated Integrated Integrated, Mini-mill

Flat, Pipes and Tubes Long Flat, Long, Pipes and Tubes

Mittal Steel Annaba Mittal Steel Skopje Mittal Steel Zenica Sonasid Pipes & Tubes

Algeria Macedonia BH Morocco Romania, Czech Republic, South Africa, Algeria, Poland, Canada, Kazakhstan

Integrated, Mini-mill Downstream Mini-mill Mini-mill Downstream

Flat, Long, Pipes and Tubes Flat Long Long Pipes and Tubes

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Production Facilities AACIS

Number of Facilities Capacity (in million tonnes per year) Production in 2006 (in million tonnes)(1)(2)

Facility

Coke Plant..................................................................... Sinter Plant.................................................................... Blast Furnace ................................................................ Basic Oxygen Furnace (including TandemFurnace)..... DRI Plant ...................................................................... Electric Arc Furnace ..................................................... Continuous Caster - Bloom / Billet ............................... Breakdown Mill (Blooming / Slabbing Mill)................ Billet Rolling Mill......................................................... Medium Section Mill .................................................... Light Section Mill ......................................................... Bar Mill......................................................................... Wire Rod Mill ............................................................... Continuous Caster Slabs ............................................ Hot Rolling Mill............................................................ Pickling Line................................................................. Tandem Mill.................................................................. Annealing Line.............................................................. Skin Pass Mill ............................................................... Hot Dip Galvanizing Line............................................. Electro Galvanizing Line .............................................. Tinplate Mill ................................................................. Color Coating Line........................................................ Plate Mill....................................................................... Seamless Pipes .............................................................. Welded Pipes ................................................................

24 11 15 19 6 11 4 2 2 2 6 6 7 6 5 6 6 10 6 7 2 4 3 1 4 3

11.3 26.8 22.2 22.5 1.5 5.7 4.3 10.0 2.3 0.6 3.9 1.4 4.1 11.2 12.0 5.6 5.7 2.1 1.9 1.7 0.2 1.4 0.2 0.6 0.8 0.3

8.4 23.5 16.4 16.8 1.4 3.7 2.8 7.6 1.7 0.5 3.9 1.4 3.8 7.5 8.0 3.8 3.5 1.2 0.9 1.4 0.1 0.9 0.2 0.4 0.4 0.1

(1) Production facility details include the production numbers for each step in the steel-making process. Output from one step in the process is used as input in the next step in the process. Hence, the summation of production numbers does not equal the quantity of saleable finished steel products. (2) 2006 production figures are based on annual production as if acquisitions had occurred on January 1, 2006.

Mittal Steel Temirtau Mittal Steel Temirtaus wholly-owned integrated steel plant consists of six coke oven batteries, three sinter plants, four blast furnaces (three operational), three basic oxygen furnaces, two continuous slab casters, one hot strip mill, three cold rolling mills, three tinning lines, two galvanizing lines, a color coating line and two welded pipe mills. Mittal Steel Temirtau covers an area of approximately 50.9 square kilometers. In December 2001, Mittal Steel Temirtau signed an investment agreement with the government of the Republic of Kazakhstan, pursuant to which Mittal Steel Temirtau agreed to make capital expenditures of approximately $580 million. The investment agreement has been completed with total investment of $584 166

million as of December 31, 2006. These capital expenditures included reconstructing blast furnaces, constructing two continuous casters together with ladle furnaces, constructing a coke oven battery, constructing a galvanizing line, and other technological updates of fixed assets. Mittal Steel Temirtau is currently constructing a bar mill and is also upgrading its tinning line. Mittal Steel Temirtaus product range of flat steel products includes pig iron, continuous caster slabs, hot and cold-rolled coils and sheets, black plates, covers, tin plates, hot dipped galvanized products, color coated products and welded pipes. It sells steel products to a range of industries, including the tube and pipe making sectors, and manufacturers of consumer goods and appliances. Mittal Steel South Africa Mittal Steel South Africa has four main production facilities which are supported by a metallurgical byproducts division (Mittal Coke and Chemicals). Vanderbijlpark Steel is an integrated flat steel producer whose facility is located in Gauteng province, approximately 80 kilometers to the south of Johannesburg, and covers an area of approximately 23.0 square kilometers. Vereeniging Steel is a mini-mill located in Vereeniging, close to Vanderbijlpark Steel, producing specialty steel products and covering an area of approximately 0.8 square kilometers. Newcastle Steel is an integrated long products facility located in Kwa-Zulu Natal province and covering an area of approximately 13.1 square kilometers. It produces sections and bars as well as billets for rerolling and wire rod. Saldanha Steel is a flat steel producer located in Cape Province, close to the deep-sea port of Saldanha and covering an area of approximately 4.0 square kilometers. Mittal Steel South Africas products include hot-rolled plates and sheet in coil form, cold-rolled sheet, coated sheet, wire-rod and sections as well as forgings and seamless pipes. Mittal Steel Kryviy Rih Mittal Steel acquired the Ukrainian steel-maker Kryvorizhstal pursuant to an Agreement for Sale and Purchase of Shares (SPA) dated October 28, 2005 and subsequently renamed it Mittal Steel Kryviy Rih. Mittal Steel Kryviy Rihs integrated steel plant consists of six coke oven plants, three sintering plants, six blast furnaces, six basic oxygen furnaces, two open hearth furnaces, two blooming mills and five light section/bar mills, three wire rod mills and covers an area of approximately 119.9 square kilometers including mines, agriculture division and various recreational centers. Mittal Steel Kryviy Rih is committed to invest at least $500 million through 2010, as per the SPA, which includes certain innovation, investment and environment-related undertakings. Mittal Steel Kryviy Rih has spent approximately $121 million during 2006 against these SPA commitments. Mittal Steel Kryviy Rih also has certain labor obligations relating to preservation of headcount and average wages. Mittal Steel Kryviy Rihs product range of long products includes billets, rounds, rebar and light sections including squares, angles and strips. The products are sold to a range of industries such as hardware, construction, re-rolling and fabrication. The markets for the products are Ukraine, North Africa, Europe, the Middle East and the Gulf states. Mittal Steel Annaba Mittal Steel Annaba is located in Algeria. Mittal Steel Annaba is the only integrated steel plant in Algeria. Mittal Steel Annaba also owns port facilities at Annaba, which are located approximately 12 kilometers from its steel-producing operations, for handling exports of steel products and imports of raw materials. Mittal Steel Annabas production facilities consist of six basic oxygen furnaces and one electric arc furnace. It operates with two sinter plants, two blast furnaces, a hot-strip mill, a cold reducing mill, a bar and rod mill and a seamless tube mill. Mittal Steel Annaba produces both long and flat products. Its flat product range includes slabs, hot rolled and cold-rolled coils and sheets, hot-dipped galvanized products and tin plates, and its long product range includes billets, wire-rods, rebars and seamless tubes. Mittal Steel Annaba supplies products primarily to the construction, housing, engineering, packaging and petrochemical industries.

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Sonasid Sonasid is the largest long steel producer in Morocco and has facilities in Nador, Jorf and Lasfar in Morocco. Sonasid principally produces steel bars and rods. These products include reinforcing bars (used in construction), wire rods (used to manufacture nails and springs) and merchant bars (used in mechanical construction and steel framework structures). Pipes & Tubes Mittal Steel operates pipes and tubes making facilities (seamless and welded products) on four continents: Europe, Africa, Asia and North America. The plants manufacturing seamless pipes are Roman in Romania, Ostrava in the Czech Republic (see Long Carbon section), Vereeniging in South Africa and Annaba in Algeria (see AACIS section). Welded pipes are made in Ostrava in the Czech Republic (see Long Carbon section), Krakow in Poland (see Flat Carbon Europe Section), Iasi and Galati in Romania (see Flat Carbon Europe section), Contrecoeur in Canada (see Long Carbon section) and Temirtau in Kazakhstan (see AACIS section). Pipes and Tubes offers a wide range of products for the energy, construction and automotive markets including seamless and spiral-welded and longitudinally-welded tubular products, including calibrated and colddrawn precision tubes. Stainless Steel Mittal Steels Stainless Steel segment has production facilities in South America and Europe, including Brazil, France and Belgium. The following two tables set forth a general description of Mittal Steels principal production locations and production units in the Stainless Steel segment: Production Locations Stainless Steel
Unit Country Locations Type of Plant Products

Acesita

Brazil

Timoteo

Integrated

Stainless Steel, Silicium Steel, Carbon Alloyed Steel Stainless Steel

Ugine & Alz

France, Belgium

Charleroi (Carinox), Gueugnon, Genk, Isbergues*

Mini-mill

The Isbergues melt shop closed in the third quarter of 2006.

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Production Facilities for Stainless Steel

Number of Facilities Capacity (in million tonnes per year) Production in 2006 (in million tonnes)(1)(2)

Facility

Blast Furnace ............................................................ Electric Arc Furnace .............................................. Breakdown Mill (Blooming / Slabbing Mill)............ Continuous Caster Slabs ........................................ Hot Rolling Mill........................................................ Cold Rolling Mill (Z mill) ........................................ Pickling Line .......................................................... Annealing Line.......................................................... Skin Pass Mill ...........................................................
(4) (3)

2 6 1 4 4 19 5 16 7

0.7 3.0 0.1 3.0 4.5 2.1 2.1 2.4 1.3

0.5 2.2 0.0 2.2 2.2 1.6 1.7 1.8 0.9

(1) Production facility details include the production numbers for each step in the steel-making process. Output from one step in the process is used as input in the next step in the process. Hence, the summation of production numbers does not equal the quantity of saleable finished steel products. (2) 2006 production figures are based on annual production as if acquisitions had occurred on January 1, 2006. (3) In 2006, the Isbergues plant produced an additional 220,000 tonnes at the electric arc furnace and continuous casting (the melt-shop shut down in the third quarter of 2006). (4) Allocation to pickling lines and annealing lines is based on carbon steel process logic where the category Pickling Line includes hot annealing lines (anneal prior rolling for stainless steel). Annealing lines include final annealing and pickling lines as well as bright annealing lines, which are similar to annealing lines for carbon steel.

Acesita Acesita is located in Timteo in the Vale do Ao region in Minas Gerais, Brazil. It has several subsidiaries. Acesita Servios Campinas is a service center of approximately 12,000 square meters. Amorim Comercial is a service center with facilities of 11,000 square meters in Ipiranga, So Paulo which also produces tubes and bars. Cetubos is a manufacturer of seam-welded stainless steel tubes with a strip processing capacity of approximately 16,000 tonnes per year. Inox Tubos serves customers with special welded seams needs. Acesita Energtica produces wood and charcoal from cultivated eucalyptus forests for steel-making applications. It is located in Vale do Jequitinhonha, Minas Gerais, and occupies a continuous area of 126,300 hectares, which includes the following cities: Capelinha, Minas Novas, Turmalina, Itamarandiba and Veredinha. Acesita has also a research center. The integrated plant includes two blast furnaces, melting shop area (two electrical furnaces, one smelter, two converters, two continuous casting machines), hot strip rolling mill (one walking beam and one push furnace with one rougher mill and one steckel mill), stainless cold rolling (one hot annealing pickling, three cold annealing pickling, one cold preparation line, three cold rolling mill) and silicon cold rolling (one hot annealing pickling line, two tandem lines, one decarb line, one carlite coating line, one cold rolling mill, boxes annealing) and silicon cold rolling (one hot annealing pickling line, two tandem lines, one decarb line, one carlite coating line, one cold rolling mill). Ugine & Alz Belgium and France The upstream facilities of Ugine & Alz (U&A) consist of two steel-making plants in Belgium (Genk and Charleroi). The Genk plant includes two electric arc furnaces, ladle refining metallurgy, vacuum and argon oxygen decarburizing facilities and slab continuous caster. The Genk plant also includes a cold rolling mill facility. The Genk plant covers an area of approximately 0.8 square kilometers. The Charleroi plant is an integrated upstream steel-making plant with a melt shop and a hot rolling mill. Charleroi melt shop includes an electric arc furnace, ladle refining metallurgy, argon oxygen decarburizing equipment, slab continuous caster, 169

and slab grinders. In addition to this melt shop, the Charleroi plant includes a hot rolling facility. The Charleroi plant covers an area of approximately 0.5 square kilometers. The U&A downstream facilities consist of three cold rolling mill plants, located in Genk, Belgium and Gueugnon and Isbergues, France. All three plants include annealing and pickling lines (with shot blasting and pickling equipments), cold rolling mills, bright annealing lines (in Gueugnon and Genk), box annealing (in Gueugnon), skin-pass, and finishing operations equipment. In addition, the Isbergues plant also includes a direct rolling annealing and pickling (DRAP) line. The Genk plant is focused on austenitic products, Gueugnon on ferritic products, and Isbergues on DRAP products. The Gueugnon plant covers an area of approximately 0.4 square kilometers and the Isbergues plant covers an area of approximately 0.9 square kilometers. An in-house distribution network enables U&A to cover the entire European market. Its steel service centers are U&A France Service in Isbergues, France, U&A Benelux Service in Genk, Belgium, U&A Luxembourg SA in Luxembourg, RCC & Weha GmbH in Sersheim and Rheinhausen, Germany, U&A Iberica SL in Viladecans, Spain, U&A Italia SRL and Alinox SRL, respectively in Massalengo and Podenzano, Italy, U&A Polska in Bytom, Poland, Matthey SRO near Prague, Czech Republic and Meusienne in Ancerville, France. All service centers have dedicated equipment to adapt products to local markets. They include slitters, coils packaging line, cut to length lines and coils polishing lines. In addition, Meusienne and Matthey have welded tubes equipments. Ugine & Alz produces and sells a wide range of products, including semi-finished products delivered by the upstream division (austenitic, ferritic and martensitic slabs and hot rolled coils) and finished products delivered by specialties, and the automotive and industry division. The specialties division provides products for the following markets: appliances, sinks, cooking utensils, cutlery, catering, automobile decorative components, building and heating systems. The automotive and industry division is a leading supplier in the markets of first transformation (tubes, flat and bars), the food and processing industries and the automotive industry (exhaust systems and structure). Arcelor Mittal Steel Solutions and Services Arcelor Mittal Steel Solutions and Services (AM3S) is primarily an in-house trading and distribution arm of Mittal Steel. It is also provides value-added and customized steel solutions through further processing to meet specific customer requirements. AM3S is the largest customer of both the Flat and Long Carbon Steel business units (approximately 80% sourced internally). AM3S has numerous small- to medium-size service centers and warehouses. AM3S consists of five operational units: Distribution (AMD), Steel Service Centers (AMSSC), Construction (AMC), Foundation Solutions (AMFS) and International (AMI). Arcelor Mittal Distribution Arcelor Mittal Distribution (AMD) is a multi-customer, multi-service and multi-product distributor, expert in service and proximity. It has a regional network able to supply small customers locally, to meet the complex needs of industrial key accounts and to assist the worldwide development of multinational companies. AMDs business consists of two activities: the stockholding activity and the processing activity. AMD has locations in France, Belgium, the Netherlands, Luxembourg, Germany, the United Kingdom, Spain, Portugal and Central and Eastern Europe. Its facilities include decoiling, shotblasting, painting, laser cutting, waterjet cutting, plasma cutting, flame cutting, sawing, bending, drilling and threading lines and machinery. It sells a broad range of metal products (mainly carbon steel, but also stainless steel, aluminum and other metals) in small lot sizes from stock to global solutions and tailor-made offers. Its main customers are in the building, civil engineering, boilerworks, shipbuilding and railway construction, lifting equipment and general industry markets.

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Arcelor Mittal Steel Service Center Arcelor Mittal Steel Service Center (AMSSC) processes flat carbon steel products and logistics for the automotive and industrial markets. It is based on tailor-made offers and on-time deliveries in ready-to-use dimensions and quantities. AMSSC has locations in France, Belgium, Italy, Spain, Germany, the United Kingdom, and Central and Eastern Europe. Its facilities include approximately one hundred and sixty production lines: 88 slitters, 64 cut-to-length lines and eight cutting presses. Additionally, AMSSC has one pickling line, two galvanizing lines, one organic coating line and five cold rolling mills. AMSSC supplies customers with an integrated offer of slit coils, sheets and blanks, mixing external sourcing and its products with technical expertise and innovation for the automotive and general industry markets. Arcelor Mittal Construction Arcelor Mittal Construction (AMC) provides its customers with light steel-based solutions for cladding and roofing. AMC has locations in France, Spain, Belgium, Germany, Austria, Switzerland, the United Kingdom, Portugal, Greece and the Caribbean area. Its facilities includes one pickling line, one cold roll mill, two integrated galvanizing and coating lines, two coating lines, ninety profiling lines and sixteen panel lines. AMC sells three main types of products: profiles, floor elements and sandwich panels. The brand ARCLAD is dedicated to standard cladding profiles and panels for construction with short lead time, on-time deliveries and competitive pricing for the largest standard product range. The ARVAL brand is dedicated to serving architects and engineering firms most diverse requirements with cladding of various colors, shapes and qualities. ARMAT is focused on residential houses: roof tiles, steel wall panels and reinforced doors. Arcelor Mittal Foundation Solutions Arcelor Mittal Foundation Solutions (AMFS) designs and supplies solutions for large infrastructure projects. It supplies a complete range of foundation products and accessories, logistics, rental, stock, welding, leasing and coating. Its manufacturing plants are located in the Netherlands, the United States and Malaysia. AMFSs main products are sheet piles, beams, tubes and heavy sheet piles which are used in customized steel solutions for large projects, such as piled foundations, marine works and waterfront structures, landfill, underground car parks, tunnels and waste disposal. Arcelor Mittal International Arcelor Mittal International (AMI) is a worldwide sales network. It supplies Arcelor Mittal products outside of the home markets of the Arcelor Mittal mills. AMI has over 50 sales offices on five continents. AMI provides its customers with a wide range of flat and long products. The main markets of AMI are the NAFTA area, South America, China, Southeast Asia, Iran, the United Arab Emirates and India and Africa. AMI supplies steel products and technical support for complex projects, such as offshore and onshore drilling platforms, multi-purpose vessels, bridges, sports infrastructures, airports, electric power plants and skyscrapers. Legal Proceedings This section discusses the principal environmental liabilities of ArcelorMittal and the principal legal actions to which ArcelorMittal is a party. In addition, ArcelorMittal is a party to various legal actions arising in the ordinary course of business.

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Environmental Liabilities ArcelorMittals operations are subject to a broad range of laws and regulations relating to the protection of human health and the environment at its multiple locations and operating subsidiaries. As of December 31, 2006, Mittal Steel had established reserves of approximately $830 million for environmental liabilities. Previous owners of ArcelorMittals facilities expended in the past, and ArcelorMittal expects to expend in the future, substantial amounts to achieve or maintain ongoing compliance with applicable environmental laws and regulations. USA In 1990, Mittal Steel USAs Indiana Harbor (East) facility was party to a lawsuit filed by the United States Environmental Protection Agency (the EPA) under the RCRA. In 1993, Mittal Steel USA entered into a consent decree, which, among other things, requires facility-wide RCRA corrective action and Indiana Harbor Ship Canal sediment assessment and remediation. Mittal Steel USAs properties in Lackawanna, New York are subject to an Administrative Order on Consent with the EPA requiring facility-wide RCRA corrective action. The Administrative Order, entered into in 1990 by the former owner, Bethlehem Steel, requires ArcelorMittal to perform a Remedial Facilities Investigation (RFI) and corrective measures study, to complete corrective measures, and to perform any required post-remedial activities. In 2004, the RFI was completed, and the New York State Department of Environmental Conservation and Mittal Steel USA executed an Order on Consent to perform interim corrective measures at a former benzol storage tank area. In 1997, Bethlehem Steel, the EPA and the Maryland Department of the Environment agreed to a phased RFI as part of a comprehensive multimedia pollution Consent Decree for investigation and remediation at Mittal Steel USAs Sparrows Point, Maryland facility. Mittal Steel USA has assumed Bethlehem Steels ongoing obligations under the Consent Decree. The Consent Decree requires Mittal Steel USA to address compliance, closure and post-closure care matters and implement corrective measures associated with two onsite landfills, perform a site-wide investigation, continue the operation and maintenance of a remediation system at an idle rod and wire mill and address several pollution prevention items. The potential costs, as well as the time frame of possible remediation activities, which ArcelorMittal currently considers probable, relating to the site-wide investigation at Sparrows Point, cannot be reasonably estimated until more of the investigations required by the Consent Decree have been completed and the data therefrom analyzed. Mittal Steel USA is required to prevent acid mine drainage from discharging to surface waters at closed mining operations in southwestern Pennsylvania. In 2003, Mittal Steel USA entered into a Consent Order and Agreement with the Pennsylvania Department of Environmental Protection (the PaDEP) addressing the transfer of required permits from Bethlehem Steel to Mittal Steel USA and providing financial assurance for long-term operation and maintenance of the wastewater treatment facilities associated with these mines. As required by this Consent Order and Agreement, Mittal Steel USA submitted an operational improvement plan to improve treatment facility operations and lower long-term wastewater treatment costs. The Consent Order and Agreement also required Mittal Steel USA to propose a long-term financial assurance mechanism. In 2004, Mittal Steel USA entered into a revised Consent Order and Agreement outlining a schedule for implementation of capital improvements and requiring the establishment of a treatment trust that the PaDEP has estimated to be the net present value of all future treatment cost. Mittal Steel USA expects to fund the treatment trust over a period of up to ten years at a current target value of approximately $20 million until the improvements are made and the treatment trust is fully funded. After the treatment trust is fully funded, the treatment trust will then be used to fund the cost of treatment of acid mine drainage. Although remote, Mittal Steel USA could be required to make up any deficiency in the treatment trust in the future. On August 8, 2006, the EPA issued Mittal Steel USAs Burns Harbor, Indiana facility a Notice of Violation (NOV) alleging that in early 1994 the facility (then owned by Bethlehem Steel, from whom the assets were acquired out of bankruptcy) commenced a major modification of its #2 Coke Battery without obtaining a Prevention of Significant Deterioration (PSD) permit and has continued to operate without the appropriate PSD permit. In October and November 2006, Mittal Steel USA met with the EPA to obtain a preliminary understanding of the allegations and the EPAs technical bases for the NOV. Further communication and discussion with the EPA is planned.

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Legal Claims ArcelorMittal is a party to various legal actions. As of December 31, 2006, Mittal Steel has established reserves of approximately $440 million for such actions. The principal legal actions are disclosed below. United States In July, 2004, the Illinois Environmental Protection Agency (the IEPA) notified Indiana Harbor (East) that it had identified that facility as a potentially responsible party in connection with alleged contamination relating to Hillside Mining Co. (Hillside), a company that Indiana Harbor (East) acquired in 1943, operated until the late 1940s and then sold the assets of in the early 1950s, in conjunction with the corporate dissolution of that company. The IEPA is requesting that Indiana Harbor (East) and other potentially responsible parties conduct an investigation of certain areas of potential contamination. Indiana Harbor (East) intends to defend itself fully in this matter. As of December 31, 2006, it is not possible to reasonably estimate the amount of environmental liabilities relating to this matter. Canada In March 2004, a group of residents in Nova Scotia brought a potential class action in the Supreme Court of Nova Scotia against various parties, including Mittal Canada, alleging various torts for damage allegedly caused by the steel plant and coke ovens formerly owned and occupied by Dominion Steel and Coal Corporation from 1927 to 1967. Mittal Steel acquired Mittal Canada in 1994, and the plaintiffs are attempting to establish that Mittal Canada thereby assumed the liabilities of the former occupiers. The plaintiffs seek to have the claim approved as a class action, though the court has not yet issued a decision on this matter. As of December 31, 2006, Mittal Steel is unable to assess the outcome of these proceedings or to reasonably estimate the amount of Mittal Canadas liabilities relating to this matter, if any. All of the matters discussed above are legacy environmental matters arising from acquisitions. Mittal Steel North America Inc. and Mittal Steel Roman are involved in a dispute with Canadian Natural Resources Limited (CNRL). Mittal Steel has learned that on March 30 and April 3, 2007, CNRL filed complaints in Calgary, Alberta for negligence seeking damages of $56.4 million and $25.4 million respectively. As of this time, the complaints have not been served on either Mittal Steel entity. The plaintiff alleges that it purchased defective pipe manufactured by Mittal Steel Roman and sold by Mittal Steel Roman and Mittal Steel North America Inc. Mittal Steel is unable to reasonably estimate the amount of Mittal Steel North America Inc.s and Mittal Steel Romans liabilities relating to this matter, if any. Mexico Siderurgia Lzaro Crdenas las trunchas S.A. de C.V. (Sicartsa) is involved in a dispute with Ejido Santa Maria of the Municipality of La Union Guerrero over the payment of materials and related damages under a Joint Venture Agreement between the parties. In October 2006, the Agrarian Unity Tribunal entered a judgment ordering Sicartsa to pay the plaintiff damages of $54 million. In April 2007, upon appeal by Sicartsa, a higher court set aside the judgment and ordered further expert evidence relating to the matters in dispute. Mittal Steel and other subsidiaries, as purchasers under the Sicartsa Share Purchase Agreement (SPA), have served notice on Pacifico, S.A. de C.V., and Conjunto Siderrgico del Balsas, S.A. de C.V., as sellers under the SPA seeking indemnity for any damages that may be incurred with respect to this claim, since it was not disclosed in connection with the acquisition. South America The Brazilian Federal Revenue Service has claimed that Belgo Siderurgia S.A. (Belgo) owes certain amounts for IPI (Manufactured Goods Tax) concerning its use of tax credits on the purchase of raw materials that were non-taxable, exempt from tax or subject to a 0% tax rate and the disallowance of IPI credits recorded five to ten years after the relevant acquisition. In September 2000, two construction companies filed a complaint with the Brazilian Economic Law Department against three long steel producers, including Belgo. The complaint alleged that these producers colluded to raise prices in the Brazilian rebar market, thereby violating applicable antitrust laws. In September 2005, the Brazilian Antitrust Council (CADE) issued a decision against Belgo that resulted in Belgos having to pay a penalty of $36 million. Belgo has appealed the decision to the Brazilian Federal Court. In September 173

2006, Belgo offered a letter guarantee and obtained an injunction to suspend enforcement of this decision pending the courts judgment. As a result of the foregoing decision by CADE, customers of Belgo commenced civil proceedings for damages. There is also a related class action commenced by the Federal Public Prosecutor of the state of Minas Gerais against Belgo for damages based on the alleged violations investigated by CADE. In 2003, the Brazilian Federal Revenue Service granted CST a tax benefit for certain investments. CST had received certificates from SUDENE, the former Agency for the Development of the Northeast Region of Brazil, confirming CSTs entitlement to this benefit. In September 2004, CST was notified of the annulment of these certificates. CST has pursued its right to this tax benefit though the courts against both ADENE, the successor to SUDENE, and against the Brazilian Federal Revenue Service. In May 2007, the Brazilian Federal Revenue Service issued a $726 million tax assessment to Belgo to recover taxes primarily related to credit settlements in the context of the 2003 financial reorganization and acquisition of Mendes Jnior Siderurgia S.A. In September 2007, Belgo received an administrative decision on the tax assessment pursuant to which it was determined that the amount of tax payable under the assessment should be $14 million. This decision is subject to mandatory review by an Administrative Court which may modify the decision and also subject to appeal by Belgo. Europe In late 2002, three subsidiaries of Mittal Steel (Trfileurope, Trfileurope Italia S.r.l. and Fontainunion S.A.), and two former subsidiaries of Arcelor Espaa (Emesa and Galycas), along with other European manufacturers of pre-stressed wire and strands steel products, received notice from the European Commission that it was conducting an investigation into possible anti-competitive practices by these companies. In 2004, Emesa and Galycas were sold. ArcelorMittal and its subsidiaries are cooperating fully with the European Commission in this investigation. The European Commission has not yet notified a Statement of Objections to ArcelorMittal or any of its subsidiaries. The European Commission can impose fines of up to a maximum of 10% of annual revenues for breaches of EU competition law. ArcelorMittal is currently unable to assess the ultimate outcome of the proceedings before the European Commission or the amount of any fines that may result. Arcelor is contractually required to indemnify the present owner of Emesa and Galycas if a fine is imposed on it for any matters under the ownership of Arcelor. The Competition Council of Romania has commenced investigations against Mittal Steel Galati and Mittal Steel Hunedoara with respect to certain commercial practices. ArcelorMittal is cooperating fully with the authorities but cannot at present determine the outcome of the investigations or estimate the amount or range of a potential fine that may be imposed. In June 2005, the Competition Council of Romania began an investigation concerning alleged state aid received by Mittal Steel Roman in connection with its privatization. In September 2007, the European Commission commenced an investigation concerning the same matter." Since 2001, Mittal Steel Ostrava has been involved in a dispute with Kaiser Netherlands B.V. (Kaiser), the contractor for phase one of a mini-mill works project (rolling mill P1500), and its parent company, Kaiser Group International. Kaiser Group International and certain of its affiliates (collectively, KGI) filed an action in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court) (where these companies commenced Chapter 11 bankruptcy proceedings) seeking monetary awards against Mittal Steel Ostrava, which has been stayed. On January 6, 2004, Kaiser filed arbitration claims against Mittal Steel Ostrava with the International Court of Arbitration of the ICC in Paris. On May 16, 2006, the arbitration panel awarded Kaiser $7.3 million in favor of its claims and Mittal Steel Ostrava $10.5 million in favor of its claims, resulting in a net award, including costs and interest, of approximately $6.4 million to Mittal Steel Ostrava. As a result of the award, Mittal Steel Ostrava is seeking to enforce its award against Kaiser. Mittal Steel Ostrava has also filed a motion for summary judgment in its favor in the action commenced in the Bankruptcy Court. KGI have opposed that motion. KGI have also filed a motion for summary judgment in the Bankruptcy Court to enforce a portion of the arbitration award against Mittal Steel Ostrava without set-off. Both motions for summary judgement were rejected by the Bankruptcy Court.

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On April 23, 2007, Mittal Steel received a decision of the Financial Directorate in Ostrava, Czech Republic, in which it ordered Mittal Steel Ostrava to pay approximately $106 million for allegedly abusing its economic position and, as a result, acquiring unjustified profits in respect of prices of blast furnace coke produced by Mittal Steel Ostrava and delivered in 2004. The Financial Directorate subsequently ordered Mittal Steel Ostrava to pay an additional fine of $24.7 million for the period from January to March 2005. After its previous decision in October 2006 was cancelled by the Czech Republic Ministry of Finance, the matter was returned to the Financial Directorate in Ostrava for new investigation and decision. Mittal Steel Ostrava received notice on June 14, 2007 that the Ministry of Finance had upheld the Financial Directorate of Ostravas decision. Mittal Steel Ostrava filed a petition with the Municipal Court, Prague, on June 29, 2007. Filing the petition had the effect of suspending payment of the fines. In 2004, La Direction Gnrale de la Consommation et de la Repression des Fraudes (the French competition authority) commenced an investigation into alleged anti-competitive practices in the steel distribution sector in France, including Arcelor Ngoce Distribution, a subsidiary of Arcelor. The case has been referred to the Conseil de la Concurrence (the French competition council), which is now in charge of the investigation procedure. Any potential fine that might be imposed will depend on the entity that will be considered liable for the alleged practices. No Statement of Objections has yet been issued against ArcelorMittal or any of its subsidiaries. Various retired or present employees of certain Arcelor subsidiaries commenced lawsuits to obtain compensation for asbestos exposure in excess of the amounts paid by French social security. 421 such suits are still pending. Spanish tax authorities have claimed that amortization recorded by Arcelor Planos Seguntos SL in 1995, 1996 and 1997 is non-deductible for corporation tax purposes. Spanish tax authorities seek payment of $49 million, including the amount of tax, interest and penalties. The case is pending before the court (the Audiencia Nacional), administrative procedures having been exhausted. South Africa Mittal Steel South Africa is involved in a dispute with Harmony Gold Mining Company Limited and Durban Roodeport Deep Limited alleging that Mittal Steel South Africa is in violation of the Competition Act. On March 27, 2007, the Competition Tribunal decided that Mittal Steel South Africa had contravened Section 8(a) of the Competition Act by charging an excessive price. On September 6, 2007, the Competition Tribunal imposed a penalty on Mittal Steel South Africa of approximately $97 million, other behavioural remedies designed to prevent Mittal Steel South Africa imposing or agreeing with customers any conditions on the resale of flat steel products and ordered that Mittal Steel South Africa pay the costs of the case. Mittal Steel South Africa has appealed the decision of the Competition Tribunal on the merits and also intends to appeal its decision on the remedies. The Competition Commission has stated that it will not seek to recover the penalty pending the outcome of the appeals. In February 2007, the complaint previously filed with the South African Competition Commission by Barnes Fencing, a South African producer of galvanized wire, alleging that Mittal Steel South Africa, as a dominant firm, discriminated in its pricing of low carbon wire rod, was referred to the Competition Tribunal. The complainant seeks, among other sanctions, a penalty of 10% on Mittal Steel South Africas sales for 2006 in respect of low carbon wire rod and an order that Mittal Steel South Africa cease its pricing discrimination. The complaint is under review by the Competition Tribunal. ArcelorMittal is unable to assess the outcome of this proceeding or the amount of Mittal Steel South Africas potential liability, if any. Mittal Steel South Africa is involved in a dispute with the South African Revenue Service in respect of the tax treatment of payments made under a Business Assistance Agreement of $88 million in 2003 and $105 million in 2004.

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THE ArcelorMittal EXTRAORDINARY GENERAL MEETING Date, Time, Place, Purpose and Agenda of the ArcelorMittal Extraordinary General Meeting The extraordinary general meeting of shareholders of ArcelorMittal will be held on November 5, 2007, at 10:30 a.m., Luxembourg time, at the registered office of ArcelorMittal located at 19, Avenue de la Libert, L2930 Luxembourg, Grand Duchy of Luxembourg. The purpose of the extraordinary general meeting is to consider and to vote on the proposal to merge ArcelorMittal into Arcelor as contemplated by the merger proposal (projet de fusion) and the explanatory memorandum (rapport crit dtaill), dated as of September 25, 2007. The agenda for the extraordinary general meeting is as follows: 1. Approval of the merger whereby ArcelorMittal shall merge into Arcelor by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal (the Merger) as contemplated by (i) the merger proposal as filed, together with the applicable documents, with the Luxembourg Register of Trade and Companies and as published in the Mmorial C, Recueil des Socits et Associations and (ii) the explanatory memorandum to the aforementioned merger proposal, which approval expressly includes an approval to transfer all assets and liabilities of ArcelorMittal to Arcelor and the dissolution without liquidation of ArcelorMittal and which designates the date of effectiveness of the merger. Discharge of the directors and the auditors of ArcelorMittal and determination of the place where the books and records of ArcelorMittal will be kept for a period of five years.

The ArcelorMittal Board of Directors unanimously recommends that you vote FOR the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. For the reasons for this recommendation, see The Merger Recommendation of the ArcelorMittal Board of Directors and the ArcelorMittal and Arcelor Board of Directors Reasons for the Merger. The first proposal on the agenda for the extraordinary general meeting is the approval of the merger as contemplated by the merger proposal and the explanatory memorandum. The merger will result in the absorption by Arcelor of ArcelorMittal without the liquidation of ArcelorMittal. The merger shall become effective between ArcelorMittal and Arcelor and vis--vis third parties on the date of the publication of the Luxembourg law governed notarial deeds containing the minutes of the extraordinary meetings of shareholders of ArcelorMittal and Arcelor, respectively. Pursuant to Luxembourg law, a merger by absorption is the act by which a company is dissolved without liquidation by the transfer to another existing entity of all the assets and liabilities of the company being absorbed in return for shares issued by the absorbing company. As a result of voting in favor of proposal 1 on the agenda, ArcelorMittal shareholders will approve the transfer of all assets and liabilities of ArcelorMittal to Arcelor and the dissolution without liquidation of ArcelorMittal upon effectiveness of the merger. The proposal on the merger requires the approval of at least two-thirds of the votes cast at the ArcelorMittal extraordinary general meeting where at least 50% of the issued share capital of ArcelorMittal is present or represented at the meeting. The second proposal on the agenda is for the discharge of the directors and the auditors of ArcelorMittal and the determination of the place where the books and records of ArcelorMittal will be kept for a period of 5 years. Under Luxembourg law, the directors of a company to be absorbed in a merger will remain liable for actions performed by them up to the date of the merger. The approval of this item in the agenda will have the effect of discharging the directors and auditors from such liability to ArcelorMittal, which could otherwise subject them to potential liability for an indeterminate amount of time. This second item on the agenda will also involve a vote on the determination of the place where the books and records of ArcelorMittal will be kept for five years following the effectiveness of the merger, which is a Luxembourg law requirement for any company that will be dissolved. Unlike the proposal to merge, this proposal may be passed by a simple majority of the votes cast at the meeting without any quorum. Who Can Vote at the ArcelorMittal Extraordinary General Meeting Holders of European Registry Shares. In order to exercise their voting rights at the extraordinary general meeting in person or by proxy, holders of ArcelorMittal shares whose ownership is directly or indirectly recorded in ArcelorMittals local Dutch shareholder registry or directly on the Luxembourg shareholder registry without being held on either local shareholder registry, which are referred to as European Registry Shares, must 176

follow the instructions described under Manner of VotingHolders of European Registry Shares Whose Ownership is Directly Recorded in ArcelorMittals Dutch or Luxembourg Shareholder Registry or Manner of VotingHolders of European Registry Shares Whose Ownership is Indirectly Recorded in ArcelorMittals Dutch or Luxembourg Shareholder registry, as applicable. Holders of New York Registry Shares. In order to exercise their voting rights at the extraordinary general meeting in person or by proxy, holders of ArcelorMittal shares whose ownership is directly or indirectly recorded in ArcelorMittals New York shareholder registry, which are referred to as New York Registry Shares, must follow the instructions described under Manner of VotingHolders of New York Registry Shares Whose Ownership is Directly Recorded in ArcelorMittals New York Shareholder Registry or Manner of VotingHolders of New York Registry Shares whose Ownership is Indirectly Recorded in ArcelorMittals New York Shareholder Registry, as applicable. Vote Required for Adoption of Decision to Merge In order to effect the merger, ArcelorMittal shareholders must adopt the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. The decision to merge requires the approval of at least two-thirds of the votes cast at the ArcelorMittal extraordinary general meeting where at least 50% of the issued share capital of ArcelorMittal is present or represented at the meeting. Holders may cast one vote for each ArcelorMittal share that they own on the dates indicated below. Manner of Voting ArcelorMittal shareholders may submit their vote for or against the proposal submitted at the ArcelorMittal extraordinary general meeting in person or by proxy. All ArcelorMittal shares entitled to vote and represented by duly completed proxies received prior to the ArcelorMittal extraordinary general meeting in accordance with the applicable formalities, and not revoked, will be voted at the ArcelorMittal extraordinary general meeting as instructed on the proxies. Holders of European Registry Shares and New York Registry Shares and their duly appointed proxies that wish to attend the ArcelorMittal extraordinary general meeting in person, must follow the applicable instructions described below and bring a form of personal identification to enter the meeting. Holders of European Registry Shares Whose Ownership is Recorded Directly in ArcelorMittals Dutch or Luxembourg Shareholder Registry The following paragraphs apply only to those holders of European Registry Shares whose ownership is directly recorded in ArcelorMittals local Dutch shareholder registry or on the Luxembourg shareholder registry without being held on either local shareholder registry on October 31, 2007 (the blocking date). (These European Registry Shares cannot be traded on Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the regulated market of the Luxembourg Stock Exchange and the Spanish exchanges, unless the holders of these shares are deregistered from the shareholder registry and these shares are entered into the relevant book-entry system.) Attendance in Person. Holders of these European Registry Shares who elect to attend the extraordinary general meeting in person are invited to indicate to ArcelorMittal their intention to attend. These holders of European Registry Shares will complete, sign and date the participation form that can be obtained from ArcelorMittal (c/o Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, phone +352 4792 1) or downloaded from ArcelorMittals website (www.arcelormittal.com). The completed, signed and dated participation form should be returned to ArcelorMittal (c/o Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, or facsimile +352 4792 2189) on or before the day preceding the blocking date. Attendance by Proxy. Holders of these European Registry Shares who are unable to attend the extraordinary general meeting in person, may give a voting instruction to the Secretary of ArcelorMittal, Mr. Henk Scheffer (c/o Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg), or to a third party that the holder designates. Prior to giving voting instructions to the Secretary of ArcelorMittal, holders of European Registry Shares must complete, sign and date a participation form that can be obtained from ArcelorMittal (c/o Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, phone + 352 4792 1) or downloaded from ArcelorMittals website. The completed, signed and dated participation form must be returned to ArcelorMittal (c/o Arcelor Service Titres , 177

19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, or facsimile + 352 4792 2189) on or before the day preceding the blocking date. If a holder of these European Registry Shares wishes to be represented by a proxy other than the Secretary of ArcelorMittal, then this holder must have completed, signed and dated a participation form that can be obtained from ArcelorMittal (c/o Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, phone + 352 4792 1) or downloaded from ArcelorMittals website, indicating the name of the proxy. The completed, signed and dated participation form must be returned to ArcelorMittal (c/o Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, or facsimile + 352 4792 2189) on or before the day preceding the blocking date. Holders of European Registry Shares Whose Ownership is Indirectly Recorded in ArcelorMittals Dutch or Luxembourg Shareholder Registry The following paragraphs apply only to those holders of European Registry Shares whose ownership is indirectly recorded in ArcelorMittals local Dutch shareholder registry or on the Luxembourg shareholder registry without being held on either local shareholder registry. (These European Registry Shares are held through a book-entry system and can be directly traded on Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the regulated market of the Luxembourg Stock Exchange and the Spanish exchanges.) Attendance in Person. Holders of these European Registry Shares who elect to attend the extraordinary general meeting in person must request their financial intermediary (bank, financial institution or other intermediary) with whom their ArcelorMittal shares are on deposit, to send a blocking certificate (the blocking certificate) for their ArcelorMittal shares to the relevant central registration bank on or before the day preceding the blocking date (a list of the relevant central registration banks is included below. See Central Registration Banks). Such blocking certificate must indicate clearly the precise identity of the owner of the ArcelorMittal shares, the number of ArcelorMittal shares being blocked, the date such shares are being blocked, which must be no later than the blocking date, and a statement that the relevant European Registry Shares are registered in the local bank or brokers records in the holders name and shall be blocked until the close of the extraordinary general meeting. The holders of the European Registry Shares must bring a copy of the blocking certificate to the extraordinary general meeting, which will serve as an attendance card for the extraordinary general meeting. Besides the blocking certificate, in order to vote their shares in person, these holders of ArcelorMittal shares are invited to announce their intention to participate at the extraordinary general meeting by completing, signing, dating and returning the participation form on or before the day preceding the blocking date. Attendance by Proxy. Holders of these European Registry Shares who are unable to attend the extraordinary general meeting in person, may give a voting instruction to the Secretary of ArcelorMittal, Mr. Henk Scheffer (c/o Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, phone + 352 4792 1), or to a third party that the holder designates. Prior to giving voting instructions to the Secretary of ArcelorMittal, holders of European Registry Shares must (a) have obtained and delivered to the relevant central registration bank the blocking certificate described above (see Attendance in Person), and (b) complete, sign and date the participation form that can be obtained from the relevant central registration bank or downloaded from ArcelorMittals website. The completed, signed and dated participation form must be returned to ArcelorMittal (c/o Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, or facsimile + 352 4792 2189) on or before the day preceding the blocking date. If a holder of these European Registry Shares wishes to be represented by a proxy other than the Secretary of ArcelorMittal, then this holder must (a) have obtained and delivered to the relevant central registration bank the blocking certificate described above (see Attendance in Person), and (b) have completed, signed, dated and returned a participation form that can be obtained from the relevant central registration bank or downloaded from ArcelorMittals website, indicating the name of the proxy to ArcelorMittal (c/o Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, or facsimile + 352 4792 2189) on or before the blocking date in order to have that name recorded on the registration list for the extraordinary general meeting. Holders of European Registry Shares whose ownership is directly recorded in ArcelorMittals local Dutch or Luxembourg shareholder registry, who have executed a participation form but who wish to revoke such proxy may do so at any time before such proxy is exercised by timely delivering a properly executed, later-dated 178

participation form on or before the day preceding blocking date or by attending the ArcelorMittal extraordinary general meeting and voting in person. Holders of European Registry Shares whose ownership is not directly recorded in ArcelorMittals Dutch or Luxembourg shareholder registry, who have obtained the blocking certificate and have executed a participation form, but who wish to revoke such proxy may do so at any time by timely delivering a properly executed, later-dated participation form on or before the day preceding the blocking date or by properly attending and voting in person at the ArcelorMittal extraordinary general meeting. In either case, simply attending the ArcelorMittal extraordinary general meeting without voting will not revoke the proxy. Central Registration Banks. ArcelorMittal has appointed the following central registration banks: For European Registry Shares that are included in the Euroclear Nederland system and that are admitted to trading on Euronext Amsterdam by NYSE Euronext: ABN AMRO Bank N.V. For European Registry Shares that are included in the Euroclear Belgium system and that are admitted to trading on Euronext Brussels by NYSE Euronext: Fortis Bank SA/NV. For European Registry Shares that are included in the Euroclear France system and that are admitted to trading on Euronext Paris by NYSE Euronext: Socit Gnrale. For European Registry Shares that are included in the Clearstream Banking or Euroclear Bank system and that are admitted to trading on the Luxembourg Stock Exchanges regulated market: Fortis Banque Luxembourg S.A. For European Registry Shares that are included in the Iberclear system and that are admitted to trading on the Spanish exchanges: Banco Bilbao Vizcaya Argentaria, S.A. Holders of New York Registry Shares Whose Ownership is Directly Recorded in ArcelorMittals New York Shareholder Registry The following paragraphs apply to holders of New York Registry Shares whose ownership is directly recorded in ArcelorMittals local New York shareholder registry. Attendance in Person. Holders of these New York Registry Shares who elect to attend the extraordinary general meeting in person are invited to indicate to ArcelorMittal their intention to attend. These holders of New York Registry Shares will complete, sign and date the participation form that can be obtained from ArcelorMittal (c/o ArcelorMittal Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, phone +352 4792 1) or downloaded from ArcelorMittals website (www.arcelormittal.com). The completed, signed and dated participation form should be returned to ArcelorMittal (c/o ArcelorMittal Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, or facsimile +352 4792 2189) on or before the day preceding the blocking date. Attendance by Proxy. For those holders of New York Registry Shares who are unable to attend the extraordinary general meeting in person, the enclosed U.S. proxy card is a means by which such holders can exercise their voting rights, by signing, dating and returning the enclosed U.S. proxy card on or before 5 p.m. (New York time) on the day preceding the blocking date to The Bank of New York (marked for the attention of the Proxy Department), 101 Barclay Street, A Level, New York, New York, 10286, USA. The U.S. proxy card appoints The Bank of New York as proxy holder, with full power of substitution. If the U.S. proxy card is duly completed, dated, signed and returned, all New York Registry Shares represented thereby will be voted, and, if a 179

voting instruction is included by the holder of the New York Registry Shares in the U.S. proxy card, the New York Registry Shares will be voted by The Bank of New York or its substitute(s) in accordance with such voting instruction. If no voting instruction is included in the U.S. proxy card, the proxy will be voted by The Bank of New York or its substitute(s) FOR the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum and all other matters on the agenda for the extraordinary general meeting. Holders of these New York Registry Shares who are unable to attend the extraordinary general meeting in person and who wish to appoint a proxy holder other than The Bank of New York, must fill in the name of their chosen proxy holder on the U.S. proxy card. The completed, signed and dated U.S. proxy card must be returned to The Bank of New York (marked for the attention of the Proxy Department), 101 Barclay Street, A Level, New York, New York, 10286, USA on or before the day preceding the blocking date. Holders of New York Registry Shares Whose Ownership is Indirectly Recorded in ArcelorMittals New York Shareholder Registry The following paragraphs apply to holders of New York Registry Shares whose ownership is indirectly recorded in ArcelorMittals New York local shareholder registry. Attendance in Person. Holders of these New York Registry Shares who elect to attend the extraordinary general meeting in person must have their financial intermediary (bank, financial institution or other intermediary) or its agents with whom their ArcelorMittal shares are on deposit, issue to them a proxy confirming that they are authorized to attend and vote at the meeting. In addition to obtaining a proxy, their financial intermediary must complete and return a New York Registry share blocking request to The Bank of New York. This blocking request must be received by The Bank of New York on or before the day preceding the blocking date. These holders must bring the proxy received from their financial intermediary to the extraordinary general meeting, which will serve as an attendance card for the extraordinary general meeting. The share blocking request will result in these holders ArcelorMittal shares being placed into a designated blocked account at The Depository Trust Company for a period to commence on the blocking date until after the completion of the extraordinary meeting of shareholders. Attendance by Proxy. Those holders of New York Registry Shares who are unable to attend the extraordinary general meeting in person must follow the voting procedures and instructions received from their financial intermediary or its agents. In addition, they must instruct their financial intermediary to complete and return a New York Registry share blocking request to The Bank of New York. This blocking request must be received by The Bank of New York on or before the day preceding the blocking date. The share blocking request will result in these holders ArcelorMittal shares being placed into a designated blocked account at The Depository Trust Company for a period to commence on the blocking date until after the completion of the extraordinary meeting of shareholders. Finally, holders of New York Registry Shares whose ownership is directly recorded in the New York shareholder registry, who have executed a U.S. proxy card but who wish to revoke such proxy may do so by (a) delivering a subsequently dated U.S. proxy card or by giving written notice of revocation, which in each case must be received by The Bank of New York (marked for the attention of the Proxy Department), 101 Barclay Street, A Level, New York, New York 10286 on or before 5 p.m. (New York time) on or before the day preceding the blocking date, or (b) giving written notice of revocation to be received by The Bank of New York (marked for the attention of the Proxy Department), 101 Barclay Street, A Level, New York, New York 10286 before 5 p.m. (New York time) on or before the day preceding the blocking date and attending the extraordinary general meeting in person and voting in person by ballot. Simply attending the ArcelorMittal extraordinary general meeting without voting will not revoke such proxy. Holders of New York Registry Shares whose ownership is indirectly recorded in the ArcelorMittal New York local shareholder registry must contact their financial intermediary regarding the procedures to change or revoke their voting instruction.

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THE ARCELOR EXTRAORDINARY GENERAL MEETING Date, Time, Place, Purpose and Agenda of the Arcelor Extraordinary General Meeting The extraordinary general meeting of shareholders of Arcelor will be held on November 5, 2007, at 2:30 p.m., Luxembourg time, at the registered office of Arcelor located at 19, Avenue de la Libert, Luxembourg, Grand Duchy of Luxembourg. The purpose of the extraordinary general meeting is to consider and to vote on the proposal to merge ArcelorMittal into Arcelor as contemplated by the merger proposal (projet de fusion) and the explanatory memorandum (rapport crit dtaill), dated as of September 25, 2007. The agenda for the extraordinary general meeting is as follows: 1. Amendment of Article 6.2 and 6.6 and insertion of a new Article 6.7 and subsequent renumbering of the existing Article 6.7 into Article 6.8 so as to provide for the possibility to divide the shares of Arcelor (the Company) in fractions (coupures) to read as follows: 6.2. Sous rserve de ce qui est prvu larticle 6.3 des statuts, la Socit considrera la personne au nom de laquelle des actions ou des coupures sont inscrites dans le registre des actionnaires comme le titulaire de ces actions ou de ces coupures. 6.6. Sous rserve des dispositions de larticle 6.7 des statuts, les actions ou coupures sont indivisibles lgard de la Socit qui ne reconnat quun seul propritaire pour chaque action ou coupure. Les propritaires indivis dune action ou dune coupure sont tenus de se faire reprsenter auprs de la Socit par une seule et mme personne afin de pouvoir exercer leurs droits. 6.7. Les actions de la Socit peuvent tre divises en coupures gales, chaque coupure reprsentant un septime (1/7) dune action. La division dactions en coupures ne pourra tre effectue que dans le cadre dune restructuration du capital social dcide par lassemble gnrale des actionnaires de la Socit. Le dtenteur dune coupure aura droit un septime (1/7) de toute distribution par action faite par la Socit, ou suite sa liquidation. Les coupures nauront pas de droit de vote aux assembles gnrales des actionnaires de la Socit moins quun nombre de coupures gale une action entire ne soit runi. Tout dtenteur de coupures dtenant sept (7) coupures peut en demander la conversion en une (1) action entire. 2. Share capital restructuring by replacing the 669,813,408 pre-capital restructuring shares by 765,501,037 post-capital restructuring shares, through an exchange of every seven (7) pre-restructuring Company shares for eight (8) post-restructuring Company shares, the round down of the aggregate number of shares composing the issued share capital being assumed by the Company on its treasury shares. Allocation of the post capital restructuring shares to the existing shareholders. Impact of the share capital restructuring on the existing Company stock options and on the per-share amount payable with respect to the last installment of the dividend decided by the annual general meeting of the Company held on April 27, 2007. 3. Increase of the share capital of the Company by an amount of EUR 3,827,502.06 so as to bring it from its current amount of EUR 3,349,067,040 to EUR 3,352,894,542.06 by incorporation into the capital of an amount of EUR 3,827,502.06 to be drawn from the free reserves of the Company, without issuing new shares but by increasing the par value of the shares up to EUR 4.38 per share.

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4. Subsequent amendment of Article 5.1 of the Articles of Association of the Company to reflect the aforementioned items. 5. Decision to distribute an additional dividend of USD 0.040625 per post-capital restructuring share, payable simultaneously with the last installment of the dividend decided by the ordinary general meeting of the Company on April 27, 2007, so that each post-capital restructuring share (other than those issued in, or following the Merger) will be entitled to a dividend payment of USD 0.325 on December 15, 2007. 6. Decision to create an authorised share capital in the amount of EUR 6,438,600,000, represented by 1,470,000,000 shares without nominal value for a period ending on November 5, 2012 and to authorise the Board of Directors of the Company to issue within the limits of the authorised share capital, stock options or other equity-based awards granted under any Companys employee incentive or benefit plan or employee share offerings, giving a right to acquire or subscribe for one or more shares, to issue shares within the limits of the authorised share capital for delivery upon exercise or conversion, as applicable, of the Companys stock options or other equity-based awards granted under any Companys employee incentive or benefit plan or employee share offerings and to limit or cancel the preferential subscription right of the existing shareholders; report of the Board of Directors of the Company relating to the creation of an authorised share capital. 7. Change of name from Arcelor to ArcelorMittal and subsequent amendment of Article 1 of the Articles of Association to be reworded as follows: Article 1 Forme Dnomination Sociale La Socit a pour dnomination ArcelorMittal et elle a la forme dune socit anonyme. 8. Amendment of the first paragraph and of the third paragraph of Article 3 of the Articles of Association relating to the corporate purpose to be reworded as follows: Article 3 Objet La Socit a pour objet la fabrication, le traitement et le commerce de lacier, de produits sidrurgiques et de tous autres produits mtallurgiques, ainsi que de tous les produits et matriaux utiliss dans leur fabrication, leur traitement et leur commercialisation, et toutes les activits industrielles et commerciales directement ou indirectement lies ces objets, y compris les activits minires et de recherche et la cration, lacquisition, la dtention, lexploitation et la vente de brevets, de licences, de savoir-faire et plus gnralement de droits de proprit intellectuelle et industrielle. [] Dune manire gnrale, lobjet de la Socit comprend la participation, sous quelque forme que ce soit, dans des socits de capitaux ou de personnes, ainsi que lacquisition par achat, souscription ou de toute autre manire ainsi que la cession par vente, change ou de toute autre manire dactions, dobligations, de titres reprsentatifs de crances, de warrants et dautres valeurs et instruments de toute nature. []

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9. General revision of the Articles of Association of the Company, and more particularly amendment to the following Articles in order to conform them with the relevant provisions of the articles of association of ArcelorMittal: Article 4 Sige Social, Article 6 Actions (by deleting the words et certificats dactions in the title, Article 6.4 and by replacing in Article 6.8 the words titres by valeurs mobilires and bons by warrants ), Article 7 Droits et obligations des actionnaires (mainly by changing the thresholds), Article 8 Conseil dAdministration (mainly by changing the composition of the board amending the term of the Directors mandate, inserting the right to a proportional representation from August 1, 2009 for the Mittal Shareholder as defined in the ArcelorMittal articles of association and providing for indemnification provisions), Article 9 Procdures des runions du conseil dadministration (mainly by providing for the appointment of a Chairman of the Board and a President ; by deleting the casting vote of the Chairman), Article 10 Procs-verbaux des runions du conseil dadministration (by changing the signatories of the minutes and of a copy of the minutes), Article 11 Pouvoirs du conseil dadministration (by providing the possibility to create committees and the rules governing the composition of the audit committee), Article 13 Assemble des actionnaires Gnralits (mainly by providing for the possibility to vote by correspondence and by any means of telecommunication), Article 14 Assemble gnrale annuelle des actionnaires (mainly by fixing the date of the annual meeting on the second Tuesday of May), Article 15 Rviseurs dentreprises (by deleting the references to the statutory auditor), Article 19 Modification des statuts (by providing for special voting requirements majority of votes representing two-thirds of the voting rights attached to the shares in the Company - in case of amendment of Articles 8.1, 8.4, 8.5, 8.6, 11.2 and 19), Article 20 Loi applicable et comptence judiciaire, this list being exhaustive. 10. Change of the binding language of the Articles of Association from French to English and adoption of an English language version. 11. Conditional upon the approval of items 2 and 3 of the agenda, approval of the merger whereby ArcelorMittal shall merge into the Company by way of absorption by the Company of ArcelorMittal (ArcelorMittal and the Company jointly referred to as the Merging Companies) and without liquidation of ArcelorMittal (the Merger) as contemplated by (i) the merger proposal as filed, together with the applicable documents, with the Luxembourg Register of Trade and Companies (RCSL) and as published in the Mmorial C, Recueil des Socits et Associations (the Mmorial) and (ii) the explanatory memorandum to the aforementioned merger proposal. 12. Conditional upon the approval of items 2 and 3 of the agenda, decision to increase the share capital of the Company by the issue of a maximum of one billion four hundred and seventeen million two hundred and seven thousand two hundred and fifty three (1,417,207,253) new shares without nominal value to be reduced by the number of ArcelorMittal shares held by or for the account of the Company or ArcelorMittal as at November 5, 2007 (the Merger Shares) in consideration for the transfer by operation of law of all assets and liabilities of ArcelorMittal to the Company; conversion with effect on the day of publication of the notarial deed in the Mmorial of the stock options of ArcelorMittal into stock options of the Company (the Company Stock Options). 13. Conditional upon the approval of items 2 and 3 of the agenda, allocation of the Merger Shares to the shareholders of ArcelorMittal and allocation of the Company Stock Options to the holders of stock options of ArcelorMittal with effect on the day of publication of the notarial deed in the Mmorial, in accordance with the provisions of the merger proposal. 14. Conditional upon the approval of items 2 and 3 of the agenda, decision to cancel with effect on the day of publication of the notarial deed in the Mmorial the seven hundred and twenty one million four hundred and twenty seven thousand three hundred and sixty five (721,427,365) Company shares except the fractions of Company shares, if any, that will be held by ArcelorMittal as a result of the effectiveness of the abovementioned restructuring and transferred to the Company pursuant to the Merger and consequently to reduce the Companys share capital to the extent of the accounting par value of these Company shares and for the difference between their book value in ArcelorMittals accounts and their accounting par value by reducing the merger premium account.

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15. Subsequent amendment of Article 5.1 of the Articles of Association of the Company to reflect the above capital increase and capital reduction. 16. Cancellation with effect on the effective date of the Merger of the authorisation granted to the Board of Directors by the general meeting of shareholders held on April 27, 2007 with respect to share buy-back and decision to authorise the Board of Directors of the Company and the corporate bodies of the other companies in the group referred to in Article 49bis of the Luxembourg law on commercial companies dated August 10, 1915 as amended to acquire and sell shares in the Company, under the conditions set forth in the Luxembourg law on commercial companies dated August 10, 1915 as amended. 17. Appointment of Deloitte S.A. as an independent auditor of the Company.

18. Effectiveness of the Merger as well as of the other items on the agenda (with the exception of items 1, 2, 3, 4 and 5, which will be effective on November 6, 2007) on November 13, 2007, the day of publication of the notarial deed in the Mmorial. The Arcelor Board of Directors unanimously recommends that you vote FOR the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. For the reasons for this recommendation, see The Merger Recommendation of the ArcelorMittal and Arcelor Boards of Directors and the ArcelorMittal and Arcelor Boards of Directors Reasons for the Merger. Who Can Vote at the Arcelor Extraordinary General Meeting In order to exercise their voting rights at the extraordinary general meeting in person or by proxy, holders of Arcelor shares whose ownership is directly or indirectly recorded in Arcelors shareholder registry, must follow the instructions described under Manner of VotingHolders of Arcelor Shares whose ownership is directly recorded in Arcelors shareholder registry or Manner of VotingHolders Arcelor Shares whose ownership is indirectly recorded in Arcelors shareholder registry, as applicable. Vote Required for Adoption of Decision to Merge In order to effect the merger, Arcelor shareholders must adopt the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. The decision to merge requires the approval of at least two-thirds of the votes cast at the Arcelor extraordinary general meeting where at least 50% of the issued share capital of Arcelor is present or represented at the meeting. Manner of Voting If you are an Arcelor shareholder, you may submit your vote for or against the proposal submitted at the Arcelor extraordinary general meeting in person or by proxy. All Arcelor shares entitled to vote and represented by duly completed proxies received prior to the Arcelor extraordinary general meeting in accordance with the applicable formalities, and not revoked, will be voted at the Arcelor extraordinary general meeting as instructed on the proxies. Holders of Arcelor Shares and their duly appointed proxies that wish to attend the Arcelor extraordinary general meeting in person, must follow the applicable instructions described below and bring a form of personal identification to enter the meeting. Holders of Arcelor Shares Whose Ownership is Recorded Directly in Arcelors Shareholder Registry The following paragraphs apply only to those holders of Arcelor Shares whose ownership is directly recorded in Arcelors shareholder registry on October 31, 2007 (the blocking date). Attendance in Person. Holders of these Arcelor Shares who elect to attend the extraordinary general meeting in person are invited to indicate to Arcelor their intention to attend. These holders of Arcelor Shares will complete, sign and date an attendance form that can be obtained from Arcelor ( Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, phone +352 4792 1) or downloaded from ArcelorMittals website (www.arcelormittal.com). The completed, signed and dated participation form should 184

be returned to Arcelor ( Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg , or facsimile +352 4792 2189) on or before the day preceding blocking date. Attendance by Proxy. Holders of these Arcelor Shares who are unable to attend the extraordinary general meeting in person, may give a voting instruction to Arcelor ( Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg), or to a third party that the holder designates. Prior to giving voting instructions to the Chairman of the Meeting, holders of Arcelor Shares must complete, sign and date a participation form that can be obtained from Arcelor ( Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, phone +352 4792 1) or downloaded from ArcelorMittals website. The completed, signed and dated participation form must be returned to Arcelor ( Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, or facsimile +352 4792 2189) on or before the day preceding the blocking date. If a holder of these Arcelor Shares wishes to be represented by a proxy other than to the Chairman of the Meeting, then this holder must have completed, signed, dated and returned a participation form that can be obtained from Arcelor ( Service Titres ), 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, phone + 352 4792 1) or downloaded from ArcelorMittals website, indicating the name of the proxy to Arcelor ( Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg or facsimile +352 4792 2189) such that the participation form will be received by Arcelor on or before the day preceding the blocking date. Holders of Arcelor Shares Whose Ownership is Indirectly Recorded in Arcelors Shareholder Registry The following paragraphs apply only to those holders of Arcelor Shares whose ownership is indirectly recorded in the shareholder registry of Arcelor. Attendance in Person. Holders of these Arcelor Shares who elect to attend the extraordinary general meeting in person must request their local bank or broker at which their shares are held, to send a blocking certificate to the relevant central registration bank on or before the blocking date, which is October 31, 2007. (A list of the relevant central registration banks is included below. See Central Registration Banks.) The blocking certificate must state that the relevant Arcelor Shares are registered with the local bank or brokers records in the holders name and shall be blocked until the close of the extraordinary general meeting. The holders of the Arcelor Shares must bring a copy of the blocking certificate to the extraordinary general meeting, which will serve as an attendance card for the extraordinary general meeting. Holders of these Arcelor Shares should also make sure to remit the form notifying their intention to attend the extraordinary general meeting in person (and to give voting instructions to the Chairman if desired) to the intermediary who handles the management of their Arcelor Shares. In this respect, the form may be obtained from one of the local centralizing banks mandated by Arcelor to such effect, and which are listed below or which can be downloaded from ArcelorMittals website. Holders of these Arcelor shares whose ownership is indirectly recorded in the shareholder registry of Arcelor will be requested to bring a copy of the blocking certificate and of the form and resent it to the reception desk on the day of the extraordinary general meeting. Attendance by Proxy. Holders of these Arcelor Shares who are unable to attend the extraordinary general meeting in person, may also vote by proxy with or without giving voting instruction to the Chairman of the Meeting Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, phone + 352 4792 1), or to a third party that the holder designates. Prior to giving voting instructions to the Chairman of the Meeting, holders of these Arcelor Shares must (a) have obtained and delivered to the relevant central registration bank the blocking certificate described above (see Attendance in Person), and (b) complete, sign and date the participation form that can be obtained from the relevant central registration bank or downloaded from ArcelorMittals website. The completed, signed and dated participation form must be returned to Arcelor (c/o Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg or facsimile + 352 4792 2189) on or before the blocking date. If a holder of these Arcelor Shares wishes to be represented by a proxy other than to the Chairman of the Meeting, then this holder must (a) have obtained and delivered to the relevant central registration bank the blocking certificate described above (see Attendance in Person), and (b) have completed, signed, dated and returned a participation form that can be obtained from the relevant central registration bank or downloaded from ArcelorMittals website, indicating the name of the proxy to Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg or facsimile + 352 4792 2189) on or before the blocking date in order to have that name recorded on the registration list for the extraordinary general meeting. 185

Holders of Arcelor Shares whose ownership is directly recorded in Arcelors shareholder registry, who have executed a proxy form but who wish to revoke such participation may do so at any time before such proxy is exercised by timely delivering a properly executed, later-dated participation form or by attending the Arcelor extraordinary general meeting and voting in person. Holders of Arcelor Shares whose ownership is not directly recorded in Arcelors shareholder registry, who have obtained the blocking certificate and have executed a participation form, but who wish to revoke such proxy may do so at any time by timely delivering a properly executed, later-dated participation form or by properly attending and voting in person at the Arcelor extraordinary general meeting. In either case, simply attending the Arcelor extraordinary general meeting without voting will not revoke the proxy. Central Registration Banks. Arcelor has appointed the following central registration banks: For Arcelor Shares that are included in the Euroclear Belgium system and that are admitted to trading on Euronext Brussels by NYSE Euronext: Fortis Bank SA/NV. For Arcelor Shares that are included in the Euroclear France system and that are admitted to trading on Euronext Paris by NYSE Euronext: Socit Gnrale. For Arcelor Shares that are included in the Clearstream Banking or Euroclear Bank system and that are admitted to trading on the Luxembourg Stock Exchanges regulated market: Fortis Banque Luxembourg S.A. For Arcelor Shares that are included in the Iberclear system and that are admitted to trading on the Spanish exchanges: Banco Bilbao Vizcaya Argentaria, S.A

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THE MERGER The following is a description of the material aspects of the merger. While ArcelorMittal and Arcelor believe that the following description covers the material terms of the merger, the description may not contain all the information that is important to you. ArcelorMittal and Arcelor encourage you to read carefully this entire prospectus, including the merger agreement and the merger proposal and the explanatory memorandum, copies of which are attached to this prospectus as Annex A and Annex B, respectively, for a more complete understanding of the merger. Overview Each of ArcelorMittals and Arcelors Board of Directors has unanimously approved and signed the merger agreement, the merger proposal and the explanatory memorandum and has unanimously approved the transactions contemplated by the merger proposal and the explanatory memorandum. At the effective time of the merger, ArcelorMittal will merge into Arcelor by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal. The combined company will be renamed ArcelorMittal. ArcelorMittal shareholders will receive the merger consideration upon the terms set forth in the merger proposal and the explanatory memorandum and as further described under The Merger Agreement, the Merger Proposal and the Explanatory MemorandumMerger Consideration. Background of the Merger On January 27, 2006 Mittal Steel, the predecessor entity to ArcelorMittal, publicly announced the launch of an unsolicited offer for all of the shares and convertible bonds of Arcelor, which is referred to as the Offer. On January 29, 2006, Arcelors Board of Directors rejected the Offer as initially announced. On June 25, 2006, following numerous communications between members of the management of Mittal Steel and Arcelor, and a revision of the initial Offer on May 19, 2006, Arcelors Board of Directors considered a subsequent revision of the Offer and decided unanimously to recommend Mittal Steels revised Offer in connection with the simultaneous execution of the Memorandum of Understanding. In the Memorandum of Understanding, the parties agreed, among other things, to use their best efforts to procure that Mittal Steel would merge into Arcelor as soon as practicable following completion of the revised Offer, including any subsequent offer or compulsory buy-out proceedings required under Luxembourg law, and that the combined entity would be incorporated, domiciled and headquartered in Luxembourg. For a description of the Memorandum of Understanding, see Material Contracts and Related Party TransactionsMemorandum of Understanding between Mittal Steel, Arcelor and the Significant Shareholder and Management and EmployeesMittal Steel / Arcelor Memorandum of Understanding. On July 26, 2006, Mittal Steel announced the final results of its offer for Arcelor securities, which expired on July 13, 2006 in Belgium, France, Luxembourg, Spain and the United States. As of such date, 594,549,753 Arcelor shares were tendered (including Arcelor shares underlying the Arcelor ADS tendered in the United States) and 19,858,533 Arcelor convertible bonds (OCEANEs 2017) were tendered, which represented, on a fully-diluted basis, 91.88% of Arcelors share capital and 91.97% of Arcelors voting rights. During the subsequent offering period, which ran from July 27, 2006 through August 17, 2006 in Belgium, France, Luxembourg, Spain and the United States, Arcelor security holders tendered an additional 12,721,565 Arcelor shares (including Arcelor shares underlying Arcelor ADSs tendered in the U.S.), and 57,651 Arcelor convertible bonds (OCEANEs 2017). The offer was then kept open until November 17, 2006 pursuant to Luxembourg law. On December 31, 2006, Mittal Steel held 607.3 million Arcelor shares and 19.9 million Arcelor convertible bonds representing 93.72% of Arcelors issued share capital and 93.80% of Arcelors voting rights. As of September 3, 2007, ArcelorMittal (as successor to Mittal Steel) held Arcelor shares representing 94.24% of Arcelors issued share capital and 94.26% of Arcelors voting rights. On August 4, 2006, Mittal Steel and Arcelor announced new appointments to the management board and, subject to approval of the respective general meetings of shareholders, the Board of Directors for both Mittal Steel and Arcelor, allowing for the immediate start of the integration of Mittal Steel and Arcelor. Following the August 4, 2006 announcement, executives and senior management at both Mittal Steel and Arcelor, assisted by external advisers, commenced the preparation of the merger of Mittal Steel into Arcelor. 187

On January 11, 2007, the Board of Directors of Mittal Steel engaged Goldman Sachs International to act as its financial advisor in connection with the contemplated merger with Arcelor. Subsequently, the Board of Directors of Mittal Steel and ArcelorMittal requested that Goldman Sachs evaluate the fairness, from a financial point of view, of the exchange ratio to be received by the holders of the outstanding shares of ArcelorMittal in the proposed merger between ArcelorMittal and Arcelor. The Board of Directors of Arcelor engaged each of Morgan Stanley & Co. Limited on March 29, 2007, Socit Gnrale on April 3, 2007, Ricol, Lasteyrie & Associs on April 27, 2007 and Fortis Bank (Nederland) N.V. on April 28, 2007, to evaluate the fairness, from a financial point of view, of the exchange ratio to be received by shareholders holding the 5.76% of the issued share capital of Arcelor not held by Mittal Steel in the proposed merger between ArcelorMittal (as successor to Mittal Steel) and Arcelor and to provide an opinion in that regard. On April 27, 2007, the Board of Directors of Mittal Steel met to discuss the possibility of merging Mittal Steel into Arcelor in two steps in order to have Mittal Steel incorporated, domiciled and headquartered in Luxembourg, as required by the Memorandum of Understanding, as promptly as possible. On May 2, 2007, pursuant to written decisions as of such date, the Board of Directors of Mittal Steel and ArcelorMittal each unanimously approved the merger agreement between Mittal Steel and ArcelorMittal and it was executed by the parties. On May 15, 2007, the Board of Directors of Mittal Steel appointed AGN Daamen & van Sluis as independent auditor and the Board of Directors of ArcelorMittal appointed Mazars and Mazars Paardekooper Hoffman N.V. as independent auditors, each for purposes of the merger process. On May 15, 2007, the Board of Directors of each of Mittal Steel, Arcelor and ArcelorMittal met to discuss the proposed second-step merger between ArcelorMittal and Arcelor. At these meetings the Boards of Directors of Mittal Steel and ArcelorMittal met with their financial advisor, who rendered a fairness opinion stating that as of the date of the fairness opinion and based upon and subject to the factors and assumptions set forth therein, and assuming that the first-step merger had been consummated, the proposed exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the draft merger agreement provided to them was fair, from a financial point of view, to the holders of the outstanding shares of ArcelorMittal. The Board of Directors of Arcelor met with its financial advisors, who rendered fairness opinions stating that as of the date of such opinions, and based upon and subject to the various considerations set forth in the opinions, the proposed exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the draft merger agreement provided to them, was fair from a financial point of view to shareholders holding the 5.76% of the issued share capital of Arcelor not held by Mittal Steel. After these meetings, the Arcelor and ArcelorMittal Boards jointly announced the exchange ratio of 0.875 Arcelor shares for every ArcelorMittal share. On May 15, 2007, the Board of Directors of ArcelorMittal appointed Mazars as independent auditor for purposes of the second-step merger process. On May 15, 2007, the Board of Directors of Arcelor appointed Grant Thornton Luxembourg S.A. as independent auditor, for purposes of the second-step merger process. After Grant Thornton Luxembourg S.A. commenced its work in this regard, its relationship with the Grant Thornton International ceased for reasons unrelated to the merger. The Grant Thornton Luxembourg S.A. team in charge of the assignment, which subsequently operated under the name of Compagnie Luxembourgeoise dExpertise et de Rvision Comptable (CLERC), completed its review of the second step merger process and issued its written report to the Arcelor Board of Directors. On June 25, 2007, Mazars Paardekooper Hoffman N.V. issued its written auditors declaration (accountantsverklaring) and its written auditors report (accountantsverslag) to the Board of Directors of ArcelorMittal with respect to, among other things, the fairness of the exchange ratio for the Mittal Steel class A common shares and the exchange ratio for the Mittal Steel class B common shares in connection with the firststep merger, as required pursuant to Dutch law. On June 25, 2007, Mazars issued its written report (un rapport crit destin aux actionnaires) to the Board of Directors of ArcelorMittal, with respect to, among other things, the exchange ratio for the Mittal Steel class A common shares and the exchange ratio for the Mittal Steel class B common shares in connection with the first-step merger, as required pursuant to Luxembourg law.

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On June 25, 2007, AGN Daamen & van Sluis issued its written auditors declaration (accountantsverklaring) and its written auditors report (accountantsverslag) to the Board of Directors of Mittal Steel with respect to, among other things, the fairness of the exchange ratio for the Mittal Steel class A common shares and the exchange ratio for the Mittal Steel class B common shares in connection with the first-step merger, as required pursuant to Dutch law. On June 25, 2007, all members of the Mittal Steel Board of Directors and the ArcelorMittal Board of Directors signed the merger proposal and the explanatory memorandum for the first-step merger. The merger proposal and the explanatory memorandum for the first-step merger, each dated June 25, 2007, were made publicly available on June 29, 2007. On August 28, 2007, Mittal Steel held an extraordinary general meeting of shareholders in order to approve the first-step merger of Mittal Steel into ArcelorMittal, which was approved by the Mittal Steel shareholders. On August 28, 2007, the sole shareholder of ArcelorMittal approved the first-step merger of Mittal Steel into ArcelorMittal. On September 3, 2007, the first-step merger of Mittal Steel with and into ArcelorMittal became effective. On September 25, 2007, the Boards of Directors of ArcelorMittal and Arcelor decided that it would be advisable to restructure the share capital of Arcelor prior to the effectiveness of the second-step merger so as to effect the merger based on a one-to-one exchange ratio. On September 25, 2007, the Board of Directors of ArcelorMittal and Arcelor each unanimously approved the merger agreement between ArcelorMittal and Arcelor and it was executed by the parties. On September 25, 2007, Mazars issued its written report (un rapport crit destin aux actionnaires) to the Board of Directors of ArcelorMittal, with respect to, among other things, the Exchange Ratio in connection with the second-step merger, as required pursuant to Luxembourg law. On September 25, 2007, CLERC issued its written report (un rapport crit destin aux actionnaires) to the Board of Directors of Arcelor, with respect to, among other things, the Exchange Ratio in connection with the second-step merger, as required pursuant to Luxembourg law. On September 25, 2007, the Board of Directors of ArcelorMittal and Arcelor approved and executed the merger proposal and the explanatory memorandum regarding the second-step merger of ArcelorMittal with and into Arcelor. Two-Step Merger Process In the MOU, Mittal Steel agreed that it would merge into Arcelor as soon as practicable following completion of its revised offer for Arcelor, and that the combined entity would be incorporated, domiciled and headquartered in Luxembourg. Following discussions at a meeting held on April 27, 2007, the Mittal Steel Board of Directors decided, pursuant to written decisions dated May 2, 2007, to organize a two-step process pursuant to which Mittal Steel would first be merged into ArcelorMittal, which would subsequently be merged into Arcelor as the ultimate surviving entity. The objective of the two-step process is to ensure the earliest possible compliance with the undertakings made by Mittal Steel in the context of its revised offer for Arcelor (as reflected in the MOU). In addition to enabling the parties to comply more rapidly and efficiently with part of the MOU undertakings, the first-step merger permitted a simplification of the groups corporate structure as both ArcelorMittal and Arcelor are now located in the same jurisdiction (Luxembourg) with the same headquarters. The first-step merger, completed on September 3, 2007, therefore contributed to a more efficient and rapid integration of the management and administrative teams of Mittal Steel and Arcelor. The merger that is the subject of this prospectus constitutes the second and final step of the combination of Mittal Steel and Arcelor into a single legal entity governed by Luxembourg law. In this second-step merger, ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) will merge into Arcelor and 189

shareholders of ArcelorMittal will become shareholders of Arcelor, which will be renamed ArcelorMittal. This second-step merger is governed solely by Luxembourg law, since it is a domestic merger between two Luxembourg law governed entities. The second-step merger is intended to further rationalize the corporate structure of the combined company initiated by the first-step merger of Mittal Steel and ArcelorMittal. Applicable Legal Framework The merger will be implemented in accordance with Section XIV of the Luxembourg law on commercial companies dated August 10, 1915, as amended. Merger Proposal and Explanatory Memorandum As required by Luxembourg law, the Boards of Directors of ArcelorMittal and Arcelor have prepared, executed and filed with the Luxembourg Registry of Trade and Companies a merger proposal (projet de fusion) for the merger of ArcelorMittal into Arcelor, together with the appropriate documents as required under Luxembourg law. In addition, as required by Luxembourg law, the Boards of Directors of ArcelorMittal and Arcelor have prepared and signed, and made available at the offices of both companies, an explanatory memorandum (rapport crit dtaill) to the merger proposal, together with the appropriate documents as required under Luxembourg law. As a matter of Luxembourg law, the decision to merge ArcelorMittal and Arcelor is effected solely through the adoption by the shareholders of ArcelorMittal and Arcelor of the decision to merge as contemplated by the merger proposal and the explanatory memorandum. Therefore, you are encouraged to read carefully the merger proposal and the explanatory memorandum in their entirety. A copy of the merger proposal, including its exhibits, can be obtained at the Luxembourg Registry of Trade and Companies, the offices of ArcelorMittal and Arcelor, and at http://investors.arcelormittal.com from September 28, 2007. A copy of the explanatory memorandum can be obtained free of charge at the offices of ArcelorMittal and Arcelor, and at http://investors.arcelormittal.com. Effectiveness of the Merger The effectiveness of the merger is subject to the satisfaction or waiver, where legally permissible, of the conditions precedent described under Conditions to Effectiveness of the Merger. The merger will become effective between ArcelorMittal and Arcelor and vis--vis third parties upon the publication of the Luxembourg law governed notarial deeds (procs-verbal de lassemble gnrale tabli par acte notari) containing the minutes of the extraordinary general meeting of shareholders of Arcelor and ArcelorMittal, respectively, approving the decision to merge, in the Mmorial, Recueil des Socits et Associations, the official gazette of the Grand Duchy of Luxembourg in accordance with Luxembourg law. For accounting purposes, the merger of ArcelorMittal into Arcelor shall be considered a combination of entities under common control as of January 1, 2007. All recorded assets and liabilities of ArcelorMittal and Arcelor shall be carried forward at their historical book values, and the income of Arcelor shall include the income of ArcelorMittal as of January 1, 2007. For statutory reporting purposes in Luxembourg, the final accounting year of ArcelorMittal shall end on December 31, 2006. Pre-Merger Restructuring of the Share Capital of Arcelor At a meeting held on September 25, 2007, the ArcelorMittal and the Arcelor Board of Directors decided that it would be advisable to restructure the share capital of Arcelor prior to the effectiveness of the second-step merger so as to have a one-to-one exchange ratio in the merger. The share capital restructuring would take the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 post-restructuring Arcelor shares, thus mechanically resulting in an adjusted exchange ratio of one new Arcelor share for every one ArcelorMittal share without any economic effect on Arcelor or ArcelorMittal shareholders.

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The sole purpose for the decision of the Boards of Directors to implement such share capital restructuring was to limit the effect of the merger on the ArcelorMittal share price and hence its comparability pre- and post-merger. The share prices of Arcelor and ArcelorMittal are currently not aligned. Given that the trading volume of ArcelorMittal shares is far greater than that of Arcelor, it is anticipated that the trading characteristics of Arcelor (to be renamed ArcelorMittal upon the effectiveness of the merger) will immediately upon effectiveness of the merger inherit the pre-merger trading characteristics of ArcelorMittal. Without the share capital restructuring, the 0.875 exchange ratio would necessarily and mechanically cause the ArcelorMittal share price immediately post-merger to be different from the ArcelorMittal share price immediately pre-merger, because the application of the 0.875 ratio would affect the share price in a manner similar to a reverse stock split; effecting the Arcelor share capital restructuring pre-merger resulting in a one-to-one merger exchange ratio will avoid the merger from having this mechanical effect on the post-merger ArcelorMittal share price. As a result of the share capital restructuring, each holder of pre-restructuring Arcelor shares would receive a number of post-restructuring Arcelor shares equal to (i) the number of pre-restructuring Arcelor shares held by that person divided by 0.875 (7 divided by 8) (such quotient being referred to as A) or (ii) if such number is not a whole number, the immediately lower whole number of post-restructuring Arcelor shares (such number being referred to as B) and a number of fractions of a seventh of a post-restructuring Arcelor share (a Fraction) equal to seven multiplied by the difference between A and B. Example: A shareholder holding 10 pre-restructuring Arcelor shares is entitled to (i) a number of post-restructuring shares equal to the whole part of (10/0.875) post-restructuring Arcelor shares, that is 11 post-restructuring Arcelor shares, and (ii) a number of Fractions equal to 7 times the difference between (10/0.875) and 11, that is 3 Fractions. The share capital of Arcelor shall be increased by incorporation of free reserves without issuing new shares, but by increasing the par value of the shares in order to round up the par value of post-restructuring Arcelor shares to the immediately higher euro cent. Under Luxembourg law, a holder of a Fraction will be entitled to dividend and other distributions on a pro rata basis, but will not be entitled to any voting rights. Fractions are transferable. Fractions will, however, not be traded on the Luxembourg Stock Exchange, Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, and the New York Stock Exchange. A holder of Fractions who holds 7 Fractions can request their conversion into one post-restructuring Arcelor share. Finally, except for the exchange pool facility described below, Arcelor will not assist Arcelor shareholders in the sale or purchase of Fractions, or repurchase their Fractions. Fractions will be delivered to those holders of Arcelor shares whose ownership is recorded directly in Arcelors shareholder registry (registre des actionnaires), through an entry in that registry. Book-entry systems do not allow for delivery of Fractions to those holders of Arcelor shares whose ownership is recorded indirectly through a book-entry system in Arcelors shareholder registry. Upon completion of the share capital restructuring, Fractions that would otherwise have been delivered to such shareholders if their share-ownerships were directly registered in the Arcelor shareholder registry will be transferred by the financial intermediary through which they hold their Arcelor share (except if that financial intermediary elects to apply a different procedure) or the relevant clearing system, as the case may be, to a centralizing bank. The centralizing bank will aggregate those Fractions and cause the resulting full shares to be sold, at any of the European stock exchanges where the Arcelor shares are admitted to trading, for the accounts of these shareholders, at dates to be determined, but not later than 15 business days following the effective date of the share capital restructuring. The proceeds realized from such sale will within 5 business days be paid to each shareholder entitled thereto in proportion to that shareholders interest in the aggregate number of shares sold. No interest will be paid in respect of the cash proceeds resulting from the sale. Arcelor will pay the brokerage and related fees and stock exchange duties connected with such exchange pool facility. Those holders of Arcelor shares whose ownership is recorded directly in Arcelors shareholder registry may elect to have their Fractions sold through the same exchange pool facility by filling in the appropriate section of the participation form for the Arcelor extraordinary shareholders meeting or by sending a written notification to Arcelor Service Titres , 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, within 10 business days following the effective date of the capital restructuring. ARCELOR SHAREHOLDERS WHO, AFTER THE COMPLETION OF THE CAPITAL RESTRUCTURING, OWN FRACTIONS, ARE URGED TO CAREFULLY CONSIDER THE POSSIBILITY TO PARTICIPATE IN THE EXCHANGE POOL FACILITY. Further information with respect to the exchange pool facility will be published on www.arcelormittal.com and in a local newspaper with nationwide circulation in Belgium, France, 191

Luxembourg and Spain, providing holders of Fractions (who hold their shares through a direct entry in Arcelors shareholder registry) 10 business days to elect to participate in the exchange pool facility. Arcelor shareholders who wish to avoid receiving or being compensated for Fractions, as the case may be, as a result of the capital restructuring may, until the day before the effective date of the share capital restructuring, which, subject to shareholders approval, is expected to be the day following the Arcelor extraordinary shareholders meeting, that is, under the proposed calendar November 6, 2007, purchase or sell Arcelor shares on the Luxembourg Stock Exchange, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, or the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, where these shares are admitted to trading in order to own a number of pre-restructuring Arcelor shares entitling them to receive a whole number of post-restructuring Arcelor shares, that is a multiple of 7 shares. The share capital restructuring will result in a mechanical adjustment of the per-share amount payable with respect to the last installment of the dividend decided by the annual general meeting of Arcelor held on April 27, 2007, which will amount to $0.284375 per share after the restructuring instead of $0.325 per share and of the terms of the Arcelor stock options. Following the share capital restructuring, the number of Arcelor stock options granted prior to the merger will remain unchanged and the terms and conditions of the options will be amended as follows in order to neutralize the impact of the share capital restructuring: each Arcelor stock option will give the right to purchase or subscribe, as applicable, a number of shares equal to the pre-restructuring peroption number of underlying shares divided by 0.875, at a price per share equal to the product of the prerestructuring per-share price multiplied by 0.875. The share capital restructuring and the related capital increase will be submitted for approval to the general meeting of Arcelor shareholders called to approve the second-step merger. The completion of the share capital restructuring and capital increase are conditions precedent to the effectiveness of the second-step merger. The fairness opinions issued to the Boards of Directors of ArcelorMittal and Arcelor, respectively, were delivered before the decision was made to condition the effectiveness of the second-step merger on the completion of the Arcelor share capital restructuring. The contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share without any economic effect on Arcelor and ArcelorMittal shareholders. Additional Dividend Distribution At a meeting held on September 25, 2007, the Arcelor Board of Directors decided to propose to the shareholders meeting of Arcelor the distribution of an additional dividend of $0.040625 per post-share capital restructuring Arcelor share (other than those issued in the second-step merger), payable simultaneously with the last installment of the dividend decided by the ordinary general meeting of Arcelor on April 27, 2007, so that each post-share capital restructuring Arcelor share (other than those issued in the second-step merger) would be entitled to a dividend payment of $0.325 on or about December 15, 2007. Financial Analysis of the Exchange Ratio Summary On May 15, 2007, the Boards of Directors of Mittal Steel, ArcelorMittal and Arcelor unanimously decided to propose to the shareholders of ArcelorMittal and Arcelor that the second-step merger of ArcelorMittal into Arcelor be effected on the basis of an exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share. The basis of the Boards determination and the reports prepared in connection therewith are summarized below and described either below or elsewhere in this prospectus. In summary at the outset and in each case subject to the more detailed description below or elsewhere in this prospectus: The Boards relied upon a multi-criteria valuation analysis to ensure that the exchange ratio was relevant and reasonable (pertinent et raisonnable) in view of the merging companies respective intrinsic values, which is the applicable test under Luxembourg law. The Boards respective financial advisors issued opinions as to the fairness from a financial point of view of the exchange ratio for the companies respective shareholders. Independent auditors issued reports, as required by Luxembourg law, as to the relevance and reasonableness of the exchange ratio and the adequacy of the valuation methods used by the Boards to determine it. In addition, based on a market value analysis, the Boards determined that the exchange ratio was consistent with the value of Arcelor shares in the secondary exchange offer by Mittal Steel for Arcelor 192

shares announced on June 25, 2006 as of its settlement date (August 1, 2006) and therefore with prior agreements between, and disclosure by, the companies. Subsequently, on September 25, 2007, the ArcelorMittal and the Arcelor Boards of Directors decided to propose the pre-merger restructuring of the share capital of Arcelor described above under PreMerger Restructuring of the Share Capital of Arcelor, mechanically resulting in an adjusted exchange ratio of one new Arcelor share for every one ArcelorMittal share without any economic effect on Arcelor or ArcelorMittal shareholders. The Boards also determined on such date that no event, transaction or new development had occurred since May 15, 2007 that would lead to an adjustment of the merger exchange ratio other than to reflect the share capital restructuring described above. Luxembourg Law Requirement; Boards Multi-Criteria Valuation Analysis

Luxembourg corporate law requires that the exchange ratio in any legal merger be relevant and reasonable (pertinent et raisonnable) in view of the respective intrinsic values of the companies to be merged. To determine the exchange ratio in light of this legal requirement, the Boards of Directors of Arcelor, ArcelorMittal and Mittal Steel relied upon a multi-criteria analysis so as to ensure that the exchange ratio adequately reflects the respective relative intrinsic values of the two companies. The following excerpt from the explanatory memorandum attached to this prospectus as Annex B sets out in detail the multi-criteria analysis applied by the Boards: II. Guidance Methodology

The multi-criteria analysis is based on the following information, which has also been communicated to the market: based on an analysis of the nature of the synergies reflected in the Harmonized Value Plan 2008 and, in particular their allocation among the various segments and geographic areas, approximately 41% of the previously announced synergies generated by the combination of Arcelor and Mittal Steel will be realized at the level of Arcelor; based on the 2008 Arcelor EBITDA estimate taken into account for the purposes of the preparation of the Harmonized Value Plan 2008 (which represents 49% of the 2008 target EBITDA of USD 20 billion for the ArcelorMittal group), Arcelor will contribute approximately 49% of the combined Arcelor/Mittal Steel group EBITDA indicated in the combined Arcelor/Mittal Steel group Harmonized Value Plan 2008; based on an analysis of the capital expenditures taken into account for the purposes of the Harmonized Value Plan 2008, Arcelor will account for approximately 50% of the combined Arcelor/Mittal Steel groups capital expenditures indicated in the Harmonized Value Plan 2008. These elements relate to the Harmonized Value Plan 2008. The breakdown of the 2008 target EBITDA of USD 20 billion for the ArcelorMittal group can be summarized as follows: Ex-Arcelor Proforma EBITDA 2005 Brownfield and production growth in the market Value added growth in line with market Management gains and stand alone synergies net of restructuring Mining expansion Merger synergies Regulatory remedies Price cost squeeze EBITDA 2008 target ____________________________ Note: Synergies and costs reflected in this table have been allocated based on where they were expected to be generated or incurred, respectively. 193 8.2 2.8 0.0 2.3 0.0 0.7 -0.2 -4.0 9.8 Ex-Mittal Steel 6.7 1.8 1.1 1.9 0.4 0.9 0.0 -2.6 10.2 ArcelorMittal 14.9 4.6 1.1 4.2 0.4 1.6 -0.2 -6.6 20.0

The financial information used to assess the terms and conditions of the Second-Step Merger are derived from the consolidated financial statements of ArcelorMittal and Arcelor for accounting year 2006, prepared in accordance with IFRS, pro forma for acquisitions made in 2006 as if such acquisitions had occurred on 1 January 2006. Minority interests in listed entities (Arcelor, Mittal South Africa, Acesita) and listed associates investments (Erdemir, Hunan Valin) have been valued at market value. The value of the Arcelor Brasil minority interest was calculated based on the share price of Arcelor Brasil as at 11 May 2007, after the announcement of the terms of the mandatory offer. All calculations are based on 670.3 million Arcelor shares and 1,389.6 million ArcelorMittal shares, in both cases diluted based on the treasury method applied as of the end of April 2007. Since the first-step merger was to be (and has been) implemented based on a one-to-one exchange ratio, the value of an ArcelorMittal share has been considered equal to the value of a Mittal Steel share. Certain reorganizations have been implemented since the date of the Harmonized Value Plan 2008. However, they were not considered to have any impact on the exchange ratio. Similarly, the mandatory tender offer for the outstanding shares of Arcelor Brasil, which was completed after the determination of the exchange ratio and which was principally settled in cash does not impact the exchange ratio, since for the purposes of the intrinsic value analysis supporting the determination of the exchange ratio the Arcelor Brasil minority interest had been valued using the share price of Arcelor Brasil as at 11 May 2007, after the announcement of the terms of the mandatory offer. A similar conclusion was reached with respect to the contemplated disposal of the Sparrows Point facility, which is made at fair market value. III. Methods that have been disregarded

Trading Value - Valuations based on Arcelor trading value have not been used since when the Boards of Directors made their determination, the Arcelor share price was not believed to represent the intrinsic value of the company since (i) before the announcement of the proposed exchange ratio 16 May 2007, the trading value of Arcelor was heavily impacted by market speculation regarding the timing of the merger and the exchange ratio (which is evidenced in particular by the fact that Arcelor was trading at a higher EBITDA multiple than ArcelorMittal without any justification in light of the growth perspective of their respective businesses) and (ii) the Arcelor share had only a limited liquidity compared to historical averages. Analysis of the liquidity of Arcelor share Average daily Average daily trading volume on trading volume on Euronext Paris Euronext Paris / Total shares (669.8 million as at 31 December 2006) 270,900 0.04% Since sell-out (27 November 2006 through 11 May 2007) Last over the month preceding the announcement of the offer (i.e. before 26 January 2006) Source: Bloomberg 4,122,900 0.62%

Consolidated dividend per share In the steel industry, dividend yield is not regarded as a relevant valuation criterion given the cyclicality of the industry. As both investors as well as equity research analysis are not focused on this criterion, an analysis based on consolidated dividend per share has not been used. Analysis of precedent transactions Precedent transactions in the steel industry reflect situations where a change of control takes place. As such, prices paid in precedent transactions reflect, in addition to the 194

intrinsic stand-alone value, a so-called control premium reflecting in particular the ability of the purchaser to generate synergies and efficiency gains. As ArcelorMittal already has control over Arcelor and no synergies are expected from the legal merger itself, an analysis of precedent transactions has not been used. Revaluated net asset value As both investors as well as equity research analysis not rely on this valuation method and generally focus on future profitability, an analysis based on revaluated net asset has not been used. IV. (a) Methods that have been used Analysis of comparable companies

Valuations of listed companies in the steel industry are frequently compared on the basis of enterprise value to EBITDA (EV/EBITDA) and price to earnings per share (P/E) multiples. EBITDA is defined as operating profit before depreciation and amortisation. Enterprise value corresponds to the aggregate of the equity market capitalisation, net indebtedness and minority interests. Investments in associates and other financial assets are excluded from enterprise value as the income associated with these assets is generally not included in EBITDA. A number of steel manufacturing conglomerates have been excluded from the analysis as a material part of their operations are not steel related. Company ThyssenKrupp JFE Non steel related operations ThyssenKrupp is an industrial conglomerate with diverse activities unrelated to steel, including submarine and shipbuilding, elevators and automotive components. JFE is an industrial conglomerate with diverse activities unrelated to steel, including microelectronics, engineering for the energy sector and environmental solutions and urban development. Nippon Steel is an industrial conglomerate with diverse activities unrelated to steel, including power supply, chemicals, urban development, construction and engineering. Kobe Steel is an industrial conglomerate with diverse activities unrelated to steel, including titanium, welding equipment and consumables, machinery such as crushers, tire and rubber machines and plastic processing machines, power generation plants, as well as activities in infrastructure construction.

Nippon Steel Corp.

Kobe Steel

A number of other European and North American steel companies were considered, but excluded for the purpose of trading multiple analysis due to the unique features of their businesses which exhibit less comparability to ArcelorMittal and Arcelor. Company Salzgitter Svenskt Stal (SSAB) Reasons for exclusion Salzgitter is a regional niche steel manufacturer. SSAB is a Nordic focused niche producer of high strength sheets and quenched plate steels with high exposure to the booming mining equipment market, construction equipment and fuel-efficient automotive manufacturing sectors. The strong position in niche products gives SSAB greater pricing power and therefore higher and more sustainable margins and returns. SSAB is therefore not directly comparable to the major steel companies. Rautaruukki is a company in a transition phase from a steel producer to a complete solutions provider for the construction and engineering sectors. As part of this transition, Rautaruukki has acquired companies active in construction systems and total delivery know-how, components for lifting, handling and transportation equipment. It is seeking to exit its long products business. Nucor is entirely focused on the US and exclusively produces steel via the EAF method.

Rautaruukki

Nucor

195

For the purposes of the comparison, ArcelorMittal and Arcelor have also been disregarded to not influence the outcome of the analysis. Arcelor Brasil was at the time of the determination of the exchange ratio subject to a delisting mandatory offer and has also been excluded as its share price reflected a regulated offer process. In general, investors typically base investment decisions on future profitability. Although, for this reason, 2007 and 2008 should be regarded as the most relevant periods as investors are looking for future profitability and value future cash flows, 2006 should also be considered in light of the lack of up-to-date broker research estimates for Arcelor. The selected comparable companies are covered by numerous equity research analysts and consensus estimates for the periods 2007 and 2008 are widely available. The table below summarizes the EV/EBITDA and P/E multiples for these steel companies based on reported 2006 results and consensus EBITDA estimates derived from IBES and calendarised to reflect a 31 December year end. EBITDA Multiple 2006 A 6.7 7.2 6.3 10.0 7.6 P/E Multip le 2006 A 13.2 11.3 9.7 20.0 13.5 _________________ The companies presented in this table report under different accounting standards. EBITDA is adjusted to exclude total pension expenses recognised during the last twelve-month period for which figures are available. Sources: IBES estimates, financial data based on last published financials.

Posco Voest Alpine US Steel CSN Average Multiple

2007 E 6.3 6.5 6.7 6.9 6.6

2008 E 5.3 6.7 6.6 6.5 6.3

The application of the relevant average multiple mentioned in the table above to the 2006 pro-forma EBITDA, the 2007 and 2008 EBITDA implied by the Harmonized Value Plan 2008 and IBES estimates and the 2006 pro-forma earnings per share for both ArcelorMittal and Arcelor provide for equity values, share prices and implied exchange ratios as shown in the table below: Share Price () Exchange Ratio 0.845 - 0.965 ArcelorMittal Arcelor 42.3 - 61.9 49.3 - 64.1 ____________________________ Equity Value (bn) ArcelorMittal 58.8 - 86.0 Arcelor 33.1 - 43.0

Note: Exchange ratios based on combination of Arcelor and ArcelorMittal share prices within the minimum and maximum range implied by the application of the valuation described above. The main purpose of the analysis is to perform a relative valuation for ArcelorMittal and Arcelor and as such a relatively broad range of valuation multiples has been used. In addition to the table above, a sensitivity analysis has been performed by applying the minimum and maximum valuation multiples of the group of selected comparable companies which resulted in an exchange ratio range of 0.818 to 0.965. (b) Analysis made on discounted cash flows

Arcelor and Mittal Steel performed a discounted cash flow analysis as at May 15, 2007 using publicly available forecast consisting both of (i) the Harmonized Value Plan 2008 communicated to the market, subject to adjustments aimed at including the Sicartsa acquisition1 and related synergies, and (ii) the consensus broker estimates in 2007 and 2008 for ArcelorMittal derived from Institutional Brokers Estimate System (IBES), Arcelor estimates being in the latter case derived from ArcelorMittal broker estimates based on the guidance set forth in paragraph II. above, since most brokers no longer cover the Arcelor share.

ArcelorMittal announced on December 20, 2006, the acquisition of Sicartsa, a Mexican integrated steel producer from Grupo Villacero. 196

The discounted cash flow analysis is based on the assumptions described in paragraph II. above and on the following additional assumptions: (i) a tax rate at 25% for each of the two companies; (ii) the same discount rate was applied to the future cash flows of each of the two companies; (iii) the 2007 EBITDA based on the Harmonized Value Plan 2008 represents an average between the 2006 pro forma EBITDA and the 2008 EBITDA reflected in the Harmonized Value Plan 2008; (iv) depreciation and amortization were set as per IBES consensus estimates; (v) ArcelorMittal Capex was set as per Harmonized Value Plan 2008; and (vi) working capital optimization was estimated at 0.9 billion for ArcelorMittal as per Harmonized Value Plan 2008, broken down 50/50 between 2007 and 2008 and at 0.3 billon in 2007 and 2008 for Arcelor as per Arcelors 27 February 2006 investor presentation. The terminal value was calculated both based on EBITDA exit multiples and the perpetual growth method. The table below shows the resulting equity values, share prices and exchange ratios assuming, for each of Arcelor and ArcelorMittal, an exit multiple of 6.5x EBITDA, a perpetuity growth rate of 0% and a discount rate of 9.25%: Equity Value (bn) ArcelorMittal Harmonize EBITDA Exit d Value Plan 2008 Perpetual Growth IBES EBITDA Exit 71.7 Arcelor 38.3 Share Price () ArcelorMittal 51.6 Arcelor 57.1 Exchange Ratio 0.904

85.0 63.2

44.4 35.0

61.2 45.5

66.3 52.2

0.923 0.871

Perpetual 74.3 40.3 53.5 60.2 0.889 Growth In addition, a sensitivity analysis was performed, using EBITDA exit multiples ranging from 6.0x EBITDA to 7.0x EBITDA, perpetual growth rates ranging from -1% to 1% and discount rates ranging from 9% to 9.5% which resulted in an exchange ratio range of 0.860 to 0.936 (using identical assumptions for each of Arcelor and ArcelorMittal). (c) Contribution analysis

ArcelorMittal and Arcelor reviewed specific historical earnings per share (EPS) and historical and estimated future EBITDA for Arcelor and ArcelorMittal, based on both the Harmonized Value Plan 2008 and the IBES consensus, Arcelor estimates being in the latter case derived from ArcelorMittal estimates based on the guidance set forth in paragraph II. above, since brokers no longer cover Arcelor. The analysis of the contribution, on a debt-adjusted basis, of Arcelor to the aggregate equity value of ArcelorMittal based on EBITDA or EPS provides for an exchange ratio range comprised between 0.833 and 0.965 Arcelor share for every ArcelorMittal share, ArcelorMittal equity value being determined based on the closing value of the Mittal Steel share (based on Amsterdam listing) on 11 May 2007. The table below illustrates the corresponding values for Arcelor and ArcelorMittal implied by the exchange ratios resulting from this analysis, based on a value of the ArcelorMittal share equal to the closing value of the Mittal Steel share (based on Amsterdam listing) on 11 May 2007: Share Price () Exchange Ratio 0.833-0.965 ArcelorMittal 41.8 Arcelor 43.3 - 50.2 Equity Value (bn) ArcelorMittal 58.1 Arcelor 29.0 - 33.6

(d)

Summary assessment of the exchange ratio based on intrinsic values

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The outcome of the multi-criteria valuation analysis based on average multiples as far as the analysis of comparable companies is concerned and the median assumptions described herein above as far as the discounted cash flow analysis is concerned can be summarized as follows.

Share Price () Exchange Ratio Comparable Companies DCF Analysis Contribution Analysis Average 0.845 - 0.965 0.871 - 0.923 0.833 - 0.965 ArcelorMittal 42.3 - 61.9 45.5 - 61.2 41.8 Arcelor 49.3 - 64.1 52.2 - 66.3 43.3 - 50.2 50.6 - 57.9

Equity Value (bn) ArcelorMittal 58.8 - 86.0 63.2 - 85.0 58.1 60.0 - 76.3 Arcelor 33.1 - 43.0 35.0 - 44.4 29.0 - 33.6 33.9 - 38.8

0.850 - 0.951 43.2 - 54.9 _________________

Note: Exchange ratios based on combination of Arcelor and ArcelorMittal share prices within the minimum and maximum range implied by the application of the valuations described above (based on average multiples as far as the analysis of comparable companies is concerned and the median assumptions described herein above as far as the discounted cash flow analysis is concerned). The average exchange ratio bracket resulting from the valuations described above, taking into account the sensitivity analyses that have been performed for the comparable companies and discounted cash flows methods, as described in paragraphs (a) and (b) above, is 0.837-0.955, as shown in the table below. Implied Exchange Ratio Comparable companies DCF analysis Contribution analysis Average Min 0.818 0.860 0.833 0.837 Max 0.965 0.936 0.965 0.955

The exchange ratio of 0.875 Arcelor share for every ArcelorMittal share is therefore consistent with the analysis of the relative intrinsic value range of Arcelor and ArcelorMittal. None of the methods used for the purposes of the multi-criteria analysis has been given a specific weight compared to the others. As noted above, the exchange ratio of 0.875 Arcelor share for every ArcelorMittal share does not take into consideration the implementation of a share capital restructuring of Arcelor prior to the effectiveness of the Second-Step Merger, in the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 postrestructuring Arcelor shares. The contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share. Fairness Opinions of the Boards Financial Advisors and Independent Auditor Reports The Boards of Directors of Mittal Steel and ArcelorMittal noted in this regard the opinion of their financial advisor, which stated that as of the date of the opinion, and based upon and subject to the factors and assumptions set forth therein, and assuming that the first-step merger had been consummated, the exchange ratio of 0.875 pursuant to the draft merger agreement reviewed by it was fair from a financial point of view to the holders of the outstanding shares of ArcelorMittal. See Fairness Opinion of Financial Advisor to Mittal Steel and ArcelorMittal. The Board of Directors of Arcelor noted in this regard the opinions of its financial advisors, all of which stated that as of the date of such opinions, and based upon and subject to the various considerations set forth in such opinions, the exchange ratio of 0.875, pursuant to the draft merger agreement reviewed by it, was fair from a financial point of view to shareholders holding the 5.76% of the issued share capital of Arcelor not held by Mittal Steel (as predecessor to ArcelorMittal). See Fairness Opinions of Financial Advisors to Arcelor. 198

The relevance and reasonableness of the exchange ratio, from a financial perspective, as well as the adequacy of the valuation methods applied by the Boards, was also confirmed by the independent auditors reports referenced below. See Opinion of Independent Luxembourg Auditor for ArcelorMittal and Opinion of Independent Luxembourg Auditor for Arcelor. Consistency with the Companies Prior Agreements and Disclosure The Boards of Directors of Mittal Steel, ArcelorMittal and Arcelor also determined that the exchange ratio of 0.875 that resulted from its analysis conducted pursuant to the preceding paragraphs in this sub-section was consistent with agreements between and disclosure previously made by the companies. Specifically, in the MOU signed in the context of Mittal Steels revised offer for Arcelor securities announced on June 25, 2006 and in subsequent public statements, Mittal Steel and Arcelor had provided guidance on the principles based upon which they intended to use their best efforts to implement the post-offer merger of the two companies. Such principles provided that the merger exchange ratio would be consistent with the value of Arcelor shares pursuant to the secondary exchange offer as at the date of its settlement and delivery on August 1, 2006. This value corresponds to the implicit value of Arcelor shares resulting from application as of August 1, 2006 of the exchange ratio in the secondary exchange offer to the Mittal Steel share value as of such date. For the avoidance of doubt, the companies never stated nor intended to ensure the same exchange ratio in the merger as in the exchange offer. In addition, the need to ensure consistency with the prior agreement between, and public disclosure made by, the companies had to be coupled with the legal requirement described above that the exchange ratio reflect the intrinsic values of the merging companies. This latter requirement necessitated conducting a new valuation exercise for each of the two companies as of the time the exchange ratio was determined, using then-relevant valuation criteria and available financial information. At their meetings held on May 15, 2007, the Boards of Directors of Mittal Steel, ArcelorMittal and Arcelor determined that the merger exchange ratio was consistent with the value of Arcelor shares pursuant to the secondary exchange offer as at the date of its settlement and delivery on August 1, 2006. The Boards determination was based on the process and analysis: summarized in the following paragraph. The value of the Arcelor share based on the exchange ratio of the secondary exchange offer as at the date of its settlement and delivery on August 1, 2006 was between 41.38 and 42.58, depending on whether the opening share price on the NYSE or Euronext Amsterdam by NYSE Euronext is used as the reference for the Mittal Steel share value. This value of the Arcelor share was compared by the Boards to the market value of the Mittal Steel share on and before May 11, 2007 (i.e., before the date of the determination of the exchange ratio on May 15, 2007). Several time periods were reviewed for the purposes of determining the value of the Mittal Steel share, as further explained in the explanatory memorandum attached as Annex B hereto. The comparison of the Mittal Steel share value over several time periods and the Arcelor share value determined in accordance with the above-mentioned principles resulted in an exchange ratio comprised between 0.876 and 1.01 Arcelor share for every ArcelorMittal share (pre-share capital restructuring of Arcelor). The exchange ratio of 0.875 Arcelor shares for every ArcelorMittal share pre-share capital restructuring of Arcelor was therefore considered by the Boards to be consistent with the valuation range resulting from the above-mentioned principles. For the avoidance of doubt, the question of whether the exchange ratio is consistent with agreements between and disclosure previously made by the companies was outside the scope of the fairness opinions requested of the Boards financial advisors and of the reports of the independent auditors referred to above and summarized below. It is noted that one of the Arcelor advisors in its exchange ratio valuation analysis used as one criteria the value of the Arcelor share in the secondary exchange offer as of August 1, 2006 (the date of its settlement). Recommendation of the ArcelorMittal and Arcelor Boards of Directors and the ArcelorMittal and Arcelor Boards of Directors Reasons for the Merger Following discussions at a meeting held on May 15, 2007, the ArcelorMittal Board of Directors unanimously decided to approve an exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share. At a meeting held on September 25, 2007, the ArcelorMittal Board of Directors decided that it would be advisable to restructure the share capital of Arcelor prior to the effectiveness of the second-step merger so as to effect the merger based on a one-to-one exchange ratio, as described above in Pre-merger Restructuring of the Share Capital of Arcelor.

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By unanimous vote, the ArcelorMittal Board of Directors, at a meeting held on September 25, 2007, approved the merger agreement, the merger proposal and the explanatory memorandum and signed the merger agreement, the merger proposal and the explanatory memorandum. The ArcelorMittal Board of Directors unanimously recommends that the ArcelorMittal shareholders vote FOR the decision to merge as contemplated by the merger proposal and the explanatory memorandum. In reaching its decision to effect the merger of Arcelor and ArcelorMittal, the ArcelorMittal Board of Directors consulted with ArcelorMittals management and its advisors and considered a variety of factors including, among others, the following: the completion of the second-step merger would enable ArcelorMittal to comply with the commitments of the MOU which stated that Mittal Steel would merge into Arcelor as soon as practicable following completion of its revised offer for Arcelor, and that the combined entity would be incorporated, domiciled and headquartered in Luxembourg; the second-step merger would further rationalize the corporate structure of the group initiated by the first-step merger of Mittal Steel and ArcelorMittal; the second-step merger would not significantly affect the corporate governance or operational organization of the combined entity; the considerations described above under Financial Analysis of the Exchange Ratio; the fairness opinion of Goldman Sachs, as financial advisor to Mittal Steel and ArcelorMittal stating that as of the date of the fairness opinion and based upon and subject to the factors and assumptions set forth therein, and assuming that the First Step Merger (as defined below) had been consummated, the proposed exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the draft merger agreement provided to them was fair, from a financial point of view, to the holders of the outstanding shares of ArcelorMittal; it being noted by the Board that (i) this fairness opinion was issued before the decision was made to condition the effectiveness of the second-step merger to the completion of the Arcelor share capital restructuring and (ii) the contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share without any economic impact on the ArcelorMittal shareholders; correspondence from minority shareholders (or their representatives) of Arcelor, including a letter and valuation report dated April 24, 2007 received from the Association de dfense des actionnaires minoritaires (ADAM) setting out ADAMs views on an appropriate exchange ratio for the transaction, which indicated the potential for minority shareholder challenges of the Exchange Ratio in the merger; the second-step merger would neither cause any material adverse corporate tax consequences in Luxembourg for ArcelorMittal or Arcelor, nor trigger any Luxembourg capital duty; and it was not anticipated that any of the regulatory requirements to which the second-step merger is subject would hinder, delay or restrict the effectiveness of such merger.

In light of the number and wide variety of factors considered in connection with their evaluation of the transaction, the ArcelorMittal Board of Directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that they considered in reaching their determination. The ArcelorMittal Board of Directors viewed their position as being based on all available information and the factors presented to and considered by them. In addition, individual directors may have given different weights to different factors. This explanation of ArcelorMittals reasons for the merger and all other information presented in this section are forward-looking in nature and, therefore, should be read in light of the factors discussed under Cautionary Statement Concerning Forward-Looking Statements. The ArcelorMittal Board of Directors realized that there could be no assurance about future results, including results expected or considered in the factors listed above. However, the ArcelorMittal Board of Directors concluded that the potential benefits of effecting the merger with Arcelor were significant and outweighed any potential risks of Arcelor minority shareholder challenges to, or litigation in respect of, the merger based on the Exchange Ratio as the Board believed any such challenges or litigation would be 200

groundless. The ArcelorMittal Board of Directors also concluded, in particular, that the merger would enable ArcelorMittal to comply with MOU undertakings. Following discussions at a meeting held on May 15, 2007, the Arcelor Board of Directors also unanimously decided to approve an exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share. At a meeting held on September 25, 2007, the Arcelor Board of Directors decided that it would be advisable to restructure the share capital of Arcelor prior to the effectiveness of the second-step merger so as to effect the merger based on a one-to-one exchange ratio, as described above in Pre-merger Restructuring of the Share Capital of Arcelor. By unanimous vote, the Arcelor Board of Directors, at a meeting held on September 25, 2007, approved the merger agreement, the merger proposal and the explanatory memorandum and signed the merger agreement, the merger proposal and the explanatory memorandum. The Arcelor Board of Directors unanimously recommends that the Arcelor shareholders vote FOR the decision to merge as contemplated by the merger proposal and the explanatory memorandum. In reaching its decision to effect the merger of Arcelor and ArcelorMittal, the Arcelor Board of Directors consulted with Arcelors management and its advisors and considered a variety of factors including, among others, the following: the completion of the second-step merger would enable Arcelor to comply with the commitments of the MOU which stated that Mittal Steel would merge into Arcelor as soon as practicable following completion of its revised offer for Arcelor, and that the combined entity would be incorporated, domiciled and headquartered in Luxembourg; the factors described above under Financial Analysis of the Exchange Ratio; the fairness opinions of Fortis Bank (Nederland) N.V., Morgan Stanley & Co. Limited, Socit Gnrale and Ricol, Lasteyrie & Associs, as financial advisors to Arcelor, stating that, as of the date of such opinions, and based upon and subject to the various considerations set forth in the opinions, the proposed exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the draft merger agreement provided to them, was fair from a financial point of view to shareholders holding the 5.76% of the issued share capital of Arcelor not held by Mittal Steel; it being noted by the Board that (i) these fairness opinions were issued before the decision was made to condition the effectiveness of the second-step merger to the completion of the Arcelor share capital restructuring and (ii) the contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share without any economic impact on the Arcelor shareholders; correspondence from minority shareholders (or their representatives) of Arcelor, including a letter and valuation report dated April 24, 2007 received from ADAM setting out ADAMs views on an appropriate exchange ratio for the transaction, which indicated the potential for minority shareholder challenges of the Exchange Ratio in the merger; the second-step merger would neither cause any material adverse corporate tax consequences in Luxembourg for ArcelorMittal or Arcelor, nor trigger any Luxembourg capital duty; and it was not anticipated that any of the regulatory requirements to which the second-step merger is subject would hinder, delay or restrict the effectiveness of such merger.

In light of the number and wide variety of factors considered in connection with their evaluation of the transaction, the Arcelor Board of Directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that they considered in reaching their determination. The Arcelor Board of Directors viewed its position as being based on all available information and the factors presented to and considered by them. In addition, individual directors may have given different weights to different factors. This explanation of Arcelors reasons for the merger and all other information presented in this section are forward-looking in nature and, therefore, should be read in light of the factors discussed under Cautionary Statement Concerning Forward-Looking Statements. The Arcelor Board of Directors realized that there could be no assurance about future results, including results expected or considered in the factors listed above. However, the Arcelor Board of Directors concluded that the potential benefits of effecting the merger with ArcelorMittal were significant and outweighed any potential risks of Arcelor minority shareholder challenges to, or litigation in respect of, the merger based on the 201

Exchange Ratio as the Board believed any such challenges or litigation would be groundless. The Arcelor Board of Directors also concluded, in particular, that the merger would enable Arcelor to comply with MOU undertakings. Timetable for the Merger The merger proposal and the explanatory memorandum, each dated September 25, 2007, have been made publicly available on September 26, 2007. A copy of the merger proposal and a copy of the explanatory memorandum are attached to this prospectus as Annex B. In order to complete the merger, ArcelorMittal shareholders must adopt the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. The extraordinary general meeting of shareholders of ArcelorMittal that will vote on the proposal to merge ArcelorMittal into Arcelor will be held on November 5, 2007, at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg. The extraordinary general meeting of shareholders of Arcelor that will vote on the proposal to merge ArcelorMittal into Arcelor, among other things, will also be held on November 5, 2007. If the proposal to merge is adopted by the respective requisite majority at the extraordinary general meeting of shareholders of ArcelorMittal and Arcelor and all other conditions precedent are satisfied or waived, the merger is expected to be effective on or about November 13, 2007. Upon effectiveness of the merger, holders of ArcelorMittal shares will automatically receive newlyissued Arcelor shares in accordance with the Exchange Ratio and on the basis of their respective holdings as entered in the ArcelorMittal shareholder registry or their respective securities accounts. Holders of ArcelorMittal shares whose shares are registered directly in ArcelorMittals shareholder registry, will automatically receive newly-issued Arcelor shares through an entry in the shareholder registry (registre des actionnaires) of Arcelor. Holders of ArcelorMittal shares whose shares are registered indirectly, that is through a book-entry system, in ArcelorMittals shareholder registry, will automatically receive newly-issued Arcelor shares through a credit to their respective securities accounts. Upon the day of effectiveness of the merger, which is expected to be on or about November 13, 2007, the Arcelor shares issued in the merger will be listed and traded on the Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the stock exchanges of Barcelona, Bilbao, Madrid and Valencia and the New York Stock Exchange, traded on the regulated market of the Luxembourg Stock Exchange and listed on the Official List of the Luxembourg Stock Exchange. Finally, the ArcelorMittal shares, which will automatically disappear in the merger, will no longer be listed and traded on the Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the stock exchanges of Barcelona, Bilbao, Madrid and Valencia and the NYSE or traded on the regulated market of the Luxembourg Stock Exchange or listed on the Official List of the Luxembourg Stock Exchange as of the day of effectiveness of the merger. The last day of listing and trading of the ArcelorMittal shares at these exchanges is expected to be on or about November 12, 2007. Opinion of Independent Luxembourg Auditor for ArcelorMittal On September 25, 2007, Mazars issued its written report (un rapport crit destin aux actionnaires) to the Board of Directors of ArcelorMittal with respect to, among other things, the fairness of the Exchange Ratio, as required pursuant to Luxembourg law. Mazars opined, among other things, that, as of the date of its report and based upon the factors and assumptions set forth therein, no fact has come to its attention that causes it to believe that the Exchange Ratio is not relevant and reasonable (pertinent et raisonnable) to all shareholders of ArcelorMittal or that the valuation methods used by the Board of Directors to determine the Exchange Ratio are not adequate. A copy of the report is attached to the merger proposal, a copy of which is attached to this prospectus as Annex B, and both the merger proposal and the report are also available at the offices of ArcelorMittal and Arcelor and at the Luxembourg Registry of Trade and Companies. Mazars is certified as a Luxembourg auditor (Rviseur dEntreprises) by the Luxembourg Department of Justice (agr par le Ministre de la Justice), according to Article 3 of the law dated June 28, 1984, which regulates the profession of Rviseur dEntreprises. Mazars was selected among a number of auditor firms considered by the Board of Directors of ArcelorMittal, taking into account the auditor firms reputation, expertise and independence from both ArcelorMittal and Arcelor. Neither Mazars nor any of its affiliates has had any material relationship with ArcelorMittal and its affiliates during the past two years, except that it acted 202

as independent auditor for ArcelorMittal in connection with the first-step merger, and that Mazars & Gurard in France, an affiliate of Mazars, at the request of Arcelor, currently an affiliate of ArcelorMittal, conducted a due diligence investigation with respect to the Severstal group in April 2006 and with respect to the entities owned by Vallourec in June 2007. Arcelor has been a subsidiary of ArcelorMittal (as successor to Mittal Steel) since August 1, 2006. Mazars expects to receive an estimated aggregate compensation of 900,000 for its services in connection with the first and second step mergers, none of which is contingent upon the consummation of either merger. For purposes of its report, Mazars was requested by the Board of Directors of ArcelorMittal to express its opinion on the fairness of the Exchange Ratio as set by the Boards of Directors of ArcelorMittal and Arcelor in accordance with Luxembourg law. For purposes of its report, Mazars reviewed, at the request of the Board of Directors of ArcelorMittal, among other things, the merger proposal, the explanatory memorandum and the financial statements of ArcelorMittal and Arcelor for accounting year 2006 and the first six months of 2007. In its review, Mazars followed the applicable procedures of the Luxembourg Institut des Rviseurs dEntreprises, which requires, among other things, to plan and perform the review to obtain moderate assurance (une assurance modre) as to whether the Exchange Ratio is reasonable. No limitation was imposed by ArcelorMittal or Arcelor on the scope of Mazarss investigation. Based on the reviewed documents, the applicable procedures, and the Exchange Ratio, Mazars, in its report, reached the conclusion that no fact has come to its attention that causes it to believe that the Exchange Ratio is not relevant and reasonable (pertinent et raisonnable) to all shareholders of ArcelorMittal or that the valuation methods used by the Board of Directors to determine the Exchange Ratio are not adequate. Opinion of Independent Luxembourg Auditor for Arcelor On September 25, 2007, CLERC issued its written report (un rapport crit destin aux actionnaires) to the Board of Directors of Arcelor with respect to, among other things, the fairness of the Exchange Ratio, as required pursuant to Luxembourg law. CLERC opined, among other things, that, as of the date of its report and based upon the factors and assumptions set forth therein, no fact has come to its attention that causes it to believe that the Exchange Ratio is not relevant and reasonable (pertinent et raisonnable) to all shareholders of Arcelor or that the valuation methods used by the Board of Directors to determine the Exchange Ratio are not adequate. A copy of the report is attached to the merger proposal, a copy of which is attached to this prospectus as Annex B, and both the merger proposal and the report are also available at the offices of ArcelorMittal and Arcelor and at the Luxembourg Registry of Trade and Companies. CLERC is certified as a Luxembourg auditor (Rviseur dEntreprises) by the Luxembourg Department of Justice (agr par le Ministre de la Justice), according to Article 3 of the law dated June 28, 1984, which regulates the profession of Rviseur dEntreprises. CLERC was selected among a number of auditor firms considered by the Board of Directors of Arcelor, taking into account the auditor firms reputation, expertise and independence from both ArcelorMittal and Arcelor. Neither CLERC nor any member or correspondent firm has had any material relationship with Arcelor and its affiliates during the past two years. CLERC expects to receive an estimated aggregate compensation of 500,000 for its services in connection with the second-step merger, none of which is contingent upon the consummation of the merger. For purposes of its report, CLERC was requested by the Board of Directors of Arcelor to express its opinion on the fairness of the Exchange Ratio as set by the Boards of Directors of ArcelorMittal and Arcelor in accordance with Luxembourg law. For purposes of its report, CLERC reviewed, at the request of the Board of Directors of Arcelor, among other things, the merger proposal, the explanatory memorandum and the financial statements of ArcelorMittal and Arcelor for accounting year 2006 and the first six months of 2007. In its review, CLERC followed the applicable procedures of the Luxembourg Institut des Rviseurs dEntreprises, which requires, among other things, to plan and perform the review to obtain moderate assurance (une assurance modre) as to whether the Exchange Ratio is reasonable. No limitation was imposed by ArcelorMittal or Arcelor on the scope of CLERCs investigation. Based on the reviewed documents, the applicable procedures, and the Exchange Ratio, CLERC, in its report, reached the conclusion that no fact has come to its attention that causes it to believe that the Exchange Ratio is not relevant and reasonable (pertinent et raisonnable) to all shareholders of Arcelor or that the valuation methods used by the Board of Directors to determine the Exchange Ratio are not adequate.

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Fairness Opinion of Financial Advisor to Mittal Steel and ArcelorMittal On May 15, 2007, Goldman Sachs delivered its written opinion to the Boards of Directors of each of Mittal Steel and ArcelorMittal that, as of the date of the fairness opinion and based upon and subject to the factors and assumptions set forth therein, and assuming that the First Step Merger (as defined below) had been consummated, the proposed exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the draft merger agreement, dated May 14, 2007, provided to them was fair from a financial point of view to the holders of the outstanding shares of ArcelorMittal (which holders were, immediately prior to consummation of the First Step Merger, holders of the outstanding Mittal Steel Shares, as defined below). The First Step Merger was the transaction which was consummated on September 3, 2007, whereby Mittal Steel was merged into ArcelorMittal, by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel, and each holder of an outstanding class A common share, with a nominal value of one eurocent (0.01) per share (the Mittal Steel Class A Shares) of Mittal Steel, and each holder of an outstanding class B common share, with a nominal value of one eurocent (0.01) per share (the Mittal Steel Class B Shares; together with the Mittal Steel Class A Shares, the Mittal Steel Shares), of Mittal Steel received one ArcelorMittal share. The full text of the written opinion of Goldman Sachs, dated May 15, 2007, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C. Goldman Sachs provided its opinion for the information and assistance of the Board of Directors of Mittal Steel and the Board of Directors of ArcelorMittal in connection with their respective consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holder of the Mittal Steel Shares should vote as to the First Step Merger or as to how any holder of ArcelorMittal shares or Arcelor shares should vote with respect to the merger or any issuance of Arcelor shares. In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things: a draft merger agreement, dated May 14, 2007, which provided for an exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share; the merger agreement for the First Step Merger dated as of May 2, 2007 between Mittal Steel and ArcelorMittal; the Registration Statement on Form F-4 confidentially submitted by ArcelorMittal to the SEC on May 2, 2007 in connection with the First Step Merger; a draft of a registration statement dated May 9, 2007 prepared for purposes of this merger; annual reports to stockholders of Mittal Steel for the three fiscal years ending December 31, 2006 and Arcelor for the four fiscal years ended December 31, 2006; certain interim reports to stockholders of Mittal Steel and Arcelor; certain other communications from Mittal Steel and Arcelor to their respective stockholders; certain research analyst reports with respect to the future financial performance of Mittal Steel and Arcelor; certain financial analyses and targets for Mittal Steel, including the 2008 Value Plan for Mittal Steel, on a combined basis with Arcelor, announced on September 27, 2006 and reconfirmed on February 21, 2007, prepared by management of Mittal Steel (the 2008 Value Plan), including certain cost savings and operating synergies projected by the management of Mittal Steel to result from the combination of Mittal Steel and Arcelor (the Synergies); certain financial analyses and forecasts for Arcelor prepared by its management that are publicly available;

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the information contained in a draft of the press release regarding details of the merger process which was published by Mittal Steel on May 16, 2007 (the Mittal Steel Press Release); and guidance provided by management of Mittal Steel, related to the portion of the Synergies allocable to Arcelor (41%), the portion of capital expenditures provided for in the 2008 Value Plan that Arcelor will account for (50%), and the relative contribution of Arcelor to EBITDA indicated in the 2008 Value Plan (49%), as published by Mittal Steel in the Mittal Steel Press Release.

Goldman Sachs also held discussions with members of the senior management of Mittal Steel regarding their assessment of the strategic rationale for, and the potential benefits of, the merger, and with members of the senior management of Mittal Steel and Arcelor regarding their assessment of the current business operations, financial condition and future prospects of Mittal Steel and Arcelor. In addition, Goldman Sachs reviewed the reported price and trading activity for Mittal Steel Class A Shares and the Arcelor shares, compared certain financial and stock market information for Mittal Steel and Arcelor with similar information for certain other companies the securities of which are publicly traded, and performed such other studies and analyses, and considered such other factors, as it considered appropriate. Goldman Sachs relied without independent verification upon the accuracy and completeness of all financial, accounting, legal, tax and other information discussed with or reviewed by it and assumed such accuracy and completeness for purposes of rendering the opinion described above. In that regard it assumed, with Mittal Steels consent, that the 2008 Value Plan, including the Synergies, and the financial information contained in the Mittal Steel Press Release were reasonably prepared on a basis reflecting the best currently available estimates and judgments of Mittal Steel and Arcelor, respectively. Goldman Sachs also assumed that any transactions between Mittal Steel and Arcelor not reflected in the 2008 Value Plan were conducted on an arms-length basis at fair market value. Goldman Sachs was advised by Mittal Steel that, except for the right of the holders of Mittal Steel Class B Shares to convert those shares into an equal number of Mittal Steel Class A Shares, as provided in Mittal Steels articles of association, the Mittal Steel Class A Shares and the Mittal Steel Class B Shares carry identical economic and voting rights. In addition, Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or offbalance-sheet assets and liabilities) of Mittal Steel or Arcelor or any of their respective subsidiaries and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs also assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the First Step Merger and the merger would be obtained without any adverse effect on Mittal Steel or Arcelor or on the expected benefits of those transactions in any way meaningful to its analysis. Goldman Sachs opinion did not address the First Step Merger, or the transactions contemplated by the First Step Merger Agreement, and assumed that the First Step Merger had been consummated. Moreover, Goldman Sachs opinion did not address the underlying business decision of Mittal Steel to engage in the First Step Merger or the merger and Goldman Sachs was not expressing any opinion as to the prices at which Mittal Steel Class A Shares, the ArcelorMittal shares or the Arcelor shares would trade at any time. Goldman Sachs opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available as of, the date thereof. Goldman Sachs advisory services and its opinion were provided for the information and assistance of the Board of Directors of Mittal Steel and the Board of Directors of ArcelorMittal in connection with their respective consideration of the merger and such opinion does not constitute a recommendation as to how any holder of the Mittal Steel Shares should vote with respect to such First Step Merger, or as to how any holder of the ArcelorMittal shares or Arcelor shares should vote with respect to the merger. The following is a summary of the material financial analyses delivered by Goldman Sachs to the Boards of Directors of Mittal Steel and ArcelorMittal in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent the relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before May 15, 2007 and is not necessarily indicative of current market conditions. In connection with certain of such financial analyses, Goldman Sachs used the following data for earnings before interest, tax, depreciation and amortization (EBITDA) for each of Mittal Steel and Arcelor, based on information that it obtained from public filings and consensus estimates of the Institutional Brokers 205

Estimate System, or IBES, where indicated, and based on the 2008 Value Plan, where indicated. Goldman Sachs also used the following data for earnings per share based on reported 2006 financial results, adjusted for acquisitions as noted.

Mittal Steel ( billion other than for 2006PF EPS)

2006 Pro-Forma Financials 2006PF EBITDA (1) 2006PF EPS (2) ( per share)

Arcelor ( billion other than for 2006PF EPS)

12.2 2006PF EBITDA (1) 4.57 2006PF EPS (2) 6.2 4.74

Value Plan-Based Financials 2007E VP EBITDA (3) 2008E VP EBITDA (4) IBES-Based Financials 2007E IBES EBITDA (5) 2008E IBES EBITDA (5) 12.9 2007E IBES EBITDA (6) 13.8 2008E IBES EBITDA (6) 6.5 6.8 13.6 2007E VP EBITDA (3) 15.1 2008E VP EBITDA (4) 6.7 7.2

Estimates based on the 2008 Value Plan and on IBES were converted for U.S. dollars to euro (Datastream) at May 11, 2007 Fx rate of $1.000 to 0.740.
1

2006PF EBITDA for Mittal Steel is based on Mittal Steels reported 2006 financial results adjusted for acquisitions in 2006, as if such acquisitions had occurred on January 1, 2006 (Mittal Steel 2006PF EBITDA). 2006PF EBITDA for Arcelor is based on Arcelors reported 2006 consolidated financial results adjusted for the acquisitions of Dofasco and Sonasid as if those acquisitions had occurred on January 1, 2006 (Arcelor 2006PF EBITDA).

2 2006PF EPS for Mittal Steel is based on reported 2006 financial results adjusted for acquisitions in 2006, as if such acquisitions had occurred on January 1, 2006 (Mittal 2006PF EPS) based on 1,389.6 million shares outstanding as of the end of April 2007, diluted based on a treasury method. 2006PF EPS for Arcelor is based on Arcelors reported 2006 consolidated financial results adjusted for the acquisitions of Dofasco and Sonasid as if those acquisitions had occurred on January 1, 2006 (Arcelor 2006PF EPS) based on 670.3 million shares outstanding as of the end of April 2007, diluted based on a treasury method. 3

2007E VP EBITDA for Mittal Steel (Mittal Steel 2007E VP EBITDA) is based on the average of Mittal Steel 2006PF EBITDA and Mittal Steel 2008E VP EBITDA, as defined below. 2007E VP EBITDA for Arcelor (Arcelor 2007E VP EBITDA) is based on the average of Arcelor 2006PF EBITDA and Arcelor 2008E VP EBITDA, as defined below. 2008E VP EBITDA for Mittal Steel is estimated based on the 2008 EBITDA target contained in the 2008 Value Plan ($20bn) adjusted for the acquisition of Sicartsa and related synergies, as disclosed in the presentation of Mittal Steel of December 20, 2006 and in the JPMorgan research report dated December 20, 2006 (Mittal Steel 2008E VP EBITDA). 2008E VP EBITDA for Arcelor is based on the percentage of EBITDA attributable to Arcelor (49%) as announced by Mittal Steel in the Mittal Steel Press Release applied to the Mittal Steel 2008E EBITDA Target ($20bn) (Arcelor 2008E VP EBITDA). Mittal Steel estimated EBITDA for 2007 (Mittal Steel 2007E IBES EBITDA) and 2008 (Mittal Steel 2008E IBES EBITDA) are based on IBES estimates. Relevant IBES estimates are not available for Arcelor. Accordingly, 2008E IBES EBITDA for Arcelor (Arcelor 2008E IBES EBITDA) is calculated as 49% (based on management guidance in the Mittal Steel Press Release) of 2008E IBES EBITDA for Mittal Steel. 2007E IBES EBITDA for Arcelor is based on the average of Arcelor 2006PF EBITDA and Arcelor 2008E IBES EBITDA (Arcelor 2007E IBES EBITDA).

Historical Stock Trading Analysis. To provide background information and perspective with respect to the relative historical share prices of Mittal Steel and Arcelor, Goldman Sachs reviewed the historical trading prices for the Mittal Steel Class A Shares and Arcelor shares for each of the 5 days, 1 month, 2 months, 3 months, 4 months and 5 months ending May 11, 2007, as well as from November 17, 2006, the end of the final offer period by Mittal Steel for Arcelor, to May 11, 2007, and computed the implied exchange ratios by dividing the volume weighted average share prices of Mittal Steel by those of Arcelor for each respective period. The outcome of the analysis is presented in the table below:

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Volume Weighted Average Price () Period Ending 11 May 2007

Last 5 days Last 1 month Last 2 months Last 3 months Last 4 months Last 5 months Since November 17, 2006

Arcelor Mittal
41.8 40.4 39.8 39.5 38.7 37.9 37.3

Arcelor
58.1 55.6 54.4 52.4 51.3 50.8 50.1

Implied Exchange Ratio

0.719 0.727 0.730 0.753 0.753 0.746 0.745

Selected Companies Analysis. Goldman Sachs reviewed and compared certain financial information for Mittal Steel and Arcelor to corresponding financial information, ratios and public market multiples for the following publicly traded corporations in the steel industry, of which each is referred to as a Selected Company and collectively as the Selected Companies: JFE Steel Corporation; Nippon Steel Corporation; Pohang Iron and Steel Company, Limited (POSCO); ThyssenKrupp AG; voestalpine AG; Salzgitter AG; AK Steel Holding Corporation; Nucor Corporation; US Steel Corporation; and Compania Siderrgica Nacional (CSN). Although none of these Selected Companies is directly comparable to Mittal Steel or Arcelor, the companies included were chosen because they are publicly traded companies with operations that for the purposes of analysis may be considered similar to certain operations of Mittal Steel and Arcelor. Goldman Sachs calculated and compared various financial multiples and ratios for the Selected Companies, Mittal Steel and Arcelor based on the information that it obtained from (i) public filings and IBES estimates, with respect to the Selected Companies and, where indicated, Mittal Steel and Arcelor and (ii) the 2008 Value Plan with respect to Mittal Steel and Arcelor, where indicated. With respect to Mittal Steel and Arcelor, Goldman Sachs used the EBITDA and EPS data described above and calculated estimated enterprise value to EBITDA ratios (EV/EBITDA Multiple) for the calendar years 2006, 2007 and 2008 as well as the price to earnings per share ratio (PE Multiple) for 2006. With respect to the Selected Companies, Goldman Sachs calculated the EV/EBITDA Multiple for historic calendar year 2006 and estimated calendar year 2007 and 2008 as well as the PE Multiple for 2006. The multiples and ratios of Mittal Steel and Arcelor and the selected companies were based on, where applicable, market data as of May 11, 2007. The following table presents the results of this analysis:

Selected Companies Min Median Max 2006 Pro Forma 9.1x 7.0

Mittal Steel IBES Value Plan 2006 Pro Forma 12.3x 7.8 6.5 6.1 6.2 5.6

Arcelor IBES Value Plan

PE Multiple EV/EBITDA Multiple

2006 2006 2007E 2008E

9.5x 5.4 5.5 5.3

12.3x 7.2 6.5 6.7

20.0x 11.3 7.6 8.5

7.5 7.1

7.2 6.6

Applying the minimum, median and maximum EV/EBITDA Multiple for 2006, 2007 and 2008 and the minimum, median and maximum PE Multiple for 2006 of the Selected Companies to Mittal Steel and Arcelor 2006 pro-forma EBITDA and EPS, and to the data for Mittal Steel and Arcelor Value Plan-based EBITDA and Mittal Steel and Arcelor IBES-based EBITDA for each of 2007 and 2008, described above, Goldman Sachs calculated an implied exchange ratio range of 0.783 to 0.965. Debt Adjusted Contribution Analysis. Goldman Sachs reviewed the relative contribution on a debtadjusted basis of Arcelor to aggregate equity value of Mittal Steel based on EBITDA and EPS. Goldman Sachs (a) applied the 2008 Value Plan based Arcelor EV/EBITDA multiples to the corresponding Mittal Steel 2008 Value Plan based financial data for the years 2007 and 2008, and (b) applied the IBES based Arcelor 207

EV/EBITDA Multiples to the corresponding Mittal Steel IBES based financial data for the years 2007 and 2008, and (c) applied the 2006PF EV/EBITDA and PE Multiples to the corresponding Mittal Steel 2006PF financials. The resulting implied exchange ratio range was 0.850 to 0.965. Goldman Sachs performed the equivalent analysis applying Mittal Steel EV/EBITDA and PE Multiples to Arcelor financial data for the respective years, and the implied exchange ratio range was 0.833 to 0.965. Discounted Cash Flow Analysis. Goldman Sachs performed an illustrative discounted cash flow analysis for each of Mittal Steel and Arcelor. Mittal Steels unlevered free cash flow was calculated using both the 2008 Value Plan based EBITDA data and the IBES based EBITDA data described above as well as the following assumptions: depreciation and amortisation (D&A) as per IBES; 25% tax rate as per guidance of Mittal Steel management; capital expenditure targets as per 2008 Value Plan; and working capital optimisation targets as per 2008 Value Plan, and split equally between 2007 and 2008.

Arcelor unlevered free cash flow was also calculated using both the 2008 Value Plan based EBITDA data and the IBES based EBITDA data as described above as well as the following assumptions: D&A set at 55.3% of Mittal Steel D&A, for both 2007 and 2008, based on Arcelor 2006 pro forma D&A as a percentage of Mittal Steel 2006 pro forma D&A; 25% tax rate assumed to be the same as Mittal Steel; capital expenditure set at 50% of the Mittal Steel capital expenditures for 2007 and 2008 respectively, as per the guidance of management of Mittal Steel contained in the Mittal Steel Press Release; and working capital optimisation targets as per presentation of Arcelor management dated February 27, 2006.

Goldman Sachs discounted the projected unlevered free cash flows in 2007 and 2008 using discount rates ranging from 9.0-9.5% based on an analysis of the theoretical cost of capital of the Selected Companies. Goldman Sachs applied both the perpetuity growth rate method (using an illustrative perpetuity growth rate of 1% to 1% for both Mittal Steel and Arcelor) and the exit multiple method (using an illustrative exit multiple range of 6.0 to 7.0 times EBITDA) to derive illustrative terminal values. The following table presents the results of this analysis: Implied Exchange Ratio Financials Value Plan IBES EBITDA Exit Perp Growth EBITDA Exit Perp Growth Min 0.895 0.910 0.860 0.873 Median 0.904 0.923 0.871 0.889 Max 0.912 0.936 0.880 0.904

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs' opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company used in the above analyses as a comparison is directly comparable to ArcelorMittal or Arcelor. Goldman Sachs prepared these analyses for purposes of providing its opinion to the Boards of Directors of Mittal Steel and ArcelorMittal as to the fairness from a financial point of view of the exchange ratio of 0.875 208

Arcelor shares for every one ArcelorMittal share. These analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favourable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Mittal Steel, ArcelorMittal, Arcelor, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecasted. The exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share was determined through arms-length negotiations between Mittal Steel and Arcelor and was approved by the Boards of Directors of Mittal Steel, ArcelorMittal and Arcelor. Goldman Sachs provided advice to Mittal Steel during these negotiations. Goldman Sachs did not, however, recommend any specific exchange ratio to Mittal Steel or ArcelorMittal or the Boards of Directors of Mittal Steel or ArcelorMittal or that any specific exchange ratio constituted the only appropriate exchange ratio for the merger. As described above, Goldman Sachs opinion to the Boards of Directors of Mittal Steel and ArcelorMittal was one of many factors taken into consideration by the Boards of Directors, respectively in making their determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex C. Goldman Sachs and its affiliates, as part of their investment banking business, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions as well as for estate, corporate and other purposes. Goldman Sachs and its affiliates have acted as financial advisor to Mittal Steel and ArcelorMittal in connection with, and have provided advice and input to Mittal Steel with respect to the negotiations leading to, the transaction contemplated by the merger agreement. In addition, Goldman Sachs acted as financial advisor to Mittal Steel in connection with the tender offer by Mittal Steel for Arcelor first announced on January 27, 2006, including as dealer manager in connection with the U.S. Offer, as defined in the Prospectus Supplement dated July 7, 2006 to the Amended and Restated Exchange Offer Prospectus dated June 29, 2006. In addition, Goldman Sachs participated in the financing of the Offer by Mittal Steel. Goldman Sachs received fees for its services in connection with the Offer, the principal portion of which was contingent upon consummation of the Offer, and Mittal Steel agreed to reimburse its expenses and indemnify it against certain liabilities arising out of such engagement. In addition, Goldman Sachs has provided and is currently providing certain investment banking services to Mittal Steel from time to time, including having acted as lender in connection with the $4.9 billion acquisition by Mittal Steel of OJSC Krivorizky Ore Mining Company and Steel Works Kryvorizstal (renamed Mittal Steel Kryviy Rih) in November 2005, and is acting as financial advisor with respect to Mittal Steels offer for the shares of Arcelor Brasil, S.A. not owned by Arcelor S.A. Goldman Sachs has provided certain investment banking services to Arcelor from time to time, including having acted as financial advisor to Aceralia Corporacion Siderurgica SA, one of the predecessor entities of Arcelor, in its February 2002 merger with Arbed SA and Usinor SA. In connection with the above-described services unrelated to the transaction contemplated by the merger agreement, Goldman Sachs has received aggregate fees of approximately $51 million. Goldman Sachs also may provide investment banking services to Mittal Steel, Arcelor, ArcelorMittal and their respective affiliates in the future. Goldman Sachs is a full service securities firm engaged, either directly or through its affiliates, in securities trading, investment management, financial planning and benefits counseling, risk management, hedging, financing and brokerage activities for both companies and individuals. In the ordinary course of these activities, Goldman Sachs and its affiliates may provide such services to Mittal Steel, ArcelorMittal, Arcelor and their respective affiliates, may actively trade the debt and equity securities (or related derivative securities) of Mittal Steel, ArcelorMittal and Arcelor for their own account and for the accounts of their customers and may at any time hold long and short positions of such securities. The Boards of Directors of each of Mittal Steel and ArcelorMittal selected Goldman Sachs as their respective financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transaction contemplated by the merger agreement. Pursuant to a letter agreement dated May 14, 2007, the Boards of Directors of each of Mittal Steel and ArcelorMittal engaged Goldman Sachs to act as their respective financial advisor in connection with the contemplated transaction. Pursuant to the terms of this engagement letter, Mittal Steel and ArcelorMittal agreed to pay Goldman Sachs a transaction fee of approximately $1.5 million, which became payable upon the request of Mittal Steel that Goldman Sachs undertake an analysis of the fairness of the exchange ratio, from a financial 209

point of view. Mittal Steel and ArcelorMittal agreed to reimburse certain of its expenses and indemnify Goldman Sachs and its affiliates against certain liabilities arising out of its engagement. Fairness Opinions of Financial Advisors to Arcelor Summary of Fairness Opinion of Fortis Bank (Nederland) N.V. Arcelor retained Fortis Bank (Nederland) N.V. (Fortis) to provide it with a financial opinion in connection with its merger with ArcelorMittal. Arcelor selected Fortis to provide it with a financial opinion based on Fortis qualifications, expertise and reputation. On May 15, 2007, Fortis rendered its written opinion that, as of that date, based upon and subject to the various considerations set forth in its opinion, the proposed exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the merger agreement provided to them, was fair from a financial point of view to shareholders holding the 5.76% of the issued share capital of Arcelor not held by Mittal Steel (the Public Shareholders). The full text of the written opinion of Fortis, dated as of May 15, 2007, is attached to this prospectus as Annex E. The opinion sets forth, among others, the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by Fortis in rendering its opinion. We encourage you to read the entire opinion carefully. Fortis opinion addresses only the fairness from a financial point of view of the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share to the Public Shareholders in the context of the merger and does not address any other transaction that Arcelor has considered, may consider or could have considered. It does not express any view as to the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of Arcelor other than the Public Shareholders, or the holders of any class of securities, creditors or other constituencies of Mittal Steel or ArcelorMittal. The opinion does not in any manner address or consider the prices at which shares of Arcelor will trade following the merger. It does not constitute an opinion or recommendation to Arcelors shareholders as to whether or not to accept the terms and conditions of the merger or how the shareholders of Arcelor, Mittal Steel or ArcelorMittal should vote in connection with the merger. In addition, Fortis has not reviewed the state of affairs, strategy or financing of Arcelor or Mittal Steel. The opinion does not assess the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share in respect of any other area, including, but without limitation, tax, accounting, actuarial or legal aspects. The opinion also does not address the underlying business decisions regarding the merger. The summary of the opinion of Fortis set forth in this prospectus is qualified in its entirety by reference to the full text of the opinion. Pursuant to the terms and conditions of its engagement agreement, Fortis issued its opinion for the sole use by and benefit of the Arcelor Board of Directors. Fortis has advised the Arcelor Board of Directors that it does not believe any person other than the Arcelor Board of Directors has the legal right to rely on the opinion. Fortis would likely assert the substance of this view and the disclaimer described above as a defense to claims and allegations, if any, that might hypothetically be brought or asserted against it by any persons or entities other than the Arcelor Board of Directors with respect to the aforementioned opinion and its financial analyses thereunder. Fortis bases its belief that no person other than the Arcelor Board of Directors may rely on the Fortis opinion on the limited nature of Fortis contractual duty to Arcelor. Fortis is not aware of any controlling precedent that would create a statutory or common law right for persons other than the Arcelor Board of Directors to rely on the Fortis opinion. In the absence of controlling precedent, the ability of a shareholder to rely on the Fortis opinion would be resolved by a court of competent jurisdiction. Any resolution by a court of competent jurisdiction as to this question would have no effect on the rights and responsibilities of the Arcelor Board of Directors under applicable law or on the rights and responsibilities of either Fortis or the Arcelor Board of Directors under federal securities laws. In arriving at its opinion, Fortis reviewed and considered the following information: publicly available historical business and financial information relating to the relevant companies, including, but not limited to, the 2005 and 2006 annual reports of Arcelor and Mittal Steel and the 2008 Value Plan; the first-step merger agreement and a draft dated May 2, 2007 of the registration statement on Form F-4 in relation to the issuance of shares by ArcelorMittal in the first-step merger;

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the draft second-step merger agreement and a draft dated May 9, 2007 of the registration statement on Form F-4 to be submitted to the SEC on a confidential basis in relation to the issuance of shares by Arcelor in the second-step merger; a draft dated May 14, 2007 of the press release published by Arcelor on May 16, 2007 announcing details relating to the merger (the Draft Press Release); certain relevant third party equity research analyst reports (the Equity Research Reports); the financial information set forth in the Draft Press Release regarding the allocation between Mittal Steel and Arcelor of synergies generated by the combination of the two companies, EBITDA and capital expenditures set forth in the 2008 Value Plan; certain clarifications of the financial information relating to Mittal Steel and Arcelor regarding among others, tax rates, working capital improvements, deferred employee benefits and the acquisition of Sicartsa by Mittal Steel; and such other financial studies, analyses and investigations as Fortis may deem appropriate.

In arriving at its opinion, Fortis assumed and relied upon, without independent verification, the accuracy and completeness of the business and financial information that was publicly available or supplied or otherwise made available to it for the purposes of its opinion by Mittal Steel and Arcelor, including, without limitation: the Equity Research Reports; the financial information set forth in the Draft Press Release regarding the allocation between Mittal Steel and Arcelor of synergies generated by the combination of the two companies, EBITDA and capital expenditures set forth in the 2008 Value Plan; and certain clarifications of the financial information relating to Mittal Steel and Arcelor regarding among others, tax rates, working capital improvements, deferred employee benefits and the acquisition of Sicartsa by Mittal Steel; and Fortis did not perform any investigation of or otherwise undertake to verify the accuracy and completeness of the information reviewed by it for the purposes of rendering its opinion. Fortis has not performed an independent investigation as to the tax, accounting, actuarial, legal or regulatory matters relating to the merger and the determination of the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share and has relied upon, without independent verification, the assessment of Arcelor and Mittal Steel and their respective legal, tax, accounting, regulatory and other advisors for all such matters. With respect to the financial projections provided to it, Fortis assumed, with Arcelors consent, that they have been reasonably prepared on bases reflecting the best then-currently available estimates and judgments by management as to the future financial performance of Mittal Steel and Arcelor, and Fortis did not express any view on such financial projections or the assumptions on which they were based. Fortis had no access to Arcelors senior management, advisors and auditors for the purposes of rendering its opinion. In addition, Fortis assumed that the merger would be as described in the first-step merger agreement and the draft second-step merger agreement without any waiver, breach, amendment or delay of any of their respective terms or conditions, and that the definitive second-step merger agreement will not differ in any material respects from the draft second-step merger agreement furnished to Fortis. Fortis also assumed that the press release published by Arcelor on May 16, 2007, announcing details relating to the merger would not differ in any material respect from the Draft Press Release furnished to it and that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained, and all other legal requirements will be complied with, without any adverse effect on Arcelor or the merger and that no divestitures or asset sales from Arcelor will be required as a result of the merger, in either case that would in any respect be material to Fortis analysis. Fortis did not make any independent valuation or appraisal of the assets and liabilities (contingent or otherwise) of Mittal Steel and Arcelor, nor did Fortis evaluate the solvency or fair value of Arcelor, Mittal Steel, or any of their respective affiliates, under any law relating to bankruptcy, insolvency, moratorium or similar matters. Fortis opinion was based on economic, monetary market and other conditions in effect on, and the information made available to it, as of the date of its opinion. Subsequent events may affect Fortis opinion, and Fortis did not assume any obligation to update, revise or reaffirm its opinion. The following is a brief summary of the material analyses performed by Fortis in connection with the preparation of its written opinion letter dated May 15, 2007. Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Fortis, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. The various analyses summarized below were based on closing prices for the shares of Arcelor and Mittal Steel as of May 11, 2007. 211

Comparable Companies Analysis Fortis compared certain financial information of Arcelor and Mittal Steel with publicly available consensus financial estimates for other companies that shared similar business characteristics with Arcelor and Mittal Steel. The companies used in this comparison (the Comparable Companies) included the following:

Evraz Group S.A. Gerdau S.A. Nucor Corporation Outokumpu Oyj Pohang Iron and Steel Company, Limited (POSCO) Salzgitter AG OAO Severstal ThyssenKrupp AG United States Steel Corporation voestalpine AG

Fortis reviewed, among other information, the Comparable Companies ratios, or multiples, of Enterprise Value (defined as market capitalization plus total debt, preferred stock and minority interests, if any; less cash, cash equivalents and financial fixed assets, if any) (EV) to EBITDA for each of calendar year 2007 and calendar year 2008, as well as to EBIT for each of calendar year 2007 and calendar year 2008. All data for the Comparable Companies were based on publicly available information as of May 11, 2007. Estimated 2007 and 2008 EBITDA figures and EBIT figures for the Comparable Companies were based upon estimates from research analysts. In order to calculate the implied value of each of Arcelor and Mittal Steel shares, Fortis applied a range based on the median multiples for the Comparable Companies to the 2007 and 2008 EBITDA and EBIT estimates for Arcelor and Mittal Steel. The EBITDA and EBIT estimates for Arcelor and Mittal Steel have been solely based on publicly available information and the 2008 Value Plan. The 2008 Value Plan was prepared by management of Mittal Steel and is subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of Mittal Steel, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by the 2008 Value Plan. To calculate the implied exchange ratio (ER) for Arcelor and Mittal Steel shares, Fortis divided the implied value per Mittal Steel share by the implied equity value per Arcelor share. The following table summarizes the results of this analysis:

EV/EBITDA 2007 Low Median High 4.9x 5.2x 5.5x 2008 5.5x 5.8x 6.1x

EV/EBIT 2007 6.3x 6.7x 7.0x 2008 6.8x 7.1x 6.7x

Implied ER based on EV/EBITDA 2007 0.87x 0.88x 0.89x 2008 0.91x 0.91x 0.92x

Implied ER based on EV/EBIT 2007 0.90x 0.91x 0.92x 2008 0.93x 0.93x 0.94x

Unfunded or under-funded pension obligations are often treated as debt. The Comparable Companies in this analysis have not been adjusted for such pension obligations.

212

The Comparable Companies were selected, among other reasons, because they share or have similar business characteristics to Mittal Steel and Arcelor. However, none of the Comparable Companies is identical to Mittal Steel or Arcelor. Accordingly, any comparable company analysis necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics of Mittal Steel and Arcelor and other factors that could affect the public trading value of the companies to which they are being compared. Mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using comparable company data. Discounted Cash Flow Analysis Fortis performed a discounted cash flow analysis based on a three year explicit forecast period followed by a residual value approach for subsequent years to calculate an estimate of the theoretical present equity value per share of Mittal Steel. Fortis relied on the 2008 Value Plan, guidance for Mittal Steel provided by management of each of Arcelor and Mittal Steel (as per the information contained in the May 16, 2007 press release issued by the Arcelor Board of Directors and the Mittal Steel Board of Directors) and other publicly available financial information on Mittal Steel for financial estimates for calendar years 2007 through 2009. Fortis performed a discounted cash flow analysis based on a three-year explicit forecast period followed by a residual value approach for subsequent years to calculate an estimate of the theoretical present equity value per share of Arcelor. Fortis relied on the 2008 Value Plan, guidance for Arcelor provided by management of each of Arcelor and Mittal Steel (as per the information contained in the May 16, 2007 press release issued by the Arcelor Board of Directors and the Mittal Steel Board of Directors) and other publicly available financial information on Arcelor for financial estimates for calendar years 2007 through 2009. In performing its discounted cash flow analyses for Arcelor and Mittal Steel, Fortis used a beta of 1.08 and a discount rate of 9.1%. The beta was based on (i) the median beta of the Comparable Companies and (ii) the beta of Arcelor and Mittal Steel in the period February 28, 2002 to December 31, 2005. The discount rate was based on Fortis view of an appropriate discount rate for companies with similar risk characteristics to Arcelor and Mittal Steel. Subsequently, Fortis used a EUR-USD exchange rate of 0.74 on May 11, 2007, as published by Bloomberg, to convert U.S dollar values into Euros. This analysis yielded an implied equity value per Arcelor share of EUR 59.84 and an implied equity value per Mittal Steel share of EUR 56.54. The discounted cash flow analysis did not purport to be indicative of actual values or expected values of the Mittal Steel shares before or after the merger. Fortis divided the implied equity value per share of Mittal Steel by the implied equity value per share of Arcelor to calculate the implied ER. To measure the impact of a potential difference in beta between Arcelor and Mittal Steel, Fortis also performed the discounted cash flow analysis with different betas for both companies. In this analysis, the beta of Arcelor used by Fortis was based on the average historical beta of Arcelor in the period February 28, 2002 to December 31, 2005 and amounted to 1.25. The beta of Mittal Steel used by Fortis was based on the average of the historical betas of both Arcelor and Mittal Steel in the period February 28, 2002 to December 31, 2005, since Mittal Steel is comprised of the pre-offer activities of Arcelor and Mittal Steel, amounting to 1.11. This analysis resulted in an implied ER ranging from 0.93 to 1.04. The following table summarizes the results of this analysis:

Arcelor beta Identical beta Original beta Arcelor Alternative beta Mittal Steel Alternative beta Arcelor Original beta Mittal Steel Alternative beta Arcelor Alternative beta Mittal Steel 1.08

Mittal Steel beta 1.08

Value per Arcelor share (EUR) 59.8

Value per Mittal Steel share (EUR) 56.5

Implied ER 0.94x

1.08 1.25

1.11 1.08

59.8 54.3

55.6 56.5

0.93x 1.04x

1.25

1.11 213

54.3

55.6

1.02x

Contribution Analysis In order to value Arcelor and Mittal Steel, Fortis performed a contribution analysis. The contribution analysis assumes that the relative value of Arcelor and Mittal Steel depends on their respective contribution to the combined 2008 EBITDA corrected for 2008 capital expenditures (EBITDA-Capex), which implies an equal EV/(EBITDA-Capex) multiple for Arcelor and Mittal Steel. Fortis analyzed the contribution of Arcelor and Mittal Steels estimated 2008 EBITDA-Capex to the combined estimated 2008 EBITDA-Capex, resulting in a contribution of 48% and 52% for Arcelor and Mittal Steel, respectively. Fortis relied on the 2008 Value Plan, guidance for Arcelor provided by management of each of Arcelor and Mittal Steel (as per the information contained in the May 16, 2007 press release issued by the Arcelor Board of Directors and the Mittal Steel Board of Directors), and other publicly available financial information on Arcelor for the financial estimates for the calendar year 2008. Based on their respective contributions Fortis attributed 48% of the Enterprise Value of Mittal Steel as of May 11, 2007, according to Bloomberg, to Arcelor and 52% to Mittal Steel. The implied equity value per share for both Arcelor and Mittal Steel is calculated by correcting their respective Enterprise Values by subtracting total debt, preferred stock and minority interests, if any, and adding cash, cash equivalents and financial fixed assets, if any, and dividing by the fully diluted number of shares. This analysis yielded an implied ER of 0.91. Historical Stock Price Analysis To provide background information and perspective with respect to the relative historical share prices of Arcelor and Mittal Steel, Fortis analyzed the implied ER based on the average closing share prices of Mittal Steel and Arcelor for selected periods. Fortis divided the average closing share price of Mittal Steel in a given period by the average closing share price for Arcelor for the corresponding period. Fortis performed this analysis for (i) the period from December 31, 2004 through December 31, 2005 and (ii) the period from August 1, 2006 through May 11, 2007. The period from December 31, 2004 through December 31, 2005 was selected as it was a period during which (i) the current activities of Arcelor and Mittal Steel, as of May 11, 2007, were comparable to each of Arcelors and Mittal Steels respective activities during the period and (ii) the share prices of each of Arcelor and Mittal Steel were not distorted during the period by the public offer for Arcelor by Mittal Steel. The period from August 1, 2006 through May 11, 2007 was selected to compare more recent trading to trading before announcement of the public offer for Arcelor by Mittal Steel. The outcome of this analysis is presented in the table below: Period Last 12 months prior to December 31, 2005 Last 9 months prior to December 31, 2005 Last 6 months prior to December 31, 2005 Last 3 months prior to December 31, 2005 Period Last 9 months prior to May 11, 2007 Last 6 months prior to May 11, 2007 Last 3 months prior to May 11, 2007 May 11, 2007 Miscellaneous The preparation of a fairness opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Fortis opinion. In arriving at its fairness determination, Fortis considered the results of all of its analyses. Rather, Fortis 214 Mittal Steel (EUR) 23.63 22.05 22.65 22.13 Mittal Steel (EUR) 33.52 36.05 39.57 41.79 Arcelor (EUR) 17.98 18.04 18.95 20.10 Arcelor (EUR) 45.99 48.42 53.06 58.50 Implied ER 1.31x 1.22x 1.20x 1.10x Implied ER 0.73x 0.74x 0.75x 0.71x

made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. The analyses summarized above do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. As these analyses are inherently subject to uncertainty and based upon numerous factors or events beyond the control of the parties or their respective advisors, Fortis does not assume responsibility if future results are materially different from those forecasted. Fortis opinion and its presentation to the Arcelor Board of Directors was one of many factors taken into consideration by the Arcelor Board of Directors in deciding to approve, adopt and authorize the merger and should not be viewed as determinative of the views of the Arcelor Board of Directors with respect to the merger or the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share provided for in the merger. The exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share to be applied by Arcelor was determined through arms-length negotiations between Arcelor and Mittal Steel and was approved by the Arcelor Board of Directors. Fortis did not provide advice to Arcelor during these negotiations. Fortis did not recommend any specific exchange ratio to Arcelor or that any specific exchange ratio constituted the only appropriate exchange ratio for the second-step merger. The Arcelor Board of Directors selected Fortis to deliver a fairness opinion because it is an internationally recognized investment banking and advisory firm. Under the terms of its engagement letter, Fortis provided to the Arcelor Board of Directors only a fairness opinion in connection with the merger and, upon delivering its written opinion, received a fee of $1.5 million for its services. In addition, Arcelor has agreed to reimburse Fortis for its reasonable expenses, including attorneys fees and expenses, and to indemnify Fortis and related persons against liabilities arising from the assignment. Fortis was not involved in the structuring, planning, negotiation or preparation of the merger. In the past two years, Fortis has provided financing services to Arcelor in connection with its mergers and acquisition activities, including Arcelors acquisition of Dofasco, and has acted as broker for Mittal Steel in connection with its share repurchase program. In connection with these services, Fortis received fees totaling $2.3 million. Certain departments within Fortis and affiliated entities may maintain business relations with Arcelor, Mittal Steel and ArcelorMittal and may have performed transactions in shares in these companies for their own account or for the account of third parties. These business relations include, without limitation, general lending, trade finance, equity capital markets, hedging arrangements, trust services, employee benefits and custody. Summary of Fairness Opinion of Morgan Stanley & Co. Limited Arcelor retained Morgan Stanley & Co. Limited to provide it with a financial opinion in connection with its merger with ArcelorMittal. Arcelor selected Morgan Stanley & Co. Limited to provide it with a financial opinion based on Morgan Stanley & Co. Limiteds qualifications, expertise and reputation. On May 15, 2007, Morgan Stanley & Co. Limited rendered its written opinion, that, as of that date, based upon and subject to the various considerations set forth in its opinion, the proposed exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the merger agreement provided to them, was fair from a financial point of view to the Public Shareholders.

The full text of the written opinion of Morgan Stanley & Co. Limited, dated as of May 15, 2007, is attached to this prospectus as Annex D. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by Morgan Stanley & Co. Limited in rendering its opinion. We encourage you to read the entire opinion carefully. Morgan Stanley & Co. Limiteds opinion addresses only the fairness from a financial point of view of the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the second-step merger to the Public Shareholders, as of the date of the opinion. It does not express any view as to the fairness of the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share or the second-step merger to any other holders of securities in Arcelor, to any holders of securities in Mittal Steel or ArcelorMittal or to the employees or creditors of any of those companies. The opinion does not in any manner address or consider the prices at which the Arcelor shares will trade on or at any time after the completion of the second-step merger. It does not address any other aspects of the second-step merger and does not constitute an opinion or a recommendation to any holder of Arcelor, Mittal Steel or ArcelorMittal securities as to how to vote at their respective annual general shareholders meetings. The opinion also does not address the relative merits of the second-step merger as compared to alternative 215

transactions or strategies that might be available to Arcelor nor does it address the underlying business decision to effect the second-step merger. The summary of the opinion of Morgan Stanley & Co. Limited set forth in this prospectus is qualified in its entirety by reference to the full text of the opinion. Pursuant to the terms and conditions of its engagement agreement, Morgan Stanley & Co. Limiteds opinion was provided solely for the information of the Arcelor Board of Directors. Morgan Stanley & Co. Limited has advised the Arcelor Board of Directors that it does not believe any person other than the Arcelor Board of Directors has the legal right to rely on the opinion. Morgan Stanley & Co. Limited would likely assert the substance of this view and the disclaimer described above as a defense to claims and allegations, if any, that might hypothetically be brought or asserted against it by any persons or entities other than the Arcelor Board of Directors with respect to the aforementioned opinion and its financial analyses thereunder. Morgan Stanley & Co. Limited bases its belief that no person other than the Arcelor Board of Directors may rely on the Morgan Stanley & Co. Limited fairness opinion on the limited nature of Morgan Stanley & Co. Limiteds contractual duty to Arcelor. Morgan Stanley & Co. Limited is not aware of any controlling precedent that would create a statutory or common law right for persons other than the Arcelor Board of Directors to rely on the Morgan Stanley & Co. Limited fairness opinion. In the absence of controlling precedent, the ability of a shareholder to rely on the Morgan Stanley & Co. Limited fairness opinion would be resolved by a court of competent jurisdiction. Any resolution by a court of competent jurisdiction as to this question would have no effect on the rights and responsibilities of the Arcelor Board of Directors under applicable law or on the rights and responsibilities of either Morgan Stanley & Co. Limited or the Arcelor Board of Directors under federal securities laws. In connection with its opinion, Morgan Stanley & Co. Limited, among other things: reviewed certain publicly available financial statements and other business and financial information relating to Arcelor and Mittal Steel respectively, and the industries in which they operate; reviewed certain financial projections relating to Arcelor and Mittal Steel for the year ending December 31, 2008 prepared by the management of Arcelor and Mittal Steel and set forth in the 2008 Value Plan, taking into account financial information set forth in the Draft Press Release regarding the allocation between Arcelor and Mittal Steel of synergies generated by the combination of the two companies, EBITDA and capital expenditures set forth in the value plan; reviewed the reported prices and trading activity for shares of Arcelor and shares of Mittal Steel, respectively; compared the financial and operating performance of Arcelor and Mittal Steel and the prices and trading activity of the shares of each of Arcelor and Mittal Steel with that of certain other publiclytraded companies comparable with Arcelor and Mittal Steel, respectively, and their securities; reviewed the first-step merger agreement and a draft dated May 2, 2007 of the registration statement on Form F-4 in relation to the issuance of shares by ArcelorMittal in the first-step merger; reviewed the draft second-step merger agreement, and a draft dated May 9, 2007 of the registration statement on Form F-4 to be submitted to the SEC on a confidential basis in relation to the issuance of shares by Arcelor in the second-step merger; reviewed a draft dated May 14, 2007 of the Draft Press Release; and performed such other analyses, reviewed such other information and considered such other factors as Morgan Stanley & Co. Limited deemed appropriate for the purposes of its opinion.

In arriving at its opinion, Morgan Stanley & Co. Limited assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to it for the purposes of its opinion by or on behalf of Mittal Steel and Arcelor. With respect to the financial projections provided to it, Morgan Stanley & Co. Limited assumed, with Arcelors consent, that they had been reasonably prepared on bases reflecting the best then-currently available estimates and judgments by management as to the future financial performance of Mittal Steel and Arcelor, and Morgan Stanley & Co. Limited did not express any view on such financial projections or the assumptions on 216

which they were based. In addition, Morgan Stanley & Co. Limited assumed that the second-step merger will be consummated in accordance with the terms set forth in the first-step merger agreement and the draft secondstep merger agreement without any waiver, breach, amendment or delay of any of their respective terms or conditions, and that the definitive second-step merger agreement will not differ in any material respects from the draft second-step merger agreement furnished to it. Morgan Stanley & Co. Limited also assumed that the press release published by Arcelor on May 16, 2007 announcing details relating to the second-step merger would not differ in any material respect from the Draft Press Release furnished to it. Morgan Stanley & Co. Limited did not make any independent valuation or appraisal of the assets and liabilities (including any contingent, derivative or off-balance sheet assets and liabilities) of Mittal Steel and Arcelor, nor was it furnished with any such valuations or appraisals. With respect to all legal, tax and regulatory matters relating to the second-step merger and the determination of the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share, Morgan Stanley & Co. Limited relied upon the assessment of Arcelor and Mittal Steel and their respective legal, tax and regulatory advisors. Morgan Stanley & Co. Limiteds opinion does not address the legal, tax or regulatory consequences of the proposed second-step merger to Arcelor, its creditors or any other party. Morgan Stanley & Co. Limiteds opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of the date of its opinion. Events occurring after the date of its opinion may affect Morgan Stanley & Co. Limiteds opinion and the assumptions used in preparing it, and Morgan Stanley & Co. Limited did not assume any obligation to update, revise or reaffirm its opinion. The following is a brief summary of the material analyses performed by Morgan Stanley & Co. Limited in connection with the preparation of its written opinion letter dated May 15, 2007. Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley & Co. Limited, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. The various analyses summarized below were based on closing prices for the shares of each of Arcelor and Mittal Steel as of May 11, 2007. Trading Range Analysis To provide background information and perspective with respect to the relative historical share prices of Arcelor and Mittal Steel, Morgan Stanley & Co. Limited reviewed the historical range of closing prices of shares of each of Arcelor and Mittal Steel for the one-month, three-month and six-month periods ending May 11, 2007 and, using the observed trading ranges, computed the resulting implied exchange ratios for such periods by dividing the low, average or high trading price of Mittal Steel for a given period by the observed low, average or high trading price for Arcelor for the same period. Morgan Stanley & Co. Limited observed the following: Period Ending May 11, 2007 Current Last One Month Last Three Months Last Six Months 53.6 47.5 42.6 Arcelor ( per share) Low Average 58.5 55.6 53.0 48.5 58.9 58.9 58.9 38.8 36.1 30.6 High Mittal Steel ( per share) Low Average 41.8 40.3 39.5 36.1 42.4 42.4 42.4 0.714 0.714 0.705 High Low Exchange Ratio Average 0.714 0.725 0.746 0.745 0.742 0.807 0.807 High

Comparable Companies Analysis Morgan Stanley & Co. Limited compared certain financial information of Arcelor and Mittal Steel with publicly available consensus financial estimates for other companies that shared similar business characteristics to Arcelor and Mittal Steel. The companies used in this comparison included the following companies and were each compared to Arcelor and Mittal Steel:

CSN National Steel Co. Evraz Group S.A. Gerdau Ameristeel Corporation JFE Holdings, Inc. 217

Nippon Steel Corporation OJSC Novolipetsk Steel Nucor Corporation Pohang Iron and Steel Company, Limited (POSCO) Salzgitter Mannesmann International OAO Severstal Swedish Steel AB Tata Steel (adjusted for Corus Group) United States Steel Corporation voestalpine AG

For the purposes of this analysis, Morgan Stanley & Co. Limited analyzed the ratio of aggregate value (defined as market capitalization plus total debt, less cash and cash equivalents, plus other adjustments) to estimated calendar year 2007 and 2008 EBITDA. Morgan Stanley & Co. Limited applied a range of multiples to Arcelor and Mittal Steels 2007 and 2008 EBITDA. Morgan Stanley & Co. Limited also analyzed the ratio of equity value (defined as market capitalization) to estimated calendar year 2007 and 2008 earnings. Morgan Stanley & Co. Limited applied a range of multiples to Arcelor and Mittal Steels 2007 and 2008 earnings. Morgan Stanley & Co. Limited utilized as information sources for Arcelor and Mittal Steel financial forecasts the 2008 Value Plan for Mittal Steel, guidance for Arcelor and Mittal Steel provided by management of each of Arcelor and Mittal Steel and reflected in the information contained in the May 16, 2007 press release issued by the Arcelor Board of Directors and the Mittal Steel Board of Directors, and other publicly available financial information on Arcelor and Mittal Steel. Based on Arcelors and Mittal Steels then-outstanding shares and options, Morgan Stanley & Co. Limited estimated the implied value per share of each of Arcelor and Mittal Steel, respectively, as of May 11, 2007, as follows:

Calendar Year Financial Mittal Steel: Mittal Steel Aggregate Value to Estimated 2007 EBIDTA Mittal Steel Aggregate Value to Estimated 2008 EBITDA Mittal Steel Equity Value to Estimated 2007 Earnings Mittal Steel Equity Value to Estimated 2008 Earnings Arcelor: Arcelor Aggregate Value to Estimated 2007 EBITDA Arcelor Aggregate Value to Estimated 2008 EBITDA Arcelor Equity Value to Estimated 2007 Earnings Arcelor Equity Value to Estimated 2008 Earnings

Comparable Companies Multiple Statistic

Range of Implied Equity Values Per Share ()

6.0x - 7.0x 6.0x - 7.0x 10.0x - 12.0x 10.0x - 12.0x 6.0x - 7.0x 6.0x - 7.0x 10.0x - 12.0x 10.0x - 12.0x

42.2 - 52.5 45.9 - 56.8 50.4 - 60.4 56.7 - 68.0 49.9 - 60.5 51.1 - 61.9 48.6 - 58.4 51.5 - 61.8

218

Morgan Stanley & Co. Limited also analyzed the exchange ratios implied by these analyses, as follows:

Valuation Metric Aggregate Value to Estimated 2007 EBITDA Aggregate Value to Estimated 2008 EBITDA Equity Value to Estimated 2007 Earnings Equity Value to Estimated 2008 Earnings

Low 0.774x 0.822x 0.945x 1.004x

Mid-Point 0.858x 0.910x 1.036x 1.100x

High 0.950x 1.006x 1.134x 1.205x

No company utilized in the comparable companies analysis is identical to Arcelor or Mittal Steel. In evaluating comparable companies, Morgan Stanley & Co. Limited made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Arcelor or Mittal Steel, such as the impact of competition on the businesses of Arcelor or Mittal Steel and the industry generally, industry growth and the absence of any adverse material change in the financial condition and prospects of Arcelor or Mittal Steel or the industry or in the financial markets in general. Mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using comparable company data. Equity Research Analysts Price Targets Morgan Stanley & Co. Limited reviewed and analyzed selected future public market trading price targets for Mittal Steel shares prepared and published by equity research analysts. Arcelor is no longer actively covered by equity research analysts and, as a result, Morgan Stanley & Co. Limited did not analyze price targets for Arcelor. The targets for Mittal Steel reflect each analysts estimate of the future public market trading price of Mittal Steel shares. The range of equity analyst price targets reviewed for Mittal Steel was from 40.00 to 50.00 per share of Mittal Steel common stock, with an average of 46.30. Morgan Stanley & Co. Limited then compared these price targets with the average share price of shares of Arcelor during the three-month period ending May 11, 2007, which was 53.00, and by dividing the low, high and average of the range of equity analyst price targets for Mittal Steel by the average share price of shares of Arcelor during the three-month period ending May 11, 2007, obtained an exchange ratio range of 0.755x to 0.943x, with an average exchange ratio of 0.873x. The public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for shares of Mittal Steel and these estimates are subject to uncertainties, including the future financial performance of Mittal Steel and future financial market conditions. Discounted Cash Flow Analysis Morgan Stanley & Co. Limited calculated the range of equity values per ordinary share for each of Arcelor and Mittal Steel based on a four-year discounted cash flow analysis. In conducting its analysis, Morgan Stanley & Co. Limited relied upon: (i) the 2008 Value Plan for Mittal Steel, (ii) guidance with respect to Arcelor and Mittal Steel provided by management of each of Arcelor and Mittal Steel and reflected in the May 16, 2007 press release issued by the Arcelor Board of Directors and the Mittal Steel Board of Directors and (iii) other publicly available financial information on Arcelor and Mittal Steel for financial estimates for calendar years 2007 through 2010. The 2008 Value Plan was prepared by management of Mittal Steel and is subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of Mittal Steel, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by the 2008 Value Plan. Utilizing such projections, Morgan Stanley & Co. Limited calculated Arcelors and Mittal Steels annual after-tax unlevered free cash flows for fiscal years 2007 through 2010. In arriving at a range of equity values per share of shares of each of Arcelor and Mittal Steel, Morgan Stanley & Co. Limited calculated the terminal value by applying an exit EBITDA multiple ranging from 6.0x to 7.0x. The annual after-tax unlevered free cash flows from calendar year 2007 through 2010 and the terminal value were then discounted to present 219

values using a range of discount rates of 8.0% to 9.0%, which are rates Morgan Stanley & Co. Limited viewed as the appropriate range for companies with similar risk characteristics to Arcelor and Mittal Steel. Based on the aforementioned assumptions and projections, the following table summarizes the results of Morgan Stanley & Co. Limiteds discounted cash flow analysis:

Key Assumptions Arcelor: 6.0x - 7.0x exit EBITDA multiple, 8.0% - 9.0% discount rate Mittal Steel: 6.0x - 7.0x exit EBITDA multiple, 8.0% - 9.0% discount rate

Range of Implied Equity Values Per Share () 51.90 - 61.60 46.50 - 56.30

Using the range of implied equity values per share determined for each Arcelor and Mittal Steel, Morgan Stanley & Co. Limited analyzed the exchange ratio implied by the discounted cash flow values and noted that this represented a range of 0.826x to 0.991x with a mid-point at 0.905x. Miscellaneous In connection with the review of the merger by the Arcelor Board of Directors, Morgan Stanley & Co. Limited performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Morgan Stanley & Co. Limited considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Morgan Stanley & Co. Limited believes that selecting any portion of its analyses, without considering all analyses as a whole, would create an incomplete view of the process underlying its analyses and opinion. In addition, Morgan Stanley & Co. Limited may have given various analyses and factors more or less weight than other analyses and factors and may have deemed various assumptions more or less probable than other assumptions, so that the range of valuations resulting from any particular analysis described above should not be taken to be Morgan Stanley & Co. Limiteds view of the actual value of Arcelor or Mittal Steel. In performing its analyses, Morgan Stanley & Co. Limited made numerous assumptions with respect to industry performance, general business and economic conditions and other matters. Many of these assumptions are beyond the control of Arcelor. Any estimates contained in Morgan Stanley & Co. Limiteds analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates. Morgan Stanley & Co. Limited conducted the analyses described above solely as part of its analysis of the fairness of the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share to be applied pursuant to the second-step merger agreement from a financial point of view to the Public Shareholder and in connection with the delivery of its opinion to the Arcelor Board of Directors. These analyses do not purport to be appraisals or to reflect the prices at which shares of Arcelor, Arcelor Mittal or Mittal Steel might actually trade. The exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share to be applied by Arcelor was determined through arm's-length negotiations between Arcelor and Mittal Steel and was approved by the Arcelor Board of Directors. Morgan Stanley & Co. Limited did not provide advice to Arcelor during these negotiations. Morgan Stanley & Co. Limited did not recommend any specific exchange ratio to Arcelor or that any specific exchange ratio constituted the only appropriate exchange ratio for the merger. Morgan Stanley & Co. Limiteds opinion and its presentation to the Arcelor Board of Directors was one of many factors taken into consideration by the Arcelor Board of Directors in deciding to approve, adopt and authorize the merger and should not be viewed as determinative of the views of the Arcelor Board of Directors with respect to the merger or the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share provided for in the second-step merger agreement. Morgan Stanley & Co. Limited was not involved in the structuring, planning, negotiation or preparation of the merger. The Arcelor Board of Directors selected Morgan Stanley & Co. Limited to deliver a fairness opinion because it is an internationally recognized investment banking and advisory firm. Morgan Stanley & Co. Limited, as part of its investment banking and financial advisory business, is continuously engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, 220

competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate, estate and other purposes. In the ordinary course of its trading, brokerage, investment management and financing activities, Morgan Stanley & Co. Limited or its affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for its own account or the accounts of its customers, in debt or equity securities or senior loans of Arcelor, Mittal Steel or any other company or any currency or commodity that may be involved in the merger. Under the terms of its engagement letter, Morgan Stanley & Co. Limited provided to the Arcelor Board of Directors only a financial opinion letter in connection with the merger, and received a fee of $1.5 million from Arcelor upon rendering of the opinion. Arcelor has also agreed to reimburse Morgan Stanley & Co. Limited for its expenses incurred in performing its services. In addition, Arcelor has agreed to indemnify Morgan Stanley & Co. Limited and its affiliates, their respective directors, officers, agents and employees and each person, if any, controlling Morgan Stanley & Co. Limited or any of its affiliates against certain liabilities and expenses, including certain liabilities under the federal securities laws, related to or arising out of Morgan Stanley & Co. Limiteds engagement. In the past, Morgan Stanley & Co. Limited and its affiliates have provided financial advisory and financing services for Arcelor, ArcelorMittal and Mittal Steel and have received fees in connection with such services. Such services in the past two years include acting as financial advisor to the Board of Directors of Arcelor in connection with Mittal Steels initial unsolicited $22.8 billion offer for Arcelor and the subsequent $32 billion combination of Mittal Steel and Arcelor. Morgan Stanley & Co. Limited also provided financial advisory and financing services to ArcelorMittal in connection with the sale of the Sparrows Point facility and its acquisition of a 38.41% stake in Laiwu Steel. Morgan Stanley & Co. Limited received fees totaling $22.6 million in relation to these services. Morgan Stanley & Co. Limited may also seek to provide such services to the combined group in the future and will receive fees for the rendering of these services. Summary of Fairness Opinion of Ricol, Lasteyrie & Associs Arcelor retained Ricol, Lasteyrie & Associs (RLA) to provide it with a financial opinion letter as to the fairness from a financial point of view to the Public Shareholders of the proposed exchange ratio of 0.875 Arcelor shares for every ArcelorMittal share in connection with the merger. Arcelor selected RLA to provide it with a financial opinion based on RLAs qualifications, expertise and reputation. On May 15, 2007, RLA rendered its written opinion that, as of that date, based upon and subject to the various considerations set forth in its opinion and based upon such other matters which were considered relevant, the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the draft merger agreement provided to them, was fair from a financial point of view to the Public Shareholders. The full text of the written opinion, dated as of May 15, 2007 is attached as Annex G to this prospectus. This opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by RLA in rendering its opinion. We encourage you to read the entire opinion carefully. RLAs opinion addresses only the fairness from a financial point of view of the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share to the Public Shareholders, as of the date of the opinion, and RLA did not express any view as to the fairness of the exchange ratio or the merger to any other holders of securities in Arcelor, Mittal or ArcelorMittal, or to the creditors or any other constituencies of any of those companies. RLAs opinion does not address any other aspects of the merger and does not constitute a recommendation to any shareholder of Arcelor, Mittal Steel or ArcelorMittal as to how such shareholder should vote with respect to the merger or any other matter at its annual general shareholders meeting. The summary of the opinion of RLA set forth in this prospectus is qualified in its entirety by reference to the full text of the opinion. Pursuant to the terms and conditions of its engagement agreement, RLAs opinion is provided for the sole information of the Arcelor Board of Directors in connection with its evaluation of the proposed merger. RLA has advised the Arcelor Board of Directors that it does not believe any person other than the Arcelor Board of Directors has the legal right to rely on the opinion. RLA would likely assert the substance of this view and the disclaimer described above as a defense to claims and allegations, if any, that might hypothetically be brought or asserted against it by any persons or entities other than the Arcelor Board of Directors with respect to the aforementioned opinion and its financial analyses thereunder. RLA bases its belief that no person other than the Arcelor Board of Directors may rely on the RLA opinion on the limited nature of RLAs contractual duty to Arcelor. RLA is not aware of any controlling precedent that would create a statutory or common law right for persons other than the Arcelor Board of Directors to rely on the RLA opinion. In the absence of controlling precedent, the ability of a shareholder to rely on the RLA opinion would be resolved by a court of competent jurisdiction. Any resolution by a court of competent jurisdiction as to this question would have no effect on the 221

rights and responsibilities of the Arcelor Board of Directors under applicable law or on the rights and responsibilities of either RLA or the Arcelor Board of Directors under federal securities laws. RLAs opinion did not address the relative merits of the merger as compared to any alternative business strategy or transaction that might be available to Arcelor or Mittal Steel, nor did it address the underlying business decisions of such companies to engage in the merger. In addition, RLA did not express any opinion as to the prices at which the Arcelor shares will trade at any time. RLAs opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it, as of the date of its opinion. Subsequent developments may affect RLAs opinion, and RLA does not have any obligation to update, revise, or reaffirm its opinion. For the purposes of rendering its opinion, RLA: reviewed certain publicly available financial statements and other business and financial information of Arcelor and Mittal Steel, including, but not limited to, the 2006 annual reports of Arcelor and Mittal Steel, the 2008 Value Plan, and the combined entitys 2006 full year pro-forma and last quarter results; reviewed the reported prices and trading activity for Mittal Steels and Arcelors shares, studied brokers notes, compared certain financial and stock market information for Mittal Steel and Arcelor with similar financial and stock market information for certain other publicly-traded companies comparable with Mittal Steel and Arcelor; reviewed the publicly available financial terms of certain recent business combinations in the steel industry; reviewed a draft dated May 14, 2007 of the Draft Press Release; reviewed the first-step merger agreement and a draft dated May 2, 2007 of the registration statement on Form F-4 in relation to the issuance of shares by ArcelorMittal in the first-step merger; reviewed the draft second-step merger agreement which provided for an exchange ratio of 0.875 Arcelor shares for every ArcelorMittal share and a draft dated May 9, 2007 of the registration statement on Form F-4 to be submitted to the SEC on a confidential basis in relation to the issuance of ordinary shares by Arcelor in the second-step merger; and performed such other studies and analyses as RLA deemed appropriate for the purposes of its opinion.

RLA did not hold any discussions with the senior management of Arcelor and Mittal Steel, with the exception of two conference calls on the financial information set forth in the Draft Press Release regarding the allocation between Mittal Steel and Arcelor of synergies generated by the combination of the two companies, EBITDA and capital expenditures set forth in the 2008 Value Plan. In arriving at its opinion, RLA assumed and relied upon, without independent verification, the accuracy and completeness of all information that was publicly available or supplied or otherwise made available by or on behalf of Arcelor and Mittal Steel. With respect to the financial projections provided, RLA received, at its request, a written confirmation from Arcelor that RLA could rely on all publicly available information and on certain specific assumptions provided to the firm, which were subsequently publicly disclosed, and that Arcelor was not aware of any situation, fact or event that would make RLAs assessment inappropriate, inaccurate or misleading in the context of RLAs opinion. RLA did not express any view on such financial projections or the assumptions on which they were based. In addition, RLA did not make an independent evaluation or appraisal of the assets and liabilities (including any derivative or off-balance-sheet assets and liabilities) of Mittal Steel or Arcelor or any of their respective affiliates, nor was it furnished with any such evaluation or appraisal. RLAs opinion did not address the legal or tax consequences of the proposed merger. RLA relied upon, without independent verification, the assessment of Arcelor and Mittal Steel and their respective legal, regulatory and tax advisors as to all legal, regulatory and tax matters relating to the proposed merger and the determination of the exchange ratio of 0.875 Arcelor shares for every ArcelorMittal share. RLA assumed and relied upon the assurances of the management of Arcelor that it was not aware of any relevant information that had been omitted or that remained undisclosed to RLA. 222

RLA further assumed that the merger will be consummated in accordance with the terms set forth in the merger agreements without any waiver, breach, amendment or delay of any of their respective terms or conditions, and that the definitive second-step merger agreement would not differ in any material respects from the draft second-step merger agreement furnished to it. RLA also assumed that the press release published by Arcelor on May 16, 2007 announcing details relating to the merger would not differ in any material respect from the Draft Press Release furnished to it. For the purposes of rendering its opinion, RLA assumed that the exchange ratio of 0.875 Arcelor shares for every ArcelorMittal share was determined in accordance with the requirements of applicable laws and the contractual arrangement between the parties with respect to the merger and relied on the substance of the November 14, 2006 press release of the parties relating to the merger. RLAs opinion was delivered in this context. In connection with rendering its opinion, RLA performed certain financial, comparative and other analyses as described below. The following is a brief summary of the material analyses performed by RLA. To analyze the exchange ratio of 0.875 Arcelor shares for every ArcelorMittal share, RLA used different approaches: Application of the agreed terms between the Parties set forth in the November 14, 2006 press release relating to the merger; Market-based analysis; Comparable companies analysis; Comparable transaction analysis; Contribution analysis; and Discounted cash flow approach.

Application of the Agreed Terms between the Parties Set Forth in the November 14, 2006 Press Release Relating to the Merger The November 14, 2006 press release states that: As publicly disclosed in the course of the offer, the merger exchange ratio will be consistent with the value of Arcelor shares pursuant to the secondary exchange offer as at the date of its settlement and delivery on August 1, 2006. Based on the share price of Mittal Steel of 27.05 as of August 1, 2006, the date of settlement and delivery, the implied value of an ordinary share of Arcelor was 42.50 pursuant to the secondary exchange offer. Based on a share price of 42.50 for an ordinary share of Arcelor, the exchange ratio from November 14, 2006 through May 11, 2007 ranged between 0.72 and 1.00 in three phases: from November 14, 2006 through January 12, 2007, the exchange ratio ranged from 0.72 to 0.78; from January 12, 2007 through February 26, 2007, the exchange ratio increased as a result of a strong increase of the share price of ordinary shares of Mittal Steel. The exchange ratio ranged from 0.74 to 0.97; and from February 26, 2007 through May 11, 2007, the exchange ratio ranged from 0.97 to 1.00 due to the continued increase of the share price of ordinary shares of Mittal Steel.

223

The average exchange ratio from November 14, 2006 through May 11, 2007 ranged between 0.85 (as the average of daily parities) and 0.87 (based on a weighted average of the share price of ordinary shares of Mittal Steel). Based on an implied value of 42.50 per Arcelor share, the table below sets forth the share price of ordinary shares of Mittal Steel and the resulting range of exchange ratios for the periods indicated: Exchange Ratio Analysis for period beginning November 14, 2006 through May 11, 2007 Minimum exchange ratio for period(1) Maximum exchange ratio for period(1) Average exchange ratio for period
(1) (1) (1) (1)

Mittal Steel Share Price () 30.60 42.41 36.10 40.33 39.85 39.56 37.26

Exchange Ratio 0.720 0.998 0.849 0.949 0.938 0.931 0.877

Average exchange ratio for one-month period ending May 11, 2007

Average exchange ratio for two-month period ending May 11, 2007 Average exchange ratio for period(2)

Average exchange ratio for three-month period ending May 11, 2007

(1) Calculated based on the daily closing share price of ordinary shares of Mittal Steel (2) Weighted average share price of ordinary shares of Mittal Steel RLA noted that the one-, two- and three-months average exchange ratios for the periods ending May 11, 2007 ranged from 0.93 to 0.95. Market-Based Analysis In order to conduct a market-based analysis of Arcelor and Mittal Steel, RLA compared the closing prices of the shares of Mittal Steel and Arcelor following the closing of the secondary exchange offer. From November 14, 2006 through January 20, 2006, the market-based exchange ratio and the one resulting from the November 14, 2006 press release examined above, are in line. From November 14, 2006 through May 11, 2007, the range of market-based exchange ratios was from 0.70 to 0.81, whereas the exchange ratio resulting from the November 14, 2006 press release has increased from 0.72 to 1.00. The table below sets forth a summary of the results of RLAs market-based analysis for the periods indicated: Market-based analysis for period beginning November 14, 2006 through May 11, 2007 Minimum exchange ratio for period(1) Maximum exchange ratio for period Average exchange ratio for period
(1) (1)

Mittal Steel Share Price () 30.60 41.00 36.10

Arcelor Share Price () 43.43 50.80 48.49

Exchange Ratio 0.705 0.807 0.744

Average exchange ratio for one-month period ending May 11, 2007(1) Average exchange ratio for two-month period ending May 11, 2007 (1) Average exchange ratio for three-month period ending May 11, 2007 (1) Average exchange ratio for period
(2)

40.33 39.85 39.56 37.26

55.58 54.15 53.09 49.89

0.726 0.736 0.746 0.747

(1) Calculated based on the daily closing share price of ordinary shares of Mittal Steel (2) Weighted average share price of ordinary shares of Mittal Steel 224

RLA noted that from November 14, 2006 through May 11, 2007, the exchange ratio based on the companies share prices ranged from 0.70 to 0.81 and the one-, two- and three-months average exchange ratios ranged from 0.73 to 0.75. Comparable Company Analysis RLA compared certain financial information of Mittal Steel and Arcelor with publicly available consensus estimates for other publicly traded companies which, although not identical to Mittal Steel or Arcelor, operate in the same industry and share similar business characteristics to Mittal Steel and Arcelor. This method consists of valuing the two entities based on the same observed valuation multiples on comparable publicly-traded companies. The following five companies were used in performing the comparable company analysis: Nucor Corporation Pohang Iron and Steel Company, Limited (POSCO) United States Steel Corporation voestalpine AG Usinas Siderrgicas De Minas Gerais S/A (USIMINAS)

For the purposes of this analysis, RLA determined multiples of Enterprise Value (defined as market capitalization plus total net debt including minority interest and other adjustments) to actual 2006 and estimated 2007 and 2008 EBITDA and EBIT. These multiples were applied to Mittal Steel and Arcelor EBITDA and EBIT to obtain an Enterprise Value for each company, from which net debt (including minority interests and non operating assets and liabilities) was deducted to derive an equity value and a value per share. Mittal Steel EBITDA and EBIT were determined on the basis of a consensus of analysts for 2007 and 2008. They were also determined taking into consideration the 2008 Value Plan, according to which Mittal Steel will register an EBITDA of $20 billion in 2008. Estimates for Arcelor were determined on the basis of indications given by the management which were made public in the May 16, 2006 press release announcing the conditions of the merger. Arcelors pro forma 2006 results were determined on the basis of public information relating to Dofasco and Sonasid acquisitions. On this basis, the comparable company method resulted in an exchange ratio between 0.83 and 0.89, based on the consensus of analysts for 2007 and 2008, and between 0.83 and 0.92, based on the 2008 Value Plan. Comparable Transactions Analysis RLA analyzed the acquisition price of target companies in recent transactions involving companies operating in the same industry and sharing similar business characteristics to Mittal Steel and Arcelor. The conditions of the tender offer to Arcelor Brasils remaining minority shareholders have been included in the analysis, although the tender offer was pending and its results not known at the time RLA delivered its opinion. The same multiples as in the comparable company method were determined. The resulting multiples were applied to Arcelor and Mittal Steel 2006 and 2007 EBITDA and EBIT to derive a value per share. RLA noted that the range of exchange ratios as a result of conducting its comparable transaction analysis was from 0.86 to 0.92. Contribution Analysis In conducting the contribution analysis, RLA measured the relative weight of Arcelor compared to Mittal Steel based on selected financial and valuation metrics: EBITDA and EBIT. RLA compared the 2006 and 2007 EBITDA and EBIT of Mittal Steel and Arcelor, taking into account the net debt of each company (including minority interests and non operating assets and liabilities) and converted the value of the contribution of each of Mittal Steel and Arcelor into an equivalent number of shares based on a one-month average share price of each company. RLA noted that the resulting exchange ratios obtained were from 0.82 to 0.86. 225

Earnings per share. RLA compared the 2006 pro forma earnings per share of Arcelor and Mittal Steel and noted that the exchange ratio resulting from this analysis was 0.87. Discounted Cash Flow Analysis RLA conducted a discounted cash flow analysis. Other than as described above, RLA did not have access to the management of either Arcelor or Mittal Steel, and RLA was not provided with the business plan of Arcelor, Mittal Steel or the combined company. As a result, RLA conducted its discounted cash flow analysis solely on the basis of publicly available information. Cash flows were determined over a 5-year period on the basis of a consensus of equity research analysts (growth of sales and EBITDA margin) and the 2008 Value Plan. A terminal value was added taking account of a perpetual growth rate of 0.5%, which is consistent with the cyclical nature of the steel industry. The discount rate was determined on the basis of certain assumptions of risk free rate, market risk, beta and gearing, resulting in a discount rate of 8.7%. The same discount rate was retained for both companies. A sensitivity analysis has been performed using a range of discount rates of 8.2% to 9.2%. The discounted cash flow analysis did not purport to be indicative of actual values or expected values of shares of Arcelor or Mittal Steel before or after the merger. RLA noted that its discounted cash flow analysis resulted in a range of exchange ratios from 0.88 to 0.94. Miscellaneous The preparation of a fairness opinion involves determinations as to the most appropriate and relevant methods of financial and comparative analysis and the application of those methods to the particular circumstances, and therefore, such an opinion is not readily susceptible to summary description. Accordingly, RLA believes that its analyses must be considered as a whole and that considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion. In addition, RLA may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuation resulting from any particular analysis described below should not be taken to be RLAs view of the actual value of Arcelor or ArcelorMittal. In its analyses, RLA made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Arcelor and ArcelorMittal. None of Arcelor, ArcelorMittal, RLA or any other person assumes responsibility if future results are materially different from estimates used. Any estimates contained in these analyses were not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth therein. In addition, analyses relating to the value of businesses do not purport to be appraisals or to reflect the prices at which businesses may actually be sold or might actually trade. RLAs opinion and financial analyses were among many factors considered by the Arcelor Board of Directors in its evaluation of the merger and should not be viewed as determinative of the views of the Arcelor Board of Directors with respect to the merger or the exchange ratio of 0.875 Arcelor shares for every ArcelorMittal share provided for in the merger. The Arcelor Board of Directors selected RLA to deliver a fairness opinion because of its reputation as a provider of independent financial expertise. RLA received a fee of 900,000 for its services upon rendering of this financial opinion, and Arcelor has agreed to reimburse RLA for certain expenses and indemnify RLA against certain liabilities arising out of its engagement. RLA has not provided any services to Arcelor, Mittal Steel or any of their respective affiliates over the past two years. For the avoidance of doubt, RLA was not acting, for the purpose of this opinion, as an independent expert pursuant to the provisions of articles 261-1 and seq. of the regulations of the French Autorit des marchs financiers. Summary of Fairness Opinion of Socit Gnrale Arcelor retained Socit Gnrale to provide it with a financial opinion in connection with its merger with ArcelorMittal. Arcelor selected Socit Gnrale to provide it with a financial opinion based on Socit Gnrales qualifications, expertise and reputation. On May 15, 2007, Socit Gnrale delivered its written 226

opinion to the Arcelor Board of Directors that, as of the date of the fairness opinion and based upon and subject to the factors and assumptions set forth therein, the proposed exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the draft merger agreement provided to them, was fair from a financial point of view to the Public Shareholders. The full text of the written opinion of Socit Gnrale, dated as of May 15, 2007, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex F. We encourage you to read the entire opinion carefully. Socit Gnrale expresses no opinion or recommendation as to how the shareholders of Arcelor, Mittal Steel or ArcelorMittal should vote at any shareholders meetings to be held in connection with the merger. Socit Gnrales opinion addresses only the fairness from a financial point of view of the exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share to the Public Shareholders, as of the date of the opinion. It does not express any view as to the fairness of the exchange ratio or the merger to any other holders of securities in Arcelor, to any holders of securities in Mittal Steel or ArcelorMittal or to the employees or creditors of any of those companies. The opinion also does not address the relative merits of the merger as compared to alternative transactions or strategies that might be available to Arcelor nor does it address the underlying business decision of Arcelor to proceed with the merger. Socit Gnrale does not express an opinion as to the prices at which the shares of Arcelor will trade at any time post-merger. Socit Gnrales opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Socit Gnrale as of May 15, 2007. Subsequent developments may affect Socit Gnrales opinion and Socit Gnrale does not have any obligation to update, revise, or reaffirm its opinion. The summary of the opinion of Socit Gnrale set forth in this prospectus does not purport to be a complete description of the analyses performed by Socit Gnrale in connection with its opinion and is qualified in its entirety by reference to the full text of the opinion. Pursuant to the terms and conditions of its engagement agreement, Socit Gnrales opinion was provided solely for the information and assistance of the Arcelor Board of Directors in connection with the merger. Socit Gnrale has advised the Arcelor Board of Directors that it does not believe any person other than the Arcelor Board of Directors has the legal right to rely on the opinion. Socit Gnrale would likely assert the substance of this view and the disclaimer described above as a defense to claims and allegations, if any, that might hypothetically be brought or asserted against it by any persons or entities other than the Arcelor Board of Directors with respect to the aforementioned opinion and its financial analyses thereunder. Socit Gnrale bases its belief that no person other than the Arcelor Board of Directors may rely on the Socit Gnrale opinion on the limited nature of Socit Gnrales contractual duty to Arcelor. Socit Gnrale is not aware of any controlling precedent that would create a statutory or common law right for persons other than the Arcelor Board of Directors to rely on the Socit Gnrale opinion. In the absence of controlling precedent, the ability of a shareholder to rely on the Socit Gnrale opinion would be resolved by a court of competent jurisdiction. Any resolution by a court of competent jurisdiction as to this question would have no effect on the rights and responsibilities of the Arcelor Board of Directors under applicable law or on the rights and responsibilities of either Socit Gnrale or the Arcelor Board of Directors under federal securities laws. In arriving at its opinion, Socit Gnrale relied upon and assumed, without assuming responsibility or liability for independent verification, the accuracy and completeness of all information that was publicly available. In that regard, Socit Gnrale assumed, with Arcelors consent, that the financial projections, synergies and their allocation had been reasonably prepared reflecting the best currently available estimates and judgments by management as to the future financial performance of Mittal Steel and Arcelor and expressed no view on such financial projections or the assumptions on which they were based. Socit Gnrale also assumed that all governmental, regulatory or other consents or approvals necessary for the consummation of the merger would be obtained without any adverse effect on Arcelor that would have a material impact on its analysis. In addition, Socit Gnrale assumed that the merger would be consummated in accordance with the terms set forth in the first-step merger agreement and the draft second-step merger agreement without any waiver, breach, amendment or delay of any terms or conditions, and that the definitive second-step merger agreement would not differ in any material respects from the draft second-step merger agreement furnished to Socit Gnrale. Socit Gnrale also assumed that the press release published by Arcelor on May 16, 2007 announcing details relating to the merger would not differ in any material respect from the Draft Press Release furnished to Socit Gnrale. Socit Gnrale is not a legal, tax, regulatory or actuarial advisor. Accordingly, the opinion rendered by Socit Gnrale did not address the legal or tax consequences of the proposed merger to Arcelor, its shareholders, its creditors or any other party and Socit Gnrale relied upon, without independent verification, the assessment of Arcelor and Mittal Steel and their respective legal, tax and regulatory advisors as to all legal, tax and regulatory matters relating to the proposed merger and the determination of the exchange ratio. Socit Gnrale did not carry out any independent evaluation or appraisal of the assets and liabilities (including any 227

contingent, derivative or off-balance sheet assets and liabilities) of Mittal Steel or Arcelor or any of their respective subsidiaries and was not furnished with any such evaluation or appraisal. In connection with rendering the opinion described above and performing its related financial analyses, Socit Gnrale, among other things: reviewed certain publicly available business and financial information concerning Mittal Steel and Arcelor as well as other companies in the global steel industry; reviewed certain financial projections relating to Mittal Steel and Arcelor for the years ending December 31, 2007 and 2008 prepared by the managements of Mittal Steel and Arcelor and set forth in the 2008 Value Plan; analyzed Mittal Steel and Arcelor stock trading performance, liquidity and correlation before and since the end of the mandatory sell out period; performed a comparable companies analysis as well as a contribution analysis based upon financial performance and capitalization; performed a discounted cash flows valuation of Mittal Steel and Arcelor reflecting, inter alia, (a) the financial information set forth in the Draft Press Release regarding the allocation between Mittal Steel and Arcelor of synergies generated by the combination of the two companies, EBITDA and capital expenditures set forth in the 2008 Value Plan, (b) latest completed and pending corporate acquisitions (acquisition of Sicartsa, buy-out of the minority shareholders in Arcelor Brasil), and (c) research analyst projections; reviewed precedents of back-end mergers subsequent to a public offer; reviewed the first-step merger agreement and a draft dated May 2, 2007 of the registration statement on Form F-4 in relation to the issuance of shares by ArcelorMittal in the first-step merger; reviewed the draft second-step merger agreement which provided for an exchange ratio of 0.875 Arcelor shares for every ArcelorMittal share and a draft dated May 9, 2007 of the registration statement on Form F-4 to be submitted to the SEC on a confidential basis in relation to the issuance of shares by Arcelor in the second-step merger; reviewed a draft dated May 14, 2007 of the Draft Press Release; ran sensitivity analyses; and performed other financial analyses that it deemed appropriate for the purposes of rendering its opinion.

Other than information set forth in the Draft Press Release, the above analyses were exclusively based on publicly available information as of May 15, 2007. The 2008 Value Plan was prepared by management of Mittal Steel and is subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of Mittal Steel, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by the 2008 Value Plan. The following is a summary of the material financial analyses delivered by Socit Gnrale to the Board of Directors of Arcelor in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Socit Gnrale, nor does the order of analyses described represents the relative importance or weight given to those analyses by Socit Gnrale. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Socit Gnrales financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before May 8, 2007 and is not necessarily indicative of current market conditions. 228

Historical Stock Trading Analysis Socit Gnrale reviewed historical trading prices and volumes for Mittal Steel shares listed on Euronext Amsterdam and Arcelor shares listed on Euronext Paris for the period beginning January 1, 2006 through May 8, 2007. Socit Gnrale computed the implied exchange ratios of closing stock market prices of Mittal Steel shares to Arcelor shares for a given period by dividing the trading price for Mittal Steel by the trading price for Arcelor for the corresponding period. Socit Gnrale observed the following: Arcelor (/share) Spot (May 8, 2007) Period high (January 25, 2006) Period low (August 11, 2006) One-month VWAP Six-month VWAP One-year VWAP
(2)(3) (2)(3)

Mittal Steel(1)(/share) 41.36 40.27 39.80 37.80 34.30

Implied Exchange Ratio 0.72 1.19 0.60 0.73 0.74 0.74 0.73

57.49 55.44 53.87 50.74 46.78

Three-month VWAP

(2)(3)

(2)(3)

(1) Trading price of Mittal Steel on Euronext Amsterdam (2) Volume Weighted Average Price (3) Average as at May 8, 2007 In particular, Socit Gnrale focused on the period following the mandatory sell-out, from November 17, 2006 through May 8, 2007. Socit Gnrale computed the implied exchange ratios of closing stock market prices of Mittal shares to Arcelor shares during the period immediately following the mandatory sell-out period by dividing the trading price for Mittal Steel shares by the trading price for Arcelor shares for the period beginning November 17, 2006 through May 8, 2007. Socit Gnrale observed the following:

Period ending May 8, 2007 Spot (May 8, 2007) Period high (March 1, 2007) Period low (December 1, 2006) Period average
(2)

Arcelor (/share) 57.49 50.80 43.43 50.21

Mittal Steel(1) (/share) 41.36 41.00 30.60 37.28

Implied Exchange Ratio 0.72 0.81 0.70 0.74

(1) Trading price of Mittal Steel shares on Euronext Amsterdam (2) Volume weighted average price As part of this analysis, Socit Gnrale reviewed the liquidity of Arcelor stock for the period starting November 17, 2005 through May 8, 2007. Socit Gnrale compared the traded volume of Arcelor shares during the period beginning November 17, 2006 through May 8, 2007 to the volumes traded during the period beginning November 17, 2005 through May 8, 2006 and noted that the cumulative traded volume during the period beginning November 17, 2005 through May 8, 2006 was 20 times greater than during the same period during 2006 and 2007, Socit Gnrale also compared the cumulated turnover of trading in Arcelor shares during the period beginning November 17, 2006 through May 8, 2007 to the cumulated turnover of trading in Arcelor shares during the period beginning November 17, 2005 through May 8, 2006 and noted that the cumulative turnover of trading in Arcelor shares during the period beginning November 17, 2005 through May 229

8, 2006 was 11 times greater than during the same period during 2006 and 2007. The following table summarizes the results of Socit Gnrales historical stock trading analysis: Average Arcelor Stock

Cumulated Volume of Arcelor (thousands of shares) Cumulated Turnover of Trading in Arcelor (thousands of )

Period From November 17, 2005 through May 8, 2006 From November 17, 2006 through May 8, 2007

Price (/share)

28.27

634,308

17,932,463

49.97

31,907

1,594,385

August 1, 2006 Implied Exchange Ratio. Socit Gnrale calculated the implied value of shares of Arcelor by multiplying the closing trading price of shares of Mittal Steel as of August 1, 2006, 27.05, by the secondary offer exchange ratio (11 shares of Mittal Steel for every 7 shares of Arcelor). Socit Gnrale noted that the implied value of shares of Arcelor was 42.50. Socit Gnrale calculated the range of implied exchange ratios by dividing the historical closing prices for shares of Mittal Steel from November 17, 2006 through May 8, 2007 by the implied value of shares of Arcelor. Socit Gnrale noted that, based on the closing price of shares of Mittal Steel on May 8, 2007 this analysis yielded an implied exchange ratio of 0.97 and, based on the volume weighted average closing price of shares of Mittal Steel for the period, an average exchange ratio of 0.88. Comparable Companies Analysis Socit Gnrale compared certain financial information of Arcelor and Mittal Steel with publicly available consensus financial estimates for other publicly traded companies in the global steel industry which, although not directly comparable to Arcelor, have operations that may be considered similar to certain operations of Arcelor and Mittal Steel (hereafter referred to, individually, as a Selected Company and, collectively, as the Selected Companies): Rautaruukki Corporation Salzgitter Mannesmann International ThyssenKrupp AG voestalpine AG CSN National Steel Co. Usinas Siderrgicas De Minas Gerais S/A (USIMINAS) Gerdau Ameristeel Corporation

United States Steel Corporation Nucor Corporation Pohang Iron and Steel Company, Limited (POSCO)

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Socit Gnrale based its analysis on (i) information obtained from public filings and (ii) publicly available equity analyst research reports. Socit Gnrale compared, inter alia, the following financial ratios for each of the Selected Companies to Arcelor: ratios of enterprise value (defined as market capitalization plus net financial debt (i.e., financial debt less cash and cash equivalents) plus minorities plus the unfunded portion of pensions less financial assets) to 2006 and 2007 EBITDA; ratios of enterprise value to 2006 and 2007 EBIT; and ratios of equity value to 2006 and 2007 earnings (based on reported net income and adjusted net income, as adjusted for extraordinary items after tax).

Socit Gnrale applied average financial multiples derived from the analysis of the Selected Companies to certain financial metrics of Arcelor for the fiscal years 2006 and 2007, each as adjusted for corporate acquisitions and disposals from January 1, 2006 through May 8, 2007, in order to compute estimated enterprise values, equity values and per share equity values of Arcelor. Socit Gnrale calculated the range of implied exchange ratios by comparing the implied per share equity values obtained for shares of Arcelor to the closing price of shares of Mittal Steel on Euronext Amsterdam on May 8, 2007. Socit Gnrale noted that the range of resulting implied exchange ratios was from 0.76 to 0.94, with an average of 0.88. No company utilized in the comparable companies analysis is identical to Arcelor. In evaluating Selected Companies, Socit Gnrale made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Arcelor or Mittal Steel, such as the impact of competition on the businesses of Arcelor or Mittal Steel and the industry generally, industry growth and the absence of any adverse material change in the financial condition and prospects of Arcelor or Mittal Steel or the industry or in the financial markets in general. Mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using comparable company data. Contribution and Exchange Ratio Analysis Socit Gnrale performed a contribution analysis which reviewed the implied contributions of Arcelor and Mittal Steel to the combined company based on selected financial metrics for fiscal years 2006 and 2007. These financial metrics included EBITDA, EBITDA less capital expenditures, EBIT, reported net income, adjusted net income (as adjusted for extraordinary items after tax) and adjusted net income plus depreciation and amortization. Based on the estimated contributions of Arcelor and Mittal Steel, Socit Gnrale derived per share contributions. Socit Gnrale calculated the implied exchange ratios by dividing the calculated per share contribution of Mittal Steel by the per share contribution of Arcelor. The same analysis was carried out based on an equalized gearing approach whereby, for the purposes of comparing Arcelors and Mittal Steels respective contributions, Socit Gnrale assumed that the net financial debt of each of Arcelor and Mittal Steel had been converted into equity. Socit Gnrale also calculated the implied equity value of Arcelor that is obtained, based on a pro forma market capitalization approach, by applying Mittal Steels financial multiples to the financial metrics of Arcelor listed herein. The following table summarizes the results of this analysis: Contribution and Exchange Ratio Analysis Without debt adjustment Equalized gearing approach Pro forma market capitalization approach Implied Exchange Ratio Minimum 0.93 0.83 0.88 Maximum 1.10 0.95 1.04 Average 1.02 0.87 0.96

Discounted Cash Flow Analysis Socit Gnrale calculated the range of implied equity values per ordinary share for each of Arcelor and Mittal Steel based on a six-year discounted cash flow analysis for fiscal years 2007 through 2012. In conducting its analysis, Socit Gnrale relied upon: (i) publicly available business and financial information, 231

including information contained in the Draft Press Release; (ii) the broker consensus for Arcelor based on research reports released during the second quarter of 2006; and (iii) the broker consensus for Mittal Steel based on research reports released after its disposal of Huta Bankowa, Stahlwerk Thringen GmbH and Travi e Profilati di Pallanzeno and its acquisition of Sicartsa. In determining the intrinsic value of Arcelor and Mittal, Socit Gnrale calculated the present value of the stand-alone, post-synergies and after-tax free cash flows that each of Arcelor and Mittal Steel could generate for fiscal years 2007 through 2012. Socit Gnrale calculated estimated terminal values for Arcelor and Mittal Steel using broker consensus 2012 EBITDA margins and a 0.5% perpetuity growth rate, on which sensibility analyses were run. The estimated free cash flows and terminal values of Arcelor and Mittal Steel were then discounted to present values using discount rates of 9.1% and 9.0%, respectively, which are rates Socit Gnrale viewed as the appropriate range for companies with similar risk characteristics to Arcelor and Mittal Steel and on which sensitivity analyses were run. Each of Arcelors and Mittal Steels net financial debts (defined as financial debts plus unfunded portions of pension liabilities less excess cash) as of December 31, 2006 (as adjusted for acquisitions and disposals carried out by Arcelor and Mittal Steel from January 1, 2006 through May 8, 2007, including the minority buy-out of shareholders in Arcelor Brasil) and minority interests (as adjusted for acquisitions and disposals carried out by Arcelor and Mittal Steel from January 1, 2006 through May 8, 2007, including the minority buy-out of shareholders in Arcelor Brasil) were subtracted from the sum of the present values of Arcelors and Mittal Steels respective free cash flows and the present values of the terminal value of Arcelor and Mittal Steel to determine intrinsic equity values for each of Arcelor and Mittal Steel. These values were divided by the number of outstanding shares in Arcelor and Mittal Steel as of May 8, 2007 to determine their respective intrinsic per share equity values. The following table presents the results of this analysis and the implied exchange ratios deriving therefrom: Implied Equity Value Per Share (/share) Arcelor Low High Average 53.62 57.40 55.51 Mittal Steel 47.14 50.57 48.86 Implied Exchange Ratio 0.82 0.94 0.88

Miscellaneous The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Socit Gnrales opinion. In arriving at its fairness determination, Socit Gnrale considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Socit Gnrale made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. Socit Gnrale prepared these analyses for purposes of providing its opinion to Arcelors Board of Directors as to the fairness from a financial point of view of the exchange ratio to Arcelors Public Shareholders. These analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Arcelor, ArcelorMittal, Socit Gnrale or any other person assumes responsibility if future results are materially different from those forecasts. Other than information set forth in the Draft Press Release, Socit Gnrales analyses were exclusively based on publicly available information as of May 15, 2007. Socit Gnrales opinion and its presentation to the Arcelor Board of Directors was one of many factors taken into consideration by the Arcelor Board of Directors in deciding to approve, adopt and authorize the merger and should not be viewed as determinative of the views of the Arcelor Board of Directors with respect to the merger or the exchange ratio provided for in the merger. Socit Gnrale was not involved in the structuring, planning, negotiation or preparation of the merger. The exchange ratio to be applied by Arcelor was determined through arms-length 232

negotiations between Arcelor and Mittal Steel and was approved by the Arcelor Board of Directors. Socit Gnrale did not provide advice to Arcelor during these negotiations. Socit Gnrale did not recommend any specific exchange ratio to Arcelor or that any specific exchange ratio constituted the only appropriate exchange ratio for the second-step merger. Socit Gnrale and its affiliates, as part of their investment banking business, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions as well as for estate, corporate and other purposes. Socit Gnrale and its affiliates have provided and provide investment banking and commercial banking services from time to time to Mittal, Arcelor and their respective affiliates. Such services in the past two years include acting as joint financial advisor to Mittal Steel and bookrunner of a financing facility in relation to its public tender offer for Arcelor in 2006. Socit Gnrale has also been retained by Mittal Steel and Arcelor to advise on the disposal process of assets located in Germany, Poland and Italy. In connection with these investment banking and commercial banking services, Socit Gnrale has received fees from Mittal Steel and Arcelor and their affiliates, in aggregate, of 28.6 million (including $1.5 million upon rendering its opinion, as described below). Socit Gnrale may also provide investment banking or other services to Arcelor, Mittal Steel and ArcelorMittal in the future, and may receive compensation for such services. In the ordinary course of business, Socit Gnrale and its affiliates may actively trade debt and/or equity securities of Mittal Steel or Arcelor for their own account or for the account of their customers and, accordingly, Socit Gnrale may at any time hold long or short positions in such securities. The Arcelor Board of Directors selected Socit Gnrale to deliver a fairness opinion because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. Pursuant to an engagement letter, Socit Gnrale delivered its opinion to the Arcelor Board of Directors in connection with the merger. Pursuant to this engagement letter, Socit Gnrale received a fee of $1.5 million upon rendering its opinion. In addition, Arcelor has agreed to reimburse Socit Gnrale for its reasonable expenses, including attorneys fees and expenses, and to indemnify Socit Gnrale and related persons against liabilities arising from the assignment. Structure of the Merger Upon the terms and subject to the conditions set forth in the merger proposal and the explanatory memorandum, at the effective time of the merger, ArcelorMittal will merge into Arcelor, by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal. The combined company shall be named ArcelorMittal, as Arcelor will be renamed ArcelorMittal upon the effectiveness of the merger. The merger constitutes the second step of the combination of Mittal Steel and Arcelor into a single legal entity governed by Luxembourg law. In the first step, Mittal Steel merged into ArcelorMittal, by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel. After a vote of the shareholders of Mittal Steel at an extraordinary general meeting held on August 28, 2007 and a resolution of the sole shareholder of ArcelorMittal taken on August 28, 2007, this merger became effective on September 3, 2007 and the combined company was named ArcelorMittal. Taxation For a description of certain material tax consequences of the merger to the ArcelorMittal shareholders, see Taxation. Accounting Treatment For accounting purposes, the merger of ArcelorMittal into Arcelor shall be considered a combination of entities under common control as of January 1, 2007. All recorded assets and liabilities of ArcelorMittal and Arcelor shall be carried forward at their historical book values, and the income of Arcelor shall include the income of ArcelorMittal as of January 1, 2007. For statutory reporting purposes, the final accounting year of ArcelorMittal shall end on December 31, 2006. Listing and Admission to Trading of Arcelor Shares Under the merger agreement, Arcelor is required to have the admission to trading and listing of the Arcelor shares to be issued in the merger on Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE 233

Euronext and the Spanish exchanges, which are collectively referred to as the Spanish exchanges, as well as the admission to trading on the regulated market of the Luxembourg Stock Exchange and listing on the Official List of the Luxembourg Stock Exchange, approved by these respective exchanges. Additionally, Arcelor is required to have the admission to trading and listing of the existing and newly-issued Arcelor shares on Euronext Amsterdam by NYSE Euronext and the NYSE approved by these exchanges. Delisting of ArcelorMittal Shares Upon effectiveness of the merger, the ArcelorMittal shares will no longer be listed on the NYSE and ArcelorMittal shares will no longer be admitted to trading and will be delisted from Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the Spanish exchanges and will no longer be admitted to trading on the Luxembourg Stock Exchanges regulated market and no longer be listed on the Official List of the Luxembourg Stock Exchange. Dissenters Rights of Appraisal ArcelorMittal shareholders will not have any appraisal or dissenters rights under Luxembourg law or under ArcelorMittals articles of association in connection with the merger, and neither ArcelorMittal nor Arcelor will independently provide ArcelorMittal shareholders with any such rights. Arcelor shareholders will not have any appraisal or dissenters rights under Luxembourg law or under Arcelors articles of association in connection with the merger, and neither ArcelorMittal nor Arcelor will independently provide Arcelor shareholders with any such rights. Material Agreements Between ArcelorMittal and Arcelor Related to the Merger From time to time in the ordinary course of business, ArcelorMittal or its subsidiaries enter into contracts with Arcelor or its subsidiaries. These contracts include license agreements, non-disclosure agreements, cooperation agreements and other commercial agreements. Many of these contracts have been substantially performed, but have confidentiality, indemnity or other continuing obligations. Neither ArcelorMittal nor Arcelor views any of these contracts as material. In addition, Arcelor, Mittal Steel and the Significant shareholder entered into a Memorandum of Understanding in connection with the Offer, which includes specific governance and other provisions related to Arcelor, Mittal and the Significant shareholder. See Material Contracts and Related Party TransactionsMemorandum of Understanding between Mittal Steel, Arcelor and the Significant shareholder and ManagementMittal Steel / Arcelor Memorandum of Understanding. Minority Shareholder Claims Regarding the Exchange Ratio Several minority shareholders of Arcelor or their representatives have made allegations regarding or brought legal proceedings relating to the proposed exchange ratio in the merger. Their principal actions have been the following: writing letters to the Boards of Directors of Arcelor and Mittal Steel; seeking to instigate investigations or actions by market regulatory authorities; and seeking injunctions from Dutch and French courts. The principal allegations made by these minority shareholders (who are principally hedge funds or hedge fund managers as well as minority shareholder associations) are the following: The exchange ratio in the second step merger should be the same as that of the secondary exchange offer component of Mittal Steels June 2006 offer for Arcelor (i.e., 11 Mittal Steel shares for 7 Arcelor shares), and investors had a legitimate expectation that this would be the case based on Mittal Steels disclosure and public statements; The proposed exchange ratio is unfair to minority shareholders of Arcelor, particularly in light of developments since the June 2006 offer; Mittal Steels disclosure regarding the merger of Mittal Steel into Arcelor and specifically the exchange ratio (in the second-step merger) has been insufficient and misleading; and The two-step process is detrimental to interests of Arcelor minority shareholders.

234

Arcelor and ArcelorMittal each believe that the allegations made and claims brought by the minority shareholders regarding the proposed exchange ratio are without merit and that such exchange ratio complies with the requirements of applicable law, is consistent with previous guidance on the principles that would be used to determine the exchange ratio in the second step merger and is relevant and reasonable to shareholders of ArcelorMittal and Arcelor. The following summarizes the status of proceedings brought by minority shareholders in this regard: In June and July 2007, two hedge funds that are Arcelor minority shareholders wrote to the Netherlands Authority for the Financial Markets (the Stichting Autoriteit Financile Markten, the AFM), the Dutch securities regulator, requesting it to take various measures relating in particular to disclosure regarding the proposed exchange ratio, against Mittal Steel and making in substance the allegations summarized above. On August 17, 2007 the AFM rejected the claimants demands. In its written decision, the AFM stated in particular that: o it has no basis to conclude that the exchange ratio in the second-step merger must be the same as that in the secondary exchange offer component of Mittal Steels final offer for Arcelor securities announced on June 25, 2006; it is not aware of any facts or circumstances that lead it to question the accuracy of the proposed exchange ratio; it has no basis to conclude that Mittal Steels disclosure and public statements regarding the second-step merger and the exchange ratio were not timely and accurate or withheld price-sensitive information, and therefore were constitutive of market manipulation or otherwise incorrect or incomplete; and the proposed merger exchange ratio is not contrary to Mittal Steels public statements on this subject.

o o

On August 15, 2007, Mittal Steel received a writ of summons on behalf of three hedge funds that are shareholders of Arcelor to appear before a judge in summary proceedings of the district court of Rotterdam on August 22, 2007. The claimants requested, among other things, that the judge enjoin the proposed first-step merger of Mittal Steel and ArcelorMittal and any actions that would lead to implement a merger with Arcelor at an exchange ratio other than 11 ArcelorMittal shares for 7 Arcelor shares. On August 27, 2007 the Rotterdam court dismissed all claims by the hedge fund shareholders. In a written decision the court stated that there was no reason to rule on the fairness of the proposed merger exchange ratio and noted that: o there were no facts to support the shareholders claims that they would be treated more favorably in Dutch courts compared to Luxembourg courts and therefore there was no evidence that the plaintiffs would be prejudiced by the two-step merger process in the way alleged by them; the minority shareholders could bring their claims in Luxembourg courts so under these circumstances it would not be proper for a Dutch court to provide interim relief in a transaction between two Luxembourg entities and intervene in a Luxembourg matter; and there was no rule of Dutch law requiring Mittal Steel or Arcelor to publish any fairness opinions they received in connection with the second-step merger at this stage as those would be made public together with the prospectuses to be approved or filed with appropriate regulatory authorities in connection with the second-step merger.

On August 20, 2007, Mittal Steel received a writ of summons on behalf of an association of minority shareholders of Arcelor to appear before the civil court of Paris on August 21, 2007. The claimant requested, among other things, the adjournment of the extraordinary general meeting of Mittal Steel of August 28, 2007 convened to vote upon the merger of Mittal Steel into ArcelorMittal and that Mittal Steel be ordered to initiate a new merger process taking the form of a direct merger of Mittal Steel into Arcelor at an exchange ratio consistent with the 235

exchange ratio of 11 Mittal Steel shares for 7 Arcelor shares offered in the secondary exchange offer component of Mittal Steels final offer for Arcelor securities announced on June 25, 2006. On August 27, 2007, the court issued a written decision stating that it lacked jurisdiction over the case and dismissed all claims by the claimant. It is possible that additional claims may be brought before regulators or courts prior to the ArcelorMittal and Arcelor extraordinary general meetings that will be convened to vote on the second-step merger. Regulatory Matters Securities Law Approvals and Requirements In connection with the merger and as a condition precedent to the effectiveness of the merger, Arcelor has filed with the U.S. SEC a registration statement on Form F-4 that is expected to be effective on or about September 28, 2007. Arcelor will also file a request, subject to issuance of the shares to be issued in the merger, for admission of the Arcelor shares issued in the merger to trading on the Luxembourg Stock Exchanges regulated market and for the listing of these shares on the Official List of the Luxembourg Stock Exchange, and for the admission to trading and listing of the Arcelor shares issued in the merger on Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext and the Spanish exchanges. Additionally, Arcelor is required to have the admission to trading and listing of the existing and newly-issued Arcelor shares on Euronext Amsterdam by NYSE Euronext and the NYSE approved by these exchanges. The admission to trading of Arcelor shares issued in the merger and approval of the application for listing of the Arcelor shares on these exchanges is a condition to the effectiveness of the merger. Pursuant to the Luxembourg law of May 19, 2006 implementing Directive 2004/25/EC of the European Parliament and of the Council of April 21, 2004 on takeover bids, referred to as the Luxembourg takeover law, if a natural or legal person, acting alone or in concert, acquires securities in Arcelor which, when added to any existing holdings of those securities give him or her voting rights representing 33 1/3% of all of the voting rights attached to the issued shares in Arcelor, such person is obliged to make an offer for the remaining shares in Arcelor. The CSSF has confirmed that following the merger of ArcelorMittal into Arcelor, the Significant shareholder will not be obliged to launch a mandatory offer for the remaining shares of the combined entity. Tax Rulings ArcelorMittal has applied for several tax rulings in connection with the merger, most significantly for a ruling from the Luxembourg tax authorities to confirm that the merger (i) shall not give rise to any capital tax under Article 4-1 of the law of December 29, 1971 as amended, and (ii) shall not attract any major adverse Luxembourg corporate tax (impt sur le revenu des collectivits, impt commercial communal) consequences. Other Requirements The merger may be subject to certain other regulatory requirements of other municipal, state, federal and foreign governmental agencies and authorities, including filings with antitrust authorities in certain jurisdictions. ArcelorMittal and Arcelor are continuing to evaluate and comply in all material respects with these requirements, as appropriate. Although ArcelorMittal and Arcelor cannot rule out the possibility that one or more of the regulatory approvals required to complete the merger will not be obtained on a timely basis or at all or that any of the governmental entities with which filings are or have been made may seek new or additional regulatory concessions as conditions for granting approval of the merger, ArcelorMittal and Arcelor currently do not anticipate that any of such regulatory requirements will hinder, delay or restrict the effectiveness of the merger. Under the merger agreement, ArcelorMittal and Arcelor have each agreed to use their best efforts to consummate the merger, including to obtain all consents, approvals, authorizations, qualifications and orders of all third parties that are necessary for the consummation of the merger. See The Merger Agreement, the Merger Proposal and the Explanatory MemorandumCovenants and Agreements.

236

THE MERGER AGREEMENT, THE MERGER PROPOSAL AND THE EXPLANATORY MEMORANDUM The following summary describes selected material provisions of the merger agreement, the merger proposal and the explanatory memorandum, copies of which are attached to this prospectus as Annex A and Annex B, respectively, and are incorporated by reference into this prospectus. This summary is qualified in its entirety by reference to the complete texts of the merger agreement, merger proposal and explanatory memorandum and may not contain all the information about the merger agreement, the merger proposal and the explanatory memorandum that is important to you. As a matter of Luxembourg law, the decision to merge ArcelorMittal and Arcelor is effected solely through the adoption by the shareholders of ArcelorMittal and the shareholders of Arcelor of the decision to merge as contemplated by the merger proposal and the explanatory memorandum. Therefore, you are encouraged to read carefully the merger agreement, the merger proposal and the explanatory memorandum, in their entirety. The representations and warranties described below and included in the merger agreement were made by each of ArcelorMittal and Arcelor to the other. These representations and warranties were made as of specific dates. In addition, these representations and warranties may have been included in the merger agreement in order to allocate risk between ArcelorMittal and Arcelor rather than to establish matters as facts. If material facts exist that contradict the representations or warranties in the merger agreement, these will be disclosed elsewhere in this prospectus and as such, you should read the information provided elsewhere in this prospectus and in the documents incorporated by reference into this prospectus for information regarding ArcelorMittal and Arcelor and their respective businesses. See Documents on Display. Structure of the Merger Upon the terms and subject to the conditions set forth in the merger proposal and the explanatory memorandum, at the effective time of the merger, ArcelorMittal will merge into Arcelor, by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal. The merger constitutes the second step of the combination of Mittal Steel and Arcelor into a single legal entity governed by Luxembourg law. In the first step, Mittal Steel merged into ArcelorMittal, by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel. After a vote of the shareholders of Mittal Steel at an extraordinary general meeting held on August 28, 2007 and a resolution of the sole shareholder of ArcelorMittal taken on August 28, 2007, this merger became effective on September 3, 2007 and the combined company was named ArcelorMittal. Merger Consideration Issuance of Arcelor Shares. In the merger, a holder of ArcelorMittal shares will receive one newlyissued Arcelor share for every one ArcelorMittal share, which is referred to as the Exchange Ratio. The Arcelor shares to be issued in the merger will be created under Luxembourg law and will have the same rights as the post-restructuring Arcelor shares as set forth in Arcelors articles of association and Luxembourg law, provided however that the newly-issued shares shall be entitled only to dividends declared by Arcelor after the effective date of the merger. Specifically, the newly-issued shares will not be entitled either to (i) the last installment of the dividend decided by the annual general meeting of Arcelor held on April 27, 2007 ($0.325 per share before the share capital restructuring described on page 190; $0.284375 after such restructuring), or (ii) the additional $0.040625 per post-restructuring Arcelor share which distribution will be proposed to the general meeting of Arcelor called to approve the second-step merger, which in the aggregate represents a dividend of $0.325 per post-restructuring Arcelor share. Conversely, as a result of the second-step merger, Arcelor will assume ArcelorMittals obligation to pay the last installment of the quarterly dividend decided by the ordinary general meeting of Mittal Steel on June 12, 2007, which, in light of the exchange ratio of the first-step merger and the second-step, will represent $0.325 per Arcelor share newly-issued in the merger. Therefore, on or about December 15, 2007, each Arcelor share (whether issued in the second-step merger or previously issued) will be entitled to a dividend payment of $0.325. Cancellation of ArcelorMittal Shares Held by ArcelorMittal. ArcelorMittal shares held in treasury by or for the account of ArcelorMittal or Arcelor will disappear in the merger pursuant to Luxembourg law. Arcelor will not issue any shares in consideration of such ArcelorMittal shares held in treasury by or for the account of ArcelorMittal or Arcelor. 237

Cancellation of Arcelor Shares Held by ArcelorMittal. Each Arcelor share held by ArcelorMittal and transferred to Arcelor pursuant to the merger will be cancelled upon the effective time of the merger pursuant to a resolution of the Arcelor shareholders taken at the same time that the Arcelor shareholders shall adopt, among other items, the decision to merge. Delivery of the Arcelor Shares. Upon effectiveness of the merger, holders of ArcelorMittal shares will automatically receive newly-issued Arcelor shares in accordance with the Exchange Ratio and on the basis of their respective holdings as entered in the ArcelorMittal shareholder registry (registre des actionnaires) or their respective securities accounts. Holders of ArcelorMittal shares whose shares are registered directly in ArcelorMittals local Dutch shareholder registry or directly on the Luxembourg shareholder registry without being held on a local shareholder registry will automatically receive newly-issued Arcelor shares through an entry in the relevant shareholder registry (registre des actionnaires) of Arcelor. Holders of ArcelorMittal shares whose shares are registered directly in ArcelorMittals local New York shareholder registry will receive information about how to exchange their share certificates to receive a Direct Registration Transaction Advice evidencing their entry in the Arcelor shareholder registry. Holders of ArcelorMittal shares whose shares are registered indirectly, that is through a book-entry system, in ArcelorMittals local Dutch, Luxembourg or local New York shareholder registry, will automatically receive newly-issued Arcelor shares through a credit to their respective securities accounts. Holders of ArcelorMittal shares will receive the Arcelor shares in the same form and registry as they hold their ArcelorMittal shares, that is holders of ArcelorMittal shares whose shares are registered directly in ArcelorMittals local Dutch shareholder registry will receive Arcelor shares registered directly in Arcelors local Dutch shareholder registry. Stock Options. The merger proposal provides that for each option to purchase or subscribe for ArcelorMittal shares granted under employee and director stock plans of ArcelorMittal (including those held by directors and senior management) option holders will receive one option of Arcelor, giving the holder the right to acquire, or subscribe, as the case may be, for one Arcelor share, at an exercise price equal to the exercise price of the corresponding ArcelorMittal option, on terms and conditions otherwise similar to those governing the ArcelorMittal options prior to the effective time of the merger (subject to any changes necessary to reflect the effectiveness of the merger). Corporate Governance Matters See Management and Employees for a description of the corporate governance and certain related matters of Arcelor and ArcelorMittal. Representations and Warranties The merger agreement contains representations and warranties by Arcelor relating to the following matters, subject to the exceptions described in the merger agreement: the organization, valid existence, good standing and qualification to do business of Arcelor; Arcelors capital structure; Arcelors corporate authorization and the validity of the merger agreement; and the absence of any governmental registration, filing, notification or approval necessary for the execution of the merger agreement.

The merger agreement contains representations and warranties by ArcelorMittal relating to the following matters, subject to the exceptions described in the merger agreement: the organization, valid existence, good standing and qualification to do business of ArcelorMittal; ArcelorMittals capital structure; ArcelorMittals corporate authorization and the validity of the merger agreement; and the absence of any governmental registration, filing, notification or approval necessary for the execution of the merger agreement. 238

Some of ArcelorMittals and Arcelors representations and warranties are qualified as to materiality or material adverse effect. When used with respect to a party, material adverse effect means any exceptional event or circumstance relating to that party, or any action taken by that party (in either case other than as a result of the terms of the merger agreement or the actions of the other party) that, in either case, materially alters the substance of the relevant party or substantially affects the economics of the merger. The representations and warranties made by ArcelorMittal and Arcelor are qualified in respect of information publicly disclosed. Covenants and Agreements Conduct of ArcelorMittal. ArcelorMittal has agreed that until the earlier of the effective date of the merger or the termination of the merger agreement, except as expressly described in the merger agreement, (a) ArcelorMittal will conduct its business, and will cause its subsidiaries to conduct their businesses, only in, and ArcelorMittal will not take, and will cause its subsidiaries not to take, any action except in, the ordinary course of business and in a manner consistent with past practice, and (b) ArcelorMittal will use its best efforts to preserve substantially intact its current business organization and the business organization of its subsidiaries. Conduct of Arcelor. Arcelor has agreed that until the earlier of the effective time of the merger or the termination of the merger agreement, except as expressly described in the merger agreement, (a) Arcelor will conduct its business, and will cause its subsidiaries to conduct their businesses, only in, and Arcelor will not take, and will cause its subsidiaries not to take, any action except in, the ordinary course of business and in a manner consistent with past practice, and (b) Arcelor will use its best efforts to preserve substantially intact its current business organization and the business organization of its subsidiaries. Proxy Statement and Registration Statements. ArcelorMittal and Arcelor have agreed to cooperate in connection with the preparation of the ArcelorMittal proxy statement contained in the prospectus included in the registration statement on Form F-4, the merger proposal, the explanatory memorandum and this prospectus to be delivered to or put at the disposal of ArcelorMittal shareholders in connection with the ArcelorMittal shareholders meeting and other necessary corporate documents related to that meeting and the registration statement on Form F-4 to register the Arcelor shares. Each party has further agreed to notify promptly the other party of the receipt of any comments from any governmental body, court or authority with respect to any of these documents and to allow the other party with a reasonable opportunity to review and comment on any amendment to these documents prior to the filing of the amendment with any governmental body or authority. ArcelorMittal and Arcelor have further agreed that no amendment or supplement to any of these documents will be filed without the approval of both ArcelorMittal and Arcelor, which approval will not be unreasonably withheld or delayed. Auditors Merger Reports. ArcelorMittal has agreed to ensure that independent auditors are appointed to review, certify and report on the merger proposal and the explanatory memorandum, and, in particular, the Exchange Ratio, as required pursuant to Luxembourg law. Arcelor has agreed to ensure that independent auditors are appointed to review, certify and report on the merger proposal and the explanatory memorandum, and, in particular, the Exchange Ratio, as required pursuant to Luxembourg law. Merger Proposal and Explanatory Memorandum. ArcelorMittal and Arcelor have agreed that, as soon as possible following the availability of the auditors merger reports, the merger proposal and the explanatory memorandum, together with the appropriate documents pursuant to Luxembourg law, will be published or made available in accordance with the applicable provisions of Luxembourg law. Access to Information. Until the effective time of the merger, ArcelorMittal will, and will cause its subsidiaries to, provide to Arcelor and Arcelors representatives reasonable access at reasonable times upon prior notice to the officers, employees, agents, properties, offices and other facilities of ArcelorMittal and its subsidiaries and to the books and records thereof in order to conduct whatever investigations Arcelor deems necessary. Until the effective time of the merger, Arcelor will provide to ArcelorMittal and ArcelorMittals representatives reasonable access at reasonable times upon prior notice to the officers, employees, agents, properties, offices and other facilities of Arcelor and to the books and records thereof in order to conduct whatever investigations ArcelorMittal deems necessary. All information obtained by either of the parties and their respective representatives pursuant to any such investigations will be kept confidential in accordance with 239

the terms of the merger agreement. No investigation will affect any representation or warranty in the merger agreement or any condition to the obligations of the parties under the merger agreement. Tax Treatment. Arcelor will apply for an advance tax agreement from the Luxembourg tax authorities to confirm that the merger of ArcelorMittal into Arcelor will not attract any capital tax under Article 4-1 of the law of December 29, 1971, as amended. In addition, Arcelor will apply for an advance tax agreement from the Luxembourg corporate tax authorities to confirm that the merger of ArcelorMittal into Arcelor will not attract any major adverse Luxembourg corporate tax (impt sur le revenu des collectivits, impt commercial communal) consequences. Public Announcements. ArcelorMittal and Arcelor have agreed to use their best efforts to develop a joint communications plan, and each will use its best efforts to ensure that all press releases and other public statements with respect to the merger agreement and the transactions contemplated by the merger agreement will be consistent with that plan. ArcelorMittal and Arcelor have agreed to consult with each other before issuing any press release or other public statement with respect to the merger agreement and the transactions contemplated by the merger agreement and will not issue any such press release or public statement prior to that consultation, unless otherwise required by applicable law or by obligations pursuant to any listing agreement with, or rules of, any securities exchange. In addition, except to the extent disclosed in or consistent with this prospectus and the prospectus included in the registration statement on Form F-4, neither ArcelorMittal nor Arcelor will issue any press release or otherwise make any public statement or disclosure concerning the other party or the other partys business, financial condition or results of operations without the consent of the other party, which consent will not be unreasonably withheld or delayed. Notice. Each of ArcelorMittal and Arcelor has agreed to give prompt notice to the other party of (a) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which could reasonably be expected to cause any of its representations or warranties contained in the merger agreement to be untrue or inaccurate in any material respect and (b) any failure by it to comply with or satisfy any covenant or agreement to be complied with or satisfied by it in the merger agreement; provided, however, that the delivery of any such notice will not limit or otherwise affect the remedies available hereunder to the party receiving such notice. Best Efforts. ArcelorMittal and Arcelor have agreed to use their best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws or otherwise to consummate and make effective the merger, including using their best efforts to obtain all consents, approvals, authorizations, qualifications and orders of all third parties necessary for the consummation of the merger and to fulfill the conditions precedent to the effectiveness of the merger. If at any time after the effective time of the merger any further action is necessary or desirable to carry out the purposes of the merger agreement, the proper officers and directors of each of ArcelorMittal and Arcelor will use their best efforts to take all such action. In addition, ArcelorMittal and Arcelor have agreed to use all reasonable efforts to cause the merger to be consummated not later than December 31, 2007. Admission to Trading and Listing of Arcelor Shares. Arcelor has agreed to use its best efforts (a) to have the admission to trading on the regulated market of the Luxembourg Stock Exchange and listing on the Official List of the Luxembourg Stock Exchange of Arcelor shares approved by the Luxembourg Commission du Surveillance du Secteur Financier (for the required prospectus) and the Luxembourg Stock Exchange (for the admission to listing) , (b) to have the application for listing of the Arcelor shares issued in the merger on the Official List of the Luxembourg Stock Exchange, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext and the exchanges of Barcelona, Bilbao, Madrid and Valencia approved by these respective exchanges and (c) to have the application for the admission to trading and listing of the existing and newlyissued Arcelor shares on Euronext Amsterdam by NYSE Euronext and the New York Stock Exchange approved by these respective exchanges. Delisting of ArcelorMittal Shares. Upon effectiveness of the merger, the ArcelorMittal shares will no longer be listed on the NYSE and ArcelorMittal shares will no longer be admitted to trading and will be delisted from Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the Spanish exchanges and will no longer be admitted to trading on the Luxembourg Stock Exchanges regulated market and no longer be listed on the Official List of the Luxembourg Stock Exchange. Expenses. Each of ArcelorMittal and Arcelor will bear its own expenses in connection with the merger.

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Conditions to Effectiveness of the Merger The obligations of ArcelorMittal and Arcelor to complete the merger are subject to the satisfaction or waiver, where legally permissible, of the following conditions: the decision to merge as contemplated by the merger proposal and the explanatory memorandum will have been adopted by the requisite affirmative vote of the shareholders of ArcelorMittal; the following will have been approved by the vote of the shareholders of Arcelor: the completion of a share capital restructuring of Arcelor pursuant to which each 7 pre-capital restructuring shares of Arcelor would be exchanged for 8 post-capital restructuring shares of Arcelor, as more fully described under The Merger Pre-Merger Restructuring of the Share Capital of Arcelor; the increase of the share capital of Arcelor by incorporation of free reserves without issuing new shares, but by increasing the par value of the shares in order to round up the par value of the post-capital restructuring shares of Arcelor to the immediately higher euro cent; the decision of Arcelor to distribute an additional dividend of $0.040625 per post-share capital restructuring Arcelor share, payable simultaneously with the last installment of the dividend decided by the ordinary general meeting of Arcelor on April 27, 2007, so that each post-share capital restructuring Arcelor share (other than those issued in the second-step merger) will be entitled to a dividend payment of $0.325 on or about December 15, 2007; the decision to create an authorized share capital and authorize the Board of Directors of Arcelor to issue Arcelor shares within the limits of the authorized share capital for delivery upon exercise or conversion, as applicable, of Arcelor stock options and other equity-based awards granted under any Arcelor employee incentive or benefit plan and to limit or cancel the preferential subscription right of the existing shareholders; the amendment of Arcelors articles of association and adoption of an English language version and the change of the binding language of the articles of association from French to English; the decision to merge as contemplated by the merger proposal and the explanatory memorandum; the decision to issue the Arcelor shares in the merger; the decision to cancel, upon the effectiveness of the merger, the Arcelor shares, except the fractions of Arcelor shares, if any, that will be transferred by ArcelorMittal to Arcelor pursuant to the merger; the decision to issue Arcelor stock options in the merger in exchange for the ArcelorMittal stock options;

this prospectus will have been approved by the Luxembourg Commission de Surveillance du Secteur Financier, or the CSSF, and a copy of that approval will have been notified by the CSSF to the competent securities regulator in Belgium, France, The Netherlands and Spain and any other relevant competent securities regulator in the European Union and no actions by third parties challenging the CSSFs approval shall be pending or threatened before the competent Luxembourg courts and the CSSF shall not have withdrawn or threatended to withdraw its approval; the registration statement on Form F-4 will have been declared effective by the U.S. SEC under the U.S. Securities Act and no stop order suspending the effectiveness of the registration statement on Form F-4 will be in effect and no proceedings for such purpose will be pending before, or threatened by, the U.S. SEC;

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the Arcelor shares issued in the merger will have been (provisionally) admitted to trading and listing on Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext and the Spanish exchanges as well as admitted to trading on the regulated market of the Luxembourg Stock Exchange and listed on the Official List of the Luxembourg Stock Exchange and admitted to trading and listing on Euronext Amsterdam by NYSE Euronext and the NYSE; the existing and newly-issued Arcelor shares will have been (provisionally) admitted to trading and listing on Euronext Amsterdam by NYSE Euronext and the NYSE (subject to official notice of issuance); and there will be no action, litigation or proceeding by any court or person, instituted or pending, or statute, rule, regulation, injunction, order or decree by any court or person issued or deemed to be applicable to the merger, that seeks to prohibit or restrain the merger or seeks a divestiture of any ArcelorMittal shares or Arcelor shares (including any shares issued in the merger) or limitation on the ownership rights of ArcelorMittal over the assets and liabilities of ArcelorMittal that are transferred to ArcelorMittal upon effectiveness of the merger that would reasonably be expected to have a material adverse effect, as such concept is defined in the merger agreement.

Termination The merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time of the merger by the mutual written consent of ArcelorMittal and Arcelor. If any of the conditions precedent to the effectiveness of the merger have not been satisfied or waived, where legally permissible, by December 31, 2007, either party may terminate the merger agreement upon written notice to the other party; provided that the right to terminate the merger agreement will not be available to the party whose failure to fulfill any condition precedent under the merger agreement has been the cause of, or resulted in, the failure of the satisfaction of that condition precedent to occur on or before December 31, 2007. If no such written notice is sent, the merger agreement will remain in full force and the parties may agree to either consider such condition precedent waived or amend the merger agreement. Effect of Termination If the merger agreement is terminated and the merger is abandoned as described in Termination above, there shall be no liability on the part of any party to the merger agreement, other than (a) as set forth in Section 13.2(a) of the merger agreement and (b) any liability resulting from any breach of a partys representations, warranties, covenants or agreements contained in the merger agreement prior to its termination. In addition, certain of ArcelorMittal and Arcelors obligations under the merger agreement will survive the termination of the merger agreement. No Rescission ArcelorMittal and Arcelor have waived to the greatest extent legally possible their respective rights to rescind (rsoudre) or demand in legal proceedings the rescission (rsolution) of the merger agreement pursuant to Luxembourg law. Amendment and Waiver The merger agreement may not be amended except by a written instrument duly executed by each of ArcelorMittal and Arcelor. At any time prior to the effective time of the merger, either ArcelorMittal or Arcelor may (a) extend the time for the performance of any obligation or other act of the other party, (b) waive any inaccuracy in the representations and warranties of the other party contained in the merger agreement or in any document delivered pursuant to the merger agreement and (c) waive compliance with any agreement of the other party or any condition to its own obligations contained in the merger agreement. Any such extension or waiver will be valid only if set forth in an instrument in writing signed by the party to be bound thereby.

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MATERIAL CONTRACTS AND RELATED PARTY TRANSACTIONS Arcelor There are no significant transactions between Arcelor and its affiliates. Transactions between the company and its subsidiaries are disclosed in ArcelorMittals financial statements. See Note 25 of Arcelors 2006 Consolidated Financial Statements, Note 24 of Arcelors 2005 Consolidated Financial Statements and Note 24 of Arcelors 2004 Consolidated Financial Statements. ArcelorMittal There are no significant transactions between ArcelorMittal and its affiliates. Transactions between the company and its subsidiaries are disclosed in ArcelorMittals financial statements. These transactions included the charge-out of management fees and interest on intercompany financing. ArcelorMittal engages in certain commercial and financial transactions with related parties, all of which are affiliates and joint ventures of ArcelorMittal. Except as disclosed in this section, neither ArcelorMittal nor Arcelor is aware of any conflict of interest between the private interests or other duties of the members of ArcelorMittal or Arcelors Board of Directors and their duties and responsibilities to ArcelorMittal or Arcelor. Shareholders Agreement The Significant shareholder and Mittal Steel, as the predecessor entity to ArcelorMittal, entered into a shareholder and registration rights agreement (the Shareholders Agreement). The Shareholders Agreement contains provisions relating to demand U.S. registration rights, piggy-back rights and lockups, among others. The Shareholders Agreement previously contained certain transfer restrictions on the Mittal Steel class B common shares which are no longer applicable following the merger of Mittal Steel into ArcelorMittal as all class B common shares disappeared in that merger. Memorandum of Understanding between Mittal Steel, Arcelor and the Significant Shareholder The following summarizes certain provisions of the Memorandum of Understanding that remain in effect other than those relating to the Offer, the post-Offer merger and corporate governance aspects, the latter of which are summarized under Management and EmployeesMittal Steel / Arcelor Memorandum of Understanding below. In the summary below, references to the Company refer to each of Mittal Steel and Arcelor pre-merger, and to the parent company in Mittal Steel following the two-step merger process whereby Mittal Steel merges with and into Arcelor. Confirmation of Social Commitments Mittal Steel agreed to respect fully all of Arcelors commitments regarding employment and other social and human relations policies. Under the Memorandum of Understanding, Mittal Steel and Arcelor agreed that there will be no restructuring plan, collective lay-offs or other employee reduction plan within Arcelor in the European Union as a result of the integration of Mittal Steel and Arcelor, other than in connection with (i) Arcelors previously-announced restructuring plans and (ii) the remedy package agreed by Mittal Steel with the European Commission. Independence of the Company The parties to the MOU agreed that, during the Initial Term (that is, from August 1, 2006 until August 1, 2009), the Significant shareholder will not increase its representation on the Companys Board of Directors to attempt to remove a director (other than a director appointed by it) or attempt to make any change to the composition or size of the Companys Board of Directors. After the end of the Initial Term, and subject to the provisions of the articles of association, the Significant shareholder will be entitled to representation on the Companys Board of Directors in proportion to its shareholding. 243

Related Party Transactions The parties to the MOU have agreed that any transaction between the Company (including any of its subsidiaries) and its directors or any of its affiliates will be conducted on an arms length basis and, if material, require approval of the independent directors. The Companys Board of Directors will be entitled to request the assistance of expert advisers as it deems necessary and appropriate from time to time in connection with any key strategic decision. Standstill The Significant shareholder agreed not to acquire, directly or indirectly, ownership or control of an amount of shares in the capital stock of the Company exceeding the percentage of shares in the Company that it will own or control following completion of the Offer and any subsequent offer or compulsory buy-out, except with the prior written consent of a majority of the independent directors on the Companys Board of Directors. Any shares acquired in violation of this restriction will be deprived of voting rights and shall be promptly sold by the Significant shareholder. Notwithstanding the above, if (and whenever) the Significant shareholder holds, directly and indirectly, less than 45% of the then-issued Company shares, the Significant shareholder may purchase (in the open market or otherwise) Company shares up to such 45% limit. In addition, the Significant shareholder is also permitted to own and vote shares in excess of the threshold mentioned in the immediately preceding paragraph or the 45% limit mentioned above, if such ownership results from (a) subscription for shares or rights in proportion to its existing shareholding in the Company where other shareholders have not exercised the entirety of their rights or (b) a reduction of the number of Company shares (for example, through self-tender offers or share buy-backs) if the decisions to implement such measures were taken at a shareholders meeting in which the Significant shareholder did not vote or by the Companys Board of Directors with a majority of independent directors voting in favor. Finally, the Significant shareholder is also permitted to own and vote shares in excess of the threshold mentioned in the immediately preceding paragraph or the 45% limit mentioned above if it acquires the excess shares in the context of a takeover bid by a third party and (i) a majority of the independent directors of the Companys Board of Directors consents in writing to such acquisition by the Significant shareholder or (ii) the Significant shareholder acquires such shares in an offer for all of the shares of the Company. Lock-up During the five-year period following the settlement date of the Offer, the Significant shareholder has agreed not to transfer (and to cause its affiliates not to transfer) directly or indirectly any of the shares in the Company that it holds without the approval of a majority of the independent directors of the Company, other than in connection with (i) an acquisition proposal by a third party recommended by the majority of the independent directors of the Company or (ii) the tender of shares by the Significant shareholder in a self-tender offer by the Company. As an exception to the foregoing, during the period from the second anniversary of the settlement date of the Offer until the end of the above-referenced five-year lock-up period, the Significant shareholder may sell an amount of shares not exceeding 5% of the Companys then-outstanding share capital without the consent of a majority of the Companys independent directors. The above standstill and lock-up undertakings will cease to have effect if the Significant shareholder no longer owns or controls at least 15% of the Companys outstanding share capital. Non-compete For so long as the Significant shareholder holds at least 15% of the outstanding shares of the Company or has representatives on the Companys Board of Directors or Group Management Board, the Significant shareholder and its affiliates will not be permitted to invest in, or carry on, any business competing with the Company, except for PT. Ispat Indo.

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MANAGEMENT AND EMPLOYEES Board of Directors The following table sets forth the current members of the ArcelorMittal Board of Directors. Each of the members of the ArcelorMittal Board of Directors was appointed by the shareholders decision of August 28, 2007 in connection with the approval of the first-step merger. The composition of Arcelors Board of Directors, which will not change following the completion of the merger, is identical except with regard to the roles of Chairman and President, as discussed below.
Name Age(4) Term Expiration Position with ArcelorMittal

Lakshmi N. Mittal Joseph J. Kinsch(2)(3) Vanisha Mittal Bhatia Narayanan Vaghul Wilbur L. Ross Lewis B. Kaden
(1)(3) (1)(3) (2)(3)

56 73 26 70 69 64 70
(1)(3

2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010

Chairman of the Board of Directors and Chief Executive Officer President of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors

Franois H. Pinault(3) Jos Rmon lvarez Rendueles Sergio Silva de Freitas Georges Schmit Edmond Pachura
(1)(3) (3) (3) (2)(3)

66 63 53 72 59 60 58 61 43
(3)

Michel Angel Marti Jean-Pierre Hansen John Castegnaro(3) Antoine Spillmann

Manuel Fernndez Lpez

(2)(3)

HRH Prince Guillaume de Luxembourg Romain Zaleski

(1) Audit Committee

43 73

(2) Appointments, Remuneration and Corporate Governance Committee (3) Independent director (4) Age as of December 31, 2006.

The business address of each of the members of the Board of Directors is ArcelorMittals registered office at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg (which is the same registered office as Arcelor). The composition of the Arcelor (which will be renamed ArcelorMittal) Board of Directors is identical to that of the ArcelorMittal Board of Directors except that Mr. Joseph Kinsch is the Chairman of the Arcelor Board and Mr. Lakshmi N. Mittal is the President of the Arcelor Board. The Arcelor Board of Directors will remain the same following the consummation of the merger. Lakshmi N. Mittal, 56, is the President of the Board of Directors and Chief Executive Officer of Arcelor and is Chairman of the Board of Directors and Chief Executive Officer of ArcelorMittal. He is the founder of Mittal Steel and has been responsible for its strategic direction and development. He is also a nonexecutive director of Mittal Steel South Africa, an executive committee member of the International Iron and Steel Institute, a member of the Foreign Investment Council in Kazakhstan, the International Investment Council in South Africa, the World Economic Forums International Business Council, a director of ICICI Bank Ltd. 245

and is on the Advisory Board of the Kellogg School of Management in the United States. At the end of 2006, Mr. Mittal was named Man of the Year by the Financial Times, Business Person of 2006 by The Sunday Times, Gewinner 2006 for Die Welt, and Newsmaker of the Year by Time magazine. Mr. Mittal was awarded Fortune magazines European Businessman of the Year 2004 and was named Entrepreneur of the Year by The Wall Street Journal in 2004. He was previously named Steel Maker of the Year in 1996 by New Steel, a leading industry publication, and was awarded the 8th honorary Willy Korf Steel Vision Award, the highest recognition for worldwide achievement in the steel industry. The award was presented by American Metal Market and World Steel Dynamics. Mr. Mittal has been chosen for the 2007 Dwight D. Eisenhower Global Leadership Award. Joseph Kinsch, 73, has been the Chairman of the Board of Directors of Arcelor since 2002. He is currently President of the Board of Directors of ArcelorMittal. He has been Chairman of the Appointments and Remunerations Committee of Arcelor since 2002. At the helm of Luxembourg-based steelmaker Arbed, he has been one of the key consolidators in the global steel industry in recent decades, first by reshaping Arbeds strategy and steering its growth, notably in Europe and Brazil, then by assuming a significant role in the threeway merger of European steel companies which resulted in Arcelor, and recently by negotiating the merger between Arcelor and Mittal Steel. Mr. Kinsch joined Arbed in 1961 at its Burbach (Saar, Germany) plant. A year later, he moved to the companys headquarters in Luxembourg. There, he held various financial (accounting and finance) and industrial (steel-processing) positions. In 1975, he was named Director of Accounting and Finance, then head of steel processing firms in 1978. He joined the Arbed management board in 1985 and was named Chief Executive Officer in 1992 and Chairman of the Board of Directors in 1993. In 1998, he withdrew from daily management, but retained his position as Chairman. In 2002, at the creation of Arcelor, he was chosen to chair the Board of Directors of the new company. Mr. Kinsch is also Prsident honoraire of the Union of Luxembourg Enterprises, Prsident honoraire of the Chamber of Commerce of the Grand-Duchy of Luxembourg and Honorary Consul of Brazil in Luxembourg. He holds a Masters degree in Economics and is a Doctor of Humane Letters, honoris causa, from the Sacred Heart University of Luxembourg. Vanisha Mittal Bhatia, 26, was appointed as a member of the LNM Holdings Board of Directors in June 2004. Mrs. Vanisha Mittal Bhatia was appointed to Mittal Steels Board of Directors in December 2004. She has a Bachelor of Arts degree in Business Administration from the European Business School and has completed corporate internships at Mittal Shipping Limited, Mittal Steel Hamburg GmbH and an Internet-based venture capital fund. She is the daughter of Mr. Lakshmi N. Mittal. Narayanan Vaghul, 70, has 49 years of experience in the financial sector and has been the Chairman of Industrial Credit and Investment Corporation of India Limited for 16 years and of ICICI Bank Ltd. for the last two years. Prior to that, he was Chairman of the Bank of India and Executive Director of the Central Bank of India. He was chosen as the Businessman of the Year in 1992 by Business India, a leading Indian publication, and has served as a consultant to the World Bank, the International Finance Corporation and the Asian Development Bank. Mr. Vaghul was also a visiting Professor at the Stern Business School at New York University. Mr. Vaghul is Chairman of the Indian Institute of Finance Management & Research and is also a board member of various other companies, including Wipro Limited, Mahindra & Mahindra Limited, Nicholas Piramal India Limited, Apollo Hospitals Limited and Himatsingka Seide Limited. Wilbur L. Ross, Jr., 69, has served as the Chairman of the ISG Board of Directors since ISGs inception. Mr. Ross is the Chairman and Chief Executive Officer of WL Ross & Co. LLC, a merchant banking firm, a position he has held since April 2000. Mr. Ross is also the Chairman and Chief Executive Officer of WLR Recovery Fund L.P., WLR Recovery Fund II L.P., Asia Recovery Fund, Asia Recovery Fund CoInvestment, Nippon Investment Partners and Absolute Recovery Hedge Fund. Mr. Ross is also the general partner of WLR Recovery Fund L.P., WLR Recovery Fund II L.P., Asia Recovery Fund, and Absolute Recovery Hedge Fund. Mr. Ross is also Chairman of Ohizumi Manufacturing Company in Japan, Chairman of International Textile Group, International Coal Group and Marquis Whos Who, Inc. in the United States, and Chairman of Insuratex, Ltd. in Bermuda. Mr. Ross is a board member of the Turnaround Management Association and Nikko Electric Co. in Japan, Tong Yang Life Insurance Co. in Korea, and Syms Corp., Clarent Hospital Corp. and News Communications Inc. in the United States. He is also Director of IAC Acquisition Corporation, Ltd. in the United Kingdom, Compagnie Europenne de Wagons SARL in Luxembourg, Oxford Automotive in Denmark and Safety Components International in the United States. He is Director of the Japan Society and of the Yale School of Management. Mr. Ross is also a member of the Business Roundtable. Previously, Mr. Ross served as the Executive Managing Director at Rothschild Inc., an investment banking firm, from October 1974 to March 2000. Mr. Ross was also Chairman of the Smithsonian Institution National Board.

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Lewis B. Kaden, 64, has approximately 38 years of experience in corporate governance, dispute mediation, labor and employment law and economic policy. He is currently Vice Chairman and Chief Administrative Officer of Citigroup Inc. Prior to that, he was a partner at the law firm of Davis Polk & Wardwell, and served as counsel to the Governor of New Jersey, as a Professor of Law at Columbia University and as director of Columbias Center for Law and Economic Studies. He served as a director of Bethlehem Steel Corporation for ten years and is currently Chairman of the Board of Directors of the Markle Foundation. He is a member of the Council on Foreign Relations and the moderator of the Business-Labor Dialogue. Mr. Kaden is a graduate of Harvard College and of Harvard Law School. He was the John Harvard Scholar at Emmanuel College, Cambridge University. Franois H. Pinault, 70, is the founder and former president of the Artemis Group and PPR. The Artemis Group is a 25 billion global investment holding company with wide-ranging interests, including 42% of the listed company PPR. PPR includes retail brands, such as FNAC, La Redoute, Le Printemps and Conforama, and luxury brands, such as Gucci Group, which includes Gucci, Bottega Veneta, Yves Saint Laurent, Boucheron and Balenciaga. Artemis also owns Chateau Latour vineyard in France and Christies auction house. Mr. Pinault also owns insurance and media businesses and holds minority shares in the French group Bouygues. Mr. Pinault serves on the Board of Directors of Financire Pinault and Artemis. Jos Ramn lvarez Rendueles, 66, is Vice-Chairman of the Board of Directors and President of the Audit Committee of Arcelor. He has extensive experience in the financial, economic and industrial sectors. He was former Governor of the Bank of Spain and President of the Bank Zaragozano. He is President of the Board of Directors of Arcelor Espaa, Peugeot Espaa and Pirelli Espaa. He is also a professor of public finance at the Universidad Autnoma de Madrid, the President of the Prince of Asturias Foundation and a Director of Gestavison Telecinco S.A. Sergio Silva de Freitas, 63, has 40 years of experience in the financial sector. He is President of the Board of Directors and of the Audit, Appointments and Remunerations Committees of Arcelor Brasil. After several years spent in high-ranking positions in important financial institutions in London and in Washington, he became Senior Vice-President of Banco Ita and is now a member of the International Advisory Board of Banco Ita, Sao Paulo, Brazil. He has a bachelors degree in Electrical Engineering from Escola Nacional de Engenharia da Universidade Brasil. Georges Schmit, 53, is a member of the Board of Directors of ArcelorMittal and Arcelor as a representative of the Luxembourg State. He is Director General at the Ministry of the Economy and Foreign Trade and a Member of the Board of Economic Development of the Grand-Duchy of Luxembourg. He is also Vice-Chairman of the Socit Nationale de Crdit et dInvestissement (SNCI) and of the Entreprise des Postes et Tlcommunications, Luxembourg and a Director of SES Global S.A., Banque et Caisse dEpargne de lEtat, Luxembourg and Paul Wurth S.A. Since 2000, he has been the representative of Luxembourg on the Enterprise Policy Group, an advisory body to the European Commission. Mr. Schmit holds a Master of Arts degree in Economics from the University of Michigan. Edmond Pachura, 72, has 40 years of experience in the industrial sector. He is Chairman of the Union des Ngociants en Aciers Spciaux (UNAS), Paris. Previously, he was a Director of Renault and the CEO of Sollac. Mr. Pachura has also been a member of the Board of Directors of Charbonnages de France since 1997 and of the SNCF (Socit Nationale des Chemins de Fer) since 1998. Michel Angel Marti, 59, is a member of the Board of Directors of ArcelorMittal and Arcelor as a representative of the employees. He is a former Secretary of the Confderation Franaise Dmocratique du Travail (CFDT) union, Broye, France. Manuel Fernndez Lpez, 60, is a member of the Board of Directors of ArcelorMittal and Arcelor as a representative of the employees. He is also Secretary General of the Metal, Construccin y Afines de UGT union, Federacin Estatal (M.C.A.-U.G.T.), Madrid, Spain. Jean-Pierre Hansen, 58, is a member of the Board of Directors of ArcelorMittal and Arcelor as a representative of the Wallonia region. He is also Vice-Chairman of the Executive Committee and Senior Executive Vice-President of SUEZ, with responsibility for Operations. He entered the electricity and gas sector in 1975. Since January 1, 2005, Mr. Hansen has been Vice-Chairman and CEO of Electrabel, a role he previously held from 1992 to March 1999. Since March 1999, he has also held the position of Chairman of the Executive Committee of Electrabel. He is also CEO of SUEZ-Tractebel, Chairman of Fabricom and Director of Distrigas, Fluxys, AGBAR and ACEA, Vice-Chairman of the Federation of Enterprises in Belgium, and 247

associate professor of economics at the UCL and at the Ecole Polytechnique (Paris). Mr. Hansen holds a masters degree in electrical engineering, a degree in economics and a doctorate in engineering. John O. Castegnaro, 61, is a member of the ArcelorMittal and Arcelor Board of Directors and has been a member of the Board of Directors of Arcelor as a representative of the employees since 2002. He is a member of the Luxembourg Parliament and Honorary Chairman of trade-union Onhofhngege Gewerkschaftsbond Ltzebuerg (OGB-L). Antoine Spillmann, 43, is a member of the Board of Directors of ArcelorMittal and Arcelor as a representative of Corporacin JMAC B.V. After several years spent in different banks, mainly in the United Kingdom, he is now Asset Manager and executive partner at the firm Bruellan, an asset management company based in Geneva. H.R.H. Prince Guillaume de Luxembourg, 43, is a member of the Board of Directors of ArcelorMittal and Arcelor. He worked for six months at the International Monetary Fund in Washington and spent two years at the Commission of European Communities in Brussels. He studied at Oxford University in the United Kingdom and graduated from Georgetown University in the United States. Romain Zaleski, 73, graduated from the Ecole Polytechnique and from the Ecole des Mines de Paris (Mining School). He then served as a technical consultant in the public service, in particular at the Ministry of Industry. After leaving the public service, he was appointed as a managing director in several groups related to industry and to banking. In 1984, he settled in Italy and dedicated himself to the reorganization and the development of the Carlo Tassara SpA group, a leading group operating in the sectors of heavy industry, steel industry, ironworks, metallurgy and production of electric power. He led the Carlo Tassara group to its current position, with the holding of interests in the banking sector in Mittel, Banca Intesa, Banca Lombarda and Generali, as well as in the industrial sector, in Eramet and ArcelorMittal. A managing director of the Carlo Tassara group and of Banca Lombarda, one of the top ten Italian banks, from 2003 to 2005, Mr. Zaleski was also chairman of Italenergia Bis, a holding company of the Edison Group, the second largest producer of electric power in Italy. Senior Management The current members of ArcelorMittal and Arcelors senior management, who will remain in their roles after effectiveness of the merger with ArcelorMittal, are as set forth below, along with each members age and position:
Name Age(1) Position

Bhikam Agarwal Alain Bouchard Vijay Bhatnagar Jose Armando Campos Narendra Chaudhary Davinder Chugh Christophe Cornier Philippe Darmayan Bernard Fontana Jean-Yves Gilet Pierre Gugliermina Sudhir Maheshwari

54 60 59 58 62 50 54 54 45 50 55 43

Executive Vice President, Responsible for Financial Controlling and Reporting Executive Vice President, Responsible for Purchasing function on a Worldwide basis Executive Vice President, Responsible for Flat Eastern Europe Executive Vice President, Responsible for Flat South America Executive Vice President, Responsible for Carbon Steel Asia, Mediterranean, Black Sea Basin Senior Executive Vice President, Responsible for Shared Services Executive Vice President, Responsible for Flat Europe Executive Vice President, Responsible for Arcelor Mittal Steel Solutions & Services (AM3S) Executive Vice President, Responsible for Human Resources Executive Vice President, Responsible for Stainless Steel Worldwide Executive Vice President, Chief Technology Officer, Responsible for Health and Safety Executive Vice President, Responsible for Finance and M&A 248

Name

Age(1)

Position

Aditya Mittal Lakshmi N. Mittal Malay Mukherjee Carlo Panunzi Michael Pfitzner Gerhard Renz Michael Rippey Lou Schorsch Bill Scotting Gonzalo Urquijo Andr van den Bossche Michel Wurth

30 56 58 57 57 59 49 57 48 45 63 52

Chief Financial Officer, Member of the Group Management Board, Flat Products Americas Chief Executive Officer, Member of the Group Management Board Member of the Group Management Board, Stainless, Mining, Asia & Africa Executive Vice President, Responsible for Long Americas Executive Vice President, Responsible for Commercial Co-ordination Executive Vice President, Responsible for Long Europe Executive Vice President, Responsible for USA Executive Vice President, Responsible for Flat Americas Executive Vice President, Responsible for Performance Enhancement Member of the Group Management Board, Responsible for Long Products, Distribution and Wire Drawing Executive Vice President, Responsible for Marketing Member of the Group Management Board, Responsible for Flat Products Europe, Global Auto, Plates and R&D

(1) Age as of December 31, 2006.

The business address of each of the members of ArcelorMittals senior management is ArcelorMittals registered office at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg (which is the same registered office as Arcelor). Bhikam Agarwal, Executive Vice President, Responsible for Financial Controlling and Reporting: Bhikam Agarwal has been the Managing Director, Controlling of Mittal Steel and has over 30 years of experience in steel and related industries. He has held various senior executive positions within Mittal Steel and was previously Chief Financial Officer after its formation as Ispat International. He has been responsible for the financial strategy of Mittal Steel and has been a co-ordinator of its prior activities in the capital markets. Mr. Agarwal has also led the finance and accounting functions of Ispat International across all its operating subsidiaries. Vijay Bhatnagar, Executive Vice President, Responsible for Flat Eastern Europe: Prior to his current assignment, Vijay Bhatnagar was Chief Executive Officer of Mittal Steel Poland from June 2005. Prior to that he was Chief Operating Officer of Mittal Steel Temirtau after a term as Managing Director of Mittal Steel Lazaro Cardenas (from October 2002). He has over 34 years of experience in line and staff functions in Aluminum and Electronics industries in India working for INDAL (subsidiary of ALCAN) as Vice PresidentHR, Environment and Community Development and AT&S INDIA (subsidiary of AT&S Austria) as Managing Director and Chief Spokesperson. Mr. Bhatnagar holds a bachelor degree in Metallurgical Engineering and is an alumnus of AMP of Harvard Business School. Alain Bouchard, Executive Vice President, Responsible for Purchasing function on a Worldwide basis: Alain Bouchard has been Arcelors Executive Vice President Purchasing since 2004. Prior to that he was in charge, at Arcelor and Usinor, of the Cockerill-Sambre works in Lige, Belgium and at Sollac Lorraine. From 1993 to 1999, he held various positions in production planning, customer services, information systemsinformation technology, and reengineering of support functions within Usinors Flat Carbon Steel business in Paris. From 1989 to 1993, he worked at Usinors Fos-sur-Mer plant, after joining the IRSID Steel Research and Development Institute in 1973. Mr. Bouchard is an IT engineer, a graduate of the Ecole Nationale Suprieure dInformatique et Mathmatiques Appliques de Grenoble, and a Physics engineer, with a degree from Ecole Nationale Suprieure de Physique de Grenoble. Jose Armando Campos, Executive Vice President, Responsible for Flat South America: Jose Armando Campos has been the President and officer in charge of the Flat Steel Business Area at Arcelor Brasil and President and CEO of CST since 1997. Prior to that, he worked in mining development and metallurgical 249

areas at the Companhia Vale do Rio Doce from 1974 to 1992. Mr. Campos has been a member of the Brazilian Metallurgy and Materials Society since 1972 and the Board of Directors of the Brazilian Business Council for Sustainable Development. Mr. Campos is also a member of the Board of Directors of Acesita. He is a mining engineer, with a degree from the Federal University of Ouro Preto. Narendra Chaudhary, Executive Vice President, Responsible for Carbon Steel Asia, Mediterranean, Black Sea Basin: Narendra Chaudhary was appointed CEO of Mittal Steels Ukrainian operation in January 2006. Prior to that, Mr. Chaudhary was Director, Operations and Maintenance for Mittal Steel. Mr. Chaudhary joined Mittal Steel in 1993 at its Mexican operations and has held a number of positions at Mittal Steel since then, including as CEO of Mittal Steel Galati in Romania and CEO of Mittal Steels operations in Kazakhstan. Mr. Chaudhary possesses over 39 years of experience in a variety of technical and managerial functions in the steel industry. He worked at Steel Authority of India Limited plants in various capacities for 28 years. Mr. Chaudhary has a Bachelors degree in engineering from Bihar Institute of Technology, India. Davinder Chugh, Senior Executive Vice President, Responsible for Shared Services: Davinder Chugh, previously CEO of Mittal Steel South Africa, has over 25 years experience in the steel industry, particularly in materials purchasing, logistics, warehousing and shipping. Mr. Chugh also was Commercial Director at Mittal Steel from 2002 to 2006. Before joining Mittal Steel South Africa, he was Vice President of purchasing at Mittal Steel Europe. Mr. Chugh joined Mittal Steel in 1995 and since then has successfully integrated the materials management functions at newly acquired plants in Hamburg, Duisburg, France, Romania and Algeria. Prior to that, he held several senior positions at the Steel Authority of India Limited in New Delhi, India. He holds degrees in science and law and has a Masters of Business Administration. Christophe Cornier, Executive Vice President, Responsible for Flat Europe: Christophe Cornier has been responsible for Arcelors flat products activities in Europe and for its worldwide automotive sector since December 2005, when he was appointed a member of the Arcelors Management Committee. In June 2005, he was appointed head of Arcelors Client Value Team. At the creation of Arcelor in 2002, he was named Executive Vice-President of FCS Commercial Auto. Before that, he was CEO of Sollac Mditerrane. In 1998, he was appointed CEO of La Magona, after joining Sollac Packaging as Managing Director in 1993. In 1985 he joined Usinor, where he was Business Development Director and Chief Controller of Sollac. He began his career with the French Ministry of Industry, which he left as a Deputy Director. Mr. Cornier is a graduate of the Ecole Polytechnique and the Ecole des Mines in Paris. Philippe Darmayan, Executive Vice President, Responsible for Arcelor Mittal Steel Solutions & Services (AM3S): Philippe Darmayan has been Executive Vice President in charge of Arcelor Steel Solutions and Services since January 2005. Before that, he was CEO of Ugine & Alz. A graduate of the French business school HEC, Mr. Darmayan joined Arcelor to lead the transformation of Ugine & Alz in 2002. Prior to that, he held various management positions in the aluminum businesses of Pechiney Group, which he joined in 1996, and was a plant director and managing director of Franco-Belge de Fabrication de Combustibles, a subsidiary of Framatome. Bernard Fontana, Executive Vice President, Responsible for Human Resources: Bernard Fontana joined Arcelor in September 2004 as Flat Carbon Steel Program Office Executive manager and was appointed as Arcelor Flat Carbon Europe Executive Vice President/People and Development in July 2005. Prior to that, he worked at the Chemical Group SNPE for 18 years, including as SNPEs North American Director and as Executive Vice President of SNPE. Mr. Fontana graduated from the Ecole Polytechnique and the Ecole Nationale Suprieure des Techniques Avances in Paris. Jean-Yves Gilet, Executive Vice President, Responsible for Stainless Steel Worldwide: Jean-Yves Gilet has been advisor to the CEO with responsibility for Arcelors stainless steel business worldwide since December 2005, in charge of preparing and implementing the strategic reorganization of this business. Prior to that, he was Senior Executive Vice President of Arcelor in charge of the stainless steel sector, a position he held since the creation of Arcelor in 2002. In 1999, he became a member of the Usinor executive committee. In 1998, he was named Chairman and CEO of Acesita in Brazil. He joined Usinor in 1990 and, between 1991 and 1998, held management positions at the Imphy, Ugine-Savoie and Sprint Mtal stainless businesses. Prior to that, he was cabinet head for the Regional Development and Minister in France. Mr. Gilet, an engineering graduate of the Ecole Polytechnique (Corps des Mines), began his career in 1981 at the Industry Ministry, before joining DATAR, the regional development agency. Pierre Gugliermina, Executive Vice President, Chief Technology Officer, Responsible for Health and Safety: Pierre Gugliermina is a French engineer graduated from CENTRALE PARIS School in 1974. His career has been fully devoted to the steel industry. After joining the steel plant of Fos-Sur-Mer as a metallurgist 250

he was successively appointed as General Manager of the steelmaking section of Fos, Managing Director of Sidmed in Spain, CEO of Sollac Atlantique and co-leading manager in the Flat Products South of Europe business unit of Arcelor. He thereafter took responsibility for the Industrial Operational Direction of the Arcelor European Flat Business Unit. Mr. Gugliermina was recently in charge of the Downstream Operations in the Flat Carbon West Europe Business Unit. Sudhir Maheshwari, Executive Vice President, Responsible for Finance and M&A: Sudhir Maheshwari was previously the Managing Director, Business Development and Treasury of Mittal Steel and has 20 years of experience in steel and related industries. He was the Chief Financial Officer of LNM Holdings from January 2002 until its merger with Ispat International in December 2004. He has played an integral role in all the recent acquisitions by Mittal Steel, including turnaround and integration activities, and in various corporate finance and capital market projects, including Mittal Steels initial public offering in 1997. He also held the positions of Chief Financial Officer at Mittal Steel Europe, Mittal Steel Germany and Mittal Steel Point Lisas, and was Director of Finance and Mergers & Acquisitions at Mittal Steel. Mr. Maheshwari has worked for Mittal Steel for 18 years. Mr. Maheshwari is an Honours Graduate in Accounting and Commerce from St. Xaviers College, Calcutta, and a Fellow Member of The Institute of Chartered Accountants and The Institute of Company Secretaries in India. Aditya Mittal, CFO, Member of the Group Management Board, Responsible for Flat Products Americas: Aditya Mittal held the position of President and CFO of Mittal Steel from October 2004 to 2006. He joined Mittal Steel in January 1997 and has held various finance and management roles within Mittal Steel. In addition to these responsibilities Aditya Mittal was appointed Head of Mergers and Acquisitions for Mittal Steel in 1999. In this role, he led Mittal Steels acquisition strategy, resulting in Mittal Steels expansion into Central Europe, Africa and, most recently, the United States. This led to Mittal Steels emergence as the worlds largest and most global steel producer, growing its steel-making capacities fourfold. These acquisitions included Kryvorizhstal in Ukraine, Polskie Huty Stali in Poland, Nova Hut in Czech Republic, Sidex in Romania, Annaba in Algeria, Iscor in South Africa, and International Steel Group in the United States. Aditya Mittal holds a Bachelors Degree of Science in Economics with concentrations in Strategic Management and Corporate Finance from the Wharton School of the University of Pennsylvania, from which he graduated magna cum laude. Aditya Mittal is the son of Lakshmi N. Mittal. Malay Mukherjee, Member of the Group Management Board, Responsible for Stainless, Mining, Asia & Africa: Mr. Mukherjee has over 30 years of experience in a variety of technical and commercial functions in the steel industry, including iron ore mining, project implementation, materials management and steel plant operations. He joined the LNM Group in 1993 from the Steel Authority of India Limited, where his last position was as Executive Director (Works) at the Bhilai Steel Plant, the largest integrated steel plant in India, with a production capacity of approximately four million tonnes. Mr. Mukherjee has a Masters degree in mining from the USSR State Commission in Moscow and a Bachelor of Science degree from the Indian Institute of Technology in Kharagpur, India. Mr. Mukherjee has completed an advanced management program conducted by the Commonwealth Secretariat in joint association with University of Ottawa, Canada and the Indian Institute of Management, Ahmedabad. Mr. Mukherjee joined Ispat Karmet in 1996 from Ispat Mexicana, where he was Managing Director. He joined Ispat Europe as President and CEO in June 1999. Formerly the President and Chief Operating Officer of Ispat International N.V., Mr. Mukherjee became Chief Operating Officer of Mittal Steel in October 2004. Mr. Mukherjee is a recipient of the MECON Award from the Indian Institute of Metals. Carlo Panunzi, Executive Vice President, Responsible for Long Americas: Carlo Panunzi was previously Senior Executive Vice President of Arcelor Brasil, in charge of Long Products and Distribution. In 2002, Carlo Panunzi became the President of Belgo Mineira, a company he had joined in 1999 and where he was, among other positions, Managing Director of the Piracicaba plant in the state of So Paulo. Before that, he held several positions at Arbed, which he joined in 1973 as an engineer at the Differdange plants rolling line. Michael Pfitzner, Executive Vice President, Responsible for Commercial Co-ordination: Michael Pfitzner joined Mittal Steel as Director of Marketing in February 2006. He has over 25 years of extensive industry experience in commercial functions with several steel companies, including Mannesmann, Saarstahl, Krupp Thyssen Stainless and Salzgitter. At Salzgitter, where he worked for nearly five years, Mr. Pfitzner was a member of the Executive Board responsible for Sales and Distribution. Mr. Pfitzner has a degree in economics from the University of Bonn, Germany. Gerhard Renz, Executive Vice President, Responsible for Long Europe: Gerhard Renz has been the Chief Operating Officer of Mittal Steel Europe and has over 32 years of experience in the steel industry. Mr. Renz formerly worked as the Managing Director of Mittal Steel Hamburg. He is a Board Member of Verein 251

Deutscher Eisenhttenleute, Wirtschaftsvereinigung Stahl and the European Iron and Steel Institute. He holds a Bachelors degree in Engineering. Michael G. Rippey, Executive Vice President, Responsible for USA: Michael Rippey was elected in August 2006 as President and Chief Executive Officer of Mittal Steel USA. Previously, he had been Mittal Steel USAs Executive Vice-President, Sales & Marketing since April 2005, with direct responsibility for all sales and marketing of light flat-rolled and plate products. Mr. Rippey had been Executive Vice-President, Commercial and Chief Financial Officer at Ispat Inland since January 2004 and an officer of Mittal Steel USA since June 1998. He has a Bachelors degree in marketing from Indiana University, Bloomington, a Masters degree in banking and finance from Loyola University, Chicago and a Master of Business Administration from the University of Chicago. Lou Schorsch, Executive Vice President, Responsible for Flat Americas: Lou Schorsch was elected in August 2006 as President and Chief Executive Officer of Flat Americas. Previously, he had been Chief Executive Officer of Mittal Steel USA since the merger between Mittal Steel and ISG in October 2004. Prior to that, Dr. Schorsch was the President and Chief Executive Officer of Ispat Inland, where he was responsible for significant improvements in its operational performance. Dr. Schorsch has over 25 years of experience in consulting and managerial roles primarily relating to the steel industry. Prior to joining Ispat Inland in October 2003, he held various senior positions in the consulting and e-commerce sectors. Most recently he was President and Chief Executive Officer of GSX.Com and a Principal at McKinsey & Company where he worked from 1985 until 2000. While at McKinsey, he was a co-leader of its metals practice. Dr. Schorsch has published numerous articles in such publications as Business Week and Challenge and has co-authored a book on steel entitled Upheaval in a Basic Industry. Bill Scotting, Executive Vice President, Responsible for Performance Enhancement: Bill Scotting joined Mittal Steel in September 2002 to lead its performance enhancement activities. Formerly an Associate Principal at McKinsey & Company, Mr. Scotting has 20 years of experience in the steel industry in technical, operations management and consulting roles. He has also held positions at BHP Steel, Pioneer Concrete United Kingdom, Mascott Partnership and CRU International. Mr. Scotting holds a Bachelor of Science degree in metallurgy from the University of Newcastle in Australia, where he was awarded the Australasian Institute of Metallurgy Prize for Metallurgy, and a Masters of Business Administration (with distinction) from Warwick Business School in the United Kingdom. Gonzalo Urquijo, Member of the Group Management Board, Responsible for Long Products, Distribution and Wire Drawing: Gonzalo Urquijo, previously Senior Executive Vice President and Chief Financial Officer of Arcelor, was responsible for the following functions: Finance, Purchasing, IT, Legal Affairs, Investor Relations, Arcelor Steel Solutions & Services and other activities. Mr. Urquijo also held several other positions within Arcelor and in this sector, including Deputy Senior Executive Vice President and head of the functional directorates of distribution. Until the creation of Arcelor in 2002, when he became Executive Vice President of the Operational Unit South of the Flat Carbon Steel sector, Mr. Urquijo was CFO of Aceralia. Between 1984 and 1992, he held a variety of positions at Citibank and Crdit Agricole before joining Aristrain in 1992 as Chief Financial Officer, later becoming Co-Chief Executive Officer. Mr. Urquijo has degrees in economics and political science from Yale University and holds a Masters of Business Administration from the Instituto de Empresa in Madrid. Andr van den Bossche, Executive Vice President, Responsible for Marketing: Andr van den Bossche has been Arcelors Executive Vice President Commercial Worldwide Optimisation since 2005. Prior to that, he was Managing Director of Arcelors Flat Carbon Steel commercial organization from 2002 to 2005, Managing Director at the Aceralia Sidstahl Ibrica and Sidstahl sales organizations from 1995 to 2001, and sales director at TradeArbed Luxembourg from 1986 to 1995. At Sidmar (Ghent), which he joined in 1970, he was Vice President of the Commercial and Customer Relations Department, General Manager of the cold rolling mill and production and management engineer at the cold rolling mill. Mr. van den Bossche is a civil engineer and graduated from the Universities of Louvain and Ghent. Michel Wurth, Member of the Group Management Board, Responsible for Flat Products Europe, Global Auto, Plates and R&D: Michel Wurth was previously Vice President of the Group Management Board and Deputy Chief Executive Officer of Arcelor, and was responsible for Flat Carbon Steel Europe & Auto, Flat Carbon Steel Brazil, Coordination Brazil, Coordination Heavy Plate, R&D and NSC Alliance. The merger of Aceralia, Arbed and Usinor which led to the creation of Arcelor in 2002 saw Mr. Wurth appointed as Senior Executive Vice President and Chief Financial Officer of Arcelor, with responsibility over Finance and Management by Objectives. Mr. Wurth joined Arbed in 1979 and held a variety of positions, including Secretary of the Board of Directors, head of the Arbed subsidiary Novar and Corporate Secretary, before joining 252

the Arbed Group Management Board and becoming Chief Financial Officer in 1996. He was named Executive Vice President of Arbed in 1998. Mr. Wurth holds a law degree from the University of Grenoble, a political science degree from the Institut dEtudes Politiques de Grenoble and a Master of Economics degree from the London School of Economics. Board Compensation The members of the ArcelorMittal Board of Directors have not received any compensation for their services to date. The total annual compensation of the members of Mittal Steels (as the predecessor entity to ArcelorMittal) Board of Directors (who, except as noted below, are the same as the current members of the Arcelor Board of Directors) for 2005 and 2006 was as follows:
Year ended December 31, (Amounts in $ thousands except option information) 2005 2006

Base salary and/or directors fees................................................ Short-term performance-related bonus....................................... Long-term incentives (number of options).................................

4,369 235,000

3,760 3,288 175,000

The annual compensation of the members of Mittal Steels Board of Directors was as follows:
2005 Shortterm Performance Related 2006 Shortterm Performance Related 2005 Longterm Number of Options 2006 Longterm Number of Options

(Amounts in $ thousands except option information)

2005

2006

Lakshmi N. Mittal ............................... Aditya Mittal .................................... Vanisha Mittal Bhatia.......................... Malay Mukherjee ............................. Narayanan Vaghul............................... Ambassador Andrs Rozental .......... Fernando Ruiz Sahagun ................... Muni Krishna T. Reddy .................... Ren Lopez(6) ...................................... Wilbur L. Ross, Jr. ........................... Lewis B. Kaden ................................ Franois H. Pinault ........................... Joseph Kinsch
(10) (9) (8) (7) (5) (4) (3) (2) (1)

$2,194 1,245 18 311 109 134 22 110 74 73 79

$2,005 942 23 139 142 119 82 105 123 80

1,677 1,611

100,000 75,000 60,000

100,000 75,000

.................................

Jos Ramn lvarez-Rendueles Medina(11) ....................................... Sergio Silva de Freitas Georges Schmit
(13) (14) (12)

....................

............................... .............................
(15)

Edmond Pachura

Michel Angel Marti

........................
(16)

Manuel Fernndez Lpez Jean-Pierre Hansen John Castegnaro

(18) (17)

................

.........................

.............................. ..........................

Antoine Spillmann

(19)

HRH Prince Guillaume de Luxembourg(20) ...............................

253

(Amounts in $ thousands except option information)

2005

2006

2005 Shortterm Performance Related

2006 Shortterm Performance Related

2005 Longterm Number of Options

2006 Longterm Number of Options

Romain Zaleski(21) ............................... Total ....................................................

4,369

3,760

3,288

235,000

175,000

(1) Mr. A. Mittal resigned from Mittal Steels Board of Directors on October 30, 2006, but continued in his role as Chief Financial Officer of Mittal Steel. His compensation is included only for the period from January 2006 to October 2006. (2) Mr. Mukherjee resigned from Mittal Steels Board of Directors on April 12, 2005, but continued in his role as Chief Operating Officer of Mittal Steel. His compensation is included only for the period from January 2005 to March 2005. (3) Mr. Rozental resigned from Mittal Steels Board of Directors on October 30, 2006. (4) Mr. Ruiz resigned from Mittal Steels Board of Directors on April 12, 2005. (5) Mr. Reddy resigned from Mittal Steels Board of Directors on October 30, 2006. (6) Mr. Lopez resigned from Mittal Steels Board of Directors on October 30, 2006. (7) Mr. Ross was elected to Mittal Steels Board of Directors on April 12, 2005. (8) Mr. Kaden was elected to Mittal Steels Board of Directors on April 12, 2005. (9) Mr. Pinault was elected to Mittal Steels Board of Directors on June 30, 2006. (10) Mr. Kinsch was elected to Mittal Steels Board of Directors on October 30, 2006. (11) Mr. lvarez-Rendueles Medina was elected to Mittal Steels Board of Directors on October 30, 2006. (12) Mr. Silva de Freitas was elected to Mittal Steels Board of Directors on October 30, 2006. (13) Mr. Schmit was elected to Mittal Steels Board of Directors on October 30, 2006. (14) Mr. Pachura was elected to Mittal Steels Board of Directors on October 30, 2006. (15) Mr. Marti was elected to Mittal Steels Board of Directors on October 30, 2006. (16) Mr. Fernndez Lpez was elected to Mittal Steels Board of Directors on October 30, 2006. (17) Mr. Hansen was elected to Mittal Steels Board of Directors on October 30, 2006. (18) Mr. Castegnaro was elected to Mittal Steels Board of Directors on October 30, 2006. (19) Mr. Spillmann was elected to Mittal Steels Board of Directors on October 30, 2006. (20) HRH Prince Guillaume de Luxembourg was elected to Mittal Steels Board of Directors on October 30, 2006. (21) Mr. Zaleski was elected to Mittal Steels Board of Directors on October 30, 2006.

The members of Arcelors Board of Directors who were appointed to Mittal Steels Board of Directors on October 30, 2006 did not receive compensation in 2006 in their capacity as members of the latter. They did receive compensation, however, in 2006 in their capacity as members of Arcelors Board of Directors. This compensation, consisting of a flat fee and attendance fees, was as follows: Joseph Kinsch (246,609), Jos Ramn lvarez-Rendueles Medina (216,603), Sergio Silva de Freitas (131,927), Georges Schmit (143,697), Edmond Pachura (155,097), Michel Angel Marti (131,327), Manuel Fernndez Lpez (118,952), Jean-Pierre Hansen (145,675), John Castegnaro (131,652), Antoine Spillmann (119,074), HRH Prince Guillaume de Luxembourg (134,097) and Romain Zaleski (26,835). As of December 31, 2005 and 2006, Mittal Steel did not have outstanding any loans or advances to members of its Board of Directors, and, as of December 31, 2006, Mittal Steel had not given any guarantees for the benefit of any member of its Board of Directors.

254

The following table provides a summary of the options outstanding and the exercise of the options granted to Mittal Steels Board of Directors (in 2001, 2003 and 2004, no options were granted to members of Mittal Steels Board of Directors):
Granted in 1999 Granted in 2000 Granted in 2002 Granted in 2005 Granted in 2006 Weighted Average Exercise Price

Total

Lakshmi N. Mittal ................. Aditya Mittal ...................... Vanisha Mittal Bhatia............ Malay Mukherjee ............... Narayanan Vaghul .............. Ambassador Andrs Rozental(4)(5)...................... Fernando Ruiz Sahagun(6)(7) ...................... Muni Krishna T. Reddy(8)...... Ren Lopez ........................ Wilbur L. Ross
(10) (9) (3) (2) (1)

80,000 7,500 40,000 127,500 $11.94 10

September 14, 2009

80,000 7,500 40,000 127,500 $8.57 10

June 1, 2010

80,000 25,000 50,000 3,333 158,333 $2.26 10

April 5, 2012

100,000 75,000 60,000 235,000 $28.75 10

August 23, 2015

100,000 75,000 175,000 $33.755 10

September 1, 2016

440,000 190,000 190,000 3,333 823,333

$18.35 $25.78 $13.99 $2.26 $18.99

.................. ................
(12)

Lewis B. Kaden

(11)

Franois H. Pinault Joseph Kinsch

(13)

...........

...................

Jos Ramn lvarezRendueles Medina(14) ........ Sergio Silva de Freitas(15) ...... Georges Schmit
(16)

................. ...............
(18)

Edmond Pachura

(17)

Michel Angel Marti

..........

Manuel Fernndez Lpez(19) ........................... Jean-Pierre Hansen(20) ........... John Castegnaro

(21)

................ ............

Antoine Spillmann

(22)

HRH Prince Guillaume de Luxembourg(23) ................. Romain Zaleski(24) ................. Total ...................................... Exercise price ........................ Term (in years)...................... Expiration date ......................

(1) Mr. A. Mittal resigned from Mittal Steels Board of Directors on October 30, 2006, but continued in his role as Chief Financial Officer of Mittal Steel. (2) Mr. Mukherjee resigned from Mittal Steels Board of Directors on April 12, 2005, but continued in his role as Chief Operating Officer of Mittal Steel. (3) Mr. Vaghul exercised all his vested options in 2005. (4) Mr. Rozental resigned from Mittal Steels Board of Directors on October 30, 2006.

255

(5) Mr. Rozental exercised the majority of his vested options in 2005, except for 3,333 options granted in 2002 which were exercised in 2006. (6) Mr. Ruiz resigned from Mittal Steels Board of Directors on April 12, 2005. (7) Mr. Ruiz exercised the majority of his vested options in 2005, except for 3,333 options granted in 2002. (8) Mr. Reddy resigned from Mittal Steels Board of Directors on October 30, 2006. (9) Mr. Lopez resigned from Mittal Steels Board of Directors on October 30, 2006. (10) Mr. Ross was elected to Mittal Steels Board of Directors on April 12, 2005. (11) Mr. Kaden was elected to Mittal Steels Board of Directors on April 12, 2005. (12) Mr. Pinault was elected to Mittal Steels Board of Directors on June 30, 2006. (13) Mr. Kinsch was elected to Mittal Steels Board of Directors on October 30, 2006. (14) Mr. lvarez-Rendueles Medina was elected to Mittal Steels Board of Directors on October 30, 2006. (15) Mr. Silva de Freitas was elected to Mittal Steels Board of Directors on October 30, 2006. (16) Mr. Schmit was elected to Mittal Steels Board of Directors on October 30, 2006. (17) Mr. Pachura was elected to Mittal Steels Board of Directors on October 30, 2006. (18) Mr. Marti was elected to Mittal Steels Board of Directors on October 30, 2006. (19) Mr. Fernndez Lpez was elected to Mittal Steels Board of Directors on October 30, 2006. (20) Mr. Hansen was elected to Mittal Steels Board of Directors on October 30, 2006. (21) Mr. Castegnaro was elected to Mittal Steels Board of Directors on October 30, 2006. (22) Mr. Spillmann was elected to Mittal Steels Board of Directors on October 30, 2006. (23) HRH Prince Guillaume de Luxembourg was elected to Mittal Steels Board of Directors on October 30, 2006. (24) Mr. Zaleski was elected to Mittal Steels Board of Directors on October 30, 2006.

The total annual compensation of Mittal Steels senior management (who were the same as Arcelors senior management as of December 31, 2006) for 2006 was $16 million in base salary and $21 million in shortterm performance related bonuses. As of December 31, 2006, approximately $2.0 million was accrued by Mittal Steel to provide pension benefits to its senior management. During 2006, no loans or advances to Mittal Steels senior management were outstanding. As of December 31, 2005, $0.2 million of such loans was outstanding, which was also the maximum amount outstanding during 2005. Options were granted to senior management for 2005 and 2006 in accordance with the Mittal Steel Global Stock Option Plan described below. Finally, none of the members of ArcelorMittals Board of Directors is a party to a contract with ArcelorMittal or any of its subsidiaries that provides benefits upon termination of employment. Option Plans The merger proposal provides that for each option to purchase or subscribe for ArcelorMittal shares granted under employee and director stock plans of ArcelorMittal (including those held by directors and senior management) option holders will receive one option of Arcelor, giving the holder the right to acquire, or subscribe, as the case may be, for one Arcelor share, at an exercise price equal to the exercise price of the corresponding ArcelorMittal option, on terms and conditions otherwise similar to those governing the ArcelorMittal options prior to the effective time of the merger (subject to any changes necessary to reflect the effectiveness of the merger). In 2003, Arcelor established its International Stock Option Plan (the Arcelor Stock Option Plan). Options are granted at the discretion of the Arcelors Appointements and Remuneration Committee or its delegate. The allotment confers to the beneficiary the option of purchasing or subscribing for, at Arcelors choice, Arcelor shares under the terms laid down in the Arcelor Stock Option Plan rules. The options may be exercised over a period of a maximum of four years starting, at the earliest, three years after the allotment, depending on each country where the options are granted.

256

On June 30, 2003 Arcelor granted 1,300,000 options to a group of 73 executives at an exercise price of 9.94. Following the new issue of capital of July 27, 2004, the number of options was adjusted to 1,336,282 options and the exercise price was adjusted to 9.67. Options in the amount of 339,207 were allocated to the Group Management Board members. The options expire on June 30, 2010. On June 30, 2004 Arcelor granted 1,180,000 options to a group of 91 executives at an exercise price of 13.48. Following the new issue of capital of July 27, 2004, the number of options was adjusted to 1,212,942 options and the exercise price was adjusted to 13.11. Options in the amount of 318,649 were allocated to the Group Management Board members. The options expire on June 30, 2011. On June 30, 2005 Arcelor granted 1,135,000 options to a group of 69 executives at an exercise price of 16.17. Options in the amount of 330,000 were allocated to the Group Management Board members. The options expire on June 30, 2012. The Arcelor Board of Directors approved on June 25, 2006, upon the recommendation of the Appointments and Remuneration Committee, a resolution to amend the Arcelor Stock Option Plan so as to allow the beneficiaries to exercise as from July 1, 2006 the stock options that were granted prior to June 25, 2006, and then possibly to sell the corresponding shares. On June 30, 2006 Arcelor granted 1,135,000 options to a group of 91 executives at an exercise price of 34.43. Options in the amount of 170,000 were allocated to the Group Management Board members. The options expire on June 30, 2013. As of December 31, 2006 there were 1,485,393 options outstanding under the Arcelor Stock Option Plan with an exercise price ranging from 9.67 to 34.43 per option. Of these 1,485,393 options, none were held by current members of the Arcelor Board of Directors and 386,116 were held by current members of Arcelor senior management. In 1999, Mittal Steel, as the predecessor entity to ArcelorMittal, established the Mittal Steel Global Stock Option Plan (MittalShares), which is described more fully in Note 16 of the Mittal Steel Consolidated Financial Statements. Under the terms of MittalShares, ArcelorMittal may grant options to purchase common stock to senior management of ArcelorMittal and its affiliates for up to 20,000,000 class A common shares (increased from 6,000,000 class A common shares to 10,000,000 class A common shares after shareholder approval in 2003 and increased from 10,000,000 shares to 20,000,000 class A common shares after shareholder approval in 2006). The exercise price of each option equals not less than the fair market value of Mittal Steel stock on the date of grant, with a maximum term of 10 years. Options are granted at the discretion of the Mittal Steels Appointments, Remuneration and Corporate Governance Committee or its delegate. The options vest either ratably upon each of the first three anniversaries of the grant date, or, in total, upon the death, disability or retirement of the participant. On August 23, 2005, Mittal Steel granted 3,908,773 options to a group of key employees at an exercise price of $28.75. Of this option grant, 520,566 options (including 100,000 options granted to the Significant shareholder) were allocated to senior management. The options expire on August 23, 2015. On September 1, 2006, Mittal Steel granted 3,999,223 options to a group of key employees at an exercise price of $33.755. Of this option grant, 550,300 options (including 100,000 options granted to the Significant shareholder) were allocated to senior management. The options expire on September 1, 2016. On August 2, 2007, Mittal Steel granted 5,965,200 options to a group of key employees at an exercise price of $64.30. Of this option grant, 734,000 options (including 60,000 options granted to the Significant shareholder) were allocated to senior management. The options expire on August 2, 2017. Pursuant to the terms of the first-step merger between Mittal Steel and ArcelorMittal, each option to purchase Mittal Steel shares granted under employee and director stock plans of Mittal Steel was converted into the right to acquire (or at ArcelorMittals option, subscribe) the same number of ArcelorMittal shares on the same terms and conditions as were applicable to such options prior to the merger. Pursuant to the transitional provisions of IFRS 2, Share-Based Payments, only options granted after November 7, 2002 were recognized as an expense at their fair value. Mittal Steel determines the fair value of the options at the date of grant using the Black-Scholes model. The fair values for options and other share-based 257

compensation is recorded as an expense in the consolidated income statement over the relevant vesting or service periods, adjusted to reflect actual and expected levels of vesting. The fair value of each option grant of Mittal Steel class A common shares (as predecessor to ArcelorMittal) is estimated on the date of grant using the Black-Scholes Model with the following weightedaverage assumptions used:
Year of grant 2005 2006

Exercise price................................................................................ Dividend yield .............................................................................. Expected annualized volatility...................................................... Discount rate - Bond equivalent yield........................................... Weighted average share price ....................................................... Expected life in years.................................................................... Fair value of options (per share) ................................................... The status of MittalShares as of December 31, 2006 is summarized below:

28.75 1.44% 52% 4.50% 28.75 6 13

33.76 1.45% 60% 4.63% 33.76 6 30

Number of Options

Range of Exercise Prices ($)

Weighted Average Exercise Price ($ per option)

Outstanding, December 31, 2003............................... Exercised.................................................................... Forfeitures .................................................................. Outstanding, December 31, 2004............................... Granted....................................................................... Exercised.................................................................... Forfeitures .................................................................. Outstanding, December 31, 2005............................... Granted....................................................................... Exercised.................................................................... Cancelled.................................................................... (Forfeitures) ............................................................... Outstanding, December 31, 2006............................... Exercisable, December 31, 2006................................ Exercisable, December 31, 2005................................ Exercisable, December 31, 2004................................

3,339,334 (1,384,118) (244,000) 1,711,216 3,908,773 (351,850) (210,833) 5,057,306 3,999,223 (523,304) (4,000) (78,257) 8,450,968 2,062,787 1,352,366 1,321,721

2.26 11.94 2.26 11.94 2.26 11.94 2.26 11.94 28.75 2.26 11.94 2.26 28.75 2.26 28.75 33.76 2.26 28.75 33.76 33.76 2.26 33.76 2.26 28.75 2.26 28.75 2.26 11.94

7.32 7.76 9.07 6.72 28.75 5.87 27.87 22.92 33.76 17.83 33.76 33.76 28.27 17.27 6.96 8.03

258

The following table summarizes information about outstanding stock options as of December 31, 2006: Options Outstanding
Exercise Prices $ Number of options Weighted average contractual life (in years) Options exercisable (number of options)

11.94 8.57 2.26 28.75 33.76 2.26 33.76

315,599 330,100 442,118 3,442,185 3,920,966 8,450,968

2.71 3.42 5.27 8.65 9.67 8.66

315,599 330,100 442,118 974,970 2,062,787

As of December 31, 2006, the stock options granted under MittalShares are exercisable as follows:
Year Options Average Exercise Price ($)(1)

2007 ....................................................................... 2008 ....................................................................... 2009 ....................................................................... 2010 ....................................................................... 2011 .......................................................................

2,062,787 4,692,660 7,180,807 8,235,098 7,971,773

17.27 26.01 27.86 29.32 30.00

(1) Based on exercise prices of $11.94, $8.57, $2.26, $28.75 and $33.76 for 1999, 2000, 2002, 2005 and 2006, respectively.

Management Share Ownership Below is a description of the aggregate beneficial share ownership of ArcelorMittal directors and senior management. As of September 3, 2007, the aggregate beneficial share ownership of ArcelorMittal directors and members of senior management (40 individuals, who were the same as Mittal Steels directors and senior management prior to the first-step merger and are currently the same as Arcelors directors and senior management) was 2,263,181 ArcelorMittal shares (excluding shares owned by ArcelorMittals Significant shareholder and including options to acquire 368,525 ArcelorMittal shares that are exercisable within 60 days of September 3, 2007) being 0.16% of the total issued share capital of ArcelorMittal. Excluding options to acquire ArcelorMittal shares, these 40 individuals beneficially own 1,923,208 ArcelorMittal shares. ArcelorMittal directors and members of senior management have indicated that they expect to vote for the decision to merge ArcelorMittal into Arcelor as contemplated by the merger proposal and the explanatory memorandum. As of September 3, 2007, the Significant shareholder beneficially owned 623,285,000 of ArcelorMittals outstanding shares, representing 43.98% of ArcelorMittals outstanding shares. The percentage of total common shares in the possession of the Significant shareholder (including the treasury stock and for Mittal Steel for periods prior to the merger of Mittal Steel and ArcelorMittal) has decreased from 87.47% prior to August 1, 2006 to 44.79% after that date as a result of the acquisition of Arcelor. The number of Mittal Steel options (as predecessor to ArcelorMittal) granted to directors and senior management (including the Significant shareholder) in 2005 was 417,022 at an exercise price of $28.75, the number of Mittal Steel options granted to directors and senior management (including the Significant shareholder) in 2006 was 465,053 at an exercise price of $33.755 and the number of Mittal Steel options granted to directors and senior management (including the Significant shareholder) in 2007 was 734,000 at an exercise price of $64.30. No Mittal Steel options were granted during 2003 and 2004. These options vest either ratably upon each of the first three anniversaries of the grant date, or, in total, upon the death, disability or retirement of the participant. The option term expires 10 years after the grant date. In 2006, Arcelor granted 375,000 options to its senior management at an exercise price of 34.43. 259

See Board Compensation for a description of options held by members of ArcelorMittals Board of Directors. The following table provides summarized information on the options outstanding and the movements on the options granted to Mittal Steels senior management (in 2001, 2003 and 2004, no options were granted to members of Mittal Steels senior management):
Options* granted 1999 Options* granted 2000 Options* granted 2002 Options* granted 2005 Options* granted 2006 Options* granted 2007 Average weighted exercise price

Total

Senior Managers (including the Significant shareholder) .................... 107,500 Exercise price ...................... Term (in years) .................... $11.94 10

107,500
$8.57 10 June 1, 2010

105,000
$2.26 10 April 5, 2012

417,022
$28.75 10 August 23, 2015

465,053
$33.76 10 Septembe r 1, 2016

734,000 $64.30 10 August 2, 2017

1,936,075

$46.13

Expiration date .................... Septembe r 14, 2009

*Options awarded under MittalShares.

260

The following chart sets out the shareholdings and stock options of members of ArcelorMittals Board of Directors and its senior management as of September 3, 2007: ArcelorMittal Share Ownership ArcelorMittal Stock Options Arcelor Share Ownership Arcelor Stock Options

Name

Lakshmi N. Mittal* 30,000 500,000 Joseph J. Kinsch 184,422 Vanisha Mittal Bhatia 15,000 Narayanan Vaghul 10,000 Wilbur L. Ross 1,066,987 Lewis B. Kaden Franois H. Pinault Jos Rmon lvarez 5,416 Sergio Silva de Freitas Georges Schmit Edmond Pachura Michel Angel Marti Manuel Fernndez Lpez Jean-Pierre Hansen John Castegnaro Antoine Spillmann HRH Prince Guillaume de Romain Zaleski Bhikam Agarwal 142,000 Alain Bouchard 20,000 40,000 Vijay Bhatnagar 5,000 80,500 Jose Armando Campos 8,703 24,000 Narendra Chaudhary 4,500 91,000 Davinder Chugh 36,000 Christophe Cornier 17,803 36,000 20,558 50,558 Philippe Darmayan 197 24,000 20,000 Bernard Fontana 24,000 30,000 Jean-Yves Gilet 106,651 20,000 840 40,000 Pierre Gugliermina 54 24,000 25,000 Sudhir Maheshwari 4,999 69,003 Aditya Mittal 19,500 238,000 Malay Mukherjee 204,494 108,006 Carlo Panunzi 66,209 26,000 30,000 Michael Pfitzner 1,300 20,000 Gerhard Renz 21,000 91,000 Michael Rippey 83,066 Lou Schorsch 95,000 Bill Scotting 72,500 Gonzalo Urquijo 60,655 48,000 40,000 Andr van den Bossche 20,000 20,000 Michel Wurth 120,318 48,000 40,000 * Includes only shares and options held in a personal capacity and not the total shares held by the Significant shareholder. Mittal Steel / Arcelor Memorandum of Understanding Mittal Steel, the Significant shareholder and Arcelor entered into a Memorandum of Understanding on June 25, 2006 (the Memorandum of Understanding or MOU), on the basis of which Arcelors Board of Directors recommended Mittal Steels offer for Arcelor and pursuant to which, among other things, the parties agreed on certain corporate governance matters relating to the combined group. In particular, the Memorandum of Understanding includes certain special governance mechanisms designed to promote the integration of Mittal Steel and Arcelor during an initial three-year transitional period beginning as from August 1, 2006, which period is referred to as the Initial Term. Mittal Steel and Arcelor agreed to change and unify their respective corporate governance structures and rules until Mittal Steel is merged into Arcelor in accordance with the MOU. ArcelorMittals corporate governance structure has been established on the same basis as that of Arcelor and 261

Mittal, in accordance with the MOU. Since the implementation of the Memorandum of Understanding, Arcelor and Mittal Steel have been governed by a Board of Directors and a Group Management Board. ArcelorMittal is governed similarly. The composition and operation of each of Arcelors and ArcelorMittals Board of Directors, Group Management Board and Management Committee will be identical until ArcelorMittal is merged into Arcelor (except with respect to the roles of Chairman and President of the Board of Directors, as noted below). Board of Directors, Group Management Board and Management Committee of Arcelor The Memorandum of Understanding provides that each of Mittal Steel, Arcelor and the combined entity will be governed by a Board of Directors and a Management Board, subsequently renamed Group Management Board. The Memorandum of Understanding further provides that during the Initial Term, the Board of Directors of each of Arcelor, Mittal Steel and the combined entity will have the following characteristics: Each initial Board of Directors would be composed of 18 non-executive members, the majority of whom would be independent. Six members would be nominated by Mittal Steel, three of whom would be independent. Six members would be from the (then-existing) Arcelor Board of Directors. Three members would be from the (then-existing) Arcelor Board of Directors representing thenexisting Arcelor major shareholders. An additional three members would be employee representatives.

In addition, during the Initial Term, the Board of Directors will appoint one director as Chairman and one director as President of the Board of Directors. Mr. Joseph J. Kinsch is currently the Chairman of the Board of Directors of Arcelor while Mr. Lakshmi N. Mittal is currently the Chairman of the Board of Directors of ArcelorMittal and President of the Board of Directors of Arcelor. Following the merger of ArcelorMittal into Arcelor, Mr. Joseph J. Kinsch will remain the Chairman of the Board of Directors of Arcelor and Mr. Lakshmi N. Mittal will remain President of the Board of Directors of Arcelor. In addition, the Memorandum of Understanding provides that upon the retirement of Mr. Joseph Kinsch, Mr. Lakshmi N. Mittal would become the Chairman of the combined entity and Mr. Joseph Kinsch would propose the successor President, who shall be an independent director or a former employee of Arcelor. The proposed successor President will serve as President for so long as he or she is a director and the Significant shareholder has agreed to vote for his or her renewal as a director, except in case of gross negligence or willful misconduct in the exercise of his or her functions as director or in the event that the Appointments, Remuneration and Corporate Governance Committee vetoes his or her nomination. Moreover, upon retirement, death or incapacity of Mr. Lakshmi N. Mittal, he shall be replaced by any other representative designated by the Significant shareholder from time to time. With respect to the Group Management Board, the MOU provides that it would include the four thencurrent members of Arcelors management board, with the then-current CEO of Arcelor, Mr. Guy Doll, becoming the Chief Executive Officer of Arcelor, Mittal and the combined entity, and three members to be nominated by the then-current Mittal Steel Board of Directors, that is, seven total members. The parties agreed that if the then-current CEO of Arcelor withdrew or resigned, the new CEO would be appointed by the relevant Board of Directors further to a proposal made by Mr. Joseph Kinsch and approved by Mr. Lakshmi N. Mittal. During 2006, Mittal Steel established a Board of Directors and a Group Management Board in accordance with the Memorandum of Understanding, with the following two modifications. First, following the execution of the Memorandum of Understanding, Mr. Guy Doll decided not to serve as Chief Executive Officer of both Mittal Steel and Arcelor. Instead, Mr. Roland Junck, then a member of the Mittal Steel Group Management Board, assumed that position. As a consequence, the Group Management Board had six rather than the initially intended seven members. Second, on November 5, 2006, Mr. Roland Junck resigned as Chief Executive Officer of Mittal Steel in the interest of Mittal Steel and its stakeholders. Mr. Junck remained a member of the Group Management Board until his retirement from this position, effective July 31, 2007. At the 262

time of Mr. Roland Juncks retirement from the Group Management Board, the other Group Management Board members assumed his responsibilities and the Group Management Board has had 5 members from that date. Also on November 5, 2006, Mr. Lakshmi N. Mittal was appointed a member of the Group Management Board and Chief Executive Officer of Mittal Steel and Mr. Mittal resigned as a member of the Appointments, Remuneration and Corporate Governance Committee. As a consequence, the Board of Directors has one executive director, instead of being composed exclusively of non-executive directors. Mr. Mittal remained as Chairman of the Board of Directors of Mittal Steel prior to its merger with ArcelorMittal. Effective the same date, Mr. Sergio Silva de Freitas was appointed by the Board of Directors as Mr. Mittals successor on the Mittal Steel Appointments, Remuneration and Corporate Governance Committee. The proposal to appoint Mr. Mittal as Chief Executive Officer of Mittal Steel and Arcelor was unanimously approved by the Boards of Directors of Mittal Steel and Arcelor. The general meeting of shareholders of Mittal Steel ratified this appointment at the annual general meeting of shareholders, held on June 12, 2007. The ArcelorMittal Board of Directors is constituted identically to the Mittal Steel Board of Directors immediately prior to the merger of Mittal Steel with and into ArcelorMittal. The Board of Directors is in charge of the overall management of ArcelorMittal and Arcelor. The Arcelor and ArcelorMittal Boards of Directors are currently comprised of 17 non-executive directors and one executive director. The Chief Executive Officer of Arcelor and ArcelorMittal, Mr. Lakshmi N. Mittal, is the sole executive director on both Boards. The Board of Directors is responsible for the performance of all acts of administration necessary or useful in furtherance of the corporate purpose of Arcelor and ArcelorMittal, except those expressly reserved by Luxembourg law or by the articles of association of Arcelor and ArcelorMittal to the general meeting of shareholders. The members of the Board of Directors of both ArcelorMittal and Arcelor are appointed and dismissed by the general meeting of shareholders. The Memorandum of Understanding provides that the directors will be elected and removed by the general meeting of shareholders, by a simple majority of votes cast. Except as specifically described below, no shareholder will have special rights to nominate, elect or remove directors. All directors will be elected by the general meeting of shareholders for three-year terms. Following the Initial Term, and subject to the provisions of the combined entitys articles of association, the Significant shareholder will be entitled to representation on the combined entitys Board of Directors in proportion to its shareholding. If, for whatever reason, ArcelorMittal has not merged with and into Arcelor with Arcelor as the surviving entity by the end of the Initial Term, the Significant shareholder will be entitled to representation on ArcelorMittals Board of Directors in proportion to its shareholding. The Group Management Board is entrusted with the day-to-day management of Arcelor and ArcelorMittal. Mr. Lakshmi N. Mittal, the Chief Executive Officer, is the Chairman of the Group Management Board of both entities. The members of the Group Management Board are appointed and dismissed by the Board of Directors. As the Group Management Board is not a corporate body created by Luxembourg law or Arcelors or ArcelorMittals respective articles of association, the Group Management Board exercises only the authority granted to it by the Board of Directors. In establishing Arcelor and ArcelorMittals strategic direction and corporate policies, Mr. Lakshmi N. Mittal is supported by members of Arcelor and ArcelorMittals senior management, who have substantial professional and worldwide steel industry experience. Some of the members of Arcelor and ArcelorMittals senior management team are also members of the Group Management Board. The Group Management Board is assisted by a Management Committee comprised of the members of the Group Management Board and 19 other senior executives. The Management Committee discusses and prepares group decisions on matters of group-wide importance, integrates the geographical dimension of the group, ensures in-depth discussions with Arcelors operational and resources leaders and shares information about the situation of the group and its markets. Operation of the Board of Directors The required quorum for meetings of the Board of Directors is a majority of the directors, including at least the Chairman, the President and a majority of the independent directors being present or represented. Each director has one vote and no director has a casting vote. Decisions of the Board of Directors are made by a majority of the directors present and represented at a quorate meeting, except as otherwise required by applicable law. 263

During the Initial Term, the agenda of each meeting of the Board of Directors will be jointly agreed by the Chairman and the President of the Board of Directors and will include any matters proposed to be included on the agenda jointly by the Chairman and the President. In the event of a disagreement, the Chairman and the President will work together to try to resolve any such disagreement. After the expiration of the Initial Term, the Chairman and the President will use their reasonable best efforts to agree on the agenda. Director Independence Currently, thirteen of the 18 members of the Arcelor and ArcelorMittal Board of Directors are independent. A director is considered to be independent if (a) he or she is independent within the meaning of the Listed Company Manual of the New York Stock Exchange, Inc., which is referred to as the Listed Company Manual, as it may be amended from time to time, or any successor provision, and (b) he or she is unaffiliated with any shareholder owning or controlling more than two percent of the total issued share capital of Arcelor. For these purposes, a person is deemed affiliated to a shareholder if he or she is an executive officer, a director who also is an employee, a general partner, a managing member or a controlling shareholder of such shareholder. Separate Meeting of Non-Executive Directors The non-executive members of the Board of Directors may schedule meetings without the presence of management. There is no minimum number of meetings that the non-executive directors must hold per year. Significant Shareholder Right of Opposition and Right of Board Representation The Memorandum of Understanding provides that during the Initial Term, with respect to Board of Directors decisions that require shareholders approval, the Significant shareholder will vote in accordance with the position expressed by the Board of Directors, unless the Significant shareholder opposes any such position, in which case the Significant shareholder can vote as it wishes, subject to the following requirements. During the Initial Term, if Mr. Lakshmi N. Mittal opposes any decision of the Board of Directors on a matter that does not require shareholders approval and that was not proposed by him, Mr. Lakshmi N. Mittal will have the right to request that such action first be approved by a shareholders meeting, and the Significant shareholder will have the right to vote at such meeting as it sees fit. The Board of Directors will not approve any action that has been rejected by such shareholders meeting. The Memorandum of Understanding further provides that during the Initial Term, and subject to the Significant shareholder owning or controlling at least 15% of the outstanding share capital of Mittal Steel, ArcelorMittal or the combined entity, the Significant shareholder is entitled to elect to Mittal Steels, ArcelorMittals or the combined entitys Board of Directors, as the case may be, up to (and not more than) six directors, including three directors who are affiliated (directly or indirectly) with the Significant shareholder and three independent directors. Following the Initial Term, and subject to the provisions of Mittal Steels, ArcelorMittals or the combined entitys articles of association, as the case may be, the Significant shareholder will be entitled to representation on Mittal Steels, ArcelorMittals or the combined entitys Board of Directors, as the case may be, in proportion to its shareholding. Board of Directors Committees Following the implementation of the Memorandum of Understanding, the ArcelorMittal and Arcelor Board of Directors has two committees: an Audit Committee and an Appointments, Remuneration and Corporate Governance Committee. Audit Committee. The Audit Committee is composed of four independent directors, with independence defined as set out above and also in Rule 10A-3 under the U.S. Exchange Act. The members are appointed by the Board of Directors. The Audit Committee makes decisions by a simple majority with no member having a casting vote. The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing: the financial reports and other financial information provided by the company to any governmental body or the public; 264

the companys system of internal control regarding finance, accounting, legal compliance and ethics that the Board of Directors and members of management have established; and the companys auditing, accounting and financial reporting processes generally. The Audit Committees primary duties and responsibilities are to: serve as an independent and objective party to monitor the companys financial reporting process and internal controls system; review and appraise the audit efforts of the companys independent accountants and internal auditing department; provide an open avenue of communication among the independent accountants, financial and senior management, the internal auditing department and the Board of Directors; approve the appointment and fees of the independent auditors; and monitor the independence of the external auditors.

The current members of the Arcelor and ArcelorMittal Audit Committee are: Messrs. Narayanan Vaghul, Jos Rmon lvarez-Rendueles, Wilbur L. Ross and Edmond Pachura, all of whom are independent under the companys Corporate Governance guidelines and the NYSE standards. The Chairman of the Audit Committee is Mr. Vaghul, who has significant experience and financial expertise. Mr. Vaghul is the Chairman of ICICI Bank Ltd., a company that is listed on the NYSE and the Mumbai Stock Exchange. Mr. lvarezRendueles, a former Governor of the Bank of Espaa and former President of the Bank Zaragozano, also has significant experience and financial expertise. Both Mr. Ross and Mr. Pachura have considerable experience in managing companies affairs. The Audit Committee is required to meet at least four times a year. Appointments, Remuneration and Corporate Governance Committee. The Appointments, Remuneration and Corporate Governance Committee is comprised of four directors, all of whom are independent, as were all directors in the two predecessor committees. The members are appointed by the Board of Directors. The Appointments, Remuneration and Corporate Governance Committee makes decisions by a simple majority with no member having a casting vote. The Board of Directors has established the Appointments, Remuneration and Corporate Governance Committee to: determine, on its behalf and on behalf of the shareholders within agreed terms of reference, the companys framework of remuneration and compensation, including stock options for the Chief Executive Officer and the Chief Financial Officer of the company, the members of the Group Management Board and the members of the Management Committee; consider any appointment or reappointment to the Board of Directors at the request of the Board of Directors; provide advice and recommendations to the Board of Directors on such appointment; and develop, monitor and review corporate governance principles applicable to the company.

The Appointments, Remuneration and Corporate Governance Committees principal responsibility in compensating executives is to encourage and reward performance that will lead to long-term enhancement of shareholder value. The Appointments, Remuneration and Corporate Governance Committee will, at the request of the Board of Directors, consider any appointment or reappointment to the Board of Directors. It will provide advice and recommendations to the Board of Directors on such appointment. The Appointments, Remuneration and 265

Corporate Governance Committee is also responsible for developing, monitoring and reviewing Corporate Governance principles applicable to Arcelor. The current members of Arcelor and ArcelorMittals Appointments, Remuneration and Corporate Governance Committee are: Messrs. Joseph Kinsch, Sergio Silva de Freitas, Lewis Kaden and Jean-Pierre Hansen, all of whom are independent under Arcelors Corporate Governance guidelines and the NYSE standards. The Chairman of the Appointments, Remuneration and Corporate Governance Committee is Mr. Kaden. The Appointments, Remuneration and Corporate Governance Committee is required to meet at least twice a year. Governance Following the Initial Term The Memorandum of Understanding provides that upon expiration of the Initial Term, the parties to the MOU will review the corporate governance rules described above in order to reflect the best standards of corporate governance for comparable companies and, in particular, have them conform with the corporate governance aspects of the NYSE listing standards applied to non-U.S. companies and the applicable Luxembourg corporate governance code or similar document. The Chairman and the President shall consult in the year prior to the end of the Initial Term with a view to determining the identity of the directors that could be recommended to the Appointments, Remuneration and Corporate Governance Committee. Corporate Governance Arcelor and ArcelorMittal are committed to adopting best practice in terms of corporate governance in its dealings with shareholders. In particular, ArcelorMittal and Arcelor aim to ensure good corporate governance by applying rules concerning transparency, quality or reporting and the balance of powers. In addition, ArcelorMittal and Arcelor have a section of their joint website dedicated entirely to corporate governance. Arcelor will continue to diligently monitor new, proposed and final U.S. and Luxembourg legal requirements and will make adjustments to its corporate governance controls and procedures to stay in compliance with these requirements on a timely basis. On January 1, 2007, the Ten Principles of Corporate Governance of the Luxembourg Stock Exchange entered into force. Arcelor complies with all of the principles and recommendations set out therein, and is committed to meeting all of the corporate governance requirements proposed under such principles. There will be no significant differences between Arcelors corporate governance practices upon effectiveness of the merger and those currently required to be followed by U.S. domestic companies under the NYSE listing standards. Board of Directors and Senior Management Compliance Matters. In relation to each of the members of the Board of Directors and each of the members of senior management, neither ArcelorMittal nor Arcelor is aware of (a) any convictions in relation to fraudulent offenses in the last five years, (b) any bankruptcies, receiverships or liquidations of any entities in which such members held any office, directorships, or partner or senior management positions in the last five years, or (c) any official public incrimination and/or sanctions of such person by statutory or regulatory authorities (including designated professional bodies), or disqualification by a court from acting as a member of the administrative, management or supervisory bodies of an issuer or from acting in the management or conduct of the affairs of any issuer for at least the previous five years. Employees Arcelor had approximately 105,700 employees as of the date of this prospectus. ArcelorMittal had approximately 330,000 employees (including those of Arcelor) as of the date of this prospectus. Neither ArcelorMittal nor Arcelor employs a significant number of temporary employees.

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The table below sets forth the breakdown of the total year-end number of employees of ArcelorMittal, which as from August 1, 2006, includes Arcelor, by geographical region for the past three years.
Year Ended 2004 2005 2006

Region Americas ....................................................................... Europe........................................................................... Asia & Africa................................................................ Total .............................................................................. 9,713 79,278 75,402 164,393 24,320 128,198 71,768 224,286 57,583 192,127 69,872 319,582

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DESCRIPTION OF ARCELORS SHARE CAPITAL Set out below is a summary description of the Arcelor shares, based on the articles of association of Arcelor, as they will be in effect at the time of the merger, that is, assuming that the amendment of the articles of association that will be submitted to the shareholders of Arcelor at the extraordinary general meeting convened to approve the merger will be approved. Upon effectiveness of the merger, the rights of ArcelorMittal shareholders who become holders of Arcelor shares will be governed by Luxembourg law and Arcelors articles of association. More information concerning shareholders rights can be found in the Luxembourg law on commercial companies dated August 10, 1915, as amended from time to time, and the articles of association of Arcelor. The full text of Arcelors articles of association is available for one year from the date hereof, in both the French and English languages, at Arcelors offices and at www.arcelormittal.com. See Documents on Display and Incorporation by Reference. Additionally, Arcelors expected post-merger articles of association are attached to the merger proposal in Annex B. You are encouraged to read these documents. As described under Comparison of Rights of ArcelorMittal Shareholders and Arcelor Shareholders, at the time of the merger, the articles of association of Arcelor will be identical to the articles of association of ArcelorMittal prior to the merger (except for the amount of issued capital, which shall be increased in the merger, and certain other non-material items). General Arcelor is a Luxembourg public limited liability company (socit anonyme). The companys legal name is Arcelor. Arcelor was incorporated on June 8, 2001 under the name Newco Steel for an unlimited duration of time. On December 12, 2001, the name Newco Steel was changed to Arcelor. Arcelor is registered with the Luxembourg Registry of Trade and Companies under number B 82.454. Arcelor has its registered office at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg. Its telephone number is +352 4792-2414. The corporate purpose of Arcelor, as stated in Article 3 (Corporate Purpose), is the following: The corporate purpose of the Company shall be the manufacture, processing and marketing of steel, steel products and all other metallurgical products, as well as all products and materials used in their manufacture, their processing and their marketing, and all industrial and commercial activities connected directly or indirectly with those objects, including mining and research activities and the creation, acquisition, holding, exploitation and sale of patents, licences, know-how and, more generally, intellectual and industrial property rights. The Company may realize that corporate purpose either directly or through the creation of companies, the acquisition, holding or acquisition of interests in any companies or partnerships, membership in any associations, consortia and joint ventures. In general, the Companys corporate purpose comprises the participation, in any form whatsoever, in companies and partnerships, and the acquisition by purchase, subscription or in any other manner as well as the transfer by sale, exchange or in any other manner of shares, bonds, debt securities, warrants and other securities and instruments of any kind. It may grant assistance to any affiliated company and take any measure for the control and supervision of such companies. It may carry out any commercial, financial or industrial operation or transaction which it considers to be directly or indirectly necessary or useful in order to achieve or further its corporate purpose. Share Capital As of September 3, 2007, the issued share capital of Arcelor was 3,349,067,040 represented by 669,813,408 shares without designation of nominal value, of which 669,692,125 were outstanding. All issued shares have been fully paid up. 268

Major Shareholders As of September 3, 2007, ArcelorMittal is the sole person who is known to be the beneficial owner of more than 5% of Arcelor shares. As of September 3, 2007, ArcelorMittal held Arcelor shares representing 94.24% of Arcelors issued share capital and 94.26% of Arcelors voting rights. As of September 3, 2007, the Significant shareholder owned, directly or indirectly, through holding companies 623,285,000 shares of ArcelorMittal representing 43.98% of the issued share capital of ArcelorMittal. Although no shareholder, or group of shareholders acting in concert, currently controls or holds more than 50% of the outstanding voting rights in ArcelorMittal or, on the basis of the current shareholdings in ArcelorMittal, will control or hold such an interest in (post-merger) Arcelor, there are a number of arrangements and rights that protect minority shareholders against a possible abuse of control by a shareholder, or group of shareholders acting in concert, that controls or holds more than 50% of the outstanding voting rights. As described in Material Contracts and Related Party TransactionsIndependence of the Company and Management and EmployeesMittal Steel / Arcelor Memorandum of Understanding, the Memorandum of Understanding provides for a number of provisions that (effectively) limit the rights of the Significant shareholder and protect the independence of ArcelorMittal and Arcelor. These provisions will remain in place until at least August 1, 2009. Luxembourg statutory law and case law prohibits the abuse by shareholders (including significant and controlling shareholders) of their voting rights or other powers. In the event of such an abuse of right, shareholders could successfully require the competent court to annul resolutions of the general meeting of shareholders or the board of directors. In addition, shareholders have preemptive rights (see Preemptive Rights), have the right to convene, and to add items to the agenda of, a general meeting of shareholders (see General Meeting of Shareholders), and have certain information rights (see Information Rights). Issuance of Arcelor Shares in the Merger In the merger, Arcelor will issue a number of shares without nominal value in accordance with the terms and conditions set out in the merger proposal and the explanatory memorandum. The issuance of the Arcelor shares will be approved by the Arcelor shareholders at the same extraordinary general meeting of shareholders that will adopt the decision to merge and the amendment to the existing articles of association of Arcelor. The Arcelor shares to be issued in the merger will be created under Luxembourg law, and will have the rights as set forth in the Arcelor articles of association and Luxembourg law. Arcelor shares are issued in registered form only and are freely transferable. Based on the number of ArcelorMittal shares issued on the date hereof, Arcelor expects to issue a maximum of 1,417,207,253 Arcelor shares to ArcelorMittal shareholders in the merger, such number being nominally reduced by the number of ArcelorMittal shares that will be held by or on behalf of Arcelor or ArcelorMittal as of November 5, 2007, the date of the extraordinary general meetings of Arcelor and ArcelorMittal convened to vote on the merger. Based on the number of ArcelorMittal shares issued on the date hereof, after the effective time of the merger, former ArcelorMittal shareholders will hold approximately 97% of the then issued Arcelor shares. In addition, Arcelor may issue additional Arcelor shares as a result of the future exercise of (former) ArcelorMittal or Arcelor stock options. Form and Transfer of Shares Arcelor shares are issued in registered form only and are freely transferable. Luxembourg law does not impose any limitations on the rights of Luxembourg or non-Luxembourg residents to hold or vote Arcelor shares. Under Luxembourg law, the ownership of registered shares is evidenced by the inscription of the name of the shareholder, the number of shares held by him or her and the amount paid up on each share in the shareholder registry of Arcelor. Each transfer of shares shall be effected by written declaration of transfer to be recorded in the shareholder registry of Arcelor, such declaration to be dated and signed by the transferor and the transferee, or by their duly appointed agents. Arcelor may accept and enter into its shareholder registry any 269

transfer effected pursuant to an agreement or agreements between the transferor and the transferee, true and complete copies of which have been delivered to Arcelor. In addition, the articles of association of Arcelor provide that its shares may be held through a securities settlement system or a professional depository of securities. Shares held in such manner have the same rights and obligations as shares recorded in Arcelors shareholder registry. Shares held through a securities settlement system or a professional depository of securities may be transferred in accordance with customary procedures for the transfer of securities in book-entry form. The shares may consist of (i) shares traded on the NYSE, or Arcelor New York Registry Shares, which are registered in a local shareholder registry kept by or on behalf of Arcelor by The Bank of New York, (ii) shares traded on Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the regulated market of the Luxembourg Stock Exchange and the Spanish exchanges, or the Arcelor European Registry Shares, which are registered in a local shareholder registry kept by or on behalf of Arcelor by ABN AMRO Bank N.V., or directly on the Luxembourg shareholder registry without being held on the local Dutch shareholder registry. Issuance of Shares Pursuant to the articles of association of Arcelor, the issuance of shares in Arcelor requires the approval of at least two-thirds of the votes cast at a general meeting of shareholders where at least 50% of the issued share capital is present or represented. Currently, the Board of Directors of Arcelor is not authorized to increase the share capital of Arcelor. It will be proposed at the extraordinary general meeting of shareholders, which among other things, will vote on the proposal to merge, however, to authorize the Board of Directors for a period ending on November 5, 2012 to increase the issued share capital on one or more occasions up to the maximum amount of the authorized share capital for delivery upon exercise or conversion, as applicable, of Arcelors stock options or other equity-based awards granted under any Arcelor employee incentive or benefit plan. Such authorization can only be valid for a specific period of time, being no more than five years, and which may from time to time be extended by the general meeting of shareholders for a period of no more than five years.The Board of Directors is authorized to determine the conditions for all share issues, within the limits of the authorized share capital, including the payment in cash or in kind on such shares. Preemptive Rights Unless limited or cancelled by the Board of Directors as described below, holders of Arcelor shares have a pro rata preemptive right to subscribe for any newly-issued shares, except for shares issued for consideration other than cash (in kind). It will be proposed at the extraordinary general meeting of shareholders to amend the articles of association of Arcelor to provide that preemptive rights can be limited or cancelled by the Board of Directors for a period ending on November 5, 2012 in the event of an increase of the issued share capital by the Board of Directors within the limits of the authorized share capital. Repurchase of Shares Arcelor cannot subscribe for its own shares. Arcelor may, however, repurchase issued Arcelor shares or have another person repurchase issued Arcelor shares for its account, subject to the following conditions: the prior authorization of the general meeting of shareholders, which authorization sets forth the terms and conditions of the proposed repurchase and in particular the maximum number of shares to be repurchased, the duration of the period for which the authorization is given (which may not exceed 18 months) and, in the case of repurchase for consideration, the minimum and maximum consideration per share, must have been obtained; the nominal value or, in the absence thereof, the accounting par value of the shares acquired, as well as that of shares held by Arcelor and shares held by a person acting for Arcelors account, may not exceed 10% of the value of the entirety of the issued share capital;

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the repurchase may not reduce the net assets of Arcelor on a non-consolidated basis to a level below the aggregate of the issued share capital and the reserves that Arcelor must maintain pursuant to Luxembourg law or its articles of association; and only fully paid up shares may be repurchased.

It will be proposed at the extraordinary general meeting of shareholders, which among other things, will vote on the proposal to merge, to cancel the share buy-back auhotirzation granted by the annual meeting of shareholders held on April 27, 2007, and to grant to the Board of Directors a new authorization to repurchase up to 10% of the issued share capital in the company, the terms of which will be consistent with the authorization in force at the level of ArcelorMittal. The authorization will be valid for a period ending on the earlier of 18 months from the effective date of the merger or the date of its renewal by a subsequent general meeting of shareholders. Pursuant to such authorization, the Board of Directors of Arcelor is authorized to acquire and sell shares in the company under the conditions set forth in Article 49-2 of the Luxembourg law on commercial companies, dated August 10, 1915, as amended from time to time. Such purchases and sales may be carried out for any authorized purpose or which would come to be authorized by the laws and regulations in force. The purchase price per share to be paid in cash shall not represent more than 125% of the price on the New York Stock Exchange, Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the Luxembourg Stock Exchange or the Spanish exchanges, depending on the market on which the transactions are made, and shall not be less than the par value of the share at the time of repurchase. For off market transactions, the maximum purchase price shall be 125% of the price of Euronext Paris by NYSE Euronext. The price on the New York Stock Exchange or Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the Luxembourg Stock Exchange or the Spanish exchanges will be deemed to be the higher of the average of the final listing price per share on the relevant stock exchange during 30 consecutive days on which the relevant stock exchange is open for trading preceding the 3 trading days prior to the date of repurchase. In the event of a share capital increase by incorporation of reserves or issue premiums and the free allotment of shares as well as in the event of the division or regrouping of the shares, the purchase prices indicate above shall be adjusted by a coefficient multiple equal to the ratio between the number of shares comprising the share capital prior to the transaction and such number following the transaction. The total amount allocated for Arcelors share repurchase program cannot in any event exceed the amount of Arcelors then available equity. The Board of Directors of Arcelor will use this authorization in order to allow the continuation by Arcelor of the ArcelorMittal share buy-back policy (the 27 million share program) if not completed prior to the merger and to exercise any call option to fund its stock option plans. In addition, pursuant to Luxembourg law the Board of Directors may repurchase up to 10% of the subscribed share capital without the prior approval of the general meeting of shareholders if necessary to prevent serious and imminent harm to Arcelor. Capital Reduction The articles of association provide that the issued share capital of Arcelor may be reduced, subject to the approval of at least two-thirds of the votes cast at a general meeting of shareholders where at least 50% of the issued share capital is present or represented. General Meeting of Shareholders Each share of Arcelor entitles the holder to attend a general meeting of shareholders, either in person or by proxy, to address a general meeting of shareholders, and to exercise voting rights, subject to the provisions of the articles of association. Each share of Arcelor entitles the holder to one vote at a general meeting of shareholders. There is no minimum shareholding required to be able to attend or vote at a general meeting of shareholders. The articles of association provide that shareholders are entitled to vote by correspondence, by means of a form providing the option for a positive or negative vote or for an abstention and that the Board of Directors may decide to authorize them to participate in the general meetings by videoconference or by other telecommunications means allowing their identification. A shareholder may act at any general meeting of shareholders by appointing another person (who need not be a shareholder) as his or her proxy, which proxy shall be in writing. The writing may take the form of a 271

fax or any other means of communication guaranteeing the authenticity of the document and enabling the shareholder giving the proxy to be identified. When convening a general meeting of shareholders, Arcelor will publish two notices (which must be published at least eight days apart and in the case of the second notice, eight days before the meeting) in the Mmorial, Recueil des Socits et Associations, and in a Luxembourg newspaper. These convening notices must contain the agenda of the meeting and set out the conditions for attendance and representation at the meeting. Shareholders whose share ownership is directly registered in any shareholder registry will receive the notice by ordinary mail, which mail must be sent to such shareholders eight days prior to the general meeting of shareholders. In addition, all materials relating to a general meeting of shareholders (including the notice) are available at the website of Arcelor at www.arcelormittal.com. The articles of association provide that in the case of shares held through the operator of a securities settlement system or depository, a holder of such shares wishing to attend a general meeting of shareholders should receive from such operator or depository a certificate certifying the number of shares recorded in the relevant account on the blocking date and certifying that the shares in the account shall be blocked until the close of the general meeting. Such certificates should be submitted to Arcelor on or before the day preceding the blocking date. The annual ordinary general meeting of shareholders of Arcelor is held at 11:00 a.m. on the second Tuesday of the month of May of each year in the city of Luxembourg. If that day is a legal or banking holiday, the meeting will be held on the immediately preceding banking day. Finally, Luxembourg law provides that the Board of Directors is obliged to convene a general meeting of shareholders if shareholders representing, in the aggregate, 10% of the issued share capital so require in writing with an indication of the agenda. In such case, the general meeting of shareholders must be held within one month of the request. If the requested general meeting of shareholders is not held within one month, shareholders representing, in the aggregate, 10% of the issued share capital, may petition the competent president of the district court in Luxembourg to have a court appointee convene the meeting. Luxembourg law provides that shareholders representing, in the aggregate, 10% of the issued share capital may request that additional items be added to the agenda of a general meeting of shareholders. That request must be made by registered mail sent to the registered office at least five days before the holding of the general meeting of shareholders. Voting Rights Each share of Arcelor entitles the holder to one vote at a general meeting of shareholders. Luxembourg law distinguishes between ordinary general meetings of shareholders and extraordinary general meetings of shareholders. Extraordinary general meetings of shareholders are convened to resolve upon an amendment to the articles of association and certain other limited matters described below and are subject to the quorum and majority requirements described below. All other general meetings of shareholders are ordinary general meetings of shareholders. Ordinary General Meetings of Shareholders. At an ordinary general meeting of shareholders there is no quorum requirement, and resolutions are adopted by a simple majority, irrespective of the number of shares present or represented. Extraordinary General Meetings of Shareholders. An extraordinary general meeting of shareholders convened for the purpose of (a) an increase or decrease of the authorized or subscribed capital, (b) a limitation or exclusion of preemptive rights, (c) an approval of the acquisition by any person of one quarter or more of the shares of Arcelor, (d) approving a legal merger (such as the merger of ArcelorMittal into Arcelor) or (e) except as described immediately below, an amendment of the articles of association must have a quorum of at least 50% of the issued share capital of Arcelor. If a quorum is not reached, the extraordinary general meeting of shareholders may be reconvened, pursuant to appropriate notification procedures, at a later date with no quorum. Irrespective of whether the proposed amendment will be subject to a vote at the first or a subsequent extraordinary general meeting of shareholders, the amendment is subject to the approval of at least two-thirds of the votes cast at such extraordinary general meeting of shareholders. Appointment and Removal of Directors. Members of the Board of Directors may be elected by simple majority of present and represented shareholders at any general meeting of shareholders. Under the articles of 272

association, all directors are elected for a period terminating at a date determined at the time of their appointment. At the extraordinary general meeting of shareholders, it will be proposed to amend the Arcelor articles of association with regard to appointments after November 13, 2007 (except in the event of the replacement of a member of the Board of Directors during his or her mandate), so that their terms will expire at the third annual ordinary general meeting of shareholders following the date of their appointment. Any directors may be removed with or without cause by a simple majority vote at any general meeting of shareholders. Pursuant to Arcelors articles of association, as of August 1, 2009, the Significant shareholder will be entitled to nominate a certain number of candidates for election by the shareholders to the Board of Directors, in proportion to its shareholding. Amendment to the Articles of Association Shareholder Approval Requirements. Luxembourg law requires an extraordinary general meeting of shareholders to resolve upon an amendment to the articles of association. Such meeting is convened by the Board of Directors. The agenda of the extraordinary general meeting of shareholders must indicate the proposed amendments to the articles of association. An extraordinary general meeting of shareholders convened for the purpose of amending the articles of association must have a quorum of at least 50% of the issued share capital of Arcelor. If such quorum is not reached, the extraordinary general meeting of shareholders may be reconvened at a later date with no quorum according to the appropriate notification procedures. Irrespective of whether the proposed amendment will be subject to a vote at the first or a subsequent extraordinary general meeting of shareholders, the amendment is subject to the approval of at least two-thirds of the votes cast at such extraordinary general meeting of shareholders, except as described immediately below. Amendments to the articles of association of Arcelor relating to (a) the size and the requisite minimum number of independent and non-executive directors of the Board of Directors, (b) the composition of the audit committee, and (c) the board nomination rights of the Significant shareholder, require a majority of votes representing two-thirds of the voting rights attached to the shares in Arcelor. Formalities. Any resolutions to amend the articles of association must be taken before a Luxembourg notary and such amendments must be published in accordance with Luxembourg law. Annual Accounts Each year the Board of Directors must prepare annual accounts, that is, an inventory of the assets and liabilities of Arcelor together with a balance sheet and a profit and loss account. The Board of Directors must also prepare, each year, consolidated accounts and management reports on the annual accounts and consolidated accounts. The annual accounts, the consolidated accounts, the management report and the auditors reports must be available for inspection by shareholders at the registered office of Arcelor at least 15 calendar days prior to the date of the annual ordinary general meeting of shareholders. The annual accounts and the consolidated accounts, after approval by the annual ordinary general meeting of shareholders, will be filed with the Luxembourg registry of trade and companies. Dividends Subject to Luxembourg law, each Arcelor share is entitled to participate equally in dividends when and if declared by the annual ordinary general meeting of shareholders out of funds legally available for such purposes. Pursuant to the articles of association, the annual ordinary general meeting of shareholders may declare a dividend and the Board of Directors may declare interim dividends, to the extent permitted by Luxembourg law. Declared and unpaid dividends held by Arcelor for the account of its shareholders shall not bear interest. 273

Under Luxembourg law, claims for dividends will lapse in favor of Arcelor five years after the date such dividends are declared. Merger and Division A merger by absorption whereby one Luxembourg company, after its dissolution without liquidation transfers to another Luxembourg company all of its assets and liabilities in exchange for the issuance to the shareholders of the company being acquired of shares in the acquiring company, or a merger effected by transfer of assets to a newly incorporated company, must, in principle, be approved by an extraordinary general meeting of shareholders of each company to be held before a notary. Such merger requires the approval of at least twothirds of the votes cast at a general meeting of shareholders where at least 50% of the issued share capital is present or represented. Liquidation In the event of the liquidation, dissolution or winding-up of Arcelor, the assets remaining after allowing for the payment of all liabilities will be paid out to the shareholders pro rata to their respective shareholdings. The decisions to liquidate, dissolve or wind-up require the approval of at least two-thirds of the votes cast at a general meeting of shareholders where at least 50% of the issued share capital is present or represented. Information Rights Luxembourg law gives shareholders limited rights to inspect certain corporate records 15 calendar days prior to the date of the annual ordinary general meeting of shareholders, including the annual accounts with the list of directors and auditors, the consolidated accounts, the notes to the annual accounts and the consolidated accounts, a list of shareholders whose shares are not fully paid-up, the management reports and the auditors report. The annual accounts, the consolidated accounts, the auditors reports and the management reports are sent to registered shareholders at the same time as the convening notice for the annual ordinary general meeting of shareholders. In addition, any shareholder is entitled to receive a copy of these documents free of charge 15 calendar days prior to the date of the annual ordinary general meeting of shareholders. Under Luxembourg law, it is generally accepted that a shareholder has the right to receive responses to questions concerning items on the agenda for a general meeting of shareholders, if such responses are necessary or useful for a shareholder to make an informed decision concerning such agenda item, unless a response to such questions could be detrimental to the interests of the company. Mandatory Bid Squeeze-Out Right Sell-Out Right Mandatory Bid. Pursuant to the Luxembourg law of May 19, 2006 implementing Directive 2004/25/EC of the European Parliament and of the Council of April 21, 2004 on takeover bids, referred to as the Luxembourg takeover law, which is referred to as the Takeover Law, if a natural or legal person, acting alone or in concert, acquires securities in Arcelor which, when added to any existing holdings of those securities give him or her voting rights representing 33% of all of the voting rights attached to the issued shares in Arcelor, such person is obliged to make an offer for the remaining shares in Arcelor. In a mandatory bid situation the fair price is considered to be the highest price paid for the securities during the 12 months preceding the mandatory bid. The CSSF has confirmed that following the merger of ArcelorMittal into Arcelor the Significant shareholder will not be obliged to launch a mandatory offer for the remaining shares of the combined entity. Pursuant to Arcelors articles of association, any person or entity that acquires shares in Arcelor giving such person 25% or more of the total voting rights of Arcelor shall be obliged to make, or cause to be made, in each country where Arcelors transferable securities are admitted to trading on a regulated or other market and in each of the countries in which Arcelor has made a public offering of its shares, an unconditional public offer of acquisition to all shareholders for all of their shares and also to all holders of securities giving access to capital or linked to capital or whose rights are dependent on the profits of Arcelor. The price offered in such public offerings must be fair and equitable and must be justified by a report drawn up by a leading international financial institution.

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Squeeze-Out Right. Pursuant to Luxembourg takeover law, when an offer (mandatory or voluntary) is made to all of the holders of voting securities of Arcelor and after such offer the offeror holds 95% of the securities carrying voting rights and 95% of the voting rights, it can require the holders of the remaining securities to sell those securities (of the same class) to the offeror. The price offered for such securities must be a fair price. The price offered in a voluntary offer would be considered a fair price in the squeeze-out proceedings if 90% of the Arcelor shares carrying voting rights were acquired in such voluntary offer. The price paid in a mandatory offer is deemed a fair price. The consideration paid in the squeeze-out proceedings must take the same form as the consideration offered in the offer or consist solely of cash. Moreover, under Luxembourg takeover law, an all-cash option must be offered to these remaining Arcelor shareholders. Finally, pursuant to Luxembourg takeover law, the right to initiate such squeeze-out proceedings must be exercised within three months following the expiration of the offer. Sell-Out Right. Pursuant to Luxembourg takeover law, when an offer (mandatory or voluntary) is made to all of the holders of voting securities of Arcelor and after such offer the offeror holds 90% of the securities carrying voting rights and 90% of the voting rights, the remaining security holders can require that the offeror purchase the remaining securities (of the same class). The price offered in a voluntary offer would be considered a fair price in the sell-out proceedings if 90% of the Arcelor shares carrying voting rights were acquired in such voluntary offer. The price paid in a mandatory offer is deemed a fair price. The consideration paid in the sell-out proceedings must take the same form as the consideration offered in the offer or consist solely of cash. Moreover, under Luxembourg takeover law, an all-cash option must be offered to these remaining Arcelor shareholders. Finally, pursuant to Luxembourg takeover law, the right to initiate such sell-out proceedings must be exercised within three months following the expiration of the offer. Disclosure of Significant Ownership in Arcelor Shares Holders of Arcelor shares may be subject to notification obligations pursuant to the Luxembourg law of December 4, 1992 on major holdings, as amended from time to time. The following description summarizes those obligations. Holders of Arcelor shares are advised to consult with their own legal advisers to determine whether the notification obligations apply to them. Pursuant to Luxembourg law, where a natural or legal entity acquires or disposes of a holding in Arcelor, and where following that acquisition or disposal, the proportion of voting rights held by that person or legal entity reaches or exceeds one of the thresholds of 10%, 20%, 33%, 50% and 66% of the total voting rights existing when the situation giving rise to a declaration occurs, or, subsequently, falls below any such threshold, it must notify simultaneously Arcelor and the CSSF of such event. Disclosure to the public is made by Arcelor publishing the information provided in the declaration on the official price list of the Luxembourg Stock Exchange. Pursuant to Arcelors articles of association, the above provisions shall also apply (a) to any acquisition or disposal of shares resulting in the threshold of 2.5% of voting rights in Arcelor being exceeded or reduced below (b) to any acquisition or disposal of shares resulting in the threshold of 3% of voting rights in Arcelor being exceeded or reduced below, and (c) over and above 3% of voting rights in Arcelor, to any acquisition or disposal of shares resulting in successive thresholds of 1% of voting rights in Arcelor being exceeded or reduced below. Any person who acquires shares giving him or her 5% or more or a multiple of 5% or more of the voting rights in Arcelor must inform Arcelor within ten Luxembourg Stock Exchange trading days following the date he or she crossed such threshold by registered letter return receipt requested, of his or her intention (i) to acquire or dispose of shares in Arcelor within the next 12 months, (ii) to seek to obtain control over Arcelor or (iii) to seek to appoint a member to Arcelors Board of Directors. For the purposes of calculating the percentage of voting rights held by a person or entity the following will be taken into account: voting rights held by other persons or entities in their own names but on behalf of that person or entity; voting rights held by an undertaking controlled by that person or entity; voting rights held by a third party with whom that person or entity has concluded a written agreement that obliges them to adopt, by exercise in concert of the voting rights they hold, a lasting common policy towards the company; 275

voting rights held by a third party under a written agreement concluded with that person or entity or with an undertaking controlled by that person or entity providing for the temporary transfer for consideration of the related voting rights; voting rights attaching to shares owned by that person or entity which are given as security, except where the person or entity holding the security controls the voting rights and declares his or her intention of exercising them in which case they will be regarded as the latters voting rights; voting rights attaching to shares of which that person or entity has the life interest; voting rights that such person or entity or one of the other persons or entities mentioned above is entitled to acquire, on his or her own initiative alone, under a formal agreement (in such cases, the notification must be effected on the date of the agreement); and voting rights attaching to shares deposited with that person or entity which that person or entity can exercise at its discretion in the absence of specific instructions from the holders.

Disclosure of Insider Transactions Members of the Board of Directors and other persons exercising management responsibilities within Arcelor and persons closely associated with them must disclose to the CSSF and to Arcelor all transactions relating to the shares of Arcelor or derivatives or other financial instruments linked to the shares, conducted for their own account. The disclosure must be made within five working days of the relevant transaction using the form attached as Annex B to CSSF Circular 07/280 of February 5, 2007. Such information must be published in a manner easily accessible to the public in English, French or German. Limitation of Directors Liability/ Indemnification of Officers and Directors The articles of association of Arcelor provide that Arcelor will, to the extent permitted by law, indemnify every director or member of the Group Management Board, as well as every former director or member of the Group Management Board, the fees, costs and expenses reasonably incurred by him or her in the defense or resolution (including a settlement) of all legal actions or proceedings, whether civil, criminal or administrative, he or she has been involved in his or her role as former or current director or member of the Group Management Board of Arcelor. The right to indemnification does not exist in the case of gross negligence, fraud, fraudulent inducement, dishonesty or for a criminal offense or if it is ultimately determined that the director or member of the Group Management Board has not acted honestly, in good faith and with the reasonable belief that he or she was acting in the best interests of Arcelor.

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COMPARISON OF RIGHTS OF ArcelorMittal SHAREHOLDERS AND ARCELOR SHAREHOLDERS In connection with the merger, Arcelor shareholders will vote on a proposal to amend the provisions of Arcelors articles of association at the extraordinary meeting of shareholders to be held on November 5, 2007 to vote on, among other things, the merger proposal and the explanatory memorandum. Approval of the proposed amendments to Arcelors articles of association by the Arcelor shareholders is a condition to the effectiveness of the merger. The combined company shall be named ArcelorMittal, as Arcelor will be renamed ArcelorMittal upon the effectiveness of the merger. The rights of shareholders will be governed by the articles of association of Arcelor (as renamed ArcelorMittal). Because ArcelorMittal and Arcelor are both socits anonymes organized under the laws of Luxembourg and the articles of association of both entities will be identical upon effectiveness of the merger (except for the amount of issued capital, which shall be increased in the merger , the provisions relating to the authorized share capital and to share fractions, and certain other non-material items), there will be no material differences between the rights of ArcelorMittal shareholders and Arcelor shareholders.

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SHARE TRADING, CLEARING AND SETTLEMENT General Arcelor shares are in registered form only and are freely transferable. Ownership of Arcelor shares is recorded in a shareholder registry kept by Arcelor, at its corporate headquarters at 19, Avenue de la Libert, L2930 Luxembourg, Grand Duchy of Luxembourg (the Shareholder Registry). The registration of Arcelor shares in registered form in the Shareholder Registry may be evidenced by a certificate at the option of the shareholder concerned. Arcelor shares may also be registered on one of two local registries kept by either ABN AMRO Bank N.V. (ABN AMRO), Gustav Mahlerlaan 10, 1082 PP Amsterdam, The Netherlands, on Arcelors behalf (the Arcelor European Registry Shares and the Arcelor European Registry), or The Bank of New York (BNY), 101 Barclay Street, 22nd Floor West, New York, NY 10286, United States of America, on Arcelors behalf (the Arcelor New York Registry Shares and Arcelor New York Registry). Any registered shareholder directly listed on either the Arcelor European Registry or the Arcelor New York Registry, will also be reflected as a registered owner on the Shareholder Registry. The Arcelor European Registry and the Arcelor New York Registry reconcile with the Shareholder Registry on a daily basis. Arcelor will apply for admission to trading and listing of existing and newly-issued Arcelor shares on Euronext Amsterdam by NYSE Euronext and the NYSE. Arcelor shares are currently traded on Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the regulated market of the Luxembourg Stock Exchange, and the Spanish exchanges. The Arcelor European Registry Shares will be traded solely on Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the regulated market of the Luxembourg Stock Exchange and the Spanish exchanges (collectively, the European Exchanges). The Arcelor European Registry Shares must be converted into Arcelor New York Registry Shares before they can be traded on the NYSE. Any trades of the Arcelor shares on Euronext Amsterdam by NYSE Euronext will be settled through the book-entry system maintained by Euroclear Nederland and its participants. ABN AMRO Bank N.V., Gustav Mahlerlaan 10, Amsterdam, The Netherlands acts as paying agent for these shares. Any trades of the Arcelor shares on Euronext Brussels by NYSE Euronext will be settled through the book-entry system maintained by Euroclear Belgium and its participants. Fortis Bank SA/NV Montagne du Parc, 3, B-1000 Brussels, Belgium acts as paying agent for these shares. Any trades of the Arcelor shares on Euronext Paris by NYSE Euronext will be settled through the bookentry system maintained by Euroclear France and its participants. Socit Gnrale, 32 rue du Champ de Tir, BP 81236, 44312 Nantes, France acts as paying agent for these shares. Any trades of the Arcelor shares on the regulated market of the Luxembourg Stock Exchange will be settled through the book-entry system maintained by Clearstream Banking, societ anonyme, Luxembourg, which is referred to as Clearstream Banking, and its participants. Fortis Banque Luxembourg S.A., 50, avenue J.F. Kennedy, L-2951 Luxembourg, Luxembourg acts as paying agent for these shares. Any trades of the Arcelor shares on the Spanish exchanges will be settled through the book-entry system maintained by Iberclear and its participants. Banco Bilbao Vizcaya Argentaria, S.A. Va de los Poblados s/n, 28033 Madrid, Spain acts as paying agent for these shares. The Arcelor New York Registry Shares will be traded solely on the NYSE. The Arcelor New York Registry Shares must be converted into Arcelor European Registry Shares before they can be traded on any of the European Exchanges. Any trades of the Arcelor New York Registry Shares will be settled through the Depository Trust Company. BNY will act as paying agent for these shares.

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Exchange of Arcelor European Registry Shares for Arcelor New York Registry Shares Arcelor European Registry Shares may be exchanged for Arcelor New York Registry Shares and vice versa at the request of the holder. A holder may exchange its Arcelor European Registry Shares for Arcelor New York Registry Shares by instructing the relevant participant to provide a written request for this exchange to the office of ABN AMRO. ABN AMRO will instruct BNY to issue Arcelor New York Registry Shares and adjust the Arcelor New York Registry accordingly. Arcelor and ABN AMRO will also arrange for corresponding adjustments to be made by Euroclear Nederland in the book-entry system. Similarly, a holder may exchange Arcelor New York Registry Shares for Arcelor European Registry Shares by presenting a written request for this exchange to BNY. BNY will instruct ABN AMRO to arrange for an adjustment to be made by Euroclear Nederland in the book-entry system. BNY will also make a corresponding adjustment in the Arcelor New York Registry. A fee of up to $0.05 per Arcelor share will be charged to shareholders for the exchange of Arcelor European Registry Shares for Arcelor New York Registry Shares and vice versa. Transfer of Arcelor European Registry Shares from One European Exchange to Another European Exchange Holders of Arcelor European Registry Shares can instruct the financial intermediary through which they hold their shares to trade them on any European Exchange where Arcelor shares are admitted to trading. If necessary, such financial intermediary will transfer the relevant shares to its account with the clearing and settlement agent competent for that other European Exchange. A fee may be charged to shareholders for the transfer of Arcelor European Registry Shares from one European Exchange to another European Exchange. Market Descriptions The following is a brief description of Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the regulated market of the Luxembourg Stock Exchange, the NYSE, and the Spanish exchanges. Euronext Amsterdam by NYSE Euronext. Arcelor will apply for admission to trading and listing of the existing and newly-issued Arcelor shares on Euronext Amsterdam by NYSE Euronext. Shares admitted to trading on Euronext Amsterdam by NYSE Euronext are traded on each trading day, from 9:00 a.m. to 5:30 p.m. (CET), with a pre-opening session from 7:15 a.m. to 9:00 a.m. and a post-closing session from 5:30 p.m. to 5:35 p.m. (during which pre-opening and post-closing sessions trades are recorded but not executed until the opening auction at 9:00 a.m. and the closing auction at 5:35 p.m., respectively). In addition, from 5:35 p.m. to 5:40 p.m., trading can take place at the closing auction price. Euronext Amsterdam by NYSE Euronext may suspend trading in Arcelor shares if the quoted price of the shares increases or decreases beyond the specific price limits defined by its regulations. Euronext Amsterdam by NYSE Euronext may also suspend trading of Arcelor shares in other limited circumstances, in particular, to prevent or stop disorderly market conditions. In addition, the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financile Markten), the Dutch securities regulator, may also require Euronext Amsterdam by NYSE Euronext to suspend trading. Euronext Brussels by NYSE Euronext. Arcelor shares are currently admitted to trading and listing on Euronext Brussels by NYSE Euronext. Shares admitted to trading on Euronext Brussels by NYSE Euronext are, in principle, traded from 9:00 a.m. to 5:30 p.m. (CET) on each trading day in Brussels, Belgium, with a pre-opening session from 7:15 a.m. to 9:00 a.m. and a post-closing session from 5:30 p.m. to 5:35 p.m. (during which pre-opening and post-closing sessions trades are recorded but not executed until the opening auction at 9:00 a.m. and the closing auction at 5:35 p.m., respectively). In addition, from 5:35 p.m. to 5:40 p.m., trading can take place at the closing auction price. 279

Euronext Brussels by NYSE Euronext may suspend trading in Arcelor shares when the orderly operation of the market relating to those shares may not be ensured or in order to allow publication of information relating to those securities in appropriate conditions. In addition, the Belgian Banking, Finance and Insurance Commission (Commission bancaire, financire et des assurances/Commissie voor het bank-, financieen assurantiewezen), or CBFA, the Belgian securities regulator, may also require Euronext Brussels by NYSE Euronext to suspend trading. Euronext Paris by NYSE Euronext. Arcelor shares are currently admitted to trading and listing on Euronext Paris by NYSE Euronext. Arcelor shares are traded in the category known as Continu, which includes the most actively traded securities. Shares belonging to the Continu category are traded, through financial institutions that are members of Euronext Paris by NYSE Euronext, on each trading day from 9:00 a.m. to 5:30 p.m. (CET), with a preopening session from 7:15 a.m. to 9:00 a.m. and a post-closing session from 5:30 p.m. to 5:35 p.m. (during which pre-opening and post-closing sessions trades are recorded but not executed until the opening auction at 9:00 a.m. and the closing auction at 5:35 p.m., respectively). In addition, from 5:35 p.m. to 5:40 p.m., trading can take place at the closing auction price. Euronext Paris by NYSE Euronext may suspend trading in Arcelor shares if purchases and sales recorded in the system would inevitably result in a price beyond a certain threshold, determined on the basis of a percentage fluctuation from a reference price. With respect to those shares belonging to the Continu category, once trading has commenced, suspensions for a reservation period of two minutes (subject to extension by Euronext Paris by NYSE Euronext) are possible if the price varies either by more than 10% (with respect to nonFrench issuers not included in the CAC 40 Index) or 5% (with respect to non-French issuers belonging to the CAC 40 Index) from a reference price (for example, the opening auction price), or by more than 5% (with respect to non-French issuers not included in the CAC 40 Index) or 2% (with respect to non-French issuers belonging to the CAC 40 Index) from the last trade on such securities. Euronext Paris by NYSE Euronext may also suspend trading of a security admitted to trading on Euronext Paris by NYSE Euronext in certain circumstances including the occurrence of unusual trading activity in a security. In addition, the French Autorit des marchs financiers, or AMF, the French securities regulator, may also require Euronext Paris by NYSE Euronext to suspend trading. Luxembourg Stock Exchange. Arcelor shares are currently admitted to trading on the Luxembourg Stock Exchanges regulated market and are listed on the Official List of the Luxembourg Stock Exchange. Shares on the Luxembourg Stock Exchanges regulated market are traded, through financial institutions that are members of the Luxembourg Stock Exchange, on each trading day from 9:00 a.m. to 5:30 p.m. (CET), with a pre-opening session from 7:15 a.m. to 9:00 a.m. and a post-closing session from 5:30 p.m. to 5:35 p.m. (during which pre-opening and post-closing sessions trades are recorded but not executed until the opening auction at 9:00 a.m. and the closing auction at 5:35 p.m., respectively). In addition, from 5:35 p.m. to 5:40 p.m., trading can take place at the closing auction price. The Luxembourg Stock Exchange may suspend trading in Arcelor shares if purchases and sales recorded in the system would inevitably result in a price beyond a certain threshold, determined on the basis of a percentage fluctuation from a reference price. Once trading has commenced, suspensions for a reservation period of three minutes (subject to extension by the Luxembourg Stock Exchange) are possible if the price varies either by more than 5% from a reference price (for example, the opening auction price) or by more than 2.50% from the last trade on such securities. The Luxembourg Stock Exchange may also suspend trading of a security admitted to trading on the regulated market of the Luxembourg Stock Exchange market in certain circumstances including the occurrence of unusual trading activity in a security. In addition, the CSSF may also require the Luxembourg Stock Exchange to suspend trading. The New York Stock Exchange. Arcelor will apply for admission to trading of the Arcelor shares on the NYSE. Shares admitted to trading on the NYSE are, in principle, traded from 9:30 a.m. to 4:00 p.m. New York City time, on each trading day in New York, New York. The NYSE may suspend trading in Arcelor shares at any time that a company falls below certain quantitative and qualitative continued listing criteria such as the number of shareholders, number of publicly traded shares, market capitalization and compliance with applicable NYSE and SEC rules and regulations. 280

Spanish Exchanges. Arcelor shares are currently admitted to trading and listing on the Spanish exchanges. The Arcelor shares will be entered into the Automated Quotation System (Mercado Continuo). The Automated Quotation System links the Spanish exchanges. The Automated Quotation System is operated and regulated by Sociedad de Bolsas, S.A., a corporation owned by the companies that manage the four stock exchanges. Shares at the Automated Quotation System are, in principle, traded from 9:00 a.m. to 5:30 p.m. (CET) on trading days. However, there is a pre-opening session held from 8:30 a.m. to 9:00 a.m. each trading day, in which an opening price is established for each security traded on the Automated Quotation System based on a real-time auction in which orders can be entered, modified or cancelled but are not executed. During this preopening session, the system continuously displays the price at which orders would be executed if trading were to begin. Each of the Spanish exchanges can suspend trading in the Arcelor shares. In addition, the Spanish Comisin Nacional del Mercado de Valores, the Spanish securities regulator, may suspend trading in the Arcelor shares. Description of Clearance and Settlement Systems The following is a brief description of Clearstream Luxembourg, The Depository Trust Company, Euroclear Belgium, Euroclear France, Euroclear Nederland, and Iberclear. Arcelor will not have any responsibility for the performance by Clearstream Luxembourg, The Depository Trust Company, Euroclear Belgium, Euroclear France, Euroclear Nederland and Iberclear or their respective participants or indirect participants, of their respective obligations under the rules and procedures governing their operations. Clearstream Luxembourg. Clearstream Luxembourg is the central securities depository for the Luxembourg market, responsible for holding and transferring physical or dematerialized securities. Clearstream Luxembourg is an international central securities depository, providing, as its core services, the clearance and settlement of transactions in global and international securities and domestic securities traded across borders. These services are carried out by means of a computer based book-entry system operated from Luxembourg. Clearstream Luxembourg is registered as a bank in Luxembourg and as such is subject to regulation by the CSSF. Participants in Clearstream Luxembourg are worldwide financial institutions including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to Clearstream Luxembourg is available to other institutions that clear through or maintain a custodial relationship with an account holder of Clearstream Luxembourg. Clearstream Luxembourg has established an electronic bridge with Euroclear Bank SA/NV as the Operator of the Euroclear System, which is referred to as the Euroclear Operator, in Brussels, Belgium, to facilitate settlement of trades between Clearstream Luxembourg and the Euroclear Operator. The Depository Trust Company. The Depository Trust Company is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a clearing corporation within the meaning of the Uniform Commercial Code and a clearing agency registered pursuant to the provisions of Section 17A of the U.S. Exchange Act. The Depository Trust Company was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in the accounts of its participants, thereby eliminating the need for physical movement of certificates. The Depository Trust Company participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations. Indirect access to The Depository Trust Company system is also available to indirect participants of The Depository Trust Company such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant of The Depository Trust Company, either directly or indirectly. Because The Depository Trust Company can only act on behalf of its participants, who in turn act on behalf of indirect participants of The Depository Trust Company and certain banks, the ability of an owner of a beneficial interest in Arcelor New York Registry Shares to pledge its interest to persons or entities that do not participate in The Depository Trust Company system, or otherwise take actions in respect of its interest, may be limited by the lack of a definitive certificate for its interest. The laws of some jurisdictions require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interests in the Arcelor New York Registry Shares to persons may be limited. In addition, beneficial owners of 281

Arcelor New York Registry Shares holding their interests through The Depository Trust Company system will only receive dividend payments through The Depository Trust Companys participants. Euroclear Belgium. Euroclear Belgium is the central securities depository institution whose objects are the custody of securities and the provision of services to its participants. Euroclear Belgium settles, on behalf of LCH.Clearnet SA/NV, who acts as the central counterparty, the transactions executed on Euronext Brussels by NYSE Euronext, operates the last resort securities lending and borrowing, set up by LCH.Clearnet SA/NV, and offers real-time gross settlement for OTC-trades. Euroclear Belgium maintains links with several other central securities depositories, including Euroclear. Euroclear Belgium was registered as a settlement organization by the CBFA on November 8, 2005 pursuant to the Belgian Royal Decree of September 26, 2005, and is under the supervision of the CBFA. Participants in Euroclear Belgium are credit institutions and investment firms. Euroclear France. Euroclear France is the central securities depository for France and offers services to its participants. Euroclear France settles the transactions executed on Euronext Paris by NYSE Euronext and offers real-time gross settlement for OTC-trades. As the national securities depository, Euroclear France is the custodian of all types of securities in any currency or form. Euroclear France is under the supervision of the AMF. Euroclear Frances operating rules have been approved by the AMF. Participants in Euroclear France are credit institutions, investment firms and legal entities listed in article L.442-2 of the French Monetary and Financial Code. Euroclear Nederland. Euroclear Nederland is the central securities depository of The Netherlands whose objects are the safekeeping and administration of securities and the operation of a security giro on behalf of its participants. Euroclear Nederland was designated as the central securities depository of The Netherlands by the Dutch Ministry of Finance pursuant to the 1977 Securities Giro Administration and Transfer Act (Wet giraal effectenverkeer 1977), and is under the supervision of the Dutch Minister of Finance, the Dutch Central Bank (De Nederlandsche Bank) and The Netherlands Authority for the Financial Markets, the Dutch securities regulator. Participants in Euroclear Nederland are banks and brokers that are registered as credit institutions. Under the operation of the 1977 Securities Giro Administration and Transfer Act, book-entry transfers are made between the collective securities deposits held by Euroclear Nederland. Iberclear. Iberclear is the Spanish clearance and settlement system that performs the clearance and settlement of securities in the Spanish exchanges. Participants in Iberclear are banks and brokers duly authorized as investment services companies. Iberclear maintains the securities registry by means of book-entry form of all eligible securities admitted to trading on the Spanish exchanges and provides technical and operational services directly related to registering, clearing and settlement of securities. Iberclear can collaborate in, or co-ordinate with, other foreign entities related to registering, clearing and settlement of securities, as well as allowing it to participate in them. Security Codes The Arcelor European Registry Shares have been accepted for clearance through Euroclear and Clearstream Luxembourg under common code number 014020594. The CUSIP number for the Arcelor New York Registry Shares is 03938L 104, the ISIN for the Arcelor shares is LU0140205948 and the ISIN for the post-merger Arcelor shares is LU0323134006.

282

TAXATION Belgian Taxation The following is a summary of certain material Belgian tax consequences that are likely to be relevant to Belgian resident holders of ArcelorMittal shares as a consequence of the exchange of ArcelorMittal shares for Arcelor shares as a result of the proposed legal merger between ArcelorMittal and Arcelor. This summary also addresses certain material Belgian tax consequences that are likely to be relevant to holders of shares in respect of the ownership and disposition of the shares in Arcelor received in the merger. This summary does not purport to address all material tax considerations that may be relevant to an exchange of ArcelorMittal shares for Arcelor shares as a result of the merger and the right to receive dividends, liquidation proceeds and/or other distributions with respect to shares and capital gains derived from the Arcelor shares. This summary also does not take into account the specific circumstances of particular investors some of which may be subject to special tax rules. This summary is based on the laws, regulations and applicable tax treaties as in effect on the date hereof in Belgium, all of which are subject to change, possibly with retroactive effect. Holders of ArcelorMittal shares and/or Arcelor shares should consult their own tax advisers as to the particular tax consequences, under the tax laws of the country of which they are residents for tax purposes, of a disposition of ArcelorMittal shares pursuant to the merger and/or of the ownership or disposition of Arcelor shares. As used herein, a Belgian individual is an individual who is subject to Belgian personal income tax (personenbelasting / impt des personnes physiques), a Belgian company is a company subject to Belgian corporate income tax (vennootschapsbelasting / impt des socits), and a Belgian legal entity is any other legal entity, such as a pension fund, subject to the Belgian legal entities tax (rechtspersonenbelasting / impt des personnes morales). Belgian Holders shall mean all these holders collectively. In addition to the limitations of the scope of the tax summary set forth hereinabove, this summary does not address the possible tax and social security implications of the merger for the holders of stock options or other comparable instruments (including shares acquired under employee share ownership programs), nor does it address under which conditions these options or other instruments are or may become exercisable prior to the merger. These holders are therefore urged to consult their own tax advisers as to the potential tax and social security implications of an exercise of their options or other instruments and/or an exchange of the ArcelorMittal shares resulting therefrom for Arcelor shares (which, in certain circumstances and/or certain jurisdictions, may result in adverse tax and social security consequences). The Merger The capital gains, if any, realized by Belgian Holders on the exchange of their ArcelorMittal shares may be subject to tax in Belgium but not in Luxembourg in accordance with Article 13 of the tax treaty of September 17, 1970, as amended, between Belgium and Luxembourg. Belgian Individuals Belgian individuals holding ArcelorMittal shares as a private investment will, as a rule, not be subject to tax on any capital gains realized on the exchange of their ArcelorMittal shares for Arcelor shares. Individuals who hold their ArcelorMittal shares for professional purposes may be eligible for roll-over relief as set forth in Article 45 of the Belgian Income Tax Code (Code des Impts sur les Revenus 1992), provided that they file, together with their tax return, a certificate issued by the Luxembourg tax authorities confirming that the merger benefits from roll-over relief in accordance with the applicable Luxembourg tax provisions and listing these provisions. The acquisition price and date of acquisition of the Arcelor shares received in exchange for ArcelorMittal shares will be deemed the same as those of the ArcelorMittal shares exchanged. Belgian Companies Belgian companies realizing capital gains on the exchange of ArcelorMittal shares for Arcelor shares, may be eligible for roll-over relief as set forth in Article 45 of the Belgian Income Tax Code (Code des Impts sur les Revenus 1992), provided that they file, together with their tax return, a certificate issued by the 283

Luxembourg tax authorities confirming that the merger benefits from roll-over relief in accordance with the applicable Luxembourg tax provisions and listing these provisions. The acquisition price and date of acquisition of the Arcelor shares received in exchange for ArcelorMittal shares will be deemed the same as those of the ArcelorMittal shares exchanged. Belgian Legal Entities Belgian legal entities will, as a rule, not be subject to tax on gains realized on the exchange of ArcelorMittal shares for Arcelor shares. Ownership and Disposition of the Shares in Arcelor Dividends Paid by Arcelor to Belgian Holders Luxembourg Withholding Tax Dividends distributed by Arcelor are, as a rule, subject to Luxembourg withholding tax at the rate of 15%, subject to such relief as may be available under applicable double tax treaty provisions. Arcelor will assume responsibility for the withholding of such taxes. The Luxembourg withholding tax is not creditable against final Belgian taxes due. Belgian Individuals The net amount (that is, after deduction of the amount of Luxembourg withholding tax) of dividends paid by Arcelor will be subject to Belgian withholding tax at the rate of 25%, when paid or made available through a professional intermediary in Belgium. For individuals who hold Arcelor shares as a private investment, this Belgian withholding tax is a final tax and any dividends that have been subject to it need not be reported in such persons personal income tax return. If no dividend withholding tax has been levied in Belgium (that is, in case of payment outside of Belgium without the intervention of a professional intermediary in Belgium), the net amount (that is, after deduction of the amount of Luxembourg withholding tax) of such dividends must be reported in the holders personal income tax return and is taxable at the separate rate of 25%, to be increased with local taxes. Belgian Companies No Belgian withholding tax is levied where the Belgian Holder is a company that receives Arcelor dividends paid or made available through a professional intermediary in Belgium (provided that these Belgian Holders fulfill applicable certification formalities). The net amount (that is, after deduction of the amount of Luxembourg withholding tax) of dividends paid on Arcelor shares will, as a rule, be subject to corporate tax at the rate of 33.99%. However, companies will be able to deduct from their taxable income (other than certain disallowed expenses and other taxable items) up to 95% of the dividends received if these dividends are eligible for the dividends-received deduction. For the dividends-received deduction to apply, Arcelor must not belong to one of the categories of foreign companies (mostly low-tax vehicles) whose dividends are specifically excluded from the benefits of the dividends-received deduction and the Arcelor shares held by a Belgian company must, at the time of payment of the dividends: (i) represent at least 10% of Arcelors share capital or have an acquisition value of at least 1.2 million; (ii) be fully owned by such Belgian company; (iii) be accounted for as financial fixed assets (within the meaning of Belgian accounting law) in the financial statements of such Belgian company; and (iv) be held or have been held for an uninterrupted period of at least one year. Belgian Legal Entities The net amount (that is, after deduction of the amount of Luxembourg withholding tax) of dividends paid on Arcelor shares will be subject to Belgian withholding tax at the rate of 25%, when paid or made available through a financial intermediary in Belgium. Where the Belgian Holder is a Belgian legal entity and no dividend withholding tax has been levied in Belgium (that is, in case of payment outside of Belgium without the intervention of a professional intermediary in Belgium), the legal entity is liable to pay the 25% Belgian withholding tax. 284

Capital Gains and Capital Losses The capital gains, if any, realized on the disposition of Arcelor shares held by Belgian Holders may be subject to tax in Belgium but not in Luxembourg in accordance with Article 13 of the tax treaty of September 17, 1970, as amended, between Belgium and Luxembourg. Belgian Individuals Individuals holding Arcelor shares as a private investment will, as a rule, not be subject to tax on any capital gains arising out of a disposal of Arcelor shares. Losses will, as a rule, not be deductible in Belgium. Individuals may, however, be subject to income tax in Belgium at the rate of 33% (to be increased by additional local taxes) if they realize a capital gain on Arcelor shares which is deemed to be speculative or outside the scope of normal management of private savings. Individuals who plan to hold their Arcelor shares for professional purposes may also be subject to income tax in Belgium and should consult their Belgian tax advisers on the tax implications of holding and disposing of Arcelor shares. Belgian Companies Capital gains realized on a disposal of Arcelor shares by Belgian companies will, as a rule, be fully taxexempt, provided that dividends distributed with respect to their Arcelor shares qualify for the Belgian dividends-received deduction (without regard to the minimum holding requirement, the minimum holding period requirement and the requirement that Arcelor shares must qualify as financial fixed assets). Losses realized by such companies will, as a rule, not be deductible. Belgian Legal Entities Belgian legal entities will, as a rule, not be subject to tax on gains realized on a disposal of Arcelor shares. Losses realized by Belgian legal entities will, as a rule, not be deductible. Other Belgian Tax Implications A tax on stock exchange transactions will generally be levied in Belgium on secondary transfers of Arcelor shares through a professional intermediary established in Belgium. The current rate of the tax is 0.17%, up to a maximum of 500 per transaction and per party. This tax is not payable by: professional intermediaries described in Article 2, 9 of the Law of 2 August 2002, acting for their own account; insurance companies described in Article 2, 1 of the Law of 9 July 1975, acting for their own account; institutions for occupational retirement provisions described in Article 2, 1 of the Law of October 27, 2006, acting for their own account; collective investment undertakings, acting for their own account; and non-residents of Belgium acting for their own account.

French Taxation The following is a summary of certain material French tax consequences that are likely to be relevant to French resident holders of shares in ArcelorMittal as a consequence of the exchange of ArcelorMittal shares for Arcelor shares as a result of the proposed legal merger between ArcelorMittal and Arcelor. This summary also addresses certain material French tax consequences that are likely to be relevant to holders of shares in respect of the ownership and disposition of the shares in Arcelor received in the merger. This summary does not purport to address all material tax considerations that may be relevant to an exchange of ArcelorMittal shares for Arcelor shares as a result of the merger and the right to receive dividends, liquidation proceeds and/or other distributions with respect to the Arcelor shares and capital gains derived from 285

the Arcelor shares. This summary also does not take into account the specific circumstances of particular investors some of which may be subject to special tax rules. This summary is based on the laws, regulations and applicable tax treaties as in effect on the date hereof in France, all of which are subject to change, possibly with retroactive effect. Holders of ArcelorMittal shares and/or Arcelor shares should consult their own tax advisers as to the particular tax consequences, under the tax laws of the country of which they are residents for tax purposes, of a disposition of ArcelorMittal shares pursuant to the merger and/or of the ownership or disposition of Arcelor shares. As used herein, a French individual is an individual who is a resident of France for tax purposes, is subject to personal income tax and owns the ArcelorMittal and the Arcelor shares as private assets (impt sur le revenu) and a French legal entity is a legal entity which is a French tax resident subject to corporate income tax (impt sur les socits), and which does not held an interest in ArcelorMittal or Arcelor that would qualify as participation shares (titres de participation) benefit from a taxation at a reduced rate in accordance with the provisions set forth below. French holders shall mean all these holders collectively. In addition to the limitations of the scope of the tax summary set forth hereinabove, this summary does not address the possible tax and social security implications of the merger for the holders of stock options or other comparable instruments (including shares acquired under employee share ownership programs), nor does it address under which conditions these options or other instruments are or may become exercisable prior to the merger. These holders are therefore urged to consult their own tax advisers as to the potential tax and social security implications of an exercise of their options or other instruments and/or an exchange of the ArcelorMittal shares resulting therefrom for Arcelor shares (which, in certain circumstances and/or certain jurisdictions, may result in adverse tax and social security consequences). The Merger The capital gains, if any, realized by the French holders on the exchange of their ArcelorMittal shares may be subject to tax in France but not in Luxembourg in accordance with Article 18 of the tax treaty of April 1, 1958 as amended between France and Luxembourg. French Individuals Under Article 150-0 B of the French Code Gnral des Impts, capital gains realized by French individuals on the exchange of ArcelorMittal shares for Arcelor shares will not taken into account for the computation of income tax for the year of the exchange. As a result: the exchange does not have to be reported by the French individual in his/her income tax return and the capital gain realized, if any, including as applicable any portion thereof previously rolled-over, benefits from roll-over relief; the exchange transaction is not taken into account for the computation of the 20,000 threshold applicable for the taxation of capital gains; the capital loss realized, if any, is not taken into account and, accordingly, cannot offset capital gains realized during the year of the exchange or over the next ten years.

Roll-over relief will expire, among other circumstances, upon transfer, repurchase, redemption or cancellation of the Arcelor shares received in exchange. The net capital gain realized upon transfer of the Arcelor shares received in exchange will be based on the tax basis of the ArcelorMittal shares (which will correspond to the tax basis of the Mittal Steel shares for ArcelorMittal shares received in the first-step merger). Specific Tax Treatment Applicable to ArcelorMittal Shares Held in a Share Savings Plan (Plan dpargne en actions) French individuals who hold their ArcelorMittal shares in a plan dpargne en actions (PEA) will have to include their Arcelor shares received in exchange for their ArcelorMittal shares in their PEA. These persons will benefit from an income tax exemption on the exchange, provided that the conditions for the application of the PEA regime are met (in particular conditions relating to the duration of the PEA). Upon closure of the PEA (if it takes place more than five years after the opening of the PEA) or upon a partial withdrawal (if it takes place more than eight years after the opening of the PEA), the net gain realized since the 286

opening of the PEA benefits from an income tax exemption but is subject to additional social contributions (currently at the rate of 11% but the effective rate of such contributions depends on the date when such gain will have accrued or have been realized). Specific rules apply to the use of capital losses realized within a PEA; investors are invited to consult their tax advisor on this issue. French Legal Entities Under Article 38-7-bis of the French Code gnral des impts, French legal entities may, upon election, decide that the capital gain or capital loss resulting from the exchange of the ArcelorMittal shares for the Arcelor shares will be taken into account in the taxable income for the fiscal year when the Arcelor shares received in exchange are transferred. In such a case, the profit or loss resulting from the subsequent sale of the Arcelor shares received in exchange for ArcelorMittal shares will be based on the tax basis of the ArcelorMittal shares for the French legal entity in question (which will correspond to the tax basis of the Mittal Steel shares for ArcelorMittal shares received in the first-step merger if such legal entity has elected for rollover relief with respect to such merger). Under Article 54 septies of the French Code gnral des impts, certain reporting requirements must be complied with by French legal entities that benefit from rollover relief under Article 38-7bis of the French Code gnral des impts. Absent any election, the exchange of shares resulting from the merger will be treated as a disposal of the ArcelorMittal shares and the provisions described below under Ownership and disposition of the shares in Arcelor Capital gains and capital losses will apply. Ownership and Disposition of the Shares in Arcelor Dividends Paid by Arcelor to French Holders Pursuant to Article 19-2 of the of the tax treaty of April 1, 1958 between France and Luxembourg, France grants a tax credit for the withholding tax levied in Luxembourg. The amount of such tax credit is equal to the withholding tax at the reduced treaty rate, that is, generally 15/85 of the net amount of the dividends, capped at the amount of the French tax on the dividend. French Individuals Dividends received by French individuals will be subject to income tax at a progressive rate, under the following regime. Under Article 158 of the French Code Gnral des Impts, an allowance of 40% (the 40% Allowance) is first applied to the gross amount of the dividend, including the attached tax credit determined for the Luxembourg withholding tax. An additional allowance is applied to the amount of the dividends after deduction of the 40% Allowance and of deductible expenses, for an amount of (i) 3,050 for married couples subject to joint taxation as well as for signatories of a pacte civil de solidarit as defined under Article 515-1 of the Code civil (PACS) who are subject to joint taxation or (ii) 1,525 for single people, widows, divorcees or married people who file their tax returns separately, for all dividends received within a given tax year. The tax credit granted by France in respect of the Luxembourg withholding tax can be set off against the income tax and thereafter against additional social security contributions described below; any excess may neither be refunded nor carried forward. Moreover, under Article 200 septies of the French Code gnral des impts, a tax credit is attributed to the French individual for an amount of 50% of the amount of dividend received (before application of the 40% Allowance and the 1,525 or 3,050 allowance), capped for the aggregate amount of dividends received in the same year at (i) 230 for married couples subject to joint taxation as well as for signatories of PACS subject to joint taxation or (ii) 115 for taxpayers who are single, widowers, divorced or married and file their tax returns separately. This tax credit is chargeable to the total income tax liability (after deduction of the foreign tax credit) or may be refunded if its amount exceeds that of the income tax owed by at least 8. Additionally, the gross amount of the dividends, including the Luxembourg withholding tax, before application of the 40% Allowance and 1,525 or 3,050 allowance but after deduction of applicable expenses, is subject to four social security contributions at the total rate of 11%, out of which 5.8% are deductible from the taxable income of the year during which they are paid. 287

Specific Tax Treatment Applicable to Arcelor Held in a Share Savings Plan (Plan dpargne en actions - PEA) Arcelor shares may be held through a PEA. Under certain conditions, a PEA confers the right (i) during the duration of the PEA, to an exemption from income tax and social contributions on the net proceeds and net capital gains resulting from investments made through a PEA, provided that these proceeds and capital gains are kept in the PEA and (ii) upon closure of the PEA (if it has been open for more than five years) or after a partial withdrawal (if is occurs more than eight years after the opening of the PEA), to an income tax exemption on the net gain realized since the opening of the PEA. These proceeds and capital gains remain nevertheless subject to additional social contributions (currently at a 11% rate but the effective rate of such contributions depends on the date when such gain will have accrued or have been realized). Specific rules apply to the use of capital losses realized within a PEA; investors are invited to consult their tax advisor on this issue. A withdrawal from a PEA in the form of a life annuity is subject to a specific tax regime not described herein. Dividends received under a PEA will also confer the right to a tax credit equal to 50 % of the dividend and capped at 115 or 230 depending on the family situation of the beneficiary as indicated hereinabove. Individuals owning Arcelor shares through a PEA would lose the opportunity to use the tax credit granted by France in respect of the Luxembourg withholding tax. French Legal Entities Gross dividends (including the Luxembourg withholding tax) received by French legal entities will be subject to corporate tax at the current standard rate of 33 1/3%, (or, as the case may be, at the rate of 15% within the limit of 38,120 of their taxable profit per twelve-month period for companies that meet the conditions of Article 219 I-b, that is, which have a yearly turnover net of tax of less than 7,630,000 and with a fully paid up share capital of which at least 75% is held by individuals or by companies which themselves satisfy the conditions relating to turnover and share capital ownership) increased, as the case may be, by the social security contribution of 3.3% based on the corporate tax due, after deduction of an allowance that may not exceed 763,000 per twelve-month period (Article 235 ter ZC of the French Code gnral des impts). The tax credit granted by France in respect of the Luxembourg withholding tax is offsetable against the corporate tax (not the social security contribution); any excess may neither be refunded nor carried forward. Capital Gains and Capital Losses The capital gains, if any, realized on the disposition of Arcelor shares held by French holders may be subject to tax in France but not in Luxembourg in accordance with Article 18 of the tax treaty of April 1, 1958 between France and Luxembourg. French Individuals Pursuant to Article 150-0 A of the French Code gnral des impts, capital gains realized by French individuals on the transfer of Arcelor shares will be subject to income tax at the proportional rate of 16% from the first euro if the total amount of transfers of securities subject to Article 150-0 A of the French Code gnral des impts (excluding exchanges eligible to roll-over relief and exempted transfers of shares held through a PEA) over the fiscal year, exceed, by household, a threshold currently set at 20,000. Subject to the same condition regarding the annual amount of transfers of securities, capital gains are also subject to four social security contributions at the total rate of 11% (these contributions are not deductible for income tax purposes). Under Article 150-0 D 11 of the French Code gnral des impts, capital losses incurred during a fiscal year may offset capital gains of the same nature realized over the same year or the ten following years, so long as these capital losses result from taxable transactions, which, among other things, implies that the 20,000 transfer threshold described above was exceeded during the year that the capital loss occurred.

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It should be noted that Article 150-0 D bis of the French Code gnral des impts provides for a total or partial income tax exemption on capital gains realized on the transfer of shares, when shares have been held during at least five years. French holders are urged to consult their own tax advisers to determine whether they may avail themselves of these provisions. Specific tax treatment applicable to Arcelor held in a share savings plan (Plan dpargne en actions PEA) Please see above under the Dividends section. French Legal Entities Capital gains realized upon the transfer of Arcelor shares will be, in principle, subject to corporate tax at the current standard rate of 33%, (or, as the case may be, at the rate of 15% within the limit of 38,120 of their taxable profit per twelve-month period for companies that meet the conditions of Article 219 I-b, that is, which have a yearly turnover net of tax of less than 7,630,000 and with a fully paid up share capital of which at least 75% is held by individuals or by companies which themselves satisfy the conditions relating to turnover and share capital ownership) increased, as the case may be, by the social security contribution of 3.3% based on the corporate tax liability, after deduction of an allowance that may not exceed 763,000 per twelve-month period (Article 235 ter ZC of the French Code gnral des impts). Capital losses incurred as a result of the transfer of Arcelor shares will, in principle, be deductible from taxable income subject to corporate tax. Wealth Tax Arcelor shares held by French individuals among their private assets will have to be included in their taxable assets subject to wealth tax (Impt de solidarit sur la fortune). Inheritance and Gift Tax Arcelor shares acquired by French individuals through inheritance or as a gift will be subject to inheritance tax or gift tax. Transfer Tax Dispositions of Arcelor shares are as a rule not subject to registration taxes in France, provided that they are not recorded in an agreement entered into in France. Stock exchange transactions carried out through a professional established in France are in principle subject to a tax (impt sur les oprations de bourse) assessed on the price at which the securities were traded. This tax is payable at the rate of 0.3% on transactions of up to 153,000 and at the rate of 0.15% thereafter. This tax is also subject to a rebate of 23 per transaction and a maximum assessment of 610 per transaction. Luxembourg Taxation The following is a summary of certain material Luxembourg tax considerations that are likely to be relevant to holders of ArcelorMittal shares in respect of the exchange of ArcelorMittal shares for Arcelor shares in the proposed legal merger between ArcelorMittal and Arcelor. This summary also addresses certain material Luxembourg tax consequences that are likely to be relevant to holders of shares in respect of the ownership and disposition of the shares in Arcelor received in the merger. This summary does not purport to address all material tax considerations that may be relevant to an exchange of ArcelorMittal shares for Arcelor shares as a result of the merger and the right to receive dividends, liquidation proceeds and/or other distributions with respect to Arcelor shares. This summary also does not take into account the specific circumstances of particular investors some of which may be subject to special tax rules, including dealers in securities, financial institutions, insurance companies, and of current or prior holders (directly or indirectly) of five per cent or more of the shares of Arcelor or ArcelorMittal. This summary is based on the laws, regulations and applicable tax treaties as in effect on the date hereof in Luxembourg, all of which are subject to change, possibly with retroactive effect. Holders of ArcelorMittal 289

shares should consult their own tax advisers as to the particular tax consequences, under the tax laws of the country of which they are residents for tax purposes, of a disposition of ArcelorMittal shares pursuant to the merger and/or of the ownership or disposition of Arcelor shares. This summary does not address the terms of employee stock options or other incentive plans implemented by ArcelorMittal, Arcelor and its subsidiaries and does not purport to provide the holders of stock subscription options or other comparable instruments (including shares acquired under employee share ownership programmes) with a description of the possible tax and social security implications of the merger for them, nor to determine under which conditions these options or other instruments are or may become exercisable prior to the merger. These holders are therefore urged to consult their own tax advisers as to the potential tax and social security implications of an exercise of their options or other instruments and/or an exchange of the ArcelorMittal shares resulting therefrom for Arcelor shares (which, in certain circumstances and/or certain jurisdictions, may result in adverse tax and social security consequences). As used herein, a Luxembourg individual means an individual resident in Luxembourg who is subject to personal income tax (impt sur le revenu) on his or her worldwide income from Luxembourg or foreign sources, and a Luxembourg company means a company resident in Luxembourg subject to corporate income tax (impt sur le revenu des collectivits) on its worldwide income from Luxembourg or foreign sources. For purposes of this summary, Luxembourg individuals and Luxembourg companies are collectively referred to as Luxembourg Holders. A non- Luxembourg Holder means any investor in ArcelorMittal shares and/or Arcelor shares, as applicable, other than a Luxembourg Holder. The Merger Income Tax Treatment for Luxembourg Holders Luxembourg Holders will be eligible for optional roll-over relief as set forth in Articles 22bis and 102(10) of the Luxembourg Income Tax Law (Loi sur lImpt sur le Revenu). In the event of optional roll-over relief, the acquisition price and date of acquisition of the Arcelor shares received in exchange for ArcelorMittal shares will be deemed the same as those of the ArcelorMittal shares exchanged. If the Luxembourg Holder waives the benefit of roll-over relief, then a capital gain realized on ArcelorMittal shares will be taxable as follows: if the holder is a Luxembourg individual, a capital gain realized on ArcelorMittal shares shall only be taxable if it is realized on a disposition of ArcelorMittal shares which takes place within six months following their acquisition or if the relevant holder holds more than 10% of the ArcelorMittal shares. In such a case, such capital gain shall be subject to individual income tax at the applicable progressive rate (the top marginal tax rate is 38%) plus an unemployment fund contribution levied thereon at the rate of 2.5%; and if the holder is a Luxembourg company, such capital gain on ArcelorMittal shares shall be subject to corporate income tax and municipal business tax. The combined rate for these two taxes (including an unemployment fund contribution of four per cent) is 29.63% in the city of Luxembourg. However, such capital gains realized on the sale of ArcelorMittal shares may benefit from the full exemption set forth in Article 166 of the Luxembourg Income Tax Law and the Grand Ducal Decree of December 21, 2001 as amended, subject in each case to fulfillment of the conditions set out therein.

Ownership and Disposition of Arcelor Shares Luxembourg Withholding Tax Dividends distributed by Arcelor will in principle be subject to Luxembourg withholding tax at the rate of 15%. Arcelor will assume responsibility for the withholding of such taxes.

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Luxembourg resident corporate holders No dividend withholding tax applies on dividends paid by Arcelor to a Luxembourg resident corporate holder (that is, a fully taxable collectivit within the meaning of Article 159 of the Luxembourg Income Tax Law), which meets the qualifying participation test (that is, a shareholding in post-merger Arcelor exceeding 10% or having an acquisition cost in excess of 1.2 million held for a minimum one year holding period). If such exemption from dividend withholding tax does not apply, a Luxembourg resident corporate holder will be entitled to a tax credit. Luxembourg resident individual holders Luxembourg withholding tax on dividends paid by Arcelor to a Luxembourg resident individual holder will entitle such Luxembourg holder to a tax credit. Non-Luxembourg resident holders Non-Luxembourg Holders, provided they are resident in a country with which Luxembourg has concluded a treaty for the avoidance of double taxation, may be entitled to claim treaty relief under the conditions and subject to the limitations set forth in the relevant treaty. A non-resident corporate holder resident in a EU Member State will be able to claim an exemption from Luxembourg dividend withholding tax under the conditions set forth in the EU Parent-Subsidiary Directive as implemented in Luxembourg. Dividends Paid on Arcelor Shares and Capital Gains Luxembourg resident individual holders For Luxembourg individuals, income in the form of dividends or capital gains derived from Arcelor shares will normally be subject to individual income tax at the applicable progressive rate (the top marginal tax rate is 38%), plus an unemployment fund contribution levied thereon at the rate of 2.5%. Such dividends may benefit from the 50% exemption set forth in Article 115(15a) of the Luxembourg Income Tax Law, subject to fulfillment of the conditions set out therein. Capital gains will only be taxable if they are realized on a sale of Arcelor shares, which takes place within the first six months following their acquisition, or if the relevant holder holds more than 10% of the Arcelor shares. Luxembourg resident corporate holders For Luxembourg companies, income in the form of dividends or capital gains derived from Arcelor shares will be subject to corporate income tax and municipal business tax. The combined rate for these two taxes (including an unemployment fund contribution of four per cent) is 29.63% in the city of Luxembourg. Such dividends may benefit either from the 50% exemption set forth in Article 115(15a) of the Luxembourg Income Tax Law or from the full exemption set forth in Article 166 of the Luxembourg Income Tax Law, subject in each case to fulfillment of the respective conditions set out therein. Capital gains realized on the sale of Arcelor shares may benefit from the full exemption provided for by Article 166 of the Luxembourg Income Tax Law and by the Grand Ducal Decree of December 21, 2001, as amended, subject in each case to fulfillment of the conditions set out therein. Non-Luxembourg resident holders An individual non-Luxembourg Holder of Arcelor shares who realizes a gain on disposal thereof (and who does not have a permanent establishment in Luxembourg) will only be subject to Luxembourg taxation on capital gains arising upon disposal of such shares if such holder has (together with his or her spouse and underage children) directly or indirectly held more than 10% of the capital of Arcelor, at anytime during the past five years, and either (i) such holder has been a resident of Luxembourg for tax purposes for at least 15 years and has become a non-resident within the last five years preceding the realization of the gain, subject to any applicable tax treaty, or (ii) the disposal of Arcelor shares occurs within six months from their acquisition, subject to any applicable tax treaty. A corporate non-Luxembourg Holder (that is, a collectivit within the meaning of Article 159 of the Luxembourg Income Tax Law), which has a permanent establishment in Luxembourg to which Arcelor shares 291

would be attributable, will bear corporate income tax and municipal business tax on a gain realized on a disposal of such shares. The combined rate for these two taxes (including an unemployment fund contribution of 4%) is 29.63% in the city of Luxembourg. However, gains realized on the sale of Arcelor shares may benefit from the full exemption provided for by Article 166 of the Luxembourg Income Tax Law and by the Grand Ducal Decree of December 21, 2001, as amended, subject in each case to fulfillment of the conditions set out therein. A corporate non-Luxembourg Holder, which has no permanent establishment in Luxembourg, to which Arcelor shares would be attributable will bear corporate income tax on a gain realized on a disposal of such shares under the same conditions applicable to an individual non-Luxembourg Holder, as set out above. Net Wealth Tax Luxembourg net wealth tax will not be levied on a Luxembourg Holder unless: the Luxembourg Holder is, or is deemed to be, a legal entity subject to net wealth tax in Luxembourg (net wealth tax has been abolished in respect of natural persons by a law of December 27, 2005 with effect as of January 1, 2006); or Arcelor shares are attributable to an enterprise or part thereof which is carried on through a permanent establishment or a permanent representative in Luxembourg.

Net wealth tax is levied annually at the rate of 0.5% on the net wealth of enterprises resident in Luxembourg, as determined for net wealth tax purposes. Arcelor shares may be exempt from net wealth tax subject to the conditions set forth by Article 60 of the Law of October 16, 1934 on the valuation of assets (Bewertungsgesetz), as amended. Estate and Gift Tax Luxembourg inheritance tax may be levied on the transfer of Arcelor shares upon the death of a Luxembourg Holder. Luxembourg gift tax will be levied in the event that a gift of Arcelor shares is made pursuant to a notarial deed signed before a Luxembourg notary. Other Luxembourg Tax Considerations There is no requirement that the Arcelor shares be filed, recorded or enrolled with any court or other authority in Luxembourg, or that registration tax, transfer tax, capital tax, stamp duty or any other similar tax or duty be paid in respect of or in connection with the tender, execution, issue, delivery and/or enforcement by legal proceedings (including any foreign judgment in the courts of Luxembourg) of the Arcelor shares. Dutch Taxation The following is a summary of certain material Dutch tax consequences that are likely to be relevant to holders of ArcelorMittal shares in respect of the exchange of ArcelorMittal shares for Arcelor shares in the proposed legal merger between ArcelorMittal and Arcelor. This summary also addresses certain material Dutch tax consequences that are likely to be relevant to holders of shares in respect of the ownership and disposition of the shares in Arcelor received in the merger. This summary does not purport to address all material tax considerations that may be relevant to an exchange of ArcelorMittal shares for Arcelor shares as a result of the merger and the right to receive dividends, liquidation proceeds and/or other distributions with respect to the Arcelor shares and (deemed) capital gains derived from the ArcelorMittal shares. This summary also does not take into account the specific circumstances of particular investors some of which may be subject to special tax rules. This summary is based on the laws, regulations and applicable tax treaties as in effect on the date hereof in The Netherlands, all of which are subject to change, possibly with retroactive effect. Holders of Arcelor/Mittal shares and/or Arcelor shares should consult their own tax advisers as to the particular tax consequences, under the tax laws of the country of which they are residents for tax purposes, of a disposition of ArcelorMittal shares pursuant to the merger and/or of the ownership or disposition of Arcelor shares. 292

This summary does not describe the tax considerations for holders of shares in ArcelorMittal and/or Arcelor if such holders, and in the case of individuals, his or her partner or certain of their relatives by blood or marriage in the direct line (including foster children), have a substantial interest or deemed substantial interest (aanmerkelijk belang) in ArcelorMittal and/or Arcelor within the meaning of the 2001 Dutch Income Tax Act (Wet inkomstenbelasting 2001). Generally, a holder of securities in a company is considered to hold a substantial interest in such company, if such holder alone or, in the case of individuals, together with his or her partner, directly or indirectly, holds an interest of 5% or more of the total issued and outstanding capital of that company, or of 5% or more of the issued and outstanding capital of a class of shares of that company. Furthermore, this summary does not describe the tax considerations for holders of shares in ArcelorMittal and/or Arcelor who have an interest that qualifies as a participation (deelneming) within the meaning of the 1969 Dutch Corporate Income Tax Act (Wet vennootschapsbelasting 1969). Generally, a taxpayers shareholding of 5% or more in a companys nominal paid-up share capital qualifies as a participation. This summary does not address the possible tax and social security implications of the merger for the holders of stock options or other comparable instruments (including shares acquired under employee share ownership programmes), nor does it address under which conditions these options or other instruments are or may become exercisable prior to the merger. These holders are therefore urged to consult their own tax advisers as to the potential tax and social security implications of an exercise of their options or other instruments and/or an exchange of the ArcelorMittal shares resulting therefrom for Arcelor shares (which, in certain circumstances and/or certain jurisdictions, may result in adverse tax and social security consequences). For the purposes of this discussion, a holder of shares is considered a Dutch resident individual if such holder is an individual that is resident or deemed to be resident in The Netherlands for Dutch tax purposes (including an individual who has made an election for the application of the rules of the 2001 Dutch Income Tax Act, as they apply to residents of The Netherlands). A holder of shares is considered a Dutch resident entity if such holder is an entity (including an association that is taxable as an entity) that is a resident or deemed to be resident in The Netherlands for Dutch tax purposes. The Merger Dutch Resident Individuals If a holder of shares in ArcelorMittal is a Dutch resident individual, capital gains or other benefits derived or deemed to be derived in connection with the merger are taxable at the progressive income tax rates with a maximum of 52%, if: the ArcelorMittal shares are attributable to an enterprise from which the Dutch resident individual derives a share of the profit, whether as an entrepreneur (ondernemer) or as a person who has a coentitlement to the net worth of such enterprise, without being an entrepreneur or a shareholder, within the meaning of the 2001 Dutch Income Act; or the holder of the ArcelorMittal shares is considered to perform activities with respect to the shares that go beyond ordinary asset management (normaal vermogensbeheer) or derives benefits from the shares in ArcelorMittal that are otherwise taxable as benefits from other activities (resultaat uit overige werkzaamheden).

Roll-over relief should be available for capital gains derived from the exchange of the ArcelorMittal shares for Arcelor shares. If the two above situations do not apply, the Dutch resident individual will be taxed annually over income that is deemed to be 4% of the aggregate amount of his or her net investment assets for that year at a flat income tax rate of 30%. The shares in ArcelorMittal are recognized as investment assets and included as such in the net investment asset base. The aggregate amount of the net investment assets for the year is the average of (i) the fair market value of the investment assets less liabilities at the beginning of that year, and (ii) the fair market value of the investment assets less liabilities at the end of that year. A tax free allowance may be available. Capital gains or other actual benefits derived in connection with the merger are as such not subject to Dutch income tax.

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Dutch Resident Entities If a holder of shares in ArcelorMittal is a Dutch resident entity, capital gains or other benefits derived or deemed to be derived in connection with the merger will be subject to Dutch corporate income tax at a rate of 25.5%, except that a rate of 20% applies with respect to taxable profits up to 25,000, and a rate of 23.5% rate applies with respect to taxable profits between 25,000 and 60,000. A qualifying pension fund (pensioenfonds) is in principle not subject to Dutch corporate income tax. A qualifying investment fund (fiscale beleggingsinstelling) is subject to Dutch corporate income tax at a special rate of 0%. Roll-over relief should be available for capital gains derived from the exchange of the ArcelorMittal shares for Arcelor shares. Non-Resident Holders A holder of ArcelorMittal shares will not be subject to Dutch taxes on income or capital gains in connection with the merger, provided that: such holder is neither a resident nor deemed to be resident in The Netherlands for Dutch tax purposes and, if such holder is an individual, he or she has not made an election for the application of the rules of the 2001 Dutch Income Tax Act, as they apply to residents of The Netherlands; such holder does not have an interest in an enterprise or a deemed enterprise which, in whole or in part, is either effectively managed in The Netherlands or is carried out through a permanent establishment, a deemed permanent establishment (vaste inrichting) or a permanent representative (vaste vertegenwoordiger) in The Netherlands and to which enterprise or part of an enterprise the ArcelorMittal shares are attributable; and in the event such holder is an individual, such holder does not carry out any activities in The Netherlands with respect to the ArcelorMittal shares that go beyond ordinary asset management and does not derive benefits from the shares in ArcelorMittal that are otherwise taxable as benefits from other activities in The Netherlands.

Other Taxes and Duties No Dutch registration tax, customs duty, stamp duty or any other similar documentary tax or duty will be payable by a holder of shares in ArcelorMittal in connection with the merger. Ownership and Disposition of the Shares in Arcelor Dutch Resident Individuals If a holder of shares in Arcelor is a Dutch resident individual, capital gains, dividends or other benefits derived or deemed to be derived from the shares are taxable at the progressive income tax rates with a maximum of 52%, if: the Arcelor shares are attributable to an enterprise from which the Dutch resident individual derives a share of the profit, whether as an entrepreneur or as a person who has a co-entitlement to the net worth of such enterprise, without being an entrepreneur or a shareholder, within the meaning of the 2001 Dutch Income Act; or the holder of the Arcelor shares is considered to perform activities with respect to the shares that go beyond ordinary asset management or derives benefits from the shares in Arcelor that are otherwise taxable as benefits from other activities.

If the two above situations do not apply, the Dutch resident individual will be taxed annually over income that is deemed to be 4% of the aggregate amount of his or her net investment assets for that year at a flat income tax rate of 30%. The shares in Arcelor are recognized as investment assets and included as such in the net investment asset base. The aggregate amount of the net investment assets for the year is the average of (i) the fair market value of the investment assets less liabilities at the beginning of that year, and (ii) the fair market 294

value of the investment assets less liabilities at the end of that year. A tax free allowance may be available. Capital gains or other actual benefits derived in connection with the Arcelor shares are as such not subject to Dutch income tax. A credit for Luxembourg withholding taxes may be available with respect to dividends received on the shares in Arcelor. Dutch Resident Entities If a holder of shares in Arcelor is a Dutch resident entity, capital gains, dividends or other benefits derived or deemed to be derived from the shares, including any capital gains realized on the disposal thereof, will generally be subject to Dutch corporate income tax at a rate of 25.5%, except that a rate of 20% applies with respect to taxable profits up to 25,000, and a rate of 23.5% rate applies with respect to taxable profits between 25,000 and 60,000. A qualifying pension fund is in principle not subject to Dutch corporate income tax. A qualifying investment fund is subject to Dutch corporate income tax at a special rate of 0%. A credit for Luxembourg withholding taxes may be available with respect to dividends received on the shares in Arcelor. Non-Resident Holders A holder of shares in Arcelor will not be subject to Dutch taxes on income or on capital gains in respect of any distributions on the shares or any gain realized on the disposal or deemed disposal of the shares, provided that: such holder is neither a resident nor deemed to be resident in The Netherlands for Dutch tax purposes and, if such holder is an individual, he or she has not made an election for the application of the rules of the 2001 Dutch Income Tax Act, as they apply to residents of The Netherlands; such holder does not have an interest in an enterprise or a deemed enterprise which, in whole or in part, is either effectively managed in The Netherlands or is carried out through a permanent establishment, a deemed permanent establishment or a permanent representative in The Netherlands and to which enterprise or part of an enterprise the Arcelor shares are attributable; and in the event such holder is an individual, such holder does not carry out any activities in The Netherlands with respect to the Arcelor shares that go beyond ordinary asset management and does not derive benefits from the shares in Arcelor that are otherwise taxable as benefits from other activities in The Netherlands.

Gift, Estate and Inheritance Taxes Gift, estate and inheritance taxes will arise in The Netherlands with respect to a transfer of the shares in Arcelor by way of a gift by, or, on the death of, a holder of shares who is resident or deemed to be resident in The Netherlands at the time of the gift or his or her death. No Dutch gift, estate or inheritance taxes will arise on the transfer of the shares in Arcelor by way of a gift by, or on the death of, a holder of shares who is neither resident nor deemed to be resident in The Netherlands, unless: such holder at the time of the gift has or at the time of his or her death had an enterprise or an interest in an enterprise that, in whole or in part, is or was either effectively managed in The Netherlands or carried out through a permanent establishment or a permanent representative in The Netherlands and to which enterprise or part of an enterprise the shares in Arcelor are or were attributable; or in the case of a gift of the shares in Arcelor by an individual who at the date of the gift was neither resident nor deemed to be resident in The Netherlands, such individual dies within 180 days after the date of the gift, while being resident or deemed to be resident in The Netherlands. 295

For purposes of Dutch gift, estate and inheritance taxes, amongst others, a person that holds the Dutch nationality will be deemed to be resident in The Netherlands if such person has been resident in The Netherlands at any time during the ten years preceding the date of the gift or the death of such person. Additionally, for purposes of Dutch gift tax, amongst others, a person not holding the Dutch nationality will be deemed to be resident in The Netherlands if such person has been resident in The Netherlands at any time during the 12 months preceding the date of the gift. Applicable tax treaties may override deemed residency. Other Taxes and Duties No Dutch registration tax, customs duty, stamp duty or any other similar documentary tax or duty will be payable by a holder of shares in Arcelor in respect of the ownership or disposal of the shares. Spanish Taxation The following is a summary of certain material Spanish tax consequences that are likely to be relevant to holders of ArcelorMittal shares as a consequence of the exchange of ArcelorMittal shares for Arcelor shares in the merger between ArcelorMittal and Arcelor. This summary also addresses certain material Spanish tax consequences that are likely to be relevant to holders of shares in respect of the ownership and disposition of the Arcelor shares received in the merger. This summary does not purport to address all material tax considerations that may be relevant to the exchange of ArcelorMittal shares for Arcelor shares in the merger and the right to receive dividends, liquidation proceeds and/or other distributions with respect to the Arcelor shares and capital gains derived from the disposition of Arcelor shares. This summary also does not take into account the specific circumstances of particular investors some of which may be subject to special tax rules. This summary is based on the laws, regulations and applicable tax treaties as in effect on the date hereof in Spain, all of which are subject to change, possibly with retroactive effect. Holders of ArcelorMittal shares and/or Arcelor shares should consult their own tax advisers as to the particular tax consequences, under the tax laws of the country of which they are residents for tax purposes, of a disposition of ArcelorMittal shares pursuant to the merger and/or of the ownership or disposition of Arcelor shares. This summary does not address the possible tax and social security implications of the merger for the holders of stock options or other comparable instruments (including shares acquired under employee share ownership programmes), nor does it address under which conditions these options or other instruments are or may become exercisable prior to the merger. These holders are therefore urged to consult their own tax advisers as to the potential tax and social security implications of an exercise of their options or other instruments and/or an exchange of the ArcelorMittal shares resulting therefrom for Arcelor shares (which, in certain circumstances and/or certain jurisdictions, may result in adverse tax and social security consequences). For the purposes of this discussion, a holder of shares is considered a Spanish resident individual if such holder is an individual who is resident or deemed to be resident in Spain for Spanish tax purposes and subject to personal income tax (impuesto sobre la renta de las personas fsicas) on his or her worldwide income, and a holder of shares is considered a Spanish resident entity if such holder is an entity that is a resident or deemed to be resident in Spain for Spanish tax purposes and subject to corporate income tax (impuesto sobre sociedades) on its worldwide income. The Merger General Capital gains, if any, realized by Spanish resident shareholders in the exchange of ArcelorMittal shares for Arcelor shares might be subject to tax in Spain but not in Luxembourg in accordance with Article 13.4 of the tax treaty between Spain and Luxembourg. According to Articles 83 and 88 of the Corporate Income Tax Law (Texto refundido de la Ley del Impuesto sobre Sociedades, aprobado por Real Decreto Legislativo 4/2004, de 5 de marzo), roll-over relief is available for capital gains derived from the exchange of the ArcelorMittal shares for Arcelor shares. In order to benefit from this roll-over relief, ArcelorMittal shareholders should elect such treatment in their personal or corporate income tax return. 296

Spanish Resident Individuals If a Spanish resident individual decides no to elect for the roll-over relief, the capital gain, equal to the difference between the stock market value of the Arcelor shares at the effective time of the merger and the acquisition cost of the ArcelorMittal shares surrendered in the merger, will be taxed at a 18% rate. Spanish Resident Entities If a Spanish resident entity decides not to elect for the roll-over relief, the capital gain, equal to the difference between the stock market value of the Arcelor shares at the effective time of the merger and the acquisition cost of the ArcelorMittal shares surrendered in the merger, will, in principle, be taxed at a rate of 32.5%. Other Taxes and Duties No Spanish registration tax, customs duty, stamp duty or any other similar documentary tax or duty will be payable by a holder of ArcelorMittal shares in connection with the merger. Ownership and disposition of the Arcelor shares Spanish Resident Individuals If a holder of Arcelor shares is a Spanish resident individual, capital gains, dividends or other benefits derived or deemed to be derived from the shares will be taxed at a 18% income tax rate. If the holder has opted to apply the roll-over relief to the exchange of ArcelorMittal shares for Arcelor shares, the acquisition cost of the Arcelor shares to determine any future capital gain will be the acquisition cost of the ArcelorMittal shares surrendered in the merger. A credit for Luxembourg withholding taxes may be available with respect to dividends received on the Arcelor shares. Spanish Resident Entities If a holder of Arcelor shares is a Spanish resident entity, capital gains, dividends or other benefits derived or deemed to be derived from the shares will, in principle, be taxed at a rate of 32.5%. If the holder has opted to apply the roll-over relief to the exchange of ArcelorMittal shares for Arcelor shares, the acquisition cost of the Arcelor shares to determine any future capital gain will be the acquisition cost of the ArcelorMittal shares surrendered in the merger. A credit for Luxembourg withholding taxes may be available with respect to dividends received on the Arcelor shares. Wealth Tax Arcelor shares will be computed on the taxable base of the wealth tax for Spanish resident individuals at its average market value calculated during the fourth quarter of each year. Gift, Estate and Inheritance Taxes Gift, estate and inheritance taxes will arise in Spain with respect to a transfer of Arcelor shares by way of a gift or estate received by a Spanish resident individual at the time of the gift or on the death of a holder of shares. Other Taxes and Duties No Spanish registration tax, customs duty, stamp duty or any other similar documentary tax or duty will be payable by a holder of Arcelor shares in respect of the ownership or disposal of the shares.

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AUDITORS The consolidated financial statements of Mittal Steel Company N.V. and subsidiaries (the Company) for the years ended December 31, 2004, 2005 and 2006, included in this prospectus, have been audited by Deloitte Accountants B.V., an independent public accounting firm, as stated in their report, which is included in this prospectus (which report for the year ended December 31, 2006 expresses an unqualified opinion on the consolidated financial statements and includes an explanatory paragraph relating to the differences between International Financial Reporting Standards as adopted by the European Union (IFRS) and accounting principles generally accepted in the United States of America (U.S. GAAP)) and have been so included in reliance upon the report of such firm upon their authority as experts in accounting and auditing. The auditors employed by Deloitte Accountants B.V. are members of the Koninklijk Nederlands Instituut van Registeraccountants (Royal NIVRA) and/or the American Institute of Certified Public Accountants (AICPA). The address of the auditor referred to above is: Deloitte Accountants B.V. Admiraliteitskade 50 Postbus 2031 (P.O. Box) 3000 CA Rotterdam The Netherlands The consolidated financial statements of Arcelor S.A. and subsidiaries ( Arcelor) for the years ended December 31, 2004, 2005 and 2006, incorporated by reference into this prospectus, have been audited by KPMG Audit S..r.l, an independent public accounting firm, as stated in their report dated February 20, 2007 in respect of the consolidated financial statements of Arcelor as of December 31, 2004 and 2005, and their report dated March 23, 2007 in respect of the consolidated financial statements of Arcelor as of December 31, 2006 (which both have been incorporated by reference in this prospectus and which both express an unqualified opinion on the consolidated financial statements for the years ended December 31, 2004, 2005 and 2006) and have been so incorporated by reference in this prospectus in reliance upon the reports of such firm upon their authority as experts in accounting and auditing. The auditors employed by KPMG Audit S. r.l , are registered as Rviseurs dentreprises at the IRE (Institut des Rviseurs dEntreprises Luxembourgeois). The address of the auditor referred to above is: KPMG Audit S..r.l 31, Alle Scheffer L-2520 Luxembourg Luxembourg

298

DOCUMENTS ON DISPLAY The following information may be read and copied, or copies of this information may be obtained by mail, at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet website that contains reports and other information about issuers, like Mittal Steel, who file electronically with the SEC. The address of that website is www.sec.gov. You can also inspect reports and other information about Mittal Steel at Mittal Steels registered offices and at the offices of the NYSE, 20 Broad Street, New York, New York 10005. Mittal Steels annual report for 2006 on Form 20-F, filed with the SEC on April 17, 2007, as amended June 29, 2007 and July 3, 2007. This filing can be accessed at www.sec.gov.

For one year from the date hereof, the following information may be obtained at the registered offices of ArcelorMittal: The merger agreement. The merger proposal. The explanatory memorandum. ArcelorMittals deed of incorporation. An English language translation of ArcelorMittals articles of association. Arcleors deed of incorporation. The French language version of Arcelors articles of association. The statutory financial statements of ArcelorMittal for the years ended December 31, 2004, 2005 and 2006, prepared in accordance with Luxembourg GAAP. All reports and statements prepared by any expert at the Arcelors request, as included in Annex I to this prospectus. The historical financial information of Mittal Steel and Arcelor, as included in the Financial Annex to this prospectus, for each of the two financial years preceding the publication of this prospectus. The statutory annual reports of Mittal Steel for the years ended December 31, 2004, 2005 and 2006.

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INCORPORATION BY REFERENCE The consolidated financial statements of Mittal Steel for the year ended December 31, 2004, prepared in accordance with Dutch GAAP, including an auditors report in respect thereof (the 2004 Financial Statements), are hereby incorporated by reference into this prospectus. The consolidated balance sheet of Mittal Steel for the year ended December 31, 2004 can be found on pages 32 and 33 of the 2004 Financial Statements, the consolidated income statement can be found on page 34, the consolidated cash flow statement can be found on page 35, the notes to the consolidated financial statements on pages 36 102 and the auditors report on page 114. The English language versions of the statutory annual reports of Arcelor for the years ended December 31, 2004, 2005 and 2006 are hereby incorporated by reference into this prospectus. The sections entitled Group Consolidated Management Report and Group Consolidated Accounts can be found on pages 20-43 and pages 133-203, respectively of the statutory annual report of Arcelor for the year ended December 31, 2004. The consolidated balance sheet of Arcelor for the year ended December 31, 2004 can be found on page 135 of the 2004 Group Consolidated Accounts, the consolidated income statement can be found on page 134, the consolidated cash flow statement can be found on page 136, the notes to the consolidated financial statements on pages 138 203 and the auditors report on page 204. The sections entitled Group Consolidated Management Report and Consolidated Financial Statements can be found on pages 32-64 and pages 137-214, respectively of the statutory annual report of Arcelor for the year ended December 31, 2005. The consolidated balance sheet of Arcelor for the year ended December 31, 2005 can be found on page 139 of the 2005 Group Consolidated Accounts, the consolidated income statement can be found on page 138, the consolidated cash flow statement can be found on page 140, the notes to the consolidated financial statements on pages 142 214 and the auditors report on page 215. The section entitled Consolidated Group Management Report can be found on pages 22-53, and the auditor report dated March 23, 2007, in respect of the consolidated financial statements of Arcelor for the year ended December 31, 2006, can be found on page 124 of the statutory annual report of Arcelor for the year ended December 31, 2006. The consolidated balance sheet of Arcelor for the year ended December 31, 2006 can be found on page 57 of the 2006 Consolidated Financial Statements, the consolidated income statement can be found on page 56, the consolidated cash flow statement can be found on page 59 and the notes to the consolidated financial statements on pages 61 123. The ArcelorMittal prospectus supplement dated August 10, 2007 (which is a supplement to ArcelorMittals prospectus dated June 29, 2007) is hereby incorporated by reference into this prospectus. The "Outlook for Third Quarter 2007" and the Compilation Report of Deloitte Accountants B.V. and can be found on pages 5-6 and on page 19, respectively of the ArcelorMittal prospectus supplement dated August 10, 2007. The Unaudited Condensed Consolidated Financial Statements of Arcelor for the six months ended June 30, 2007 are hereby incorporated by reference into this prospectus. The unaudited condensed consolidated balance sheet of Arcelor for the six months ended June 30, 2007 can be found on page 2, the unaudited condensed consolidated cash flow statement can be found on page 4, the unaudited condensed consolidated income statement can be found on page 5 and the notes to the unaudited condensed consolidated financial statements can be found on pages 6 - 18. Sections not specifically mentioned within the documents set out above are incorporated for informational purposes only. The independent auditor report of KPMG Audit S..r.l. dated February 20, 2007 in respect of the consolidated financial statements of Arcelor S.A. and subsidiaries ( Arcelor) for the years ended December 31, 2004 and 2005, is hereby incorporated by reference into this prospectus. You should assume that the information appearing in this prospectus, or any documents incorporated by reference in this prospectus, is accurate only as of the date on the front cover of the applicable document. Our business, financial condition, results of operations and prospects may have changed since that date.

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RESPONSIBILITY STATEMENT Arcelor is responsible for the information contained in this prospectus. Arcelor, having taken all reasonable care to ensure that such is the case, confirms that, to the best of its knowledge as at the date of this prospectus, the information contained in this prospectus is in accordance with the facts and contains no omission likely to affect its import. However, you should assume that the information appearing in this prospectus, or any documents incorporated by reference in this prospectus, is accurate only as of the date on the front cover of the applicable document. Our business, financial condition, results of operations and prospects may have changed since that date.

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ANNEX A

MERGER AGREEMENT

BETWEEN

ArcelorMittal

AND

Arcelor

September 25, 2007

MERGER AGREEMENT BETWEEN: ArcelorMittal, a Luxembourg socit anonyme, having its registered office at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Registry of Trade and Companies under number B 102468 (ArcelorMittal), represented by Mr. Georges T.N. Schmit, duly authorized for the purpose hereof; AND: Arcelor, a Luxembourg socit anonyme, having its registered office at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Registry of Trade and Companies under number B 82454 (Arcelor), represented by Mr. Joseph J. Kinsch, duly authorized for the purpose hereof; ArcelorMittal, together with Arcelor, the Parties and, each of ArcelorMittal and Arcelor individually, a Party. WHEREAS, as a result of the successful completion of the Revised Offer, Mittal Steel Company N.V. (Mittal Steel) was on September 2, 2007 the legal and beneficial owner of 631,226,643 shares of Arcelor, representing approximately 94.24% of the issued share capital and the voting rights of Arcelor, and of 3,100,000 shares of ArcelorMittal, representing 100% of the issued share capital and the voting rights of ArcelorMittal; WHEREAS, pursuant to a memorandum of understanding (the Memorandum of Understanding) dated June 25, 2006, Arcelor, Mittal Steel and the Mittal Controlling Shareholder (as defined in the Memorandum of Understanding), had agreed to use their best efforts to procure that, as soon as practicable following completion of the Revised Offer, Mittal Steel shall be merged into Arcelor; WHEREAS, it had been decided, subject to certain conditions precedent, to combine Mittal Steel and Arcelor through a two-step merger process; WHEREAS, it had been decided, subject to the prior satisfaction of certain conditions precedent (including shareholders approval): (i) as a first step, Mittal Steel shall merge into ArcelorMittal by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel, pursuant to Dutch and Luxembourg law and in accordance with the terms and conditions of a merger proposal (voorstel tot fusie / projet de fusion) and an explanatory memorandum (toelichting op het voorstel tot fusie / un rapport crit dtaill) subject to Dutch and Luxembourg law (the First-Step Merger); and (ii) as a second step, ArcelorMittal shall merge into Arcelor by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal (following which Arcelor shall be renamed ArcelorMittal), pursuant to Luxembourg law and in accordance with the terms and conditions of a merger proposal (projet de fusion) and an explanatory memorandum (un rapport crit dtaill) subject to Luxembourg law (the Second-Step Merger); WHEREAS, the First-Step Merger was completed on September 3, 2007; WHEREAS, the select committee of the combined European works council of Arcelor and Mittal Steel had been duly informed with respect to the contemplated two-step merger process and the SecondStep Merger; WHEREAS, under Luxembourg law the merger exchange ratio of the Second-Step Merger is required to be reviewed and validated by independent auditors considering its fairness to Arcelors shareholders and ArcelorMittals shareholders and other interested persons, and to be approved by the shareholders of both companies upon adoption of the decision to merge;

A-2

WHEREAS, the issued share capital of Arcelor, as of the date hereof, amounts to EUR 3,349,067,040 and is divided into 669,813,408 shares without nominal value (the Arcelor Shares), which share capital is proposed to be restructured prior to the completion of the Second-Step Merger; and WHEREAS, the issued share capital of ArcelorMittal, as of the date hereof, amounts to EUR 14,172,072.53 and is divided into 1,417,207,253 shares without nominal value (the ArcelorMittal Shares). NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the Parties hereby agree as follows: ARTICLE 1 DEFINITIONS 1.1 Certain defined terms. For purposes of this Merger Agreement, the following terms and expressions shall have the meaning ascribed to them below: Accounts means the audited statutory and consolidated accounts (including balance sheet, profit and loss statements and notes thereto together with a report thereon from the auditor of the company) of Arcelor for the accounting year ended December 31, 2006 and the unaudited interim accounts of Arcelor as of June 30, 2007, and the audited statutory accounts (including balance sheet, profit and loss statements and notes thereto together with a report thereon from the statutory auditor of the company) of ArcelorMittal for the accounting year ended December 31, 2006 and the unaudited interim accounts of ArcelorMittal as of June 30, 2007 (including in the notes thereto a pro-forma balance sheet of ArcelorMittal as of January 1, 2007 and June 30, 2007 taking into account the effectiveness of the First-Step Merger). Arcelor has the meaning ascribed to it in the Preamble of this Merger Agreement. ArcelorMittal has the meaning ascribed to it in the Preamble of this Merger Agreement. ArcelorMittal Proxy Statement means the proxy statement of ArcelorMittal for purposes of the ArcelorMittal Shareholders Meeting, included in the F-4 Registration Statement. ArcelorMittal Shareholders Meeting has the meaning ascribed to it in Section 11.3. ArcelorMittal Shares has the meaning ascribed to it in the Preamble of this Merger Agreement. ArcelorMittal Stock Options means the stock options granted by ArcelorMittal in the FirstStep Merger and pursuant to the ArcelorMittal stock option plan for managers and employees implemented in connection with the First-Step Merger. Arcelor Shareholders Meeting has the meaning ascribed to it in Section 11.4. Arcelor Shares has the meaning ascribed to it in the Preamble of this Merger Agreement. Auditors Merger Reports means the reports that shall be prepared by independent auditors in connection with the Merger, as referred to in Section 11.9. Consent has the meaning ascribed to it in Section 8.3. CSSF means the Commission de Surveillance du Secteur Financier, the Luxembourg securities regulator. Effective Date has the meaning ascribed to it in Section 2.3. European Prospectus means the shareholder circular/prospectus prepared in accordance with the provisions of Directive 2003/71/EC for purposes of the offering of the Merger Shares to the public in the relevant member states of the European Union and the admission to trading of the Arcelor Shares and the Merger Shares on the relevant regulated markets in the European Union. Exchange Act means the U.S. Securities Exchange Act of 1934, as amended. A-3

Exchange Ratio has the meaning ascribed to it in Section 3.4(a). Explanatory Memorandum means the explanatory memorandum (un rapport crit dtaill) to the Merger Proposal, as required pursuant to the Luxembourg Company Law. F-4 Registration Statement means the registration statement on Form F-4 to be filed by Arcelor with the SEC under the Securities Act, which includes a proxy statement/prospectus to be distributed to holders of ArcelorMittal Shares who are resident of the United States (within the meaning of Rule 14d-1 under the Exchange Act), in connection with the ArcelorMittal Shareholders Meeting. First-Step Merger has the meaning ascribed to it in the Preamble of this Merger Agreement. Independent Merger Auditors means the auditors referred to in Section 11.9. Luxembourg Company Law means the Luxembourg law on commercial companies dated August 10, 1915, as amended from time to time. Luxembourg Notarial Deeds means the Luxembourg law governed notarial deeds (procsverbal de lassemble gnrale tabli par acte notari) containing the minutes of, respectively, the Arcelor Shareholders Meeting and the ArcelorMittal Shareholders Meeting approving the decision to merge as contemplated by the Merger Proposal. Material Adverse Effect has the meaning ascribed to it in Section 8.1(b). Memorandum of Understanding has the meaning ascribed to it in the Preamble of this Merger Agreement. Merger has the meaning ascribed to it in Section 2.1(a). Merger Agreement means this merger agreement. Merger Proposal means the merger proposal (projet de fusion) for the merger of ArcelorMittal and Arcelor as required pursuant to the Luxembourg Company Law, including any required exhibits. Merger Shares has the meaning ascribed to it in Section 4.1(a). Merger Terms & Conditions has the meaning ascribed to it in Section 2.1(a). Mittal Steel has the meaning ascribed to it in the Preamble of this Merger Agreement. NYSE means the New York Stock Exchange, Inc. Parties has the meaning ascribed to it in the Preamble of this Merger Agreement. Party has the meaning ascribed to it in the Preamble of this Merger Agreement. Permits means any authorization, license, consent, approval and order of or with any governmental authority. Person means a natural person, company, partnership, economic interest group, trust or unincorporated organization, or a government or any agency or political subdivision thereof. Proceeding means any claim, action, suit, dispute or legal, administrative, arbitration or other alternative dispute resolution proceeding or investigation (whether administrative, civil or criminal). Representative means with respect to any Person, any director, officer, employee, auditor, accountant, consultant, legal counsel, agent or other representative of such Person. Revised Offer means the merger of equals of Arcelor and Mittal Steel achieved by way of a mix and match offer by Mittal Steel for all of the shares and convertible bonds of Arcelor, comprising: A-4

(a) a mixed offer at a price equal to 13 Mittal Steel Class A Shares and 150.6 in cash per 12 Arcelor Shares; (b) a cash offer at a price equal to 40.4 per Arcelor Share;

(c) an exchange offer at an exchange ratio of 11 Mittal Steel Class A Shares per 7 Arcelor Shares; and (d) a mixed offer at a price equal to 13 Mittal Steel Class A Shares and 188.42 in cash per 12 Arcelor convertible bonds. SEC means the U.S. Securities and Exchange Commission, the U.S. federal securities regulator. Second-Step Merger has the meaning ascribed to it in the Preamble of this Merger Agreement. Securities Act means the U.S. Securities Act of 1933, as amended. Subsidiary means, in respect of any Person, any entity which, directly or indirectly through one or more intermediaries, is controlled by such Person, except that, for purposes of this definition, Arcelor, and any Person controlled by Arcelor, is not considered a Subsidiary of ArcelorMittal. Control in this context means the ownership, directly or indirectly through one or more intermediaries, of voting shares bearing in the aggregate at least fifty (50) percent of the aggregate voting rights of all classes of all voting shares of a Person or the right or power to instruct or manage, directly or indirectly, the management of such Person. Tax means all taxes, direct or indirect, including all levies, fees, duties, contributions, social security payments, withholdings imposed by or on behalf of any governmental entity or any other body or person whatsoever, including corporate income tax and related surtaxes, withholding tax, local taxes, value added tax, stamp duty, registration fees, customs duties, taxes on sales, and any social security charges and contributions payable by the company in accordance with the tax and social security regulations, including interest, penalties and other related charges. 1.2 Interpretation. For purposes of this Merger Agreement: (a) The section headings in this Merger Agreement are for reference only and do not affect in any way the meaning or interpretation of this Merger Agreement. References in the Merger Agreement to Articles, Sections and Exhibits are to articles in, sections in and exhibits to, the Merger Agreement, unless otherwise indicated. (b) The meanings ascribed to the defined terms are applicable to both the singular and plural forms thereof. (c) Any agreement defined or referred to in the above defined terms or in any provision of this Merger Agreement shall include any amendment, modification and supplement thereto and waiver thereof that may become effective from time to time, unless otherwise indicated. (d) Any term defined by reference to any document shall have the meaning ascribed to it therein. (e) The words hereof, hereunder and similar words shall be construed as references to this Merger Agreement as a whole and not limited to the particular article or provision in which the relevant reference appears and the words include, includes and including shall be deemed to be followed by the phrase without limitation in each instance it is used herein. (f) All words, terms and expressions used in this Merger Agreement shall be construed and interpreted in accordance with the laws of Luxembourg.

A-5

ARTICLE 2 TERMS AND CONDITIONS OF THE MERGER 2.1 Merger of ArcelorMittal into Arcelor.

(a) ArcelorMittal shall be merged into Arcelor by way of a merger by absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal (hereinafter the Merger) pursuant to (i) the provisions of section XIV of the Luxembourg Company Law, and (ii) the terms and conditions included in the Merger Proposal and the Explanatory Memorandum ((i) and (ii), together, the Merger Terms & Conditions). (b) Upon effectiveness of the Merger, all the assets and liabilities of ArcelorMittal (as such assets and liabilities shall exist on the Effective Date) shall be transferred to Arcelor by operation of law, ArcelorMittal shall cease to exist and Arcelor shall issue new shares to the (then-former) holders of ArcelorMittal Shares, in accordance with the Merger Terms & Conditions. 2.2 Objectives and Rationale of the Merger. The Merger constitutes the second and final step of the process to combine Mittal Steel and Arcelor into a single legal entity governed by Luxembourg law. The Merger shall further rationalize the corporate structure of the group initiated by the First-Step Merger. 2.3 Legal Effect of the Merger. The Merger shall become effective between ArcelorMittal and Arcelor and vis--vis third parties on the date of the publication of the Luxembourg Notarial Deeds in accordance with the provisions of Article 9 of the Luxembourg Company Law (the Effective Date). 2.4 Accounting for the Merger.

(a) For accounting purposes, the Merger shall be considered a combination of entities under common control as of January 1, 2007. All recorded assets and liabilities of ArcelorMittal and Arcelor shall be carried forward at their historical book values, and the income of Arcelor shall include the income of ArcelorMittal as of January 1, 2007. (b) For statutory reporting purposes, the final accounting year of ArcelorMittal shall end on December 31, 2006. 2.5 Third Parties Consent.

(a) In the event the consent (including any waiver or approval, whether expressed or implied) of a third party is necessary to transfer to Arcelor any asset or right of ArcelorMittal as a result of the Merger or to ensure the continued enjoyment or benefit by Arcelor of any such asset or right after the Effective Date, ArcelorMittal (or, if applicable, Arcelor) shall seek such consent as soon as possible after the execution of this Merger Agreement and use its best efforts to obtain it prior to the Effective Date. The Parties shall diligently cooperate with each other towards the obtaining of any such third party consent and shall keep each other regularly informed of the progress of any action undertaken in connection therewith. (b) In the event any third party consent fails to be obtained before the Effective Date, this failure shall not prevent the Merger from being carried out. 2.6 Post-Merger Name. Arcelor shall be renamed ArcelorMittal. ARTICLE 3 VALUATION - EXCHANGE RATIOS 3.1 Reference Accounts. The Merger Terms & Conditions have been determined by reference to the Accounts, provided, however, that the assets and liabilities of ArcelorMittal shall be transferred to Arcelor in their condition existing on the Effective Date. 3.2 Valuation Method. The transferred assets and the assumed liabilities of Mittal Steel shall be assessed at their fair market values. 3.3 Treatment of Treasury Stock. ArcelorMittal Shares held in treasury by or for the account of Arcelor or ArcelorMittal shall disappear pursuant to Article 274(1)(d) of the Luxembourg Company Law. A-6

Arcelor shall not issue any shares in consideration of the ArcelorMittal Shares held in treasury by or for the account of Arcelor or ArcelorMittal. 3.4 Exchange Ratios and Treatment of Fractional Shares.

(a) As a consequence of the transfer of all the assets and liabilities of ArcelorMittal by way of merger, Arcelor shall on the Effective Date issue to the holders of the ArcelorMittal Shares existing at such time one (1) Arcelor share for each one (1) ArcelorMittal Share (the Exchange Ratio). (b) The Merger Shares issued in accordance with the provisions of Section 3.4(a) above shall be entitled to any distribution declared after the Effective Date. For the avoidance of doubt, the Merger Shares shall not be entitled to the distribution referred to in Section 12.2(b) below. 3.5 No Other Consideration. No additional or cash consideration shall be paid by Arcelor to the shareholders of ArcelorMittal in connection with the Merger. ARTICLE 4 SHARE CAPITAL INCREASE CANCELLATION OF SHARES 4.1 Issuance of the Merger Shares.

(a) In the Merger, Arcelor shall increase its issued share capital by way of issuance of a number of shares (the Merger Shares) to the shareholders of ArcelorMittal, in accordance with the Exchange Ratio. (b) The difference between the net asset value contributed to Arcelor and the amount of the share capital increase shall be booked in a merger premium account. 4.2 Cancellation of the Arcelor Shares held by Arcelor Mittal. Upon effectiveness of the Merger, all Arcelor Shares, except the fractions of Arcelor Shares, if any, owned by ArcelorMittal and transferred to Arcelor pursuant to the Merger shall be cancelled in accordance with Article 49(3) of the Luxembourg Company Law. Such cancellation shall be offset against the share capital to the extent of the par value of the shares and for the difference between their book value and their par value in ArcelorMittals Accounts against the merger premium booked in accordance with Section 4.1. ARTICLE 5 HOLDERS OF SPECIAL RIGHTS 5.1 ArcelorMittal Stock Options. Upon effectiveness of the Merger, the ArcelorMittal Stock Options shall be converted into Arcelor stock options as follows: (i) for each one (1) ArcelorMittal Stock Option, holders of ArcelorMittal Stock Options shall receive one (1) Arcelor stock option. (ii) each Arcelor stock option granted in accordance with the provisions of this Section 5.1 shall give right to the subscription or acquisition, as the case may be, of one (1) Arcelor Share; (iii) the exercise price of the Arcelor stock options granted in accordance with the provisions of this Section 5.1 shall be equal to the exercise price of the corresponding ArcelorMittal Stock Options; and (iv) except as mentioned above, the Arcelor stock options shall be governed by terms and conditions similar to those governing the ArcelorMittal Stock Options. 5.2 Registration. As soon as possible following the Effective Date, Arcelor shall file with the SEC a registration statement on an appropriate form under the Securities Act with respect to the Arcelor Shares subject to Arcelor stock options, and shall use its best efforts to maintain the current status of the prospectus contained therein, as well as to comply with any applicable state securities or Blue Sky laws, for so long as such Arcelor stock options remain outstanding. A-7

ARTICLE 6 SPECIAL ADVANTAGES Subject to the provisions of Article 5, no special advantages were or shall be granted in connection with the Merger to the members of the Boards of Directors of ArcelorMittal and Arcelor, the members of the Management Boards of ArcelorMittal and Arcelor, the auditors of ArcelorMittal and Arcelor, the Independent Merger Auditors, other experts or advisers of ArcelorMittal and Arcelor, or any other person. ARTICLE 7 CREDITORS RIGHTS Creditors having a claim against Arcelor or ArcelorMittal prior to the date of the publication of the Luxembourg Notarial Deeds in accordance with the provisions of Article 9 of the Luxembourg Company Law, shall have the rights set forth in Article 268 of the Luxembourg Company Law. ARTICLE 8 REPRESENTATIONS AND WARRANTIES Other than as specifically represented and warranted by one Party to the other or as publicly disclosed by the relevant Party, each Party represents and warrants to the other Party as follows with respect to itself, as of the date of this Merger Agreement: 8.1 Organization, Authority and Qualification of the Parties.

(a) Each Party is a company duly registered or organized, validly existing as a legal entity properly incorporated, organized, registered and existing, under the laws of Luxembourg, and it has all necessary corporate power and authority to enter into this Merger Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Merger Agreement. Each Party has duly authorized the execution of this Merger Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereunder, and no other corporate proceedings are necessary other than those set forth in Article 11 below. Each Party has duly executed this Merger Agreement, and (assuming due authorization, execution and delivery by the other Party) this Merger Agreement constitutes legal, valid and binding obligations of each Party enforceable against each Party in accordance with its terms, except that such enforcement may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar applicable law now or hereafter in effect affecting the enforcement of creditors rights generally and subject to the qualification that equitable remedies may be granted only at the discretion of a court of competent jurisdiction. (b) Each Party is duly qualified in all material respects to do business (and is in good standing in each jurisdiction that recognizes the concept) in each jurisdiction in which it owns or leases material properties or conducts any material business and such qualification is necessary, except where failure to do so would not reasonably be expected to have a Material Adverse Effect. Material Adverse Effect means, with respect to a Party, any exceptional event or circumstance relating to such Party, or any action taken by such Party (in either case other than as a result of the terms of the Merger Agreement or the actions of the other Party) that, in either case, materially alters the substance of the relevant Party or substantially and adversely affects the economics of the Merger. 8.2 Capitalization.

(a) Arcelor hereby represents and warrants that, as of the date hereof, Arcelor has issued 669, 813,408 Arcelor Shares. Except as set forth above and except as publicly disclosed or reflected in this Merger Agreement, there are no (i) issued or outstanding shares of Arcelor, (ii) securities of Arcelor convertible into, or exchangeable or exercisable for, shares of Arcelor, (iii) warrants, calls, options or other rights to acquire or subscribe from Arcelor or any of its Subsidiaries, or any obligation of Arcelor or any of its Subsidiaries to issue, any shares or securities convertible into or exchangeable or exercisable for shares of Arcelor, or (iv) outstanding obligations of Arcelor to repurchase, redeem or otherwise acquire any such securities or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities. All of the issued Arcelor Shares have been validly issued and are fully paid up.

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(b) ArcelorMittal hereby represents and warrants that, as of the date hereof, ArcelorMittal has issued 1,417,207,253 ArcelorMittal Shares. Except as set forth above and except as publicly disclosed or reflected in this Merger Agreement, there are no (i) issued or outstanding shares of ArcelorMittal, (ii) securities of ArcelorMittal convertible into, or exchangeable or exercisable for, shares of ArcelorMittal, (iii) warrants, calls, options or other rights to acquire or subscribe from ArcelorMittal or any of its Subsidiaries, or any obligation of ArcelorMittal or any of its Subsidiaries to issue, any shares or securities convertible into or exchangeable or exercisable for shares of ArcelorMittal, or (iv) outstanding obligations of ArcelorMittal to repurchase, redeem or otherwise acquire any such securities or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities. All of the issued ArcelorMittal Shares have been validly issued and are fully paid up. 8.3 Consents and Approvals. Except as contemplated in this Merger Agreement and except where the failure to make any registration or filing with or notification to, or to obtain any permit, authorization, consent or approval of any governmental authority (any of the foregoing a Consent) (a) would not prevent or materially delay the consummation of the transactions contemplated hereby or otherwise prevent a Party from performing in all material respects its obligations under this Merger Agreement, or (b) would not individually or in the aggregate have a Material Adverse Effect, no Consent of any governmental authority is necessary for the execution and delivery of this Merger Agreement by the relevant Party and the consummation of the transactions contemplated hereby. ARTICLE 9 TAX TREATMENT 9.1 Luxembourg Capital Tax. Arcelor shall seek agreement with the Luxembourg tax authorities to confirm that the Merger shall not attract any capital tax under Article 4-1 of the law of December 29, 1971 as amended. 9.2 Luxembourg Corporate Income Tax. Arcelor and ArcelorMittal shall seek agreement with the Luxembourg corporate tax authorities to confirm that the Merger shall not attract any major adverse Luxembourg corporate tax (impt sur le revenu des collectivits, impt commercial communal) consequences. ARTICLE 10 CONDUCT OF BUSINESS PENDING THE COMPLETION OF THE MERGER 10.1 Conduct of Business by ArcelorMittal Pending the Completion. Between the date of this Merger Agreement and until the earlier of the termination of this Merger Agreement and the Effective Date, except as expressly contemplated by any other provision of this Merger Agreement, (a) ArcelorMittal shall cause the businesses of ArcelorMittal and its Subsidiaries to be conducted only in, and ArcelorMittal shall cause ArcelorMittal and its Subsidiaries to not take any action except in, the ordinary course of business and in a manner consistent with past practice, and (b) ArcelorMittal shall use its best efforts to preserve substantially intact the current business organization of ArcelorMittal and its Subsidiaries. 10.2 Conduct of Business by Arcelor Pending the Completion. Between the date of this Merger Agreement and until the earlier of the termination of this Merger Agreement and the Effective Date, except as expressly contemplated by any other provision of this Merger Agreement, (a) Arcelor shall cause the businesses of Arcelor and its Subsidiaries to be conducted only in, and Arcelor shall cause Arcelor and its Subsidiaries to not take any action except in, the ordinary course of business and in a manner consistent with past practice, and (b) Arcelor shall use its best efforts to preserve substantially intact the current business organization of Arcelor and its Subsidiaries. ARTICLE 11 ADDITIONAL REQUIREMENTS 11.1 Preparation of Disclosure Documents.

(a) ArcelorMittal and Arcelor shall cooperate with one another (i) in connection with the preparation of the Merger Proposal, the Explanatory Memorandum, the European Prospectus, the F-4 Registration Statement (including the ArcelorMittal Proxy Statement) and any board and shareholder resolutions, and any amendments or supplements thereto, (ii) in determining whether any action by or in respect of, or A-9

Consent from, any governmental body, agency or official, or authority is required, or any consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Merger Agreement and (iii) in seeking any such actions, consents, approvals or waivers or making any such filings, furnishing information required in connection therewith or with the Merger Proposal, the Explanatory Memorandum, the European Prospectus, the F-4 Registration Statement, the ArcelorMittal Proxy Statement, and any board and shareholder resolutions and seeking timely to obtain any such actions, consents, approvals or waivers. Each of ArcelorMittal and Arcelor shall use its best efforts to have the European Prospectus approved by the CSSF as promptly as practicable. Each of ArcelorMittal and Arcelor shall use its best efforts to have the F-4 Registration Statement declared effective by the SEC as promptly as practicable and to keep the F-4 Registration Statement effective as long as is necessary to consummate the Merger and the transactions contemplated by this Merger Agreement. ArcelorMittal and Arcelor shall, as promptly as practicable after receipt thereof, provide the other Party with copies of any written comments and advise the other Party of any oral comments with respect to the European Prospectus, the F-4 Registration Statement, and the ArcelorMittal Proxy Statement received by any governmental body or authority. Each of ArcelorMittal and Arcelor shall cooperate and provide the other with a reasonable opportunity to review and comment on any amendment or supplement to the European Prospectus, the F-4 Registration Statement, and the ArcelorMittal Proxy Statement prior to filing such documents with any governmental body or authority, and shall provide each other with a copy of all such filings made with any governmental body or authority. (b) Except as otherwise set forth in this Merger Agreement, no amendment or supplement (including by incorporation by reference) to the Merger Proposal, the Explanatory Memorandum, the European Prospectus, the F-4 Registration Statement, or the ArcelorMittal Proxy Statement shall be made without the approval of both ArcelorMittal and Arcelor, whose approval shall not be unreasonably withheld or delayed. (c) ArcelorMittal shall advise Arcelor, and Arcelor shall advise ArcelorMittal, promptly after it receives notice thereof, of the times when the European Prospectus has been approved by the CSSF, the F-4 Registration Statement has become effective, the issuance of any stop order, the suspension of the qualification of the Merger Shares for offering or sale in any jurisdiction or any request by any governmental body, court, or authority for amendment of the Merger Proposal, the Explanatory Memorandum, the European Prospectus, the F-4 Registration Statement and the ArcelorMittal Proxy Statement. (d) On the Effective Date, Arcelor shall file a Current Report on Form 6-K containing the information required by Rule 12g-3(f) of the Exchange Act. 11.2 Merger Proposal and Explanatory Memorandum. As soon as possible following the availability of the Auditors Merger Reports, the Merger Proposal shall be finalized and signed by the duly authorized members of the Boards of Directors of Arcelor and ArcelorMittal and then be deposited and published in accordance with the provisions of Articles 9 and 262 of the Luxembourg Company Law, and the Explanatory Memorandum shall be finalized and signed by the duly authorized members of the Boards of Directors of Arcelor and ArcelorMittal, together with the appropriate documents as referred to in the Luxembourg Company Law, and shall be available at the offices of Arcelor and ArcelorMittal. 11.3 ArcelorMittal Shareholders Meeting. ArcelorMittal shall convene and hold an extraordinary general meeting of shareholders of ArcelorMittal (the ArcelorMittal Shareholders Meeting) as referred to in Section 12.1 as soon as practicable after the satisfaction or waiver of the conditions precedent set forth in Sections 12.3 to 12.6. The ArcelorMittal Shareholders Meeting shall be held on the same day as the Arcelor Shareholders Meeting. ArcelorMittal shall use its best efforts to obtain adoption of the decision to merge by the ArcelorMittal shareholders in accordance with Section 12.1 and shall otherwise comply with all legal requirements applicable to the ArcelorMittal Shareholders Meeting. 11.4 Arcelor Shareholders Meeting. Arcelor shall convene and hold an extraordinary general meeting of shareholders of Arcelor (the Arcelor Shareholders Meeting) as referred to in Section 12.2 as soon as practicable after the satisfaction or waiver of the conditions precedent set forth in Sections 12.3 to 12.6. The Arcelor Shareholders Meeting shall be held on the same day as the ArcelorMittal Shareholders Meeting. Arcelor shall use its best efforts to obtain adoption of the decision to merge by the Arcelor shareholders in accordance with Section 12.2 and shall otherwise comply with all legal requirements applicable to the Arcelor Shareholders Meeting.

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11.5

Admission to Listing and Trading of the Arcelor Shares and the Merger Shares.

Arcelor shall use its best efforts to have the Merger Shares, and, for purposes of Euronext Amsterdam by NYSE Euronext and the NYSE, the Arcelor Shares, (provisionally) admitted to listing and trading on Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the NYSE and the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, admitted to trading on the official market of the Luxembourg Stock Exchange and listed on the official list of the Luxembourg Stock Exchange before or on the Effective Date. 11.6 Access to Information - Confidentiality.

(a) From the date of this Merger Agreement until the Effective Date, Arcelor shall, and shall cause its Subsidiaries to provide to ArcelorMittal (and ArcelorMittals Representatives) reasonable access at reasonable times upon prior notice to the officers, employees, agents, properties, offices and other facilities of Arcelor and its Subsidiaries and to the books and records thereof for the purpose of conducting whatever investigations ArcelorMittal deems necessary. (b) From the date of this Merger Agreement until the Effective Date, ArcelorMittal shall, and shall cause its Subsidiaries to provide to Arcelor and Arcelors Representatives reasonable access at reasonable times upon prior notice to the officers, employees, agents, properties, offices and other facilities of ArcelorMittal and its Subsidiaries and to the books and records thereof for the purpose of conducting whatever investigations Arcelor deems necessary. (c) All information obtained by either of the Parties and their respective Representatives pursuant to this Section 11.6 shall be kept confidential. (d) No investigation pursuant to this Section 11.6 shall affect any representation or warranty in this Merger Agreement or any condition to the obligations of the Parties. 11.7 Notification of Certain Matters. Each Party shall give prompt notice to the other Party of (a) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which could reasonably be expected to cause any representation or warranty of such first Party contained in this Merger Agreement to be untrue or inaccurate in any material respect and (b) any failure of such first Party to comply with or satisfy any covenant or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 11.7 shall not limit or otherwise affect the remedies available hereunder to the Party receiving such notice. 11.8 Further Action. Upon the terms and subject to the conditions of this Merger Agreement, each of the Parties shall use its best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws or otherwise to consummate and make effective the Merger (including without limitation the issuance of the Merger Shares), including using its best efforts to obtain all consents, approvals, authorizations, qualifications and orders of all third parties that are necessary for the consummation of the Merger and to fulfill the conditions to the Effective Date. In the event that, at any time after the Effective Date, any further action is necessary or desirable to carry out the purposes of this Merger Agreement, the proper officers and directors of each of the Parties shall use their best efforts to take all such action. The Parties acknowledge and agree that they shall use all reasonable efforts to complete the Merger no later than December 31, 2007. 11.9 Auditors Merger Reports.

(a) ArcelorMittal shall ensure that independent auditors shall be appointed to review, certify and report on the Merger Terms & Conditions, and, in particular, the Exchange Ratio, as required pursuant to Article 266 of the Luxembourg Company Law. (b) Arcelor shall ensure that independent auditors shall be appointed to review, certify and report on the Merger Terms & Conditions, and, in particular, the Exchange Ratio, as required pursuant to Article 266 of the Luxembourg Company Law.

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ARTICLE 12 CONDITIONS PRECEDENT The completion of the Merger is subject to the satisfaction or waiver, where legally permissible, of the following conditions precedent: 12.1 ArcelorMittal Shareholder Approval. The decision to merge ArcelorMittal into Arcelor as contemplated by the Merger Proposal and the Explanatory Memorandum shall have been adopted by the requisite affirmative vote of the shareholders of ArcelorMittal in accordance with Section XIV of the Luxembourg Company Law and ArcelorMittals articles of association. 12.2 Arcelor Shareholder Approval. The following shall have been approved or adopted by the requisite affirmative vote of the shareholders of Arcelor in accordance with Section XIV of the Luxembourg Company Law and Arcelors articles of association: (a) the completion of a share capital restructuring of Arcelor pursuant to which each 7 pre-capital restructuring shares of Arcelor shall be exchanged for 8 post-capital restructuring shares of Arcelor; (b) the increase of the share capital of Arcelor by incorporation of free reserves without issuing new shares, but by increasing the par value of the shares in order to round up the par value of the post-capital restructuring shares of Arcelor to the immediately higher eurocent; (c) the decision of Arcelor to distribute an additional dividend of $0.040625 per post-share capital restructuring Arcelor share, payable simultaneously with the last installment of the dividend decided by the ordinary general meeting of Arcelor on April 27, 2007, so that each post-share capital restructuring Arcelor share (other than those issued in, or following the Merger) will be entitled to a dividend payment of $0.325 on or about December 15, 2007; (d) the decision to create an authorized share capital and to authorize the Board of Directors of Arcelor to issue Arcelor Shares within the limits of the authorized share capital for delivery upon exercise or conversion, as applicable, of Arcelor stock options or other equity-based awards granted under any Arcelor employee incentive or benefit plan and to limit or cancel the preferential subscription right of the existing shareholders; (e) the amendment of Arcelors articles of association and adoption of an English language version and the change of the binding language of the articles of association from French to English; (f) the decision to merge ArcelorMittal into Arcelor as contemplated by the Merger Proposal and the Explanatory Memorandum; (g) the decision to issue the Merger Shares;

(h) the decision to cancel upon effectiveness of the Merger, the Arcelor Shares, except the fractions of Arcelor Shares, if any, that shall be transferred by ArcelorMittal to Arcelor pursuant to the Merger, as referred to in Section 4.2 above; and (i) the decision to issue the Arcelor stock options in the Merger, as referred to in Section 5.1 above. 12.3 Approval of the European Prospectus. The European Prospectus shall have been approved by the CSSF and a copy of such approval shall have been notified by the CSSF to the competent securities regulator in Belgium, France, The Netherlands and Spain, no actions by third parties challenging the CSSFs approval shall be pending or threatened before the competent Luxembourg courts, and the CSSF shall not have withdrawn or threatened to withdraw its approval. 12.4 Effectiveness of the F-4 Registration Statement. The F-4 Registration Statement shall have been declared effective by the SEC under the Securities Act, and no stop order suspending the effectiveness of the F-4 Registration Statement shall be in effect and no proceedings for such purpose shall be pending before or threatened by the SEC. A-12

12.5

Admission to Listing and Trading of the Arcelor Shares and the Merger Shares.

(a) The Merger Shares and, for purposes of Euronext Amsterdam by NYSE Euronext and the NYSE, the Arcelor Shares, shall have been (provisionally) admitted to listing and trading on Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, and the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, admitted to trading on the official market of the Luxembourg Stock Exchange and listed on the official list of the Luxembourg Stock Exchange. (b) The listing of the Arcelor Shares and the Merger Shares on the NYSE shall have been approved by the NYSE, subject to official notice of issuance. 12.6 Absence of Litigation. There shall be no action, litigation or proceeding by any court or Person, instituted or pending, or statute, rule, regulation, injunction, order or decree by any court or Person issued or deemed to be applicable to the Merger, that seeks to prohibit or restrain the Merger or seeks a divestiture of any ArcelorMittal Shares or Arcelor Shares (including the Merger Shares) or limitation on the ownership rights of Arcelor over the assets and liabilities of ArcelorMittal that are transferred to Arcelor upon effectiveness of the Merger that would reasonably be expected to have a Material Adverse Effect. ARTICLE 13 TERMINATION, AMENDMENT AND WAIVER 13.1 Termination.

(a) This Merger Agreement may be terminated and the plan to merge ArcelorMittal and Arcelor shall be abandoned if ArcelorMittal and Arcelor mutually so decide by written consent at any time prior to the Effective Date. (b) If any of the conditions precedent referred to in Article 12 above is not satisfied or waived by December 31, 2007 at the latest, this Merger Agreement may be terminated, upon written notice by either Party to the other Party, provided, however, that the right to terminate this Merger Agreement under this Section 13.1(b) shall not be available to the Party whose failure to fulfill any condition precedent under this Merger Agreement has been the cause of, or resulted in, the failure of the satisfaction of such condition precedent to occur on or before such date. If no such written notice is sent, this Merger Agreement shall remain in full force and the Parties may agree to either consider such condition precedent waived or amend this Merger Agreement. 13.2 Effect of Termination. In the event of the termination of this Merger Agreement pursuant to Section 13.1 above, there shall be no liability under this Merger Agreement on the part of any Party, except (a) as set forth in this Section 13.2, and (b) nothing herein shall relieve any Party from liability for any breach of any of its representations, warranties, covenants or agreements set forth in this Merger Agreement prior to such termination, provided, however, that the terms of this Section 13.2, and the Sections 11.6, 13.4, 14.1, 14.2, 14.3, 14.4, 14.5, 14.6, 14.7 and 14.8 (and any related definitional provisions set forth in Article 1) shall survive any termination of this Merger Agreement. 13.3 No Rescission. Without prejudice to Sections 13.1 and 13.2 above, the Parties waive to the greatest extent legally possible their respective rights to rescind (rsoudre) or demand in legal proceedings the rescission (rsolution) of this Merger Agreement pursuant to the provisions of the Luxembourg Civil Code and in particular to Article 1184 thereof, or otherwise. 13.4 Fees and Expenses. Each Party shall bear its own expenses.

13.5 Amendment - Waiver. This Merger Agreement may not be amended except by a written instrument duly executed by each of the Parties. At any time prior to the Effective Date, either Party may (a) extend the time for the performance of any obligation or other act of the other Party, (b) waive any inaccuracy in the representations and warranties of any other Party contained herein or in any document delivered pursuant hereto and (c) waive compliance with any agreement of the other Party or any condition to its own obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party to be bound thereby.

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ARTICLE 14 GENERAL PROVISIONS 14.1 Publicity. The initial press release regarding this Merger Agreement and the Merger shall be a joint press release and thereafter ArcelorMittal and Arcelor shall use their best efforts to develop a joint communications plan and each Party shall use its best efforts to ensure that all press releases and other public statements with respect to the transactions contemplated hereby shall be consistent with such joint communications plan. Unless otherwise required by applicable law or by obligations pursuant to any listing agreement with or rules of any securities exchange, each Party shall consult with the other before issuing any press release or public statement with respect to the transactions contemplated by this Merger Agreement and shall not issue any such press release or public statement prior to such consultation. In addition to the foregoing, except to the extent disclosed in or consistent with the European Prospectus and the F-4 Registration Statement, neither ArcelorMittal nor Arcelor shall issue any press release or otherwise make any public statement or disclosure concerning the other Party or the other Partys business, financial condition or results of operations without the consent of the other Party, whose consent shall not be unreasonably withheld or delayed. 14.2 Severability. If any term or other provision of this Merger Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Merger Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Merger is not affected in any manner adverse to any Party. Upon the determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Merger Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order for the Merger to be completed as originally contemplated to the fullest extent possible. 14.3 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 14.4 Assignment. Neither this Merger Agreement nor the rights and obligations under this Merger Agreement may be assigned, pledged or transferred by either Party without the prior written consent of the other Party. 14.5 Parties in Interest. This Merger Agreement shall be binding upon and inure solely to the benefit of each Party, and nothing in this Merger Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Merger Agreement. 14.6 Specific Performance. The Parties agree that irreparable damage would occur in the event any provision of this Merger Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. 14.7 Governing Law. This Merger Agreement shall be governed by, and construed in accordance with, Luxembourg law. 14.8 Dispute Resolution. The Parties hereby irrevocably submit to the exclusive jurisdiction of the courts of Luxembourg any dispute or controversy relating to or arising out of the negotiation, interpretation or enforcement of this Merger Agreement or any of the documents referred to in this Merger Agreement or the transactions contemplated hereby or thereby. 14.9 Counterparts. This Merger Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same document.

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IN WITNESS WHEREOF, ArcelorMittal and Arcelor have caused this Merger Agreement to be executed as of the date first written above by their respective directors thereto duly authorized.

ArcelorMittal __________________ /s/ Mr. Georges T.N. Schmit Director Arcelor __________________ /s/ Mr. Joseph J. Kinsch Chairman of the Board of Directors

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ANNEX B

UNOFFICIAL TRANSLATION1

PROPOSAL FOR THE MERGER OF

ArcelorMittal Luxembourg public limited liability company (socit anonyme) 19, Avenue de la Libert L-2930 Luxembourg Grand-Duchy of Luxembourg R.C.S. Luxembourg B 102468 AND Arcelor Luxembourg public limited liability company (socit anonyme) 19, Avenue de la Libert L-2930 Luxembourg Grand-Duchy of Luxembourg R.C.S. Luxembourg B 82454

September 25, 2007

For purposes of Luxembourg law, the French language version of this Merger Proposal is binding. B-1

THE BOARDS OF DIRECTORS OF: ArcelorMittal, a Luxembourg socit anonyme, having its registered office at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Registry of Trade and Companies under number B 102468 (ArcelorMittal); and Arcelor, a Luxembourg socit anonyme, having its registered office at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Registry of Trade and Companies under number B 82454 (Arcelor, together with ArcelorMittal, the Merging Companies). WHEREAS: (A) (B) It had been decided, subject to certain conditions precedent, to combine Mittal Steel Company N.V. (Mittal Steel) and Arcelor through a two-step merger process; It had been decided, subject to the prior satisfaction of certain conditions precedent (including shareholders approval) that: (i) as a first step, Mittal Steel shall merge into ArcelorMittal by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel, pursuant to Dutch and Luxembourg law and in accordance with the terms and conditions of a merger proposal (voorstel tot fusie / projet de fusion) and an explanatory memorandum (toelichting op het voorstel tot fusie / un rapport crit dtaill) subject to Dutch and Luxembourg law (the First-Step Merger); and (ii) as a second step, ArcelorMittal shall merge into Arcelor by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal (following which Arcelor shall be renamed ArcelorMittal), pursuant to Luxembourg law and in accordance with the terms and conditions of a merger proposal (projet de fusion) and an explanatory memorandum (un rapport crit dtaill) subject to Luxembourg law (the Second-Step Merger); (C) (D) The First-Step Merger was completed on September 3, 2007; The Merging Companies have entered into a merger agreement, dated September 25, 2007 (the Merger Agreement) pursuant to which the Merging Companies have agreed to merge ArcelorMittal into Arcelor by way of a merger by absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal pursuant to the provisions of section XIV of the Luxembourg law on commercial companies dated August 10, 1915, as amended from time to time (the Luxembourg Company Law); The issued share capital of Arcelor, as of the date hereof, amounts to EUR 3,349,067,040 and is divided into 669,813,408 shares without nominal value (the Arcelor Shares), which share capital is proposed to be restructured prior to the completion of the Second-Step Merger; The issued share capital of ArcelorMittal, as of the date hereof, amounts to EUR 14,172,072.53 and is divided into 1,417,207,253 shares without nominal value (the ArcelorMittal Shares); The accounting year of each of the Merging Companies coincides with the calendar year, and Arcelors statutory and consolidated accounts for the accounting year ended December 31, 2006 have been adopted by its general meeting of shareholders on April 27, 2007, and ArcelorMittals statutory accounts for the accounting year ended December 31, 2006 have been adopted by its general meeting of shareholders on April 19, 2007; The Boards of Directors have prepared and approved interim accounts of their respective Merging Companies as of June 30, 2007; None of the Merging Companies has been dissolved, has been declared bankrupt, or is subject to a suspension of payments; and All of the issued shares in the capital of the Merging Companies are fully paid up.

(E)

(F) (G)

(H) (I) (J)

NOW, THEREFORE, make the following proposal of merger (the Merger Proposal):

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1.

MERGER

ArcelorMittal shall be merged into Arcelor by way of a merger by absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal (hereinafter the Merger) pursuant to (i) the provisions of section XIV of the Luxembourg Company Law, and (ii) the terms and conditions included in this Merger Proposal and an explanatory memorandum (un rapport crit dtaill) ((i) and (ii), together, the Merger Terms & Conditions). Upon effectiveness of the Merger, all the assets and liabilities of ArcelorMittal (as such assets and liabilities shall exist on the Effective Date, as defined below) shall be transferred to Arcelor by operation of law, ArcelorMittal shall cease to exist and Arcelor shall issue new shares to the (then-former) holders of ArcelorMittal Shares, in accordance with the Merger Terms & Conditions. 2. ARTICLES OF ASSOCIATION

The articles of association of Arcelor currently read as indicated in Annex A to this Merger Proposal. Upon approval of the decision to merge by the shareholders of Arcelor, the articles of association of Arcelor (to be renamed ArcelorMittal), shall be amended to read as indicated in Annex B to this Merger Proposal. The amendments shall be effective on the Effective Date, except for the amendments related to the share capital restructuring referred to in Section 7 (Share Exchange Ratio) below, which shall be effective on the day of the effectiveness of the share capital restructuring. Annexes A and B form an integral part of this Merger Proposal. 3. COMPOSITION OF THE BOARD OF DIRECTORS OF ARCELOR The composition of the Board of Directors of Arcelor shall not change as a result of the Merger. On the Effective Date, the Board of Directors of Arcelor (which shall be renamed ArcelorMittal) shall consist of the following persons: Joseph J. Kinsch, Chairman of the Board of Directors Lakshmi N. Mittal, President and Chief Executive Officer Jos Ramn lvarez-Rendueles Medina Edmond Pachura HRH Prince Guillaume de Luxembourg Sergio Silva de Freitas Jean-Pierre Hansen Vanisha Mittal Bhatia Wilbur L. Ross Lewis Kaden Franois H.J. Pinault Narayanan Vaghul Georges T.N. Schmit Antoine R. Spillmann Romain C.L. Zaleski John O. Castegnaro Michel A. Marti Manuel Fernandz Lpez 4. EFFECTIVE DATE

The Merger shall become effective between ArcelorMittal and Arcelor and vis--vis third parties on the date of the publication of the Luxembourg law governed notarial deeds (procs-verbal de lassemble gnrale tabli par acte notari) containing the minutes of respectively the extraordinary general meeting of shareholders of ArcelorMittal approving the Merger and the extraordinary general meeting of shareholders of Arcelor approving the Merger in accordance with the provisions of Article 9 of the Luxembourg Company Law (the Effective Date). 5. ACCOUNTING FOR THE MERGER

For accounting purposes, the Merger shall be considered a combination of entities under common control as of January 1, 2007. All recorded assets and liabilities of ArcelorMittal and Arcelor shall be carried B-3

forward at their historical book values, and the income of Arcelor shall include the income of ArcelorMittal as of January 1, 2007. For statutory reporting purposes, the final accounting year of ArcelorMittal shall end on December 31, 2006. 6. REFERENCE ACCOUNTS - VALUATION

The terms and conditions of the Merger have been determined by reference to the audited statutory accounts (including the balance sheet, the profit and loss statements and the notes thereto, together with the report from the companys statutory auditor) of ArcelorMittal for the accounting year ended December 31, 2006 and the unaudited interim accounts of ArcelorMittal as of June 30, 2007 (including in the notes thereto a proforma balance sheet of ArcelorMittal as of January 1, 2007 and June 30, 2007 taking into account the effectiveness of the First-Step Merger), and the audited statutory and consolidated accounts (including the balance sheet, the profit and loss statements and the notes thereto, together with the report from the companys auditor) of Arcelor for the accounting year ended December 31, 2006 and the unaudited interim accounts of Arcelor as of June 30, 2007, provided, however, that the assets and liabilities of ArcelorMittal shall be transferred to Arcelor in their condition existing on the Effective Date. The transferred assets and the assumed liabilities of ArcelorMittal shall be assessed at their historical book values. 7. SHARE EXCHANGE RATIO

The Boards of Directors of the Merging Companies decided that it would be advisable to restructure the share capital of Arcelor immediately prior to the effectiveness of the Merger so as to have a one-to-one exchange ratio in the Merger. The share capital restructuring would take the form of an exchange of every 7 prerestructuring Arcelor shares for 8 post-restructuring Arcelor shares, thus mechanically resulting in an adjusted exchange ratio of one new Arcelor share for everyone ArcelorMittal Share without any economic effect on Arcelor or ArcelorMittal shareholders. As a result of the share capital restructuring each holder of prerestructuring Arcelor shares would receive a number of post-restructuring Arcelor shares equal to (i) the number of pre-restructuring Arcelor shares held by that person divided by 0.875 (7 divided by 8) (such quotient being referred to as A) or (ii) if such number is not a whole number, the immediately lower whole number of postrestructuring Arcelor shares (such number being referred to as B) and a number of fractions of a seventh of a post-restructuring Arcelor share equal to seven multiplied by the difference between A and B. The share capital of Arcelor shall be increased by incorporation of free reserves without issuing new shares, but by increasing the par value of the shares in order to round up to the immediately higher eurocent the par value of the post-restructuring shares. This aforementioned share capital restructuring and share capital increase will be submitted for approval to the extraordinary general meeting of shareholders of Arcelor that will be convened to adopt the decision to merge ArcelorMittal into Arcelor as contemplated by this Merger Proposal. The completion of the aforementioned share capital restructuring and share capital increase are conditions precedent to the effectiveness of the Merger. As a consequence of the transfer by operation of law of all the assets and liabilities of ArcelorMittal by way of merger, Arcelor shall on the Effective Date issue to the holders of the ArcelorMittal Shares existing at such time one (1) Arcelor share for each one (1) ArcelorMittal Share (the Exchange Ratio). As of the Effective Date, the newly-issued Arcelor shares shall rank pari passu with any existing Arcelor Shares, including with respect to any undistributed profits and other reserves. For the avoidance of doubt, the newly-issued Arcelor shares shall not be entitled either to (i) the last installment of the dividend decided by the annual general meeting of Arcelor held on April 27, 2007, or (ii) the additional $0.040625 per post-capital restructuring Arcelor share which distribution shall be proposed to the extraordinary general meeting of Arcelor convened to approve the Merger, which in the aggregate represents a dividend of $0.325 per postrestructuring Arcelor share. Conversely, as a result of the Merger, Arcelor shall assume ArcelorMittals obligation to pay the last installment of the quarterly dividend decided by the annual general meeting of Mittal Steel on June 12, 2007, which, in light of the exchange ratio of the First-Step Merger and the Merger, shall represent $0.325 per Arcelor share newly issued in the Merger. Therefore, on December 15, 2007, each Arcelor share (whether issued in the Merger or previously issued) shall be entitled to a dividend payment of $0.325. B-4

8.

SETTLEMENT OF THE MERGER

Upon effectiveness of the Merger, holders of ArcelorMittal Shares shall automatically receive newlyissued Arcelor shares in accordance with the Exchange Ratio and on the basis of their respective holdings as entered in the ArcelorMittal shareholder registry (registre des actionnaires) or their respective securities accounts. Holders of ArcelorMittal Shares whose shares are registered directly in ArcelorMittals shareholder registry shall automatically receive newly-issued Arcelor shares through an entry in the shareholder registry of Arcelor. Holders of ArcelorMittal Shares whose shares are registered indirectly, that is through a clearing system, in ArcelorMittals Dutch, Luxembourg or New York shareholder registry, shall automatically receive newly-issued Arcelor shares through a credit to their respective securities accounts. 9. INDEPENDENT AUDITORS

The Board of Directors of ArcelorMittal has appointed an independent auditor to review, certify and report on the Merger Terms & Conditions, and, in particular, the Exchange Ratio, as required pursuant to Article 266 of the Luxembourg Company Law. A copy of the report (un rapport crit destin aux actionnaires) of this independent auditor, as required pursuant to Article 266 of the Luxembourg Company Law, is available at the offices of ArcelorMittal and Arcelor. The Board of Directors of Arcelor has appointed an independent auditor to review, certify and report on the Merger Terms & Conditions, and, in particular, the Exchange Ratio, as required pursuant to Article 266 of the Luxembourg Company Law. A copy of the report (un rapport crit destin aux actionnaires) of this independent auditor, as required pursuant to Article 266 of the Luxembourg Company Law, is available at the offices of ArcelorMittal and Arcelor. 10. ARCELORMITTAL TREASURY SHARES

ArcelorMittal Shares held in treasury by or for the account of Arcelor or ArcelorMittal shall disappear pursuant to Article 274(1)(d) of the Luxembourg Company Law. Arcelor shall not issue any shares in consideration of the ArcelorMittal Shares held in treasury by or for the account of Arcelor or ArcelorMittal. 11. CANCELLATION OF ARCELOR SHARES HELD BY ARCELORMITTAL

Upon effectiveness of the Merger, all Arcelor Shares, except the fractions of Arcelor Shares, if any, owned by ArcelorMittal and transferred to Arcelor pursuant to the Merger shall be cancelled in accordance with Article 49(3) of the Luxembourg Company Law. Such cancellation shall be offset against the share capital to the extent of the par value of the shares and for the difference between their book value and their par value in ArcelorMittals accounts against the merger premium as referred to in Section 12 (Impact on Distributable Reserves and Goodwill of Arcelor) below. The shareholders of Arcelor shall vote on the cancellation referred to above, at the same extraordinary general meeting of shareholders that shall be convened to adopt the decision to merge ArcelorMittal into Arcelor as contemplated by this Merger Proposal. 12. IMPACT ON DISTRIBUTABLE RESERVES AND GOODWILL OF ARCELOR

The Merger shall result in the creation of a merger premium account, reflecting the difference between the net asset value contributed to Arcelor and the amount of the share capital increase by Arcelor. The merger premium shall be decreased as a result of the cancellation of Arcelor Shares, except the fractions of Arcelor Shares, if any, held by ArcelorMittal, as referred to in Section 11 (Cancellation of Arcelor Shares Held by ArcelorMittal) above. There shall be no impact on goodwill. 13. SPECIAL ADVANTAGES

Except for the grant of stock options as described in Section 14 (Treatment of Stock Options) below, no special advantages were or shall be granted in connection with the Merger to the members of the Boards of Directors of ArcelorMittal and Arcelor, the members of the Management Boards of ArcelorMittal and Arcelor,

B-5

the auditors of ArcelorMittal and Arcelor, the independent auditors, other experts or advisers of ArcelorMittal and Arcelor, or any other person. 14. TREATMENT OF STOCK OPTIONS

Upon effectiveness of the Merger, the ArcelorMittal stock options shall be converted into Arcelor stock options as follows: (i) (ii) (iii) (iv) 15. for each one (1) ArcelorMittal stock option, holders of ArcelorMittal stock options shall receive one (1) Arcelor stock option. each Arcelor stock option granted in the Merger shall give right to the subscription or acquisition, as the case may be, of one (1) Arcelor share; the exercise price of the Arcelor stock options granted in the Merger shall be equal to the exercise price of the corresponding ArcelorMittal stock options; and except as mentioned above, the Arcelor stock options shall be governed by terms and conditions similar to those governing the ArcelorMittal stock options.

TREATMENT OF SPECIAL RIGHTS Right of Pledge or Right of Usufruct over directly held ArcelorMittal Shares

The following applies with respect to ArcelorMittal Shares in respect of which the shareholder is directly registered in ArcelorMittals Dutch, Luxembourg or New York shareholder registry (registre des actionnaires). Each holder of ArcelorMittal Shares who has granted a right of pledge or a right of usufruct in ArcelorMittal Shares and each holder of a right of pledge or a right of usufruct in ArcelorMittal Shares, is strongly recommended to inform Mr. Henk Scheffer, Corporate Secretary at ArcelorMittal, phone +352 47922414, henk.scheffer@arcelormittal.com of such right of pledge or right of usufruct before Friday, October 19, 2007. If ArcelorMittal is informed of such right of pledge or right of usufruct before Friday October 19, 2007, the Merging Companies shall use their reasonable best efforts to assist the grantor and the holder of such right of pledge or right of usufruct with the creation and perfection of a similar interest over the newly-issued Arcelor shares to the extent legally feasible under Luxembourg law. Right of Pledge, Right of Usufruct or Similar Security or Special Interest in ArcelorMittal Shares held through a Book-Entry System The following applies with respect to ArcelorMittal Shares that are held through a book-entry system. Each holder of ArcelorMittal Shares who has granted a right of pledge, a right of usufruct or a similar security or special interest in ArcelorMittal Shares, and each holder of a right of pledge, a right of usufruct or a similar security or special interest in ArcelorMittal Shares, is strongly recommended to contact his or her bank, broker or custodian through which such right of pledge, right of usufruct, or similar security or special interest is held or recorded, to review the legal consequences, if any, resulting from the Merger on such right of pledge, right of usufruct, or similar security or special interest. Other Special Rights Except for the holders of stock options as described in Section 14 (Treatment of Stock Options) above, and holders of a right of pledge, a right of usufruct or similar security or special interest as described above, there are no natural or legal persons who or that have special rights, other than in their capacity of shareholder, within the meaning of Article 261(2)(f) of the Luxembourg Company Law, against ArcelorMittal. Except for the grant of stock options as described in Section 14 (Treatment of Stock Options) above, no compensatory payments or rights shall be granted. B-6

16.

CONTINUATION OF ACTIVITIES

Arcelor intends to continue its activities and the activities of ArcelorMittal. Arcelor does not intend to discontinue any activities in connection with the Merger. 17. BOARD OF DIRECTORS AND SHAREHOLDER APPROVALS

The Board of Directors of ArcelorMittal approved this Merger Proposal on September 25, 2007. The Board of Directors of Arcelor approved this Merger Proposal on September 25, 2007. The Merger is subject, among other conditions, to the adoption by the general meeting of shareholders of both ArcelorMittal and Arcelor of the proposal to merge as contemplated by this Merger Proposal. 18. WORKS COUNCIL CONSULTATIONS

The select committee of the combined European works council of Arcelor and ArcelorMittal has been duly informed with respect to the contemplated two-step merger process and the Merger. 19. EXPLANATORY MEMORANDUM

The Boards of Directors of ArcelorMittal and Arcelor have, in an explanatory memorandum to this Merger Proposal, described the reasons for the Merger, the exchange ratio, the anticipated consequences for the respective activities of each of ArcelorMittal and Arcelor and any legal, economic and employment-related implications of the Merger. 20. DEPOSIT OF DOCUMENTS WITH PUBLIC REGISTRIES

This Merger Proposal (including its annexes) shall be deposited with the Luxembourg Registry of Trade and Companies. 21. DOCUMENTS AVAILABLE AT THE OFFICES OF THE MERGING COMPANIES

The Merger Proposal (including its annexes) shall be available at the offices of the Merging Companies, together with the following documents: (i) the annual statutory accounts of Arcelor for 2004, 2005 and 2006 as adopted by the general meeting of shareholders of Arcelor, including the corresponding auditors reports, and the annual reports of Arcelor for 2004, 2005 and 2006; the annual statutory accounts of ArcelorMittal for 2004, 2005 and 2006 as approved by the general meeting of shareholders of ArcelorMittal including the corresponding statutory auditors reports, and the annual reports of ArcelorMittal for 2004, 2005 and 2006; the interim accounts of Arcelor as of June 30, 2007; the interim accounts of ArcelorMittal as of June 30, 2007 (including in the notes thereto a proforma balance sheet of ArcelorMittal as of January 1, 2007 and June 30, 2007 taking into account the effectiveness of the First-Step Merger); the Merger Agreement; the explanatory memorandum to this Merger Proposal, as required pursuant to Article 265 of the Luxembourg Company Law, for both ArcelorMittal and Arcelor; and the reports (un rapport crit destin aux actionnaires) of the independent auditors, as required pursuant to Article 266 of the Luxembourg Company Law.

(ii)

(iii) (iv)

(v) (vi) (vii)

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22.

LANGUAGE

An unofficial English translation of this Merger Proposal shall be available at the offices of the Merging Companies. For purposes of Luxembourg law, the French language version of this Merger Proposal is binding.

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IN WITNESS WHEREOF, ArcelorMittal and Arcelor have caused this Merger Proposal to be executed as of the date first written above by their respective directors thereto duly authorized.

ArcelorMittal __________________ /s/ Mr. Georges T.N. Schmit Director Arcelor __________________ /s/ Mr. Joseph J. Kinsch Chairman of the Board of Directors

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ANNEX A ARTICLES OF ASSOCIATION OF ARCELOR2

For purposes of Luxembourg law, the French language version of these Articles of Association is B-10

binding.

Coordinated articles of association ARCELOR public limited company 19 Avenue de la Libert L-2930 Luxembourg Commercial and Companies Register Luxembourg B 82.454 Article 1. Form - Corporate name Article 1. Form - Corporate name There exists, as between the subscribers and all those who shall subsequently become shareholders a public limited company (socit anonyme) under the name of "ARCELOR". Article 2. Duration The Company shall be established for an unlimited period. It may be dissolved at any time by decision of the general meeting of shareholders deciding in the same manner as for a change in the Articles of Association in accordance with Article 19 below. Article 3. Object The object of the Company shall be the manufacture, processing and marketing of steel, steel products and all other metallurgical products, as well as all products and materials used in their manufacture, their processing and their marketing, and all industrial and commercial activities connected directly or indirectly with those objects, including activities of research and the creation, acquisition, holding, exploitation and sale of patents, licences, know-how and, more generally, intellectual and industrial property rights. The Company may realise that object either directly or through the creation of companies, the acquisition, holding or taking of holdings in any joint stock companies or partnerships, accession to any associations, interest groupings and operations in common. In general, the Company's object comprises the participation, in any form whatsoever, in joint stock companies and partnerships, and the acquisition by purchase, subscription or in any other manner as well as the transfer by sale, exchange or in any other manner of shares, bonds, securities representing claims, vouchers and other securities and instruments of any kind. It may grant assistance to any affiliated company and take any measure for the control and supervision of such companies. It may carry out any commercial, financial or industrial operation or transaction which it considers to be directly or indirectly necessary or useful for the purposes of achieving or developing its object. Article 4. Registered office The Company's registered office and principal office shall be established in Luxembourg City. The registered office may be transferred within the Grand Duchy of Luxembourg by simple decision of the Board of Directors. Branches or offices both in Luxembourg and abroad may be set up by simple decision of the Board of Directors. In the event that the Board of Directors should consider that extraordinary political, economic or social developments have occurred or are imminent that are liable to interfere with normal activities at the registered office or with the ease of communication either with that office or from that office to places abroad, it may provisionally transfer the registered office abroad until the complete cessation of those abnormal circumstances; however, that provisional measure shall have no effect on the nationality of the Company, which, despite the provisional transfer of its registered office, shall remain a Luxembourg company. Article 5. Capital - Increase in capital 5.1. The subscribed corporate capital amounts to THREE BILLION ONE HUNDRED AND NINETY-EIGHT MILLION EIGHT HUNDRED AND SEVENTY-ONE THOUSAND SIX HUNDRED AND THIRTY-FIVE Euro (EUR 3,198,871,635). It is represented by SIX HUNDRED AND THIRTY-NINE MILLION SEVEN B-11

HUNDRED AND SEVENTY-FOUR THOUSAND THREE HUNDRED AND TWENTY-SEVEN (639,774,327) shares, with no designation of nominal value, all paid up in full. 5.2. The Company's authorised capital, including the subscribed capital, shall amount to five billion Euro (EUR 5,000,000,000). 5.3. The subscribed capital and the authorised capital of the Company may be increased or decreased by resolution of the general meeting of shareholders adopted in the forms and in accordance with the conditions laid down for amending the Articles of Association under Article 19 of the present Articles. 5.4. Subject to the provisions of the Law on commercial companies (hereinafter referred to as "the Law"), each shareholder shall have a preferential right of subscription in the event of the issue of new shares in return for contributions in cash. That preferential right of subscription shall be proportional to the fraction of the capital represented by the shares which he holds. The preferential subscription right may be limited or abolished by a resolution of the general meeting of shareholders adopted in accordance with Article 19 of the present Articles. The preferential subscription right may also be limited or abolished by the Board of Directors in the event that the general meeting of shareholders delegates, under the conditions laid down in Article 19 of the present Articles and by amending the present Articles of Association, to the Board of Directors the power to issue shares and to limit or cancel the preferential subscription right for a period of no more than five years fixed by the general meeting, and likewise pursuant to the authorisation conferred by Article 5.5 of the present Articles of Association. 5.5. The Board of Directors is authorised during the period ending on 11 December 2006, without prejudice to any renewals, to increase the subscribed capital on one or more occasions within the limits of the authorised capital. The Board of Directors is authorised to fix the rules for any subscription and for paying it up in cash or by contribution in kind. Such an increase in capital may also be made by the incorporation of reserves, issue premiums or profits carried forward, with or without the issue of new shares, or following the issue and the exercise of bonds, subordinated or non-subordinated, convertible or repayable or exchangeable for shares or coupled with vouchers or rights to subscribe for shares, or through the issue of any other security or instrument carrying an entitlement to shares. The Board of Directors is authorised to fix the subscription price, with or without issue premium, the date from which they will carry beneficial rights and, where applicable, the duration, amortization, rights (including early repayment), interest rates, conversion rates and exchange rates of the aforesaid securities as well as all the other conditions and rules for issue, subscription and paying up, for which the Board of Directors may make use of the possibility provided for in Article 32-1 paragraph 3 of the Law. The Board of Directors is authorised to limit or cancel the preferential subscription right of existing shareholders. Decisions of the Board of Directors relating to the issue - pursuant to the authorisation conferred by this Article 5.5 - of shares or any other securities carrying or potentially carrying a right to shares shall, by way of derogation from Article 9 of the present Articles, be taken by a majority of two-thirds of the members present or represented. Whenever the Board of Directors has effected a complete or partial increase in capital as authorised by the foregoing provisions, Article 5 of the present Articles shall be amended so as to reflect that increase. The Board of Directors is expressly authorised to delegate any natural or legal person to organise the market in subscription rights, accept subscriptions, conversions or exchanges, receive payment for the price of shares, bonds, subscription rights or other securities and instruments, to have legalised by authentic act increases of capital carried out as well as the corresponding amendments to Article 5 of the present Articles and to have recorded in the said Article 5 of the present Articles the amount by which the authorisation to increase the capital has actually been used and, where appropriate, the amounts by which it is reserved for securities and instruments which may carry an entitlement to shares. 5.6. The non-subscribed portion of the authorised capital may be drawn on by the exercise of conversion or subscription rights already conferred by ARCELOR.

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Article 6. Shares and share certificates 6.1. Shares shall be issued solely in the form of registered shares. 6.2. Subject to the provision of Article 6.3 of the present Articles, the Company shall consider the person in whose name the shares are recorded in the register of shareholders to be the owner of those shares. 6.3. However, where shares are recorded in the register of shareholders on behalf of one or more persons in the name of a system for the settlement of securities transactions or the operator of such a system or in the name of a professional depository of securities or any other depository (such systems, professionals or other depositories being referred to hereinafter as "Depositories") or of a sub-depository designated by one or more Depositories, the Company - subject to its having received from the Depository with whom those shares are kept in account an attestation in proper form - will permit those persons to exercise the rights attaching to those shares, including admission to and voting at general meetings, and shall consider those persons to be holders for the purposes of Article 7 of the present Articles. The Board of Directors may determine the formal requirements with which such attestations must comply. Notwithstanding the foregoing, the Company will make payments, by way of dividends or otherwise, in cash, shares or other assets only into the hands of the Depository or sub-depository recorded in the register or in accordance with their instructions, and that payment shall release the Company. 6.4. Certificates confirming that an entry has been made in the register of shareholders will be provided to the shareholders and, in the case provided for in Article 6.3 of the present Articles upon request, to the Depositories or sub-depositories recorded in the register. Without prejudice to the modalities for the transfer of fungible shares in the case provided for in Article 6.3 of the present Articles, the transfer of shares shall be made by a written declaration of transfer inscribed in the register of shareholders and dated and signed by the transferor and the transferee, or by their agents provided that they can prove they have the necessary powers. Transfers may also be carried out by handing the share certificate in to the Company endorsed for the benefit of the transferee. The Company may accept any other document, instrument, writing or correspondence as sufficient proof of the transfer. No entry shall be made in the register of shareholders and no notice of a transfer shall be recognised by the Company during the period starting on the fifth working day before the date of a general meeting and ending at the close of that general meeting, unless the Company fixes a shorter period. 6.5. Within the limits and conditions laid down by the Law, the Company may repurchase its own shares or cause them to be repurchased by its subsidiaries. 6.6. The shares are indivisible as far as the Company is concerned, which shall recognise only one owner for each share. Owners per indivisum of a share are obliged to have themselves represented vis--vis the Company by one and the same person in order to be able to exercise their rights. 6.7. The Board of Directors is authorised to issue bonds and other titles representative of claims, subordinated or otherwise, which may be converted into or exchanged for shares in the Company and any other certificates carrying an entitlement to shares, within the limits of the authorised capital, as well as vouchers and short-term securities and any other financial instruments. Such securities, vouchers, certificates or instruments shall be to bearer or registered. In the latter case, the provisions of Articles 6.3 and 6.4 of the present Articles shall apply to the extent necessary. Article 7. Rights and obligations of shareholders 7.1. As from the listing of its shares on a stock exchange in the European Union, the Company shall be subject to the provisions of the Law of 4 December 1992 relating to the information to be published upon the acquisition and disposal of a large holding in a company listed on a stock exchange, it being understood nevertheless that the provisions of Articles 1 to 10 inclusive and the sanction of suspension of voting rights in accordance with Article 13 of that law shall also apply, taking into account the provisions of Articles 7 and 8 of that law, (a) to any acquisition or disposal of shares resulting in the threshold of two point five per cent (2.5%) of voting rights in the Company being overshot or undershot, (b) to any acquisition or disposal of shares resulting in the threshold of five cent (5%) of voting rights in the Company being overshot or undershot and (c), over and above five per cent (5%) of voting rights in the Company, to any acquisition or disposal of shares resulting in successive thresholds of one per cent (1%) of voting rights in the Company being overshot or undershot. 7.2. Any person who, pursuant to Article 1 of the Law of 4 December 1992, has to declare that he holds shares giving him ten per cent (10%) or more of the voting rights in the Company must in addition - on pain of the B-13

suspension of his voting rights pursuant to Article 13 of that law - inform the Company immediately by registered letter with a form for acknowledgement of receipt of his intention (a) to acquire or dispose of shares in the Company within the next twelve months, (b) to try to obtain control over the Company or (c) to try to appoint a member to the Company's Board of Directors. 7.3. Any person under an obligation to notify the Company of the acquisition of shares conferring on that person, having regard to Articles 7 and 8 of the Law of 4 December 1992, one quarter or more of the total voting rights in the Company shall be obliged to make, or cause to be made, in each of the places where the Company's shares are listed and in each of the countries in which the Company has made a public offering of its shares, an unconditional public offer of acquisition to all shareholders for all their shares and also to all holders of securities giving access to the capital, notably securities or instruments enabling shares in the Company to be obtained, whether those securities were issued by the Company or by entities controlled or established by it or members of its group, for a cash price, whereby each of these public offers must be conducted in conformity and compliance with the legal and regulatory requirements applicable to public offers in each State concerned. In any case, the price must be fair and equitable and, in order to guarantee equality of treatment of shareholders and holders of securities giving access to the Company's capital, the said public offers must be made at an identical price, which must be justified by a report drawn up by a professional establishment of the first rank nominated by the Company whose fees and costs must be advanced by the person subject to the obligation laid down by this Article. This obligation to make a cash offer without conditions shall not apply if the acquisition of the Company's shares by the person making that notification has received the prior assent of the Company's shareholders in the form of a resolution adopted in conformity with Article 19 of the present Articles at a general meeting of shareholders, including in particular in the event of a merger or a contribution in kind paid for by a share issue. 7.4. If the public offer as described in Article 7.3 of the present Articles has not been made within a period of two (2) months of notification to the Company of the increase in the holding giving entitlement to the percentage of voting rights provided for in Article 7.3 of the present Articles or of notification by the Company to the shareholder that such increase has taken place, or if the Company is informed that a competent authority in one of the countries in which the Company is quoted (or in one of the countries in which the Company has made a public offering of its shares) has determined that the public offer was made contrary to the legal or regulatory requirements governing public offers applicable in that country, as from the expiry of the aforementioned period of two (2) months or from the date on which the Company received that information, the right to attend and vote at general meetings of shareholders and the right to receive dividends or other distributions shall be suspended in respect of the shares corresponding to the percentage of the shares held by the shareholder in question exceeding the threshold fixed in Article 7.3 of the present Articles as from which a public offer has to be made. A shareholder who has exceeded the threshold fixed by Article 7.3 of the present Articles and requires a general meeting of shareholders to be called pursuant to Article 70 of the Law, must, in order to be able to vote at that meeting, have made a definitive and irrevocable public offer as described in Article 7.3 of the present Articles before that meeting is held. Failing this, the right to vote attaching to the shares exceeding the threshold laid down by Article 7.3 of the present Articles shall be suspended. Where, at the date on which the annual general meeting is held, a shareholder exceeds the threshold laid down by Article 7.3 of the present Articles, his voting rights shall be suspended to the extent of the percentage exceeding the threshold laid down in Article 7.3 of the present Articles, save where the shareholder in question undertakes in writing not to vote in respect of the shares exceeding the threshold of one-quarter or where the shareholder has definitively and irrevocably made the public offer as provided for in Article 7.3 of the present Articles. 7.5. The provisions of Article 7 shall not apply: * (i) to the Company itself in respect of the shares which it might hold directly or indirectly, * (ii) to Depositories, acting as such, except that these provisions shall apply to persons holding their shares through the intermediary of a Depository and to shares held by a Depository on behalf of persons who have not complied with the obligations set out in this Article, * (iii) to any disposal and to any issue of shares by the Company in connection with a merger or a similar transaction or the acquisition by the Company of any other company or activity, * (iv) to the acquisition of shares resulting from a public offer for the acquisition of all the shares in the Company.

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Article 8. Board of Directors The Company shall be administered by a Board of Directors composed of at least three members; the members of the Board of Directors do not have to be shareholders in the Company. The board members shall be elected by the shareholders at the annual general meeting or at any other general meeting of shareholders for a period terminating at the fifth annual general meeting following the date of their appointment. The first board members shall be elected by the general meeting of shareholders taking place following the formation of the Company. A board member may be dismissed with or without grounds and may be replaced at any time by the general meeting of shareholders. In the event that a post of member of the board becomes vacant following the member's death or resignation or for any other reason, the remaining board members may, by a simple majority of the votes validly cast, elect a board member so as provisionally to fulfil the duties attaching to the vacant post until the next general meeting of shareholders. In addition to the fees determined in Article 17 below, the general meeting may grant board members a fixed remuneration and attendance fees to be imputed to the charges. The Board of Directors shall in addition be authorised to grant members of the board specific remuneration to be imputed to the charges where the Board confers on them special functions or tasks. Article 9. Procedures for meetings of the Board of Directors The Board shall choose from amongst its members one or more chairmen and may choose one or more vicechairmen. The Board of Directors shall meet, when convened by one of the chairmen or vice-chairmen or two board members, at the place indicated in the notice of meeting. The meetings of the Board of Directors shall be presided over by one of the chairmen and, in their absence, by one of the vice-chairmen. In the absence of the chairmen and vice-chairmen, the Board of Directors shall appoint by a majority vote a chairman pro tempore for the meeting in question. A written notice of meeting shall be sent to all board members for every meeting of the Board of Directors at least five (5) days before the date scheduled for the meeting, except in case of urgency, in which case the nature of the emergency shall be specified in the notice of meeting. Notice of meeting shall be given by letter or by fax or by any other means of communication guaranteeing the authenticity of the document and the identification of the person who is the author of the document. Notice of meeting may be waived by the consent of each board member given in the same manner as that required for a notice of meeting. A special notice of meeting shall not be required for meetings of the Board of Directors held on the dates and at the times and places determined in a resolution adopted beforehand by the Board of Directors. For any meeting of the Board of Directors, each board member may designate another board member to represent him and vote in his name and place, provided that a given board member may not represent more than one of his colleagues. The representative shall be designated in the same manner as is required for notices of meeting. The mandate shall be valid for one meeting only and, where appropriate, for every further meeting as far as there is the same agenda. The Board of Directors may deliberate and act validly only if the majority of the board members are present or represented. Decisions shall be taken by a simple majority of the votes validly cast by the board members present or represented. In the event of a split vote, the chairman shall have a casting vote. In the event that there are several chairmen, concurring votes of the chairmen shall act as casting votes. A member of the board may take part in and be regarded as being present at a meeting of the Board of Directors by telephone conference or by any other means of telecommunication which enable all the persons taking part in the meeting to hear each other and speak to each other. B-15

If all the members of the board agree as to the decisions to be taken, the decisions in question may also be taken in writing without any need for the board members to meet. To this end, the board members may express their agreement in writing, including by fax or by any other means of communication guaranteeing the authenticity of the document and the identification of the board member who wrote the document and the agreement may be based on separate documents which together constitute the minutes of such decisions. Article 10. Minutes of meetings of the Boards of Directors The minutes of meetings of the Board of Directors shall be signed by the person who chaired the meeting and at least the majority of the board members who took part in the meeting. Copies or excerpts of minutes intended for use in judicial proceedings or otherwise shall be signed by a chairman or a vice-chairman. Article 11. Powers of the Board of Directors The Board of Directors shall have the most extensive powers to administer and manage the Company. All powers not expressly reserved to the general meeting by law or the present Articles shall be within the competence of the Board of Directors. The Board of Directors may delegate the day-to-day management of the Company's business and the power to represent the Company with respect thereto to one or more general managers, managers or other agents, who may together constitute a directorate-general deliberating in conformity with rules determined by the Board of Directors. The Board of Directors may also delegate special powers to any person and confer special mandates on any person. Article 12. Authorised signatures The Company shall be bound by the joint or individual signature of all persons to whom such power of signature shall have been delegated by the Board of Directors. Article 13. Shareholders' meetings - General Any duly constituted general meeting of the Company's shareholders shall represent all the shareholders in the Company. It shall have the widest powers to order, implement or ratify all acts connected with the Company's operations. General meetings of shareholders shall be presided over by one of the chairmen and, in their absence, by one of the vice-chairmen. In the absence of the chairmen and vice-chairmen, the general meeting of shareholders shall be presided over by the most senior board member present. Each share shall give entitlement to one vote. Each shareholder may have himself represented at any general meeting of shareholders by giving a proxy in writing, including by fax or by any other means of communication guaranteeing the authenticity of the document and enabling the shareholder giving the proxy to be identified. Except where law provides otherwise, resolutions shall be adopted at general meetings by a simple majority of the votes validly cast by the shareholders present or represented. Where, in accordance with the provisions of Article 6.3 of the present Articles, shares are recorded in the register of shareholders in the name of a Depository or sub-depository of the former, the attestations provided for in the said Article 6.3 of the present Articles must be received at the Company no later than the day preceding the fifth working day before the date of the general meeting unless the Company fixes a shorter period. Such attestations must certify to the fact that the shares in the account shall be blocked until the close of the general meeting. All proxies must be received at the Company by the same deadline. The Board of Directors shall adopt all other regulations and rules concerning the availability of access cards and proxy forms in order to enable shareholders to exercise their right to vote.

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In the event that all the shareholders are present or represented at a general meeting of shareholders and declare that they have been informed of the agenda of the general meeting, the general meeting may be held without prior notice of meeting or publication. Article 14. Annual general meeting of shareholders The annual general meeting of shareholders shall be held in accordance with Luxembourg law at the Company's registered office or at any other place in the City of Luxembourg mentioned in the notice of meeting on the last Friday in the month of April each year at eleven a.m. If that day is not a banking day in Luxembourg, the annual general meeting shall be held on the preceding banking day. Fifteen days before the General Meeting, shareholders may inspect at the registered office: * 1. the annual accounts and consolidated accounts; * 2. the list of sovereign debt, shares, bonds and other corporate securities making up the portfolio; * 3. the management report; * 4. the documents drawn up by the independent auditors which are required by the Law to be communicated to registered shareholders. The management report, the annual and consolidated accounts and the aforementioned documents drawn up by the independent auditors shall be addressed to the registered shareholders at the same time as the notice of meeting. Any shareholder shall be entitled to obtain a copy of the documents mentioned in the preceding paragraph free of charge, upon production of his title, fifteen days before the meeting. Following the approval of the annual accounts and consolidated accounts, the general meeting shall decide by special vote on the discharge of the members of the Board of Directors. The other general meetings of shareholders may be held on the date, at the time and at the place indicated in the notice of meeting. Article 15. Independent Auditors - Statutory auditors As from the time when the Law or some other regulation applicable to the Company shall so require, the annual accounts and consolidated accounts shall be audited, and the consistency of the management report with those accounts verified, by one or more independent auditors (rviseurs d'entreprises) appointed by the general meeting of shareholders for a period not exceeding three years. The independent auditor or auditors may be re-elected. They shall record the result of their audit in the reports referred to in Sections XIII and XVI of the Law of 10 August 1915 on commercial companies, as amended. So long as it is not obligatory to have the accounts audited by independent auditors, the supervision and control of the Company's operations shall be entrusted to one or more statutory auditors (commissaires) appointed by the general meeting of shareholders. In this case, the provisions of the aforesaid Law of 10 August 1915 on statutory auditors shall be applicable. Article 16. Financial year The Company's financial year shall commence on 1 January each year and end on 31 December the same year. Article 17. Allocation of profits Five per cent (5%) of the Company's net annual profits shall be allocated to the reserve required by the Law. This allocation shall cease to be mandatory when that reserve reaches ten per cent (10%) of the subscribed capital. It shall become mandatory once again when the reserve falls below that percentage.

B-17

The remainder of the net profit shall be allocated as follows by the general meeting of shareholders upon the proposal of the Board of Directors: * a global amount shall be allocated to the Board of Directors by way of directors' fees (tantimes). This amount may not be less than one million Euro (EUR 1,000,000). In the event that the profits are insufficient, the amount of one million Euro shall be imputed in whole or in part to the charges. The distribution of this amount as amongst the members of the Board of Directors shall be effected in accordance with the Board's rules of procedure; * the balance shall be distributed as dividends to the shareholders or placed in the reserves or carried forward. Where, upon the conversion of convertible or exchangeable securities into shares in the Company, the Company proceeds to issue new shares or to attribute shares of its own, those shares shall not take part in the distribution of dividends for the financial year preceding the conversion or exchange, unless the issue conditions of the convertible or exchangeable securities provide otherwise. Interim dividends may be distributed under the conditions laid down by the Law by decision of the Board of Directors. No interest shall be paid on dividends declared but not paid which are held by the Company on behalf of shareholders. Article 18. Dissolution and liquidation In the event of a dissolution of the Company, liquidation shall be carried out by one or more liquidators, who may be natural or legal persons, appointed by the general meeting of shareholders, which shall determine their powers and remuneration. Article 19. Amendment of the Articles of Association The present Articles may be amended from time to time as considered appropriate by a general meeting of shareholders subject to the requirements as to quorum and voting laid down by Luxembourg law. Article 20. Applicable law and jurisdiction For all matters not governed by the present Articles, the parties refer to the provisions of the law of the tenth of August, one thousand nine hundred and fifteen on commercial companies, as amended. All disputes which may arise during the duration of the Company or upon its liquidation between shareholders, between shareholders and the Company, between shareholders and members of the Board or liquidators, between members of the Board and liquidators, between members of the Board or between liquidators of the Company on account of company matters shall be subject to the jurisdiction of the competent courts of the registered office. To this end, any shareholder, member of the Board or liquidator shall be bound to have an address for service in the district of the court for the registered office and all summonses or service shall be duly made to that address for service, regardless of their real domicile; if no address for service is given, summonses or service shall be validly made at the Company's registered office. The foregoing provisions do not affect the Company's right to bring proceedings against the shareholders, board members or liquidators of the Company in any other court having jurisdiction on some other footing and to carry out any summonses or service by other means apt to enable the defendant to defend itself. This document is an English translation of the original French "statuts coordonns" of ARCELOR. It has been prepared for information purposes only and should not be relied upon for any purpose. In the event of any ambiguity or discrepancy between this document and the French "statuts coordonns", the French "statuts coordonns" shall prevail.

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ANNEX B PROPOSED ARTICLES OF ASSOCIATION OF ARCELOR

B-19

Coordinated Articles of Association ArcelorMittal Socit anonyme 19 Avenue de la Libert L-2930 Luxembourg R.C.S. Luxembourg B 102.468

Article 1. Form - Corporate name The Companys legal name is ArcelorMittal and it is a public limited company (socit anonyme).

Article 2. Duration The Company is established for an unlimited period. It may be dissolved at any time by decision of the general meeting of shareholders taken in the same manner as for a change in the articles of association in accordance with article 19 below.

Article 3. Corporate purpose The corporate purpose of the Company shall be the manufacture, processing and marketing of steel, steel products and all other metallurgical products, as well as all products and materials used in their manufacture, their processing and their marketing, and all industrial and commercial activities connected directly or indirectly with those objects, including mining and research activities and the creation, acquisition, holding, exploitation and sale of patents, licences, know-how and, more generally, intellectual and industrial property rights. The Company may realise that corporate purpose either directly or through the creation of companies, the acquisition, holding or acquisition of interests in any companies or partnerships, membership in any associations, consortia and joint ventures. In general, the Company's corporate purpose comprises the participation, in any form whatsoever, in companies and partnerships, and the acquisition by purchase, subscription or in any other manner as well as the transfer by sale, exchange or in any other manner of shares, bonds, debt securities, warrants and other securities and instruments of any kind. It may grant assistance to any affiliated company and take any measure for the control and supervision of such companies. It may carry out any commercial, financial or industrial operation or transaction which it considers to be directly or indirectly necessary or useful in order to achieve or further its corporate purpose.

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Article 4. Registered office The Company's registered office and principal office shall be established in Luxembourg City. The registered office may be transferred within the municipality of Luxembourg City by simple decision of the board of directors. Branches or offices both in the Grand Duchy of Luxembourg and abroad may be set up by simple decision of the board of directors. In the event that the board of directors determines that extraordinary political, economic or societal events have occurred or are imminent that may hinder the ordinary course activities of the Company at the registered office or the ease of communication either with that office or from that office to places abroad, it may temporarily transfer the registered office to a location abroad until the complete cessation of the abnormal circumstances; provided, however, that such temporary transfer shall have no effect on the nationality of the Company, which, despite the temporary transfer of its registered office, shall remain a Luxembourg company.

Article 5. Capital - Increase in capital 5.1. The issued corporate capital amounts to [] Euro (EUR[]). It is represented by [] ( []) shares, without nominal value, fully paid up.13 5.2. The Company's authorised capital, including the issued capital, shall amount to six billion four hundred thirty eight million six hundred thousand Euro (EUR 6,438,600,000), represented by one billion four hundred and seventy million (1,470,000,000) shares, without nominal value. 5.3. The issued capital and the authorised capital of the Company may be increased or decreased by resolution of the general meeting of shareholders adopted in the forms and in accordance with the conditions laid down for amending the articles of association under article 19 of the present articles of association. 5.4. Subject to the provisions of the law on commercial companies (hereinafter referred to as "the Law"), each shareholder shall have a preferential right of subscription in the event of the issue of new shares in return for contributions in cash. Such preferential right of subscription shall be proportional to the fraction of the capital represented by the shares held by each shareholder. The preferential subscription right may be limited or cancelled by a resolution of the general meeting of shareholders adopted in accordance with article 19 of the present articles of association. The preferential subscription right may also be limited or cancelled by the board of directors (i) in the event that the general meeting of shareholders delegates, under the conditions laid down in article 19 of the present articles of association and by amending the present articles of association, to the board of directors the power to issue shares and to limit or cancel the preferential subscription right for a period of no more than five years set by the general meeting, as well as (ii) pursuant to the authorization conferred by article 5.5 of the present articles of association. 5.5. The board of directors is authorised during a period ending on November 5, 2012, without prejudice to any renewals, to increase the issued capital on one or more occasions within the limits of the authorised capital for delivery of shares upon exercise or conversion, as applicable, of the Companys stock options or other equitybased awards granted under any Companys employee incentive or benefit plan or issues of shares under employee share offerings. IMPORTANT: The number of issued shares in the capital of ArcelorMittal (ex-Arcelor) immediately following the merger of ArcelorMittal into Arcelor (Arcelor, the surviving entity, being renamed ArcelorMittal) is not known at the date hereof. The maximum number of issued shares in the capital of ArcelorMittal (exArcelor) immediately following the merger shall be 1,461,280,925 (number of issued ArcelorMittal shares plus number of issued post-restructuring Arcelor shares minus Arcelor shares held by ArcelorMittal post-capital restructuring). The exact number shall correspond to 1,461,280,925 minus the number of ArcelorMittal shares held by or on behalf of Arcelor or ArcelorMittal as of November 5, 2007, the day of the extraordinary general meetings of shareholders of Arcelor and ArcelorMittal convened to vote on the merger. B-21
1

The board of directors is authorised to determine the conditions of any capital increase including the form of its subscription (contribution in cash or in kind). Any such capital increase may also be made by the incorporation of reserves, issue premiums or retained earnings, with or without the issue of new shares. The board of directors is authorised, within the limits of the authorised capital, to issue stock options and any other equity-based awards granted under any Companys employee incentive or benefit plan or employee share offerings giving a right to acquire or subscribe for one or more shares of the Company. The board of directors is authorised to limit or cancel the preferential subscription right of existing shareholders. Decisions of the board of directors relating to the issue pursuant to the authorisation conferred by this article 5.5 of shares or stock options or other equity-based awards granted under any Companys employee incentive or benefit plan or employee share offerings shall, by way of derogation from article 9 of the present articles of association, be taken by a majority of two-thirds of the members present or represented. Whenever the board of directors has effected a complete or partial increase in capital as authorised by the foregoing provisions, article 5 of the present articles of association shall be amended so as to reflect that increase. The board of directors is expressly authorised to delegate to any natural or legal person to organise the market in subscription rights, accept subscriptions, conversions or exchanges, receive payment for the price of shares, bonds, subscription rights or other securities and instruments, to have registered increases of capital carried out as well as the corresponding amendments to article 5 of the present articles of association and to have recorded in the said article 5 of the present articles of association the amount by which the authorisation to increase the capital has actually been used and, where appropriate, the amounts by which it is reserved for securities and instruments which may carry an entitlement to shares. 5.6. The non-subscribed portion of the authorised capital may be drawn on by the exercise of conversion or subscription rights already conferred by the Company.

Article 6. Shares 6.1. Shares shall be issued solely in the form of registered shares. 6.2. Subject to the provision of article 6.3 of the present articles of association, the Company shall consider the person in whose name the shares or fractions are recorded in the register of shareholders to be the owner of those shares or of those fractions. 6.3. However, where shares are recorded in the register of shareholders on behalf of one or more persons in the name of a securities settlement system or the operator of such a system or in the name of a professional depository of securities or any other depository (such systems, professionals or other depositories being referred to hereinafter as "Depositories") or of a sub-depository designated by one or more Depositories, the Company subject to its having received from the Depository with whom those shares are kept in account a certificate in proper form - will permit those persons to exercise the rights attaching to those shares, including admission to and voting at general meetings, and shall consider those persons to be holders for the purposes of article 7 of the present articles of association. The board of directors may determine the formal requirements with which such certificates must comply. Notwithstanding the foregoing, the Company will make payments, by way of dividends or otherwise, in cash, shares or other assets only into the hands of the Depository or sub-depository recorded in the register or in accordance with their instructions, and that payment shall release the Company from any and all obligations for such payment. 6.4. Certificates confirming that an entry has been made in the register of shareholders will be provided to the shareholders and, in the case provided for in article 6.3 of the present articles of association upon request, to the Depositories or sub-depositories recorded in the register. Other than with respect to the procedures for transfer of fungible shares in the case provided for in article 6.3 of the present articles of association, the transfer of shares B-22

shall be made by a written declaration of transfer inscribed in the register of shareholders and dated and signed by the transferor and the transferee, or by their duly-appointed agents. The Company may accept any other document, instrument, writing or correspondence as sufficient proof of the transfer. No entry shall be made in the register of shareholders and no notice of a transfer shall be recognised by the Company during the period starting on the fifth (5th) working day before the date of a general meeting and ending at the close of that general meeting, unless the Company establishes a shorter period. 6.5. Within the limits and conditions laid down by the Law, the Company may repurchase its own shares or cause them to be repurchased by its subsidiaries. 6.6. Subject to the provisions of article 6.7 of the present articles of association, the shares or fractions are indivisible vis--vis the Company, which shall recognise only one legal owner per share or fraction. Owners per indivisum must be represented vis--vis the Company by one single person in order to be able to exercise their rights. 6.7. The shares of the Company may be divided into equal fractions, where each fraction is equal to one-seventh (1/7) of a share. The division of shares into fractions shall be effected only in the event of a corporate capital restructuring decided by the general meeting of shareholders of the Company. A holder of a fraction is entitled to one-seventh (1/7) of any distribution per share by the Company, or upon its liquidation. Fractions carry no voting rights at the general meetings of shareholders of the Company, unless a number of fractions equals a full share. Any holder of fractions who holds seven (7) fractions can request their conversion into one (1) full share.

Article 7. Rights and obligations of shareholders 7.1. The Company is currently subject, and for so long as its transferable securities are admitted to trading on a regulated market will remain subject, to the provisions of the law of 4 December 1992 (the Law of 4 December 1992). Any reference in these articles of association to a provision of the Law of 4 December 1992 shall be a reference to the equivalent provision in such law as the same may be amended or replaced. The provisions of articles 1 to 10 inclusive of the Law of 4 December 1992 and the sanction of suspension of voting rights in accordance with article 13 of the Law of 4 December 1992 shall also apply, taking into account the provisions of articles 7 and 8 of the Law of 4 December 1992, (a) to any acquisition or disposal of shares resulting in a shareholding increasing above or decreasing below a threshold of two and one-half per cent (2.5%) of voting rights in the Company, (b) to any acquisition or disposal of shares resulting in a shareholding increasing above or decreasing below a threshold of three per cent (3%) of voting rights in the Company and (c), over and above three per cent (3%) of voting rights in the Company, to any acquisition or disposal of shares resulting in successive thresholds of one per cent (1%) of voting rights in the Company being crossed (either through an increase or a decrease). In calculating the thresholds set out in this article 7 and applying the declaration obligations set out in this article 7, the voting rights set forth in articles 7 and 8 of the Law of 4 December 1992 shall be included as voting rights held by the person subject to the obligations described in this article. 7.2 Any person who, taking into account articles 7 and 8 of the Law of 4 December 1992, acquires shares resulting in possession of five per cent (5%) or more or a multiple of five percent (5%) or more of the voting rights in the Company must - on pain of the suspension of voting rights pursuant to article 13 of the Law of 4 December 1992 - inform the Company within ten (10) Luxembourg Stock Exchange trading days following the date such threshold is crossed by registered mail return receipt requested of such persons intention (a) to acquire or dispose of shares in the Company within the next twelve (12) months, (b) to seek to obtain control over the Company or (c) to seek to appoint a member to the Company's board of directors. B-23

7.3 Any person under an obligation to notify the Company of the acquisition of shares conferring on that person, having regard to articles 7 and 8 of the Law of 4 December 1992, one quarter or more of the total voting rights in the Company shall be obliged to make, or cause to be made, in each country where the Company's securities are admitted to trading on a regulated or other market and in each of the countries in which the Company has made a public offering of its shares, an unconditional public offer to acquire for cash all outstanding shares and securities giving access to shares, linked to the share capital or whose rights are dependent on the profits of the Company (hereafter collectively securities linked to capital), whether those securities were issued by the Company or by entities controlled or established by it or members of its group,. Each of these public offers must be conducted in conformity and compliance with the legal and regulatory requirements applicable to public offers in each State concerned. In any case, the price must be fair and equitable and, in order to guarantee equality of treatment of shareholders and holders of securities linked to capital of the Company, the said public offers must be made at or on the basis of an identical price, which must be justified by a report drawn up by a first rank financial institution nominated by the Company whose fees and costs must be advanced by the person subject to the obligation laid down by this article. This obligation to make an unconditional cash offer shall not apply if the acquisition of the Company's shares by the person making such notification has received the prior assent of the Company's shareholders in the form of a resolution adopted in conformity with article 19 of the present articles of association at a general meeting of shareholders, including in particular in the event of a merger or a contribution in kind paid for by a share issue. 7.4. If the public offer as described in article 7.3 of the present articles of association has not been made within a period of two (2) months of notification to the Company of the increase in the holding giving entitlement to the percentage of voting rights provided for in article 7.3 of the present articles of association or of notification by the Company to the shareholder that such increase has taken place, or if the Company is informed that a competent authority in one of the countries in which the securities of the Company are admitted to trading (or in one of the countries in which the Company has made a public offering of its shares) has determined that the public offer was made contrary to the legal or regulatory requirements governing public offers applicable in that country, as from the expiry of the aforementioned period of two (2) months or from the date on which the Company received that information, the right to attend and vote at general meetings of shareholders and the right to receive dividends or other distributions shall be suspended in respect of the shares corresponding to the percentage of the shares held by the shareholder in question exceeding the threshold fixed in article 7.3 of the present articles of association as from which a public offer has to be made. A shareholder who has exceeded the threshold fixed by article 7.3 of the present articles of association and requires a general meeting of shareholders to be called pursuant to article 70 of the Law, must, in order to be able to vote at that meeting, have made a definitive and irrevocable public offer as described in article 7.3 of the present articles of association before that meeting is held. Failing this, the right to vote attaching to the shares exceeding the threshold laid down by article 7.3 of the present articles of association shall be suspended. Where, at the date on which the annual general meeting is held, a shareholder exceeds the threshold laid down by article 7.3 of the present articles of association, his or her voting rights shall be suspended to the extent of the percentage exceeding the threshold laid down in article 7.3 of the present articles of association, save where the shareholder in question undertakes in writing not to vote in respect of the shares exceeding the threshold of onequarter or where the shareholder has definitively and irrevocably made the public offer as provided for in article 7.3 of the present articles of association. 7.5. The provisions of article 7 shall not apply: (i) (ii) to the Company itself in respect of shares directly or indirectly held in treasury, to Depositories, acting as such, provided that said Depositories may only exercise the voting right attached to such shares if they have received instructions from the owner of the shares, the provisions of this article 7 thereby applying to the owner of the shares, B-24

(iii) (iv) (v)

to any disposal and to any issue of shares by the Company in connection with a merger or a similar transaction or the acquisition by the Company of any other company or activity, to the acquisition of shares resulting from a public offer for the acquisition of all the shares in the Company and all of the securities linked to capital, to the acquisition or transfer of a participation remaining below ten per cent (10%) of total voting rights by a market maker acting in this capacity, provided that: a) it is approved by its home Member State by virtue of directive 2004/39/CE; and

b) it neither interferes in the management of the Company nor exercises influence on the Company to acquire its shares or to maintain their price. 7.6. Voting rights are calculated on the basis of the entirety of the shares to which voting rights are attached even if the exercise of such voting rights is suspended.

Article 8. Board of directors 8.1. The Company shall be administered by a board of directors composed of at least three (3) members and of a maximum of eighteen (18) members; all of whom except the Chief Executive Officer (administrateurprsident de la direction gnrale) shall be non-executive. None of the members of the board of directors, except for the Chief Executive Officer of the Company (administrateur-prsident de la direction gnrale), shall have an executive position or executive mandate with the Company or any entity controlled by the Company. At least one-half of the board of directors shall be composed of independent members. A member of the board of directors shall be considered as independent, if (i) he or she is independent within the meaning of the Listed Company Manual of the New York Stock Exchange (the "Listed Company Manual"), as it may be amended, or any successor provision, subject to the exemptions available for foreign private issuers, and if (ii) he or she is unaffiliated with any shareholder owning or controlling more than two percent (2%) of the total issued share capital of the Company (for the purposes of this article, a person is deemed affiliated to a shareholder if he or she is an executive officer, or a director who is also employed by the shareholder, a general partner, a managing member, or a controlling shareholder of such shareholder). 8.2. The members of the board of directors do not have to be shareholders in the Company. 8.3. The members of the board of directors shall be elected by the shareholders at the annual general meeting or at any other general meeting of shareholders for a period terminating on the date to be determined at the time of their appointment and, with respect to appointments which occur after the 13th November 2007 (except in the event of the replacement of a member of the board of directors during his or her mandate) at the third annual general meeting following the date of their appointment. 8.4. At any general meeting of shareholders held after 1st August 2009, the Mittal Shareholder (as defined below) may, at its discretion, decide to exercise the right of proportional representation provided in the present article and nominate candidates for appointment as members of the board of directors (the Mittal Shareholder Nominees) as follows. Upon any exercise by the Mittal Shareholder of the right of proportional representation provided by this article, the general meeting of shareholders shall elect, among the Mittal Shareholder Nominees, a number of members of the board of directors determined by the Mittal Shareholder, such that the number of members of the board of directors so elected among the Mittal Shareholder Nominees, in addition to the number of members of the board of directors in office who were elected in the past among the Mittal Shareholder Nominees, shall not exceed the Proportional Representation. For the purposes of this article, the Proportional Representation shall mean the product of the total number of members of the board of directors after the proposed election(s) and the percentage of the total issued and outstanding share capital of the Company owned, directly or indirectly, by the Mittal Shareholder on the date of the general meeting of shareholders concerned, B-25

with such product rounded to the closest integral. When exercising the right of Proportional Representation granted to it pursuant to this article, the Mittal Shareholder shall specify the number of members of the board of directors that the general meeting of shareholders shall elect from among the Mittal Shareholder Nominees, as well as the identity of the Mittal Shareholder Nominees. For purposes of this article the "Mittal Shareholder" shall mean collectively Mr. Lakshmi N. Mittal or Mrs. Usha Mittal or any of their heirs or successors acting directly or indirectly through Mittal Investments S. r.l., ISPAT International Investments S.L. or any other entity controlled, directly or indirectly, by either of them. The provisions of this article shall not in any way limit the rights that the Mittal Shareholder may additionally have to nominate and vote in favour of the election of any director in accordance with its general rights as a shareholder. 8.5. A member of the board of directors may be dismissed with or without cause and may be replaced at any time by the general meeting of shareholders in accordance with the aforementioned provisions relating to the composition of the board of directors. In the event that a vacancy arises on the board of directors following a member's death or resignation or for any other reason, the remaining members of the board of directors may, by a simple majority of the votes validly cast, elect a member of the board of directors so as temporarily to fulfil the duties attaching to the vacant post until the next general meeting of shareholders in accordance with the aforementioned provisions relating to the composition of the board of directors. 8.6. Except for a meeting of the board of directors convened to elect a member to fill a vacancy as provided in the second paragraph of article 8.5, or to convene a general meeting of shareholders to deliberate over the election of Mittal Shareholder Nominees, and except in the event of a grave and imminent danger requiring an urgent board of directors' decision, which shall be approved by the directors elected from among the Mittal Shareholder Nominees, the board of directors of the Company will not be deemed to be validly constituted and will not be authorized to meet until the general meeting of shareholders has elected from among the Mittal Shareholder Nominees the number of members of the board of directors required under article 8.4. 8.7. In addition to the directors fees determined in accordance with article 17 below, the general meeting may grant members of the board of directors a fixed amount of compensation and attendance fees, and upon the proposal of the board of directors, allow the reimbursement of the expenses incurred by members of the board of directors in order to attend the meetings, to be imputed to the charges. The board of directors shall in addition be authorised to compensate members of the board of directors for specific missions or functions 8.8. The Company will indemnify, to the broadest extent permitted by Luxembourg law, any member of the board of directors or member of the management board, as well as any former member of the board of directors or member of the management board, for any costs, fees and expenses reasonably incurred by him or her in the defence or resolution (including a settlement) of any legal actions or proceedings, whether they be civil, criminal or administrative, to which he or she may be made a party by virtue of his or her former or current role as member of the board of directors or member of the management board of the Company. Notwithstanding the foregoing, a former or current member of the board of directors or member of the management board will not be indemnified if he or she is found guilty of gross negligence, fraud, fraudulent inducement, dishonesty or of the commission of a criminal offence or if it is ultimately determined that he or she has not acted honestly and in good faith and with the reasonable belief that his or her actions were in the Companys best interests. The aforementioned indemnification right shall not be forfeited in the case of a settlement of any legal actions or proceedings, whether they be civil, criminal or administrative. The provisions above shall inure to the benefit of the heirs and successors of the former or current member of the board of directors or member of the management board without prejudice to any other indemnification rights that he or she may otherwise claim.

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Subject to any procedures that may be implemented by the board of directors in the future, the expenses for the preparation and defence in any legal action or proceeding covered by this article 8.8 may be advanced by the Company, provided that the concerned former or current member of the board of directors or member of the management board delivers a written commitment that all sums paid in advance will be reimbursed to the Company if it is ultimately determined that he or she is not entitled to indemnification under this article 8.8.

Article 9. Procedures for meetings of the Board of Directors The board of directors shall choose from amongst its members a chairman of the board of directors (the Chairman of the board of directors) (Prsident du conseil dadministration) and, if considered appropriate, a president (the President) (Prsident) and one or several vice-chairmen and shall determine the period of their office, not exceeding their appointment as director. The board of directors shall meet, when convened by the Chairman of the board of directors or the President, or a vice-chairman, or two (2) members of the board of directors, at the place indicated in the notice of meeting. The meetings of the board of directors shall be chaired by the Chairman of the board of directors or the President or, in their absence, by a vice-chairman. In the absence of the Chairman of the board of directors, of the President, and of the vice-chairmen, the board of directors shall appoint by a majority vote a chairman pro tempore for the meeting in question. A written notice of meeting shall be sent to all members of the board of directors for every meeting of the board of directors at least five (5) days before the date scheduled for the meeting, except in case of urgency, in which case the nature of the emergency shall be specified in the notice of meeting. Notice of meeting shall be given by letter or by fax or by electronic mail or by any other means of communication guaranteeing the authenticity of the document and the identification of the person who is the author of the document. Notice of meeting may be waived by the consent of each member of the board of directors given in the same manner as that required for a notice of meeting. A special notice of meeting shall not be required for meetings of the board of directors held on the dates and at the times and places determined in a resolution adopted beforehand by the board of directors. For any meeting of the board of directors, each member of the board of directors may designate another member of the board of directors to represent him and vote in his or her name and place, provided that a given member of the board of directors may not represent more than one of his or her colleagues. The representative shall be designated in the same manner as is required for notices of meeting. The mandate shall be valid for one meeting only and, where appropriate, for every further meeting as far as there is the same agenda. The board of directors may deliberate and act validly only if the majority of the members of the board of directors are present or represented. Decisions shall be taken by a simple majority of the votes validly cast by the members of the board of directors present or represented. None of the members of the board of directors, including the Chairman of the board of directors, the President and vice-chairmen, has a casting vote. A member of the board of directors may take part in and be regarded as being present at a meeting of the board of directors by telephone conference or by any other means of telecommunication which enable all the persons taking part in the meeting to hear each other and speak to each other. If all the members of the board of directors agree as to the decisions to be taken, the decisions in question may also be taken in writing without any need for the members of the board of directors to meet. To this end, the members of the board of directors may express their agreement in writing, including by fax or by any other means of communication guaranteeing the authenticity of the document and the identification of the member of the board of directors who wrote the document. The consent may be given on separate documents which together constitute the minutes of such decisions.

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Article 10. Minutes of meetings of the board of directors The minutes of meetings of the board of directors shall be signed by the person who chaired the meeting and by those members of the board of directors taking part in the meeting and who request to sign such minutes. Copies or excerpts of minutes intended for use in judicial proceedings or otherwise shall be signed by the Chairman of the board of directors or the President or a vice-chairman.

Article 11. Powers of the board of directors 11.1. The board of directors shall have the most extensive powers to administer and manage the Company. All powers not expressly reserved to the general meeting by the Law or the present articles of association shall be within the competence of the board of directors. 11.2. The board of directors may decide to set up committees to consider matters submitted to them by the board of directors, including an audit committee and an appointments, remuneration and corporate governance committee. The audit committee shall be composed solely of independent members of the board of directors, as defined in article 8.1. 11.3. The board of directors may delegate the day-to-day management of the Company's business and the power to represent the Company with respect thereto to one or more executive officers (directeurs gnraux), executives (directeurs) or other agents, who may together constitute a management board (direction gnrale) deliberating in conformity with rules determined by the board of directors. The board of directors may also delegate special powers to any person and confer special mandates on any person.

Article 12. Authorised signatures The Company shall be bound by the joint or individual signature of all persons to whom such power of signature shall have been delegated by the board of directors.

Article 13. Shareholders' meetings General Any duly constituted general meeting of the Company's shareholders shall represent all the shareholders in the Company. It shall have the widest powers to order, implement or ratify all acts connected with the Company's operations. General meetings of shareholders shall be chaired by the Chairman of the board of directors or the President or, in their absence, by a vice-chairman. In the absence of the Chairman of the board of directors, of the President and of the vice-chairmen, the general meeting of shareholders shall be presided over by the most senior member of the board of directors present. Each share shall be entitled to one vote. Each shareholder may have himself represented at any general meeting of shareholders by giving a proxy in writing, including by fax or by any other means of communication guaranteeing the authenticity of the document and enabling the shareholder giving the proxy to be identified. Except where law or the articles of association provide otherwise, resolutions shall be adopted at general meetings by a simple majority of the votes validly cast by the shareholders present or represented. Where, in accordance with the provisions of article 6.3 of the present articles of association, shares are recorded in the register of shareholders in the name of a Depository or sub-depository of the former, the certificates provided for in the said article 6.3 of the present articles of association must be received at the Company no later than the day preceding the fifth (5th) working day before the date of the general meeting unless the Company B-28

fixes a shorter period. Such certificates must certify the fact that the shares in the account shall be blocked until the close of the general meeting. All proxies must be received at the Company by the same deadline. The board of directors shall adopt all other regulations and rules concerning the availability of access cards and proxy forms in order to enable shareholders to exercise their right to vote. The board of directors may decide to allow the participation of shareholders in the general meeting of the Company by any means of telecommunication (including via telephone or videoconference), provided that such means of telecommunication allow the identification of the shareholders participating by such means, and all the other shareholders present at such general meeting (whether in person or by proxy, or by means of such type of communications device) to hear them and to be heard by them at any time. Any shareholder that participates in a general meeting of the Company by these means shall be deemed to be present at such general meeting, shall be counted when reckoning a quorum and shall be entitled to vote on matters considered at such general meeting.

Shareholders may vote by correspondence, by means of a form provided by the Company including the following information: the location, the date, and the time of the meeting, the name, address and any other pertinent information concerning the shareholder, the number of shares held by such shareholder, the agenda for the meeting, the texts of the proposed resolutions, the option to cast a positive or negative vote or to abstain, the option to vote by proxy for any new resolution or any modification of the resolutions that may be proposed during the meeting or announced by the Company after the shareholders submission of the form provided by the Company.

The forms for voting by correspondence should be received at the Company no later than the day preceding the fifth (5th) working day before the date of the general meeting unless the Company fixes a shorter period. Once the voting forms are submitted to the Company, they can neither be retrieved nor cancelled. Duly completed forms that are received by the Company as provided above shall be counted when reckoning a quorum at such general meeting. The board of directors shall adopt all other regulations and rules concerning the participation in the meeting and forms to be used to vote by correspondence. In the event that all the shareholders are present or represented at a general meeting of shareholders and declare that they have been informed of the agenda of the general meeting, the general meeting may be held without prior notice of meeting or publication.

Article 14. Annual general meeting of shareholders The annual general meeting of shareholders shall be held in accordance with Luxembourg law at the Company's registered office or at any other place in the City of Luxembourg mentioned in the notice of meeting on the second Tuesday of the month of May each year at eleven oclock (11:00) a.m.

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If that day is not a banking day in Luxembourg, the annual general meeting shall be held on the immediately preceding banking day. Fifteen (15) days before the general meeting, shareholders may inspect at the registered office the documents to be deposited at such office in accordance with the Law. The management report, the annual and consolidated accounts and the documents drawn up by the independent auditors shall be addressed to the registered shareholders at the same time as the notice of meeting. Any shareholder shall be entitled to obtain a copy of the documents referred to in the preceding paragraph free of charge, upon production of proof of his or her shareholding, fifteen (15) days before the meeting. Following the approval of the annual accounts and consolidated accounts, the general meeting shall decide by special vote on the discharge of the liability of the members of the board of directors. The other general meetings of shareholders may be held on the dates, at the time and at the place indicated in the notice of meeting.

Article 15. Independent Auditors The annual accounts and consolidated accounts shall be audited, and the consistency of the management report with those accounts verified, by one or more independent auditors (rviseurs d'entreprises) appointed by the general meeting of shareholders for a period not exceeding three (3) years. The independent auditor(s) may be re-elected. They shall record the result of their audit in the reports required by the Law.

Article 16. Financial year The Company's financial year shall commence on 1 January each year and end on 31 December the same year.

Article 17. Allocation of profits Five per cent (5%) of the Company's net annual profits shall be allocated to the reserve required by the Law. This allocation shall cease to be mandatory when that reserve reaches ten per cent (10%) of the subscribed capital. It shall become mandatory once again when the reserve falls below that percentage. The remainder of the net profit shall be allocated as follows by the general meeting of shareholders upon the proposal of the board of directors: a global amount shall be allocated to the board of directors by way of directors' fees (tantimes). This amount may not be less than one million Euro (EUR 1,000,000). In the event that the profits are insufficient, the amount of one million Euro shall be imputed in whole or in part to the charges. The distribution of this amount as amongst the members of the board of directors shall be effected in accordance with the board of directors' rules of procedure; the balance shall be distributed as dividends to the shareholders or placed in the reserves or carried forward.

Where, upon the conversion of convertible or exchangeable securities into shares in the Company, the Company proceeds to issue new shares or to attribute shares of its own, those shares shall not take part in the distribution of dividends for the financial year preceding the conversion or exchange, unless the issue conditions of the convertible or exchangeable securities provide otherwise. B-30

Interim dividends may be distributed under the conditions laid down by the Law by decision of the board of directors. No interest shall be paid on dividends declared but not paid which are held by the Company on behalf of shareholders.

Article 18. Dissolution and liquidation In the event of a dissolution of the Company, liquidation shall be carried out by one or more liquidators, who may be natural or legal persons, appointed by the general meeting of shareholders, which shall determine their powers and remuneration.

Article 19. Amendment of the articles of association The present articles of association may be amended from time to time as considered appropriate by a general meeting of shareholders subject to the requirements as to quorum and voting laid down by the Law. By exception to the preceding paragraph, articles 8.1, 8.4, 8.5, 8.6 and 11.2 as well as the provision of this article 19 may only be amended by a general meeting of shareholders disposing of a majority of votes representing twothirds of the voting rights attached to the shares in the Company.

Article 20. Applicable law and jurisdiction For all matters not governed by the present articles of association, the parties refer to the provisions of the Law. All disputes which may arise during the duration of the Company or upon its liquidation between shareholders, between shareholders and the Company, between shareholders and members of the board of directors or liquidators, between members of the board of directors and liquidators, between members of the board of directors or between liquidators of the Company on account of company matters shall be subject to the jurisdiction of the competent courts of the registered office. To this end, any shareholder, member of the board of directors or liquidator shall be bound to have an address for service in the district of the court for the registered office and all summonses or service shall be duly made to that address for service, regardless of their actual domicile; if no address for service is given, summonses or service shall be validly made at the Company's registered office. The foregoing provisions do not affect the Company's right to bring proceedings against the shareholders, members of the board of directors or liquidators of the Company in any other court having jurisdiction on some other ground and to carry out any summonses or service by other means apt to enable the defendant to defend itself.

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ANNEX C AUDITORS REPORT OF MAZARS S.A.

B-32

ArcelorMittal Merger of ArcelorMittal into Arcelor REPORT OF THE RVISEUR DENTREPRISES ON MERGER PROPOSAL AND EXPLANATORY MEMORANDUM (Article 266 of the law dated August 10, 1915 concerning commercial companies as amended from time to time)

B-33

TABLE OF CONTENTS Page 1 2 3 4 4.1 INDEPENDENCE AND AGREEMENT OF THE RVISEUR DENTREPRISES................ 1 PURPOSE OF THIS REPORT ..................................................................................................... 1 MERGER PROPOSAL AND EXPLANATORY MEMORANDUM.......................................... 2 METHODS USED BY THE BOARDS OF DIRECTORS TO DETERMINE THE EXCHANGE RATIOS ................................................................................................................. 2 SUMMARY OF THE VALUATION METHODS PERFORMED BY THE BOARDS OF DIRECTORS (REFER TO EXPLANATORY MEMORANDUM IN ANNEX)........................ 3 4.1.1 4.1.2 4.1.3 Methodology applied by the Boards of Directors ........................................................ 3 Methods that have been disregarded by the Boards of Directors ................................. 4 Methods that have been used by the Boards of Directors ............................................ 5 4.1.3.1 4.1.3.2 4.1.3.3 4.1.4 4.2 Analysis of comparable companies performed by the Boards of Directors 5 Analysis performed by the Boards of Directors on discounted cash flows . 7 Contribution analysis performed by the Boards of Directors ...................... 8

Summary assessment of the Exchange Ratio based on intrinsic values, as a result of the valuations of the Boards of Directors ....................................................... 8

REVIEW OF THE VALUATIONS PERFORMED BY THE BOARDS OF DIRECTORS ....... 9 4.2.1 4.2.2 Preliminary comments.................................................................................................. 9 Assessment of the methods used by the Boards of Directors ....................................... 10 4.2.2.1 4.2.2.2 4.2.2.3 4.2.2.4 Methods disregarded by the Boards of Directors ........................................ 10 Adequacy of the methods used, and of their relative weighting.................. 10 Accuracy of the calculations performed by the Boards of Directors and underlying assumptions ........................................ 11 Alternative assumptions considered ............................................................ 12

5 6 7 8 9

EXCHANGE RATIO.................................................................................................................... 13 SCOPE ... ................ ..................................................................................................................... 14 ADDITIONAL INFORMATION ................................................................................................. 17 OPINION ................ ..................................................................................................................... 17 LIMITATION ON THE USE OF THIS REPORT ....................................................................... 17 Annex: Merger Proposal and Explanatory Memorandum prepared by the Boards of Directors of ArcelorMittal and Arcelor

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To the Shareholders of ArcelorMittal 19, Avenue de la Libert L-2930 Luxembourg Ladies and Gentlemen, Report of the Rviseur dEntreprises on the merger proposal and the explanatory memorandum, in conformity with Article 266 of the law dated August 10, 1915 concerning commercial companies, as amended from time to time. 1 INDEPENDENCE AND AGREEMENT OF THE RVISEUR DENTREPRISES Mazars S.A. is independent from ArcelorMittal (ArcelorMittal) and Arcelor (Arcelor), including from their, respective, management and shareholders. Mazars S.A. is certified as Rviseur dEntreprises by the Luxembourg Department of Justice, according to the Article 3 of the Law dated June 28,1984, which regulates the profession of Rviseur dEntreprises. Neither Mazars S.A. nor any of its affiliates has had any material relationship with ArcelorMittal and Arcelor and their respective affiliates during the past two years, except that: Mazars & Gurard in France, an affiliate of Mazars S.A., at the request of Arcelor, currently an affiliate of ArcelorMittal, conducted a due diligence investigation with respect to the Severstal group in April 2006. Mazars & Gurard in France, an affiliate of Mazars S.A., at the request of ArcelorMittal Pipes and Tubes Holding B.V., conducted a due diligence with respect of entities detained by Vallourec (Vallourec Composants Automobiles Vitry and Vallourec Prcision Soudage) in June 2007. Mazars S.A. acted as independent auditor for ArcelorMittal in connection with the first-step merger of Mittal Steel Company N.V. (Mittal Steel) into ArcelorMittal.

PURPOSE OF THIS REPORT Following our appointment by the board of directors of ArcelorMittal and in accordance with the conditions of Article 266 of the law dated August 10, 1915 concerning commercial companies, as amended from time to time (the LSC), we present you this report of Rviseur dEntreprises concerning the merger proposal (projet de fusion) and explanatory memorandum (un rapport crit dtaill) dated September 25, 2007, relating to the merger of ArcelorMittal into Arcelor (Arcelor, together with ArcelorMittal, the Merging Companies) by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal. On May 2, 2007, the board of directors of Mittal Steel decided to organize a two-step merger process pursuant to which Mittal Steel would first be merged into ArcelorMittal, which would subsequently be merged into Arcelor as the ultimate surviving entity. In the first step, Mittal Steel merged into ArcelorMittal, by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel. On June 25, 2007, we issued our written report to the shareholders of ArcelorMittal, with respect to, among other things, the exchange ratio for the Mittal Steel class A common shares and the exchange ratio for the Mittal Steel class B common shares in connection with the first-step merger, as required pursuant to the LSC. On August 28, 2007, the extraordinary general meeting of shareholders of Mittal Steel and the sole shareholder of ArcelorMittal approved the first-step merger of Mittal Steel into ArcelorMittal. After a resolution of the sole shareholder of ArcelorMittal taken on August 28, 2007, this merger became effective on September 3, 2007, and the combined company was named ArcelorMittal. The merger subject of this report constitutes the second and final step of the combination of Mittal Steel and Arcelor into a single legal entity governed by Luxembourg law (the Merger). -1B-35

In accordance with the provisions of Article 266 of the LSC, this report (a) (b) indicates whether or not, in our opinion, the proposed share Exchange Ratio (as defined herein below) for the Merger is relevant and reasonable; indicates the valuation methods used by the boards of directors of ArcelorMittal and Arcelor (the Boards of Directors) to determine the proposed share Exchange Ratio (as defined herein below); states whether such valuation methods are adequate in the circumstances and indicates the values arrived at by each of such methods, and gives an opinion as to the relative importance attributed to such methods in determining the value actually adopted; describes any special valuation difficulties which may have arisen.

(c)

MERGER PROPOSAL AND EXPLANATORY MEMORANDUM On September 25, 2007, the Board of Directors approved the merger proposal and the explanatory memorandum for the merger of ArcelorMittal into Arcelor. ArcelorMittal is a public limited company having its registered office in Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Register of Trade and Companies (the RCSL) under number B 102468. Its registered office is located 19, avenue de la Libert, L-2930 Luxembourg. Arcelor is a public limited company having its registered office in Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Register of Trade and Companies (the RCSL) under number B 82454. Its registered office is located 19, avenue de la Libert, L-2930 Luxembourg. The merger proposal shall be deposited by ArcelorMittal with the Luxembourg Register of Trade and Companies on or around September 25, 2007, and by Arcelor with the Luxembourg Register of Trade and Companies on or around September 25, 2007. The explanatory memorandum shall be available, free of charge, at the offices of the Merging Companies. Upon effectiveness of the Merger, in conformity with Article 274 of the LSC, all the assets and liabilities of ArcelorMittal (as such assets and liabilities shall exist on the date on which the Merger shall become effective) shall be transferred to Arcelor by operation of law, the shares of ArcelorMittall shall be cancelled, in exchange for the issue of shares in Arcelor to the (then-former) holders of ArcelorMittal shares. ArcelorMittal shall cease to exist. The shareholders of ArcelorMittal shall become shareholders of Arcelor which shall be renamed ArcelorMittal following effectiveness of the Merger.

METHODS USED BY THE BOARDS OF DIRECTORS TO DETERMINE THE EXCHANGE RATIOS As a consequence of the transfer of all the assets and liabilities of ArcelorMittal by operation of law, and subject to the prior completion of a share capital restructuring of Arcelor resulting in an exchange of 7 pre-restructuring Arcelor shares for 8 post-restructuring Arcelor shares, Arcelor shall on the effective date of the Merger issue to the holders of the ArcelorMittal shares existing at such time one (1) Arcelor share for each one (1) ArcelorMittal share (the exchange ratio as adjusted in accordance with the above capital restructuring being hereinafter referred to as the Exchange Ratio). For accounting purposes, the merger of ArcelorMittal into Arcelor shall be considered as a combination of entities under common control as of January 1, 2007. All recorded assets and liabilities of ArcelorMittal and Arcelor shall be carried forward at their historical book values, and the income of Arcelor shall include the income of ArcelorMittal as of January 1, 2007. For statutory reporting purposes in Luxembourg, the final accounting year of ArcelorMittal shall end on December 31, 2006. In compliance with applicable laws, the Boards of Directors have relied upon a multi-criteria analysis, including EBITDA multiples and discounted cash flow analyses in order to ensure that the Exchange Ratio adequately reflects the respective relative intrinsic values of the Merging Companies.

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4.1

SUMMARY OF THE VALUATION METHODS PERFORMED BY THE BOARDS OF DIRECTORS (REFER TO EXPLANATORY MEMORANDUM IN ANNEX) On May 15, 2007, the boards of directors of Mittal Steel, ArcelorMittal and Arcelor unanimously decided to propose to the shareholders that the Merger be effected on the basis of an exchange ratio of 7 Arcelor shares for every 8 ArcelorMittal shares, based on a multi-criteria analysis described in the explanatory memorandum and summarized below. During the meeting held on September 25, 2007, the ArcelorMittal and the Arcelor Boards of Directors also noted that no event, transaction or new development had occurred since May 15, 2007 that would lead to an adjustment of the Merger Exchange Ratio other than to reflect the share capital restructuring described above. In this respect, the Boards of Directors noted in particular that: the mandatory tender offer for the outstanding shares of Arcelor Brasil, which was completed after the determination of the Exchange Ratio and which was principally settled in cash does not impact the Exchange Ratio, since for the purposes of the intrinsic value analysis supporting the determination of the exchange ratio the Arcelor Brasil minority interest had been valued using the share price of Arcelor Brasil as at 11 May 2007, after the announcement of the terms of the mandatory offer; the divestiture of the Sparrows Point facility, as part of the disposal program related to the offer of Mittal Steel for Arcelor, is being made at fair market value ; the consensus EBITDA estimates derived from Institutional Brokers Estimate System (IBES) following the first half 2007 earnings release is converging with the 2008 target EBITDA of USD 20 billion set forth in the harmonized value plan 2008 communicated to the market on 27 September 2006 (the Harmonized Value Plan 2008), used as basis for the multi-criteria analysis; ArcelorMittal announced on 11 September 2007 an internal growth plan target to increase shipments by more than 20% from 2006 to 2012, to reach 131mt. The Board of Directors also noted that while the growth plan 2012 does not address operating results, the preparation of the growth plan 2012 has nevertheless confirmed the Harmonized Value Plan 2008 and the respective allocations between ArcelorMittal (ex. Mittal Steel) and Arcelor as mentioned herein below in paragraph 4.1.1.

4.1.1

Methodology applied by the Boards of Directors The multi-criteria valuations performed by the Boards of Directors is based on the following information set forth in the explanatory memorandum: based on an analysis of the nature of the synergies reflected in the Harmonized Value Plan 2008 and, in particular their allocation among the various segments and geographic areas, approximately 41% of the previously announced synergies generated by the combination of Arcelor and Mittal Steel will be realized at the level of Arcelor; based on the 2008 Arcelor EBITDA estimate taken into account for the purposes of the preparation of the Harmonized Value Plan 2008 (which represents 49% of the 2008 target EBITDA of USD 20 billion for the ArcelorMittal group), Arcelor will contribute approximately 49% of the combined Arcelor/Mittal Steel group EBITDA indicated in the combined Arcelor/Mittal Steel group Harmonized Value Plan 2008; based on an analysis of the capital expenditures taken into account for the purposes of the Harmonized Value Plan 2008, Arcelor will account for approximately 50% of the combined Arcelor/Mittal Steel groups capital expenditures indicated in the Harmonized Value Plan 2008. These elements relate to the Harmonized Value Plan 2008. The breakdown of the 2008 target EBITDA of USD 20 billion for the ArcelorMittal group can be summarized as follows:

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Ex-Arcelor Proforma EBITDA 2005 Brownfield and production growth in the market Value added growth in line with market Management gains and stand alone synergies net of restructuring Mining expansion Merger synergies Regulatory remedies Price cost squeeze EBITDA 2008 target 8.2 2.8 0.0 2.3 0.0 0.7 -0.2 -4.0 9.8

Ex-Mittal 6.7 1.8 1.1 1.9 0.4 0.9 0.0 -2.6 10.2

ArcelorMittal 14.9 4.6 1.1 4.2 0.4 1.6 -0.2 -6.6 20.0

Note: Synergies and costs reflected in this table have been allocated based on where they were expected to be generated or incurred, respectively.

The financial information used by the Boards of Directors to assess the terms and conditions of the Merger are derived from the consolidated financial statements of ArcelorMittal and Arcelor for accounting year 2006, prepared in accordance with IFRS, pro forma for acquisitions made in 2006 as if such acquisitions had occurred on January 1, 2006. Minority interests in listed entities (Arcelor, Mittal South Africa, Acesita) and listed associates investments (Erdemir, Hunan Valin) have been valued by the Boards of Directors at market value. The value used for the Arcelor Brasil minority interest was calculated based on the share price of Arcelor Brasil as at 11 May 2007, after the announcement of the terms of the mandatory offer. All calculations effected by the Boards of Directors are based on 670.3 million Arcelor shares and 1,389.6 million ArcelorMittal shares, in both cases diluted based on the treasury method applied as of the end of April 2007. Since the first-step merger was to be (and has been) implemented based on a one-to-one exchange ratio, the value of an ArcelorMittal share has been considered equal to the value of a Mittal Steel share by the Boards of Directors. Certain reorganizations have been implemented since the date of the Harmonized Value Plan 2008. However, they were not deemed by the Boards of Directors to have any impact on the Exchange Ratio. Similarly, the mandatory tender offer for the outstanding shares of Arcelor Brasil, which was completed after the determination of the Exchange Ratio and which was principally settled in cash was deemed by the Board of Directors not to impact the Exchange Ratio, since for the purposes of the intrinsic value analysis supporting the determination of the exchange ratio the Arcelor Brasil minority interest value had been valued using the share price of Arcelor Brasil as at 11 May 2007, after the announcement of the terms of the mandatory offer. A similar conclusion was reached with respect to the contemplated disposal of the Sparrows Point facility which is made at fair market value. 4.1.2 Methods that have been disregarded by the Boards of Directors Trading Value: valuations based on Arcelor trading value have not been used since when the Boards of Directors made their determination, the Arcelor share price was not believed to represent the intrinsic value of the company since (i) before the announcement of the proposed Exchange Ratio on May 16, 2007, the trading value of Arcelor was heavily impacted by market speculation regarding the timing of the Merger and the Exchange Ratio (which is evidenced in particular by the fact that Arcelor was trading at a higher EBITDA multiple than ArcelorMittal without any justification in light of the growth perspective of their respective businesses) and (ii) the Arcelor share had only a limited liquidity compared to historical averages.

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Analysis of the liquidity of Arcelor share Average daily trading volume on Euronext Paris / Total shares (669.8 million as at December 31, 2006) 0.04%

Average daily trading volume on Euronext Paris Since sell-out (November 27, 2006 through May 11, 2007) Last over the month preceding the announcement of the offer (i.e. before January 26, 2006)
Source : Bloomberg

270,900

4,122,900

0.62%

Consolidated dividend per share: in the steel industry, dividend yield is not regarded as a relevant valuation criterion given the cyclicality of the industry. As both investors as well as equity research analysis are not focused on this criterion, an analysis based on consolidated dividend per share has not been used by the Boards of Directors. Analysis of precedent transactions: precedent transactions in the steel industry reflect situations where a change of control takes place. As such, prices paid in precedent transactions reflect, in addition to the intrinsic stand-alone value, a so-called control premium reflecting in particular the ability of the purchaser to generate synergies and efficiency gains. As ArcelorMittal already has control over Arcelor and no synergies are expected from the Merger itself, an analysis of precedent transactions has not been used by the Boards of Directors. Revaluated net asset value: As both investors as well as equity research analysis do not rely on this valuation method and generally focus on future profitability, an analysis based on revaluated net asset has not been used. 4.1.3 Methods that have been used by the Boards of Directors The methods that have been used by the Boards of Directors are described in the following three sections (4.1.3.1 to 4.1.3.3). The exchange ratio of 0.875 Arcelor share for every ArcelorMittal share does not take into consideration the implementation of a share capital restructuring of Arcelor prior to the effectiveness of the Merger, in the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 postrestructuring Arcelor shares. The contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share. 4.1.3.1 Analysis of comparable companies performed by the Boards of Directors Valuations of listed companies in the steel industry are frequently compared on the basis of enterprise value to EBITDA (EV/EBITDA) and price to earnings per share (P/E) multiples. EBITDA is defined as operating profit before depreciation and amortization. Enterprise value corresponds to the aggregate of the equity market capitalisation, net indebtedness and minority interests. Investments in associates and other financial assets are excluded from enterprise value as the income associated with these assets is generally not included in EBITDA.

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A number of steel manufacturing conglomerates have been excluded from the analysis as a material part of their operations are not steel related.

These excluded conglomerates are the following: Company ThyssenKrupp JFE Non steel related operations ThyssenKrupp is an industrial conglomerate with diverse activities unrelated to steel, including submarine and shipbuilding, elevators and automotive components. JFE is an industrial conglomerate with diverse activities unrelated to steel, including microelectronics, engineering for the energy sector and environmental solutions and urban development. Nippon Steel is an industrial conglomerate with diverse activities unrelated to steel, including power supply, chemicals, urban development, construction and engineering. Kobe Steel is an industrial conglomerate with diverse activities unrelated to steel, including titanium, welding equipment and consumables, machinery such as crushers, tire and rubber machines and plastic processing machines, power generation plants, as well as activities in infrastructure construction.

Nippon Steel Corp.

Kobe Steel

A number of other European and North American steel companies were considered, but excluded for the purpose of trading multiple analysis due to the unique features of their businesses which exhibit less comparability to ArcelorMittal and Arcelor. Company Salzgitter Svenskt Stal (SSAB) Reasons for exclusion Salzgitter is a regional niche steel manufacturer. SSAB is a Nordic focused niche producer of high strength sheets and quenched plate steels with high exposure to the booming mining equipment market, construction equipment and fuel-efficient automotive manufacturing sectors. The strong position in niche products gives SSAB greater pricing power and therefore higher and more sustainable margins and returns. SSAB is therefore not directly comparable to the major steel companies. Rautaruukki is a company in a transition phase from a steel producer to a complete solutions provider for the construction and engineering sectors. As part of this transition, Rautaruukki has acquired companies active in construction systems and total delivery know-how, components for lifting, handling and transportation equipment. It is seeking to exit its long products business. Nucor is entirely focused on the US and exclusively produces steel via the EAF method.

Rautaruukki

Nucor

For the purposes of the comparison, ArcelorMittal and Arcelor have also been disregarded by the Boards of Directors to not influence the outcome of the analysis. Arcelor Brasil was at the time of the determination of the exchange ratio subject to a delisting mandatory offer and has also been excluded as its share price reflected a regulated offer process. In general, investors typically base investment decisions on future profitability. Although, for this reason, 2007 and 2008 should be regarded as the most relevant periods as investors are looking for future profitability and value future cash flows, the Boards of Directors considered that 2006 should also be considered in light of the lack of up-to-date broker research estimates for Arcelor. The selected comparable companies are covered by numerous equity research analysts and consensus estimates for the periods 2007 and 2008 are widely available. The table below summarizes the EV/EBITDA and P/E multiples for these steel companies based on reported 2006 results and consensus EBITDA estimates derived from Institutional Brokers Estimate System (IBES) and calendarised to reflect a 31 December year end. -6B-40

EBITDA Multiple 2006 A Posco.................................... Voest Alpine ........................ US Steel ............................... CSN...................................... Average Multiple................ 6.7 7.2 6.3 10.0 7.6 2007 E 6.3 6.5 6.7 6.9 6.6 2008 E 5.3 6.7 6.6 6.5 6.3

P/E Multiple 2006 A 13.2 11.3 9.7 20.0 13.5

The application of the relevant average multiple mentioned in the table above to the 2006 pro-forma EBITDA, the 2007 and 2008 EBITDA implied by the Harmonized Value Plan 2008 and IBES estimates and the 2006 pro-forma earnings per share for both ArcelorMittal and Arcelor provide for equity values, share prices and implied exchange ratios as shown in the table below: Share Price () Exchange Ratio ArcelorMittal Arcelor Equity Value (bn) ArcelorMittal Arcelor

0.845 - 0.965 42.3 61.9 49.3 64.1 58.8 86.0 33.1 43.0 Note: Exchange ratios based on combination of Arcelor and ArcelorMittal share prices within the minimum and maximum range implied by the application of the valuation described above. The main purpose of the analysis is to perform a relative valuation for ArcelorMittal and Arcelor and as such a relatively broad range of valuation multiples has been used. In addition to the table above, a sensitivity analysis has been performed by applying the minimum and maximum valuation multiples of the group of selected comparable companies which resulted in an exchange ratio range of 0.818 to 0.965. 4.1.3.2 Analysis performed by the Boards of Directors on discounted cash flows The Boards of Directors performed a discounted cash flow analysis as at May 15, 2007 using publicly available forecasts consisting both of (i) the Harmonized Value Plan 2008 communicated to the market, subject to adjustments aimed at including the Sicartsa acquisition and related synergies, and (ii) the consensus broker estimates in 2007 and 2008 for ArcelorMittal derived from Institutional Brokers Estimate System (IBES), Arcelor estimates being in the latter case derived from ArcelorMittal broker estimates based on the guidance set forth in paragraph (4.1.1) above, since most brokers no longer cover the Arcelor shares. The discounted cash flow analysis performed by the Boards of Directors is based on the assumptions described in paragraph (4.1.1) above and on the following additional assumptions: (i) a tax rate at 25% for each of the two companies; (ii) the same discount rate was applied to the future cash flows of each of the two companies; (iii) the 2007 EBITDA based on the Harmonized Value Plan 2008 represents an average between the 2006 pro forma EBITDA and the 2008 EBITDA reflected in the Harmonized Value Plan 2008; (iv) depreciation and amortization were set as per IBES consensus estimates; (v) ArcelorMittal Capex was set as per Harmonized Value Plan 2008; and (vi) working capital optimization was estimated at 0.9 billion for ArcelorMittal as per Harmonized Value Plan 2008, broken down 50/50 between 2007 and 2008 and at 0.3 billon in 2007 and 2008 for Arcelor as per Arcelors February 27, 2006 investor presentation. The terminal value was calculated both based on EBITDA exit multiples and the perpetual growth method. The table below shows the resulting equity values, share prices and exchange ratios assuming, for each of Arcelor and ArcelorMittal, an exit multiple of 6.5x EBITDA, a perpetuity growth rate of 0% and a discount rate of 9.25%: -7B-41

Equity Value (bn) ArcelorMittal Value Plan EBITDA Exit Perpetual Growth IBES EBITDA Exit Perpetual Growth 71.7 85.0 63.2 74.3 Arcelor 38.3 44.4 35.0 40.3

Share Price () ArcelorMittal 51.6 61.2 45.5 53.5 Arcelor 57.1 66.3 52.2 60.2

Exchange Ratio 0.904 0.923 0.871 0.889

In addition, a sensitivity analysis was performed, using EBITDA exit multiples ranging from 6.0x EBITDA to 7.0x EBITDA, perpetual growth rates ranging from -1% to 1% and discount rates ranging from 9% to 9.5% which resulted in an exchange ratio range of 0.860 to 0.936 (using similar assumptions for each of Arcelor and ArcelorMittal). 4.1.3.3 Contribution analysis performed by the Boards of Directors The Boards of Directors reviewed specific historical earnings per share (EPS) and historical and estimated future EBITDA for Arcelor and ArcelorMittal, based both on the Harmonized Value Plan 2008 and the IBES consensus, Arcelor estimates being in the latter case derived from ArcelorMittal estimates based on the guidance set forth in paragraph (4.1.1) above, since brokers no longer cover Arcelor. The analysis of the contribution, on a debt-adjusted basis, of Arcelor to the aggregate equity value of ArcelorMittal based on EBITDA or EPS provides for an exchange ratio range comprised between 0.833 and 0.965 Arcelor share for every ArcelorMittal share, ArcelorMittal equity value being determined based on the closing value of the Mittal Steel share (based on Amsterdam listing) on May 11, 2007. The table below illustrates the corresponding values for Arcelor and ArcelorMittal implied by the exchange ratios resulting from this analysis, based on a value of the ArcelorMittal share equal to the closing value of the Mittal Steel share (based on Amsterdam listing) on May 11, 2007: Share Price () Exchange Ratio 0.833-0.965 ArcelorMittal 41.8 Arcelor 43.3 - 50.2 Equity Value (bn) ArcelorMittal 58.1 Arcelor 29.0 - 33.6

4.1.4

Summary assessment of the Exchange Ratio based on intrinsic values, as a result of the valuations of the Boards of Directors The outcome of the multi-criteria valuation analysis performed by the Boards of Directors based on average multiples as far as the analysis of comparable companies is concerned and the median assumptions described herein above as far as the discounted cash flow analysis is concerned can be summarized as follows.

.
EXCHANGE RATIO Min Max Comparable companies DCF analysis Contribution analysis Average 0.845 0.871 0.833 0.850 0.965 0.923 0.965 0.951 ARCELOR MITTAL SHARE PRICE () Min Max 42.3 45.5 41.8 43.2 61.9 61.2 41.8 54.9 ARCELOR SHARE PRICE ( ) Min Max 49.3 52.2 43.3 50.6 64.1 66.3 50.2 57.9 ARCELOR MITTAL EQUITY VALUE ( bn) Min Max 58.8 63.2 58.1 60.0 86.0 85.0 58.1 76.3 ARCELOR EQUITY VALUE ( bn) Min Max 33.1 35.0 29.0 33.9 43.0 44.4 33.6 38.8

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Note: exchange ratios based on combination of Arcelor and ArcelorMittal share prices within the minimum and maximum range implied by the application of the valuations described above (based on average multiples as far as the analysis of comparable companies is concerned and the median assumptions described herein above as far as the discounted cash flow analysis is concerned). The average exchange ratio bracket resulting from the valuation methods used by the Boards of Directors described above, taking into account the sensitivity analyses that have been performed by the Boards of Directors for the comparable companies and discounted cash flows methods as described in paragraph 4.1.3.1 and 4.1.3.2 above, is 0.837 - 0.955, as shown in the table below. Implied Exchange Ratio Comparable companies DCF analysis Contribution analysis Average Min 0.818 0.860 0.833 0.837 Max 0.965 0.936 0.965 0.955

The exchange ratio of 0.875 Arcelor share for every ArcelorMittal share is therefore consistent with the Boards of Directors analysis of the relative intrinsic value range of Arcelor and ArcelorMittal. None of the methods used by the Boards of Directors for the purposes of the multi-criteria analysis has been given a specific weight compared to the others. As noted above, the exchange ratio of 0.875 Arcelor share for every ArcelorMittal share does not take into consideration the implementation of a share capital restructuring of Arcelor prior to the effectiveness of the Merger, in the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 post-restructuring Arcelor shares. The contemplated share capital restructuring of Arcelor leads to an adjustment of the Exchange Ratio to one Arcelor share for every ArcelorMittal share. 4.2 4.2.1 REVIEW OF THE VALUATIONS PERFORMED BY THE BOARDS OF DIRECTORS Preliminary comments Opinions delivered to the Boards of Directors The boards of directors of Mittal Steel, ArcelorMittal and Arcelor have received opinions as to the fairness (as at the date of the issuance of the opinions) of the proposed exchange ratio of 7 Arcelor shares for 8 ArcelorMittal shares (i.e. ignoring the proposed share capital restructuring of Arcelor) from a financial standpoint, respectively, from Goldman Sachs, with respect to the shareholders of ArcelorMittal (i.e., the shareholders of Mittal Steel prior to completion of the first-step merger of Mittal Steel into ArcelorMittal), and from Morgan Stanley, Socit Gnrale, Fortis and Ricol Lasteyrie et Associs with respect to the public shareholders of Arcelor. The fairness opinions provided by the financial experts to the Boards of Directors, as well as the context in which their reviews were performed, will be disclosed in the European prospectus to be approved by the Commission de Surveillance du Secteur Financier, the Luxembourg securities regulator and in the registration statement on Form F-4 that will be filed by Arcelor with the U.S. Securities Exchange Commission, the U.S. federal securities regulator. The fairness opinions issued to the Boards of Directors of ArcelorMittal and Arcelor, respectively, were delivered before the decision was made by the Merging Companies to condition the effectiveness of the Merger on the completion of the Arcelor share capital restructuring described in the explanatory memorandum. The Boards of Directors noted that the contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share without any economic impact on the ArcelorMittal shareholders.

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The timeframe of financial projections taken into account is rather short The enterprise values of the Merging Companies were determined by their respective board of directors based on the Harmonized Value-Plan 2008, taking into account, if necessary and significant, changes in the consolidation scope (acquisitions, divestures) which have subsequently occurred, as well as the effect of synergies in connection with the merging of both groups operations. Neither of the Merging Companies has a business plan or a value plan for periods beyond 2008. Therefore, for the discounted cash flow method, a preponderant portion of the Merging Companies enterprise values arises from their terminal values calculated based either on an EBITDA exit multiple or the perpetuity growth method. Analysis of comparable companies also only covered the period 2006 to 2008 and the contribution analysis was only performed for the period until 2008. In order to assess the sensitivity of these assumptions, we have extrapolated the activity on a longer period (please refer to chapter 4.2.2.4 herafter), which were mainly derived from the Analysts Consensus.

4.2.2 4.2.2.1

Assessment of the methods used by the Boards of Directors Methods disregarded by the Boards of Directors

When selecting the valuation methods to be used to determine the Exchange Ratio, the Boards of Directors have disregarded the following valuation methods: Trading Value, Consolidated Dividend per Share, Analysis of precedent transactions, Revaluated net asset value.

As regards the revaluated net asset value, we noted that the Boards of Directors did not use this method mainly because both investors and equity research analysis are not focused on this valuation method and generally concentrate on future profitability. Moreover, we noted that the net assets of Arcelor have been revalued in the context of the takeover of Arcelor by Mittal Steel (for accounting purchase price allocation purposes) but not those of ArcelorMittal, as no accounting rule required such a revaluation and because the management of ArcelorMittal did not consider it useful. Therefore, such a method could not have been implemented solely on the basis of the available information. We have analyzed the reasons underlying the Boards of Directors decision to disregard these four valuation methods and concur that the last three methods are not relevant in the current context. As explained later in this report, we are of the opinion that the trading value method could be used, among other methods, as a relevant valuation method. 4.2.2.2 Adequacy of the methods used, and of their relative weighting

The three valuation methods selected by the Boards of Directors are generally accepted methods and are used to address both the relative intrinsic values of the Merging Companies and their comparative values when compared to other comparable listed companies. None of the methods used for the purposes of the multi-criteria analysis has been given by the Boards of Directors a specific weight compared to the others. We have performed some sensitivity analyses with respect to the relative weighting of the various valuation methods used by the Boards of Directors and ensured that the proposed Exchange Ratio remains included in the resulting ranges.

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The multi-criteria valuation analysis arising from the valuation methods used by the Board of Directors resulted in an exchange ratio range of 0.850 to 0.951 (0.837 to 0.955 when taking into account the sensitivity analyses performed by the Boards of Directors). The proposed exchange ratio of 0.875 (before impact of the share capital restructuring) is included within this range. 4.2.2.3 Accuracy of the calculations performed by the Boards of Directors and consistency of the underlying assumptions

We have reviewed the calculations performed by the Boards of Directors and their underlying assumptions and performed a mathematical check of the computations used in the three valuation methods selected by the Boards of Directors. Although we did not find any discrepancies in the computations performed by the Boards of Directors when applying the valuation methods, we would like to express the following observations regarding the underlying assumptions used by the Boards of Directors : Discounted Cash Flow Analysis The Boards of Directors have performed a discounted cash flow analysis using (i) publicly available forecasts consisting of the Harmonized Value Plan 2008 subject to adjustments aimed at including the Sicartsa acquisition and related synergies, and the consensus broker estimates in 2007 and 2008 for ArcelorMittal derived from Institutional Brokers Estimate System (IBES) and (ii) other assumptions set forth in paragraph 4.1.3.2 above. Although such an approach is consistent with the information publicly available as at May 15, 2007, additional information released to the market (e.g. June 30, 2007 interim financial statements, changes in the market consensus, etc.) has led us to change some of the underlying assumptions such as by lengthening the timeframe of the financial forecasts and by using different capital expenditures figures and different working capital requirements (refer to 4.2.2.4) to check whether these elements have an impact on the relative intrinsic values of the Merging Companies. Analysis of Comparable Companies The market consensus selected by the Boards of Directors was made available to us and we were able to check the consistency of some figures with the supporting analysts reports available as at May 15, 2007. The Boards of Directors based their analysis of comparable companies on 2006 to 2008 EV/EBITDA and 2006 P/E multiples. We have broadened the sample of selected comparable companies and determined multiples prevailing as at September 4, 2007 for the nineteen companies included in our sample. No company utilized in our analysis of comparable companies is identical to Arcelor or ArcelorMittal. In evaluating the comparable companies, we made judgments and assumptions with regard to general business, market and financial conditions and other matters, many of which are beyond the control of Arcelor or ArcelorMittal, such as the impact of competition on the business of Arcelor or ArcelorMittal and on the industry generally, industry growth and the absence of any adverse material change in the financial condition and prospects of Arcelor or ArcelorMittal or the industry or in the markets generally, which could affect the public trading value of Arcelor or ArcelorMittal and the aggregate value of the companies to which they were compared. As a conclusion, we chose not to use P/E multiples for the following reasons: (i) Arcelors assets have been revaluated in ArcelorMittals financial statements (which subsequently impacts amortization expense) as part of the purchase price allocation, while the same assets are recorded at book value in Arcelors financial statements, and (ii) the determination of a single 2006 P/E ratio does not appear very meaningful as this multiple is static and needs to cover a boom-to-bust cycle to provide a representative analysis of the value of steel/iron companies. Contribution analysis We have performed a mathematical recomputation of the calculations performed by the Boards of Directors of the Merging Companies and did not find any discrepancies. When performing such valuations, the Boards of Directors have considered Arcelors relative contribution within ArcelorMittal in the Harmonized Value Plan 2008 and the IBES consensus. According to us this method overlaps somewhat with the previous ones. For this reason, we consider that it may be less relevant in this context and chose to lower its weighting in comparison with the other valuation methods we reviewed.

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4.2.2.4

Alternative assumptions considered

In addition to the methods and assumptions selected by the Boards of Directors, we have implemented the methods and assumptions listed below: Valuation based on Arcelors and ArcelorMittals share trading value Investors usually expect trading values to reflect the intrinsic share value of a company when its shares are traded on a public market with a sufficiently large public float. In the case of Arcelor, only 5.74% of the outstanding shares are publicly traded. Therefore, the expected value of Arcelor arising from the share price does not necessary reflect the intrinsic value of the company, and might be subject to market speculation. The overall market liquidity of the traded volume of Arcelors shares, based on 100% of the shares, is rather limited. Such factors led the Boards of Directors to exclude a valuation based on Arcelor trading value. However the liquidity of the traded volume of Arcelors floating shares although limited may be considered to be significant. As the number of Arcelor traded shares is rather limited, and therefore more easily subject to speculation, we are of the opinion that such a valuation method, although relevant, should be taken into account in our multi-criteria approach with a lower weighting than the other selected valuation methods. Main DCF approach - alternative assumptions

The timeframe for the financial projections taken into account in the ArcelorMittal and Arcelor discounted cash flow analysis in the Harmonized Value Plan 2008 as at May 15, 2007 is rather short, with 2008 being used as the basis for the calculation of the terminal value. For this reason, the discounted terminal value accounts for the major portion of the intrinsic values calculated for Arcelor and ArcelorMittal shares. Our discounted cash flow calculations were based on the Harmonized Value Plan 2008 in addition to the following assumptions: 2009 and 2010 EBITDA is derived from the consensus analysts forecasts published by Institutional Brokers Estimate System (IBES) as of September 4, 2007; Arcelors and ArcelorMittals discount rate have been recomputed using a slightly different discount rate of 9.6% than that used by the Merging Companies, Arcelor capital expenditure for 2007 to 2008 as determined by Arcelor Management, Slightly different working capital change impacts for ArcelorMittal in 2007 and 2008 Arcelors contribution to the ArcelorMittals EBITDA is set to remain stable over the period of the discounted cash flow analysis (i.e. 49%), as stated in the section 6.I. of the explanatory memorandum. Other alternative assumptions

When implementing our alternative valuation methods and assumptions, we have also taken into account the following impacts: Net debt adjustment to take into account dividends paid by both companies to their shareholders in 2007 and cash used by ArcelorMittal to buy back its shares in 2007, - Inclusion into Arcelors cash and cash equivalents of short term financial loans granted to Mittal Steel as of December 31, 2006, - EBITDA adjustment to include companies not consolidated by Arcelor, - EBITDA adjustment, for the years 2006 and 2007, aimed to include the Sicartsa acquisition and its related synergies, for the purposes of the discounted cash flow, comparable companies and contribution analyses. Valuation method weighting -

We assigned the following weights to the valuation methods selected by us: - Trading values: 15% - Discounted cash flows: 35% - Comparable companies: 35% - Contribution analysis: 15%

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Conclusion: The exchange ratio (before the impact of the share capital restructuring) proposed by the Boards of Directors remains within the range of exchange ratios resulting from our analysis when applying the above described alternative assumptions and performing sensitivity analyses.

EXCHANGE RATIO On May 15, 2007, the boards of directors of Mittal Steel, ArcelorMittal and Arcelor unanimously decided to propose to the shareholders of the Merging Companies that the Merger be effected on the basis of an exchange ratio of 7 Arcelor shares for every 8 ArcelorMittal shares. At a meeting held on September 25, 2007, the Boards of Directors decided that it would be advisable to restructure the share capital of Arcelor immediately prior to the effectiveness of the Merger so as to have a one-to-one exchange ratio in the Merger and therefore avoid any effect of the Merger on the ArcelorMittal share price and the comparability thereof pre-and post-merger. The share capital restructuring would take the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 postrestructuring Arcelor shares, thus mechanically resulting in an adjusted exchange ratio of one new Arcelor share for every one ArcelorMittal share without any economic effect on Arcelor shareholders. As of the date thereof, the issued share capital of Arcelor amounted to EUR 3,349,067,040 and was divided into 669,813,408 shares without designation of nominal value. All issued shares have been fully paid up. As of the date thereof, the issued share capital of ArcelorMittal amounted to EUR 14,172,072.53 and was divided into 1,417,207,253 ArcelorMittal shares without nominal value, fully paid up. On pro-forma basis as of January 1, 2007, statutory balance sheet of ArcelorMittal aimed at taking into account the effectiveness of the first-step merger of Mittal Steel Company NV into ArcelorMittal, which from an accounting standpoint was given a retroactive effect as of January 1, 2007, the net asset value of ArcelorMittal as of January 1, 2007 represented USD 50,191 million. Upon effectiveness of the Merger, and pursuant to (i) article 8 of the merger proposal, holders of ArcelorMittal shares will automatically receive newly-issued Arcelor shares in accordance with the Exchange Ratio and on the basis of their respective holdings as entered in the relevant ArcelorMittal shareholder registry (registre des actionnaires) or their respective securities accounts, (ii) article 14 of the Merger proposal, every holder of a stock option issued by ArcelorMittal will automatically receive a newly issued Arcelors stock option with economic terms similar to those prevailing before the Merger. The Arcelor shares to be issued in the Merger will have the same rights as the existing Arcelor shares as set forth in Arcelors articles of association and Luxembourg law, provided however that the newlyissued shares would be entitled only to dividends declared by Arcelor after the effective date of the Merger. Specifically, the newly-issued Arcelor shares would not be entitled either to (i) the last installment of the dividend decided by the annual general meeting of Arcelor held on April 27, 2007, or (ii) the additional dividend $0.040625 per post-capital restructuring Arcelor share which distribution will be proposed to the extraordinary general meeting of Arcelor convened to approve the Merger, which in the aggregate represents a dividend of $0.325 per post-restructuring Arcelor share. Conversely, as a result of the Merger, Arcelor agreed to assume ArcelorMittals obligation to pay the last installment of the quarterly dividend decided by the annual general meeting of shareholders of Mittal Steel on June 12, 2007, which, in light of the exchange ratio of the first-step merger and the Merger, would represent $0.325 per Arcelor share newly-issued in the Merger. Therefore, on December 15, 2007, each Arcelor share (whether issued in the Merger or previously issued) would be entitled to a dividend payment of $0.325. Pursuant to article 12 of the merger proposal, the Merger will result in the creation of a merger premium account, reflecting the difference between the net asset value contributed to Arcelor and the amount of the share capital increase by Arcelor. The number of shares to be issued shall be equal to -13B-47

1,417,207,253 as reduced by the number of ArcelorMittal shares held in treasury or for the account of Arcelor or ArcelorMittal as at the date of the extraordinary general meeting called to approve the Merger. The merger premium will be decreased as a result of the cancellation of Arcelor shares except the fractions of Arcelor shares - held by ArcelorMittal, as described below, with no impact on goodwill. Pursuant to article 10 of the merger proposal, ArcelorMittal shares held in treasury by or for the account of ArcelorMittal or Arcelor will be cancelled pursuant to Luxembourg law. Arcelor will not issue any shares in consideration of the ArcelorMittal shares held in treasury by or for the account of ArcelorMittal or Arcelor. Each Arcelor share held by ArcelorMittal and transferred to Arcelor pursuant to the Merger (but excluding any fractions of shares) will be cancelled in accordance with Article 49 (3) of the LSC upon the effectiveness of the Merger pursuant to a resolution of the shareholders of Arcelor taken at the same time that the shareholders of Arcelor shall adopt, among other items, the decision to merge ArcelorMittal into Arcelor. According to article 11 of the merger proposal, such cancellation will be offset against the share capital to the extent of the par value of the shares and for the difference between their book value and their par value in ArcelorMittals accounts against the merger premium as referred to hereinabove. 6 SCOPE Pursuant to the LSC, the drafting of the merger proposal and the explanatory memorandum, as well as the determination of the valuation methods used to determine the Exchange Ratio are the responsibility of the Boards of Directors of the Merging Companies. Our responsibility is to issue a report on the adequacy of the valuation methods used to determine the Exchange Ratio and the relevance and reasonableness of the Exchange Ratio. We conducted our review in accordance with the professional standards of the Institut des Rviseurs dEntreprises of Luxembourg relevant to this engagement. Those standards require that we plan and perform the review in such a way as to obtain moderate assurance as to whether the valuation methods used are adequate and whether the determination of the Exchange Ratio is relevant and reasonable (pertinent et raisonnable). Our review is limited primarily to inquiries addressed to company personnel and to analytical procedures applied to financial data, and thus provides less assurance than an audit. We also conducted interviews with the external auditors of both ArcelorMittal and Arcelor, and with some of the advisers of the Boards of Directors of the Merging Companies. We have performed a review of the main assumptions underlying the Harmonized Value Plan 2008 and performed variance analysis with year 2006 actual figures (arising from the audited financial statements of the Merging Companies) and 2007 first half figures ( which have been subject to a limited review performed by their auditor). We have been informed by the management of the Merging Companies of comments by some shareholders of Arcelor or their representatives, and the existence of claims and legal disputes requesting the use by the Boards of Directors of the exchange ratio of the secondary exchange offer component of MittalSteels June 2006 offer for Arcelor (i.e., 11 Mittal Steel shares for 7 Arcelor shares). Such issues were addressed by the Boards of Directors, and a description and analysis of them by the Boards of Directors is disclosed in Chapter 8 of the explanatory memorandum. While we have been made aware of such comments and disputes, it is not in the scope of our review to assess the relevance of such comments or disputes, nor to assess the Boards evaluation of such comments or disputes.

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In compliance with Article 266 of the LSC and the Luxembourg professional framework described above, this report only addresses the relevance and reasonableness of the Exchange Ratio proposed by the Boards of Directors under the merger proposal as of September 25, 2007 and no opinion is given or intended as to (i) any exchange ratio other than the Exchange Ratio, (ii) any transaction other than the Merger, (iii) the relevance and reasonableness of the Exchange Ratio as of any date other than September 25, 2007. In particular, this report does not in any manner address whether the Exchange Ratio is consistent with the provisions of the Memorandum of Understanding dated June 25, 2006 by and between Arcelor, Mittal Steel and the Mittal Controlling Shareholder (as defined therein), or with any other statements made, either written or oral, at the time of the public offer made by Mittal Steel for Arcelor shares in 2006. For the avoidance of doubt, this report does not address: (i) the underlying business decision of the Merging Companies, their respective shareholders or any other party to proceed with or effect the Merger, (ii) the relevance, reasonableness or adequacy of any portion or aspect of the Merger not expressly addressed in this report, (iii) the relevance or reasonableness of any portion or aspect of the Merger to the holders of any class of securities, creditors or other constituencies of the Merging Companies, or any other party other than those set forth in this report, (iv) the relative merits of the Merger as compared to any alternative business strategies that might exist for the Merging Companies or any other person or the effect of any other transaction in which the Merging Companies or any other person might engage, (v) the tax or legal consequences of the Merger to either Merging Companies, their respective shareholders, or any other person, (vi) whether any of their respective shareholders should vote in favour of or accept the terms of the Merger, (vii) the solvency or fair value of the Merging Companies or any other participant in the Merger under any applicable laws relating to bankruptcy, insolvency or similar matters, (viii) the relevance and reasonableness of the Exchange Ratio or any portion or aspect of the Merger to any specific group of holders of equity or debt securities issued by the Merging Companies, such holders being considered as a whole for the purposes of this report and (ix) any transaction other than the Merger. Furthermore, no opinion is intended in matters that require legal, regulatory, insurance, tax or other similar professional advice. It is assumed that such professional advice has been or will be obtained from the appropriate professional sources. This report does not in any manner address the prices or volumes at which the shares of Arcelor may trade following consummation of the Merger. Furthermore, the scope of our review, as defined by the Luxembourg professional framework described above, did not include any review of the following matters: o Fulfilment by the Merging Companies of their various contractual commitments made in their geographical business areas, regarding acquisitions, divestures, or their normal course of business management; Any specific inquiry, other than interviews with the management of the Merging Companies, with regard to identifying the potential reorganizations which occurred since the takeover of Arcelor by Mittal Steel, except from the ones we were advised of. For reorganizations of which we were advised, while we considered their possible impact on the Exchange Ratio, it was not in the scope of our review to verify their economic, operational or legal reasonableness or validity.

We have not performed an audit and, accordingly, we do not express an audit opinion. At no point did we make any physical inspection or independent appraisal of the properties, assets or liabilities of Arcelor, ArcelorMittal or any other party. We have not made or been provided with an independent appraisal of any of the assets (nor individually, nor taken as a whole), properties or liabilities (contingent or otherwise) of Arcelor (except for the Purchase Price Allocation issued by ArcelorMittals independent expert in 2006), ArcelorMittal or any other party. We have undertaken no independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which Arcelor, ArcelorMittal or any other party is or may be subject or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which either Arcelor, ArcelorMittal is or may be a party or is or may be subject. -15B-49

We have relied upon and assumed, without independent verification, the accuracy and completeness of all documents, data, material and other information furnished, or otherwise made available, to us, discussed with or reviewed by us, or publicly available, and do not assume any responsibility with respect to such documents, data, material and other information and we make no representation or guarantee concerning the accuracy of any information contained in any such documents. The management of each of Arcelor and ArcelorMittal advised us, and we have assumed with their consent, without independent verification, that the Harmonized Value Plan 2008 and all other financial forecasts prepared by the Companies provided to us (the Financial Forecasts) have been reasonably prepared on bases reflecting the best currently available estimates and each of the managements judgment as to the future financial results and condition of the Merging Companies, and except as otherwise stated in this report, we express no opinion with respect to such Financial Forecasts or the assumptions on which they are based. We have discussed the Financial Forecasts with the management of ArcelorMittal and have assumed that such forecasts and projections represent reasonable estimates and judgments of the future financial results and condition of Arcelor and ArcelorMittal, and except as otherwise stated in this report, we express no opinion with respect to such forecasts and projections or the assumptions on which they are based. Nevertheless, nothing came to our attention that makes the assumptions referred to in the previous paragraph unreasonable insofar as they can impact the Exchange Ratio. We have relied upon and assumed, without independent verification (i), that there has been no material change in the assets, liabilities, financial condition, results or operations, business or prospects of Arcelor and ArcelorMittal since the date of the most recent financial statements provided to us which would not have been made public or disclosed to us, and (ii) that there are no information or facts that would make any of the information reviewed by us incomplete or misleading. Furthermore, we have relied upon and assumed, without independent verification, that (i) the representations and warranties of all parties to the merger proposal and the explanatory memorandum for the Merger and all other related documents and instruments that are referred to therein are true and correct, (ii) each party to all such agreements will fully and timely perform all of the covenants and agreements required to be performed by such party, and (iii) the Merger will be consummated in a timely manner in accordance with the terms described in the agreements provided to us, without any substantial amendments or modifications thereto or any adjustment to the Exchange Ratio or to any substantial condition of the Merger agreement. We also have relied upon and assumed, without independent verification, that (i) the Merger will be consummated in a manner that complies in all respects with all applicable laws and regulations, and (ii) all governmental, regulatory, and other consents and approvals necessary for the consummation of the Merger will be obtained and that no delay, limitations, restrictions or conditions will be imposed that would result in the disposition of any material portion of the assets of Arcelor, ArcelorMittal or any other party, or otherwise have an adverse effect on Arcelor, ArcelorMittal or any other party or any expected synergies resulting from the Merger. We arrived at the opinion set forth in this report based on the results of all reviews undertaken by us and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, analytic method or factor. We formed our opinion as to relevance and reasonableness of the Exchange Ratio and the adequacy of the valuation methods used to determine the Exchange Ratio on the basis of our experience and professional judgment after considering the results of all of our analyses. Accordingly, we believe that our analyses must be considered as a whole and that selecting portions of our analyses, analytic methods and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses as a whole, would create a misleading or incomplete view of the processes underlying our analyses and opinion. For the avoidance of doubt, nothing in this section 6 should be construed as a limitation of the scope of our review pursuant to Article 266 of the LSC or of our professional rules.

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ADDITIONAL INFORMATION In accordance with our professional standards, we have examined additional information included in the merger proposal and the explanatory memorandum in order to identify, if necessary, significant inconsistencies with data concerning the Exchange Ratio and the valuation methods used to determine the Exchange Ratio based on our general understanding of the Merging Companies in the exercise of our assignment. Based upon the above, we have no comments concerning such additional information.

OPINION Based upon the above nothing has come to our attention which causes us to believe that the proposed Exchange Ratio proposed by the Boards of Directors is not relevant and reasonable or that the valuation methods used by the Boards of Directors to determine the Exchange Ratio are not adequate.

LIMITATION ON THE USE OF THIS REPORT This report is solely for the purpose set forth in Article 266 of the LSC concerning commercial companies. This report is not to be used for any other purpose or to be distributed without our prior written consent.

For Mazars S.A., Rviseur dEntreprises

/s/ Patrick ROCHAS Partner

/s/ Philippe SLENDZAK Partner

Luxembourg, September 25, 2007

ANNEX: MERGER PROPOSAL AND EXPLANATORY MEMORANDUM -17B-51

-18B-52

ANNEX D

AUDITORS REPORT OF COMPAGNIE LUXEMBOURGEOISE DEXPERTISE ET DE RVISION COMPTABLE

B-53

MERGER OF ARCELORMITTAL INTO ARCELOR

REPORT OF THE INDEPENDENT AUDITOR TO THE SHAREHOLDERS OF ARCELOR ON THE MERGER PROPOSAL

CLERC S.A.

B-54

TABLE OF CONTENTS

Page 1. 1.1. 1.2. 2. 2.1. 2.2. 3. Acceptance of the assignment and purpose of the report Acceptance of the assignment Purpose of the report Identification of merger proposal Identification of merger proposal Identification of the companies included in the merger proposal Description of valuation methods applied by the Board of Directors of Arcelor 4 1 1

4. 4.1. 4.2 4.3 4.4 5. 5.1 5.2 5.3 5.4

Exchange ratio retained by the Board of Directors of Arcelor Summary assessment of the exchange ratio based on intrinsic values Consideration Rights Allocation Summary of work performed by the rviseur dentreprises Responsibility of the Board of Directors of Arcelor Responsibility of the Rviseur dEntreprises Scope of the assignment Description of the work performed (1)Analysis of comparable companies (2)Analysis made on discounted cash flows (3)Contribution analysis (4)Methods disregarded by the Board of Directors Conclusion Limitation on the use of our report

13

14

6. 7.

20 20

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To the shareholders of Arcelor 19, Avenue de la Libert L-2930 Luxembourg

REPORT OF THE INDEPENDENT AUDITOR ON THE MERGER PROPOSAL BY WAY OF ABSORPTION

1. Acceptance of the assignment and purpose of the report 1.1 Acceptance of the assignment We, CLERC S.A. have been appointed on September 25, 2007 by the Board of Directors of Arcelor to carry out the examination as described in Article 266 (2) of the Luxembourg Company law dated August 10, 1915, as amended from time to time (the LSC). CLERC S.A. is independent from Arcelor (Arcelor) and ArcelorMittal (ArcelorMittal), as well as their respective, managements and shareholders. The partners of CLERC S.A. are not shareholders and do not form part of the above-mentioned companies management. CLERC S.A. is certified as Rviseur dEntreprises by the Luxembourg Department of Justice, according to the Article 3 of the law dated June 28,1984, which regulates the profession of Rviseur dEntreprises. 1.2 Purpose of the report In accordance with Article 266 of the LSC, in his report, the rviseur dentreprises must in any case state whether in his opinion the share exchange ratio is relevant and reasonable (pertinent et raisonnable). His statement must at least: indicate the method or methods used to arrive at the share exchange ratio proposed; state whether such method or methods are adequate in the case in question, indicate the values arrived at using each such method and give an opinion on the relative importance attributed to such methods in arriving at the value decided on.

The report shall also describe any special valuation difficulties which have arisen.

2. Identification of merger proposal 2.1. Identification of merger proposal In 2006, Mittal Steel Company N.V. (Mittal Steel) conducted a tender offer for the outstanding shares, -1B-56

American depositary shares and convertible bonds (OCEANES) of Arcelor, the worlds second-largest steel producer by production volume, which is referred to as the Offer. Further to this Offer, Mittal Steel, which subsequently merged into its wholly owned subsidiary ArcelorMittal, owned approximately 94% of the share capital and the voting rights of Arcelor. Since August 1, 2006 Arcelor has been a subsidiary of Mittal Steel (now ArcelorMittal) and its results of operations have been included in Mittal Steels (now ArcelorMittals) consolidated results of operations from that date. It is mentioned in a Memorandum of Understanding (MoU) dated June 25, 2006 between Arcelor, Mittal Steel and the significant shareholder of Mittal Steel that as soon as practicable following completion of the Revised Offer, including any subsequent offer or compulsory buy-out, the Parties will use their best efforts to procure that Mittal Steel will merge into Arcelor, using a share for share exchange ratio consistent with the value of the Revised Offer as at the date of its settlement and delivery based on the Revised Offer terms () (but, for the avoidance of doubt, there will be no cash component in the merger). The merger will be effected in the most efficient manner possible, including from a tax point of view. It has been decided, subject to certain conditions precedent, to combine Mittal Steel and Arcelor through a twostep merger process. First step merger On September 3, 2007, Mittal Steel (a public limited liability company of the Netherlands) merged into ArcelorMittal (a Luxembourg public limited liability company), by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel. The combined company has been named ArcelorMittal. A merger proposal and an explanatory memorandum, each dated June 25, 2007, have been made publicly available on June 29, 2007 in connection with the first step merger of Mittal Steel into ArcelorMittal. In the merger, holders of Mittal Steel class A common shares received one newly issued ArcelorMittal share for every Mittal Steel class A common share and holders of Mittal Steel class B common shares received one newly issued ArcelorMittal share for every one Mittal Steel class B common share. This first-step merger has permitted a simplification of the groups corporate structure as both ArcelorMittal and Arcelor are located in the same jurisdiction (Luxembourg) with the same headquarters. On August 28th, 2007 the extraordinary general meeting of shareholders of Mittal Steel and the sole shareholder of ArcelorMittal approved this first step merger. The merger became effective Monday, September 3, 2007. Second step merger Arcelor and ArcelorMittal have agreed in a merger agreement, entered into on September 25, 2007, providing for the terms and conditions of the second-step merger, to merge as contemplated by the merger proposal and the explanatory memorandum jointly drawn up by the Boards of Directors of Arcelor and ArcelorMittal on September 25, 2007. Pursuant to the merger proposal, it is proposed that ArcelorMittal be merged into Arcelor, by way of absorption of ArcelorMittal by Arcelor and without liquidation of ArcelorMittal (the Merger), the combined company being renamed ArcelorMittal. It is proposed that in the Merger, holders of ArcelorMittal shares will receive one newly-issued Arcelor share for every one ArcelorMittal share (the Merger Exchange Ratio). This Merger Exchange Ratio assumes the prior completion of a share capital restructuring of Arcelor according to which every 7 pre-restructuring Arcelor shares would be exchanged for 8 post-restructuring Arcelor shares. No additional consideration in cash or in kind will be paid by Arcelor to the shareholders of ArcelorMittal in connection with the Merger. This second step merger will constitute the second and final step of the combination of Mittal Steel and Arcelor into a single legal entity governed by Luxembourg law.

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2.2. Identification of the companies included in the merger proposal Acquiring Company Registered name of the company: Arcelor Arcelor was incorporated on June 8, 2001 by notarial deed published in the Mmorial C number 802 of September 24, 2001 under the name Newco Steel for an unlimited duration of time. On December 11, 2001, the extraordinary general meeting of shareholders decided to increase the share capital by a contribution of three steel-producing companies, Aceralia Corporacin Siderurgica, Arbed and Usinor. The articles of association were modified for the last time on January 26, 2007, published in the Mmorial C n 208 of February 20, 2007. The Company is registered at the Registre de Commerce et des Socits in Luxembourg (the RCS) under number B 82.454, and has its registered office at 19, Avenue de la Libert, L-2930 Luxembourg. The issued share capital of Arcelor, as of September 3, 2007, amounts to EUR 3,349,067,040 and is divided into 669,813,408 shares without nominal value. The object of the Company is described in article 3 of its articles of association: The object of the Company shall be the manufacture, processing and marketing of steel, steel products and all other metallurgical products, as well as all products and materials used in their manufacture, their processing and their marketing, and all industrial and commercial activities connected directly or indirectly with those objects, including activities of research and the creation, acquisition, holding, exploitation and sale of patents, licences, know-how and, more generally, intellectual and industrial property rights. The Company may realise that object either directly or through the creation of companies, the acquisition, holding or taking of holdings in any joint stock companies or partnerships, accession to any associations, interest groupings and operations in common. In general, the Company's object comprises the participation, in any form whatsoever, in joint stock companies and partnerships, and the acquisition by purchase, subscription or in any other manner as well as the transfer by sale, exchange or in any other manner of shares, bonds, securities representing claims, vouchers and other securities and instruments of any kind. It may grant assistance to any affiliated company and take any measure for the control and supervision of such companies. It may carry out any commercial, financial or industrial operation or transaction which it considers to be directly or indirectly necessary or useful for the purposes of achieving or developing its object. Company to be absorbed Registered name of the company: ArcelorMittal The company was incorporated on August 13, 2004 by notarial deed published in Mmorial C number 1085 of October 27, 2004 under the name Verger Investments S.A. The articles of association of ArcelorMittal were modified on April 26, 2007, published in the Mmorial C number 1333 of July 3, 2007, on June 21, 2007, published in the Mmorial C number 1634 of August 3, 2007 and on August 28, 2007, published in the Mmorial C number 1866 of September 3, 2007. The Company is registered at the R.C.S. under number B 102.468 and has its registered office at 19, Avenue de la Libert, L-2930 Luxembourg. The issued share capital of ArcelorMittal as from September 3, 2007 amounts to EUR 14,172,072.53 and is divided into 1,417,207,253 shares, without nominal value, fully paid up.

-3B-58

Based on pro-forma statutory balance sheets of ArcelorMittal as of January 1, 2007 and June 30, 2007 aimed at taking into account the effectiveness of the first-step merger of Mittal Steel Company NV into ArcelorMittal, which from an accounting standpoint was given a retroactive effect as of January 1, 2007, the net asset value of ArcelorMittal as of January 1, 2007 and June 30, 2007 represented USD 50,191 million and 54,947 million respectively. ArcelorMittal is the successor company to Mittal Steel by virtue of a merger of Mittal Steel with ArcelorMittal, which became effective on September 3, 2007. The object of the Company is described in article 3 of its articles of association: The corporate purpose of the Company shall be the manufacture, processing and marketing of steel, steel products and all other metallurgical products, as well as all products and materials used in their manufacture, their processing and their marketing, and all industrial and commercial activities connected directly or indirectly with those objects, including mining and research activities and the creation, acquisition, holding, exploitation and sale of patents, licences, knowhow and, more generally, intellectual and industrial property rights. The Company may realise that corporate purpose either directly or through the creation of companies, the acquisition, holding or acquisition of interests in any companies or partnerships, membership in any associations, consortia and joint ventures. In general, the Company's corporate purpose comprises the participation, in any form whatsoever, in companies and partnerships, and the acquisition by purchase, subscription or in any other manner as well as the transfer by sale, exchange or in any other manner of shares, bonds, debt securities, warrants and other securities and instruments of any kind. It may grant assistance to any affiliated company and take any measure for the control and supervision of such companies. It may carry out any commercial, financial or industrial operation or transaction which it considers to be directly or indirectly necessary or useful in order to achieve or further its corporate purpose. Accounting for the merger The assets and liabilities taken over from ArcelorMittal shall be assessed at their historical book values. For accounting purposes, the Merger shall be considered a combination of entities under common control as of January 1, 2007. All recorded assets and liabilities of ArcelorMittal and Arcelor shall be carried forward at their historical book values, and the income of Arcelor shall include the income of ArcelorMittal as of January 1, 2007.

3. Description of valuation methods applied by the Board of Directors of Arcelor The valuation methods used are described in an explanatory memorandum, jointly drawn up by the Boards of Directors of Arcelor and ArcelorMittal on September 25, 2007 as follows:

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6. I.

DETERMINATION OF THE EXCHANGE RATIO AND VALUATION Decision process

Merger exchange ratio announced on May 16, 2007 On May 15, 2007, the Boards of Directors of Mittal Steel, ArcelorMittal and Arcelor unanimously decided to propose to the shareholders that the Second-Step Merger be effected on the basis of an exchange ratio of 7 Arcelor shares for every 8 ArcelorMittal shares. To reach their decision, in compliance with applicable laws, the Boards of Directors have relied upon a multicriteria analysis, including EBITDA multiples and discounted cash flow analyses (as further explained herein below) and have ensured that the exchange ratio adequately reflects the respective relative intrinsic values of the two companies. The Boards of Directors of Mittal Steel, ArcelorMittal and Arcelor have received opinions as to the fairness of this exchange ratio from a financial standpoint, respectively, from Goldman Sachs, with respect to the shareholders of ArcelorMittal (i.e., the shareholders of Mittal Steel prior to completion of the first-step merger of Mittal Steel into ArcelorMittal), and from Morgan Stanley, Socit Gnrale, Fortis and Ricol Lasteyrie with respect to the public shareholders of Arcelor. These opinions will be included in the European prospectus approved by the Commission de Surveillance du Secteur Financier, the Luxembourg securities regulator and in the registration statement on Form F-4 filed with the U.S. Securities Exchange Commission, the U.S. federal securities regulator. The fairness opinions issued to the Boards of Directors of ArcelorMittal and Arcelor, respectively, were delivered before the decision was made to condition the effectiveness of the Second-Step Merger on the completion of the Arcelor share capital restructuring described in the following paragraph.

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Pre-merger restructuring of the share capital of Arcelor At a meeting held on September 25, 2007, the ArcelorMittal and the Arcelor Boards of Directors decided that it would be advisable to restructure the share capital of Arcelor prior to the effectiveness of the Second-Step Merger so as to have a one-to-one exchange ratio in the merger. The share capital restructuring would take the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 post-restructuring Arcelor shares, thus mechanically resulting in an adjusted exchange ratio of one new Arcelor share for every one ArcelorMittal share without any economic effect on Arcelor or ArcelorMittal shareholders. The sole purpose for the decision of the Boards of Directors to implement such share capital restructuring was to limit the effect of the merger on the ArcelorMittal share price and hence its comparability pre- and post-merger. The share prices of Arcelor and ArcelorMittal are currently not aligned. Given that the trading volume of ArcelorMittal shares is far greater than that of Arcelor, it is anticipated that the trading characteristics of Arcelor (to be renamed ArcelorMittal upon effectiveness of the merger) will immediately upon effectiveness of the merger inherit the pre-merger trading characteristics of ArcelorMittal. Without the share capital restructuring, the 0.875 exchange ratio would necessarily and mechanically cause the ArcelorMittal share price immediately post-merger to be different from the ArcelorMittal share price immediately pre-merger, because the application of the 0.875 ratio would affect the share price in a manner similar to a reverse stock split; effecting the Arcelor share capital restructuring premerger resulting in a one-to-one merger exchange ratio will avoid the merger from having this mechanical effect on the post-merger ArcelorMittal share price. As a result of the share capital restructuring, each holder of pre-restructuring Arcelor shares would receive a number of post-restructuring Arcelor shares equal to (i) the number of pre-restructuring Arcelor shares held by that person divided by 0.875 (7 divided by 8) (such quotient being referred to as A) or (ii) if such number is not a whole number, the immediately lower whole number of post-restructuring Arcelor shares (such number being referred to as B) and a number of fractions of a seventh of a post-restructuring Arcelor share equal to seven multiplied by the difference between A and B. The share capital of Arcelor shall be increased by incorporation of free reserves without issuing new shares, but by increasing the par value of the shares in order to round up the par value of the post-restructuring shares to the immediately higher euro cent. The share capital restructuring and share capital increase will be submitted for approval to the general meeting of Arcelor shareholders convened to approve the Second-Step Merger. Their completion is a condition precedent to the effectiveness of the Second-Step Merger. The contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share. The following developments in paragraphs II to IV below provide for a description of the multi-criteria analysis taken into consideration by the Boards of Directors to propose that the Second-Step Merger be implemented based on an exchange ratio of 7 Arcelor shares for every 8 ArcelorMittal shares (or 0.875 Arcelor share for every one ArcelorMittal share). The revised one-to-one exchange ratio merely results from the application of the conversion ratio that will be used in the share capital restructuring of Arcelor (1/0.875) to the exchange ratio proposed by the Boards of Directors on May 15, 2007 (0.875). Absence of material change During the meeting held on September 25, 2007, the ArcelorMittal and the Arcelor Boards of Directors also noted that no event, transaction or new development had occurred since May 15, 2007 that would lead to an adjustment of the merger exchange ratio other than to reflect the share capital restructuring described above. In this respect, the Boards of Directors noted in particular that: the mandatory tender offer for the outstanding shares of Arcelor Brasil, which was completed after the determination of the exchange ratio and which was principally settled in cash, does not impact the exchange ratio, since for the purposes of the intrinsic value analysis supporting the determination of the exchange ratio the Arcelor Brasil minority interest had been valued using the share price of Arcelor Brasil as at 11 May 2007, after the announcement of the terms of the mandatory offer;

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the divestiture of the Sparrows Point facility, as part of the disposal program related to the offer of Mittal Steel for Arcelor, is being made at fair market value ; the consensus EBITDA estimates derived from Institutional Brokers Estimate System (IBES) following the first half 2007 earnings release is converging with the 2008 target EBITDA of USD 20 billion set forth in the harmonized value plan 2008 communicated to the market on 27 September 2006 (the Harmonized Value Plan 2008), used as basis for the multi-criteria analysis; ArcelorMittal announced on 11 September 2007 an internal growth plan target to increase shipments by more than 20% from 2006 to 2012, to reach 131mt. While the growth plan 2012 does not address operating results, the preparation of the growth plan 2012 has nevertheless confirmed the Harmonized Value Plan 2008 and the respective allocations between ArcelorMittal (ex. Mittal Steel) and Arcelor as mentioned herein below in paragraph II. II. Guidance Methodology

The multi-criteria analysis is based on the following information, which has also been communicated to the market: based on an analysis of the nature of the synergies reflected in the Harmonized Value Plan 2008 and, in particular their allocation among the various segments and geographic areas, approximately 41% of the previously announced synergies generated by the combination of Arcelor and Mittal Steel will be realized at the level of Arcelor; based on the 2008 Arcelor EBITDA estimate taken into account for the purposes of the preparation of the Harmonized Value Plan 2008 (which represents 49% of the 2008 target EBITDA of USD 20 billion for the ArcelorMittal group), Arcelor will contribute approximately 49% of the combined Arcelor/Mittal Steel group EBITDA indicated in the combined Arcelor/Mittal Steel group Harmonized Value Plan 2008; based on an analysis of the capital expenditures taken into account for the purposes of the Harmonized Value Plan 2008, Arcelor will account for approximately 50% of the combined Arcelor/Mittal Steel groups capital expenditures indicated in the Harmonized Value Plan 2008. These elements relate to the Harmonized Value Plan 2008. The breakdown of the 2008 target EBITDA of USD 20 billion for the ArcelorMittal group can be summarized as follows: Ex-Arcelor Proforma EBITDA 2005 Brownfield and production growth in the market Value added growth in line with market Management gains and stand alone synergies net of restructuring Mining expansion Merger synergies Regulatory remedies Price cost squeeze EBITDA 2008 target
____________________________ Note: Synergies and costs reflected in this table have been allocated based on where they were expected to be generated or incurred, respectively.

Ex-Mittal Steel 6.7 1.8 1.1 1.9 0.4 0.9 0.0 -2.6 10.2

ArcelorMittal 14.9 4.6 1.1 4.2 0.4 1.6 -0.2 -6.6 20.0

8.2 2.8 0.0 2.3 0.0 0.7 -0.2 -4.0 9.8

The financial information used to assess the terms and conditions of the Second-Step Merger are derived from the consolidated financial statements of ArcelorMittal and Arcelor for accounting year 2006, prepared in -7B-62

accordance with IFRS, pro forma for acquisitions made in 2006 as if such acquisitions had occurred on 1 January 2006. Minority interests in listed entities (Arcelor, Mittal South Africa, Acesita) and listed associates investments (Erdemir, Hunan Valin) have been valued at market value. The value of the Arcelor Brasil minority interest was calculated based on the share price of Arcelor Brasil as at 11 May 2007, after the announcement of the terms of the mandatory offer. All calculations are based on 670.3 million Arcelor shares and 1,389.6 million ArcelorMittal shares, in both cases diluted based on the treasury method applied as of the end of April 2007. Since the first-step merger was to be (and has been) implemented based on a one-to-one exchange ratio, the value of an ArcelorMittal share has been considered equal to the value of a Mittal Steel share. Certain reorganizations have been implemented since the date of the Harmonized Value Plan 2008. However, they were not considered to have any impact on the exchange ratio. Similarly, the mandatory tender offer for the outstanding shares of Arcelor Brasil, which was completed after the determination of the exchange ratio and which was principally settled in cash does not impact the exchange ratio, since for the purposes of the intrinsic value analysis supporting the determination of the exchange ratio the Arcelor Brasil minority interest had been valued using the share price of Arcelor Brasil as at 11 May 2007, after the announcement of the terms of the mandatory offer. A similar conclusion was reached with respect to the contemplated disposal of the Sparrows Point facility, which is made at fair market value. III. Methods that have been disregarded

Trading Value - Valuations based on Arcelor trading value have not been used since when the Boards of Directors made their determination, the Arcelor share price was not believed to represent the intrinsic value of the company since (i) before the announcement of the proposed exchange ratio 16 May 2007, the trading value of Arcelor was heavily impacted by market speculation regarding the timing of the merger and the exchange ratio (which is evidenced in particular by the fact that Arcelor was trading at a higher EBITDA multiple than ArcelorMittal without any justification in light of the growth perspective of their respective businesses) and (ii) the Arcelor share had only a limited liquidity compared to historical averages.

Analysis of the liquidity of Arcelor share

Average daily trading volume on Euronext Paris Average daily trading volume on Euronext Paris / Total shares (669.8 million as at 31 December 2006) 0.04% 0.62%

Since sell-out (27 November 2006 through 11 May 2007) Last over the month preceding the announcement of the offer (i.e. before 26 January 2006) Source: Bloomberg

270,900 4,122,900

Consolidated dividend per share In the steel industry, dividend yield is not regarded as a relevant valuation criterion given the cyclicality of the industry. As both investors as well as equity research analysis are not focused on this criterion, an analysis based on consolidated dividend per share has not been used. Analysis of precedent transactions Precedent transactions in the steel industry reflect situations where a change of control takes place. As such, prices paid in precedent transactions reflect, in addition to the intrinsic standalone value, a so-called control premium reflecting in particular the ability of the purchaser to generate synergies and efficiency gains. As ArcelorMittal already has control over Arcelor and no synergies are expected from the legal merger itself, an analysis of precedent transactions has not been used. Revaluated net asset value As both investors as well as equity research analysis not rely on this valuation method and generally focus on future profitability, an analysis based on revaluated net asset has not been used.

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IV.

Methods that have been used

(a) Analysis of comparable companies Valuations of listed companies in the steel industry are frequently compared on the basis of enterprise value to EBITDA (EV/EBITDA) and price to earnings per share (P/E) multiples. EBITDA is defined as operating profit before depreciation and amortisation. Enterprise value corresponds to the aggregate of the equity market capitalisation, net indebtedness and minority interests. Investments in associates and other financial assets are excluded from enterprise value as the income associated with these assets is generally not included in EBITDA. A number of steel manufacturing conglomerates have been excluded from the analysis as a material part of their operations are not steel related.

Company ThyssenKrupp JFE

Nippon Steel Corp.

Kobe Steel

Non steel related operations ThyssenKrupp is an industrial conglomerate with diverse activities unrelated to steel, including submarine and shipbuilding, elevators and automotive components. JFE is an industrial conglomerate with diverse activities unrelated to steel, including microelectronics, engineering for the energy sector and environmental solutions and urban development. Nippon Steel is an industrial conglomerate with diverse activities unrelated to steel, including power supply, chemicals, urban development, construction and engineering. Kobe Steel is an industrial conglomerate with diverse activities unrelated to steel, including titanium, welding equipment and consumables, machinery such as crushers, tire and rubber machines and plastic processing machines, power generation plants, as well as activities in infrastructure construction.

A number of other European and North American steel companies were considered, but excluded for the purpose of trading multiple analysis due to the unique features of their businesses which exhibit less comparability to ArcelorMittal and Arcelor. Company Salzgitter Svenskt Stal (SSAB) Reasons for exclusion Salzgitter is a regional niche steel manufacturer. SSAB is a Nordic focused niche producer of high strength sheets and quenched plate steels with high exposure to the booming mining equipment market, construction equipment and fuel-efficient automotive manufacturing sectors. The strong position in niche products gives SSAB greater pricing power and therefore higher and more sustainable margins and returns. SSAB is therefore not directly comparable to the major steel companies. Rautaruukki is a company in a transition phase from a steel producer to a complete solutions provider for the construction and engineering sectors. As part of this transition, Rautaruukki has acquired companies active in construction systems and total delivery know-how, components for lifting, handling and transportation equipment. It is seeking to exit its long products business. Nucor is entirely focused on the US and exclusively produces steel via the EAF method.

Rautaruukki

Nucor

For the purposes of the comparison, ArcelorMittal and Arcelor have also been disregarded to not influence the outcome of the analysis. Arcelor Brasil was at the time of the determination of the exchange ratio subject to a delisting mandatory offer and has also been excluded as its share price reflected a regulated offer process.

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In general, investors typically base investment decisions on future profitability. Although, for this reason, 2007 and 2008 should be regarded as the most relevant periods as investors are looking for future profitability and value future cash flows, 2006 should also be considered in light of the lack of up-to-date broker research estimates for Arcelor. The selected comparable companies are covered by numerous equity research analysts and consensus estimates for the periods 2007 and 2008 are widely available. The table below summarises the EV/EBITDA and P/E multiples for these steel companies based on reported 2006 results and consensus EBITDA estimates derived from IBES and calendarised to reflect a 31 December year end.

EBITDA Multiple 2006 A 6.7 7.2 6.3 10.0 7.6 2007 E 6.3 6.5 6.7 6.9 6.6 2008 E 5.3 6.7 6.6 6.5 6.3

Posco Voest Alpine US Steel CSN Average Multiple

P/E Multiple 2006 A 13.2 11.3 9.7 20.0 13.5

_________________ The companies presented in this table report under different accounting standards. EBITDA is adjusted to exclude total pension expenses recognised during the last twelve-month period for which figures are available. Sources: IBES estimates, financial data based on last published financials.

The application of the relevant average multiple mentioned in the table above to the 2006 pro-forma EBITDA, the 2007 and 2008 EBITDA implied by the Harmonized Value Plan 2008 and IBES estimates and the 2006 proforma earnings per share for both ArcelorMittal and Arcelor provide for equity values, share prices and implied exchange ratios as shown in the table below: Share Price () Exchange Ratio
0.845 - 0.965

Equity Value (bn) ArcelorMittal

58.8 - 86.0

ArcelorMittal
42.3 - 61.9

Arcelor
49.3 - 64.1

Arcelor
33.1 - 43.0

____________________________ Note: Exchange ratios based on combination of Arcelor and ArcelorMittal share prices within the minimum and maximum range implied by the application of the valuation described above.

The main purpose of the analysis is to perform a relative valuation for ArcelorMittal and Arcelor and as such a relatively broad range of valuation multiples has been used. In addition to the table above, a sensitivity analysis has been performed by applying the minimum and maximum valuation multiples of the group of selected comparable companies which resulted in an exchange ratio range of 0.818 to 0.965. b) Analysis made on discounted cash flows

Arcelor and Mittal Steel performed a discounted cash flow analysis as at May 15, 2007 using publicly available forecast consisting both of (i) the Harmonized Value Plan 2008 communicated to the market, subject to adjustments aimed at including the Sicartsa acquisition1 and related synergies, and (ii) the consensus broker estimates in 2007 and 2008 for ArcelorMittal derived from Institutional Brokers Estimate System (IBES), Arcelor estimates being in the latter case derived from ArcelorMittal broker estimates based on the guidance set forth in paragraph II. above, since most brokers no longer cover the Arcelor share.

The discounted cash flow analysis is based on the assumptions described in paragraph II. above and on the following additional assumptions: (i) a tax rate at 25% for each of the two companies; (ii) the same discount rate was applied to the future cash flows of each of the two companies; (iii) the 2007 EBITDA based on the Harmonized Value Plan 2008 represents an average between the 2006 pro forma EBITDA and the 2008 EBITDA reflected in the Harmonized Value Plan 2008; (iv) depreciation and amortization were set as per IBES
1

23656528/09/200728/09/2007 ArcelorMittal announced on December 20, 2006, the acquisition of Sicartsa, a Mexican integrated steel producer from Grupo Villacero. -10B-65

consensus estimates; (v) ArcelorMittal Capex was set as per Harmonized Value Plan 2008; and (vi) working capital optimization was estimated at 0.9 billion for ArcelorMittal as per Harmonized Value Plan 2008, broken down 50/50 between 2007 and 2008 and at 0.3 billon in 2007 and 2008 for Arcelor as per Arcelors 27 February 2006 investor presentation.

The terminal value was calculated both based on EBITDA exit multiples and the perpetual growth method. The table below shows the resulting equity values, share prices and exchange ratios assuming, for each of Arcelor and ArcelorMittal, an exit multiple of 6.5x EBITDA, a perpetuity growth rate of 0% and a discount rate of 9.25%:

Equity Value (bn) ArcelorMittal

Harmonized Value Plan 2008 EBITDA Exit 71.7

Share Price () ArcelorMittal

51.6

Exchange Ratio
0.904

Arcelor
38.3

Arcelor
57.1

Perpetual Growth IBES EBITDA Exit Perpetual Growth

85.0 63.2 74.3

44.4 35.0 40.3

61.2 45.5 53.5

66.3 52.2 60.2

0.923 0.871 0.889

In addition, a sensitivity analysis was performed, using EBITDA exit multiples ranging from 6.0x EBITDA to 7.0x EBITDA, perpetual growth rates ranging from -1% to 1% and discount rates ranging from 9% to 9.5% which resulted in an exchange ratio range of 0.860 to 0.936 (using identical assumptions for each of Arcelor and ArcelorMittal).

(c)

Contribution analysis

ArcelorMittal and Arcelor reviewed specific historical earnings per share (EPS) and historical and estimated future EBITDA for Arcelor and ArcelorMittal, based on both the Harmonized Value Plan 2008 and the IBES consensus, Arcelor estimates being in the latter case derived from ArcelorMittal estimates based on the guidance set forth in paragraph II. above, since brokers no longer cover Arcelor. The analysis of the contribution, on a debt-adjusted basis, of Arcelor to the aggregate equity value of ArcelorMittal based on EBITDA or EPS provides for an exchange ratio range comprised between 0.833 and 0.965 Arcelor share for every ArcelorMittal share, ArcelorMittal equity value being determined based on the closing value of the Mittal Steel share (based on Amsterdam listing) on 11 May 2007. The table below illustrates the corresponding values for Arcelor and ArcelorMittal implied by the exchange ratios resulting from this analysis, based on a value of the ArcelorMittal share equal to the closing value of the Mittal Steel share (based on Amsterdam listing) on 11 May 2007:

Share Price () Exchange Ratio

0.833-0.965

Equity Value (bn) ArcelorMittal

58.1

ArcelorMittal
41.8

Arcelor
43.3 - 50.2

Arcelor
29.0 - 33.6

(d)

Summary assessment of the exchange ratio based on intrinsic values

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The outcome of the multi-criteria valuation analysis based on average multiples as far as the analysis of comparable companies is concerned and the median assumptions described herein above as far as the discounted cash flow analysis is concerned can be summarized as follows.

Share Price () Exchange Ratio

Comparable Companies DCF Analysis Contribution Analysis Average 0.845 - 0.965 0.871 - 0.923 0.833 - 0.965 0.850 - 0.951

Equity Value (bn) ArcelorMittal

58.8 - 86.0 63.2 - 85.0 58.1 60.0 - 76.3

ArcelorMittal
42.3 - 61.9 45.5 - 61.2 41.8 43.2 - 54.9

Arcelor
49.3 - 64.1 52.2 - 66.3 43.3 - 50.2 50.6 - 57.9

Arcelor
33.1 - 43.0 35.0 - 44.4 29.0 - 33.6 33.9 - 38.8

_________________
Note: Exchange ratios based on combination of Arcelor and ArcelorMittal share prices within the minimum and maximum range implied by the application of the valuations described above (based on average multiples as far as the analysis of comparable companies is concerned and the median assumptions described herein above as far as the discounted cash flow analysis is concerned).

The average exchange ratio bracket resulting from the valuations described above, taking into account the sensitivity analyses that have been performed for the comparable companies and discounted cash flows methods, as described in paragraphs (a) and (b) above, is 0.837-0.955, as shown in the table below.

Implied Exchange Ratio

Comparable companies DCF analysis Contribution analysis Average Min 0.818 0.860 0.833 0.837 Max 0.965 0.936 0.965 0.955

The exchange ratio of 0.875 Arcelor share for every ArcelorMittal share is therefore consistent with the analysis of the relative intrinsic value range of Arcelor and ArcelorMittal. None of the methods used for the purposes of the multi-criteria analysis has been given a specific weight compared to the others. As noted above, the exchange ratio of 0.875 Arcelor share for every ArcelorMittal share does not take into consideration the implementation of a share capital restructuring of Arcelor prior to the effectiveness of the Second-Step Merger, in the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 postrestructuring Arcelor shares. The contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share.

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4. Merger Exchange ratio retained by the Board of Directors of Arcelor 4.1. Merger Exchange Ratio On May 15, 2007 the Boards of Directors of Mittal Steel, ArcelorMittal and Arcelor have unanimously decided to propose to the shareholders of Arcelor and ArcelorMittal that the Merger be effected on the basis of an exchange ratio of 7 Arcelor shares for every 8 ArcelorMittal shares or 0.875 Arcelor share for every one ArcelorMittal share. At a meeting held on September 25, 2007, the ArcelorMittal and the Arcelor Boards of Directors decided that it would be advisable to restructure the share capital of Arcelor immediately prior to the effectiveness of the Merger so as to have a one-to-one Merger Exchange Ratio in the Merger. It is therefore proposed that in the Merger, holders of ArcelorMittal shares will receive one newly-issued Arcelor share for every one ArcelorMittal share. This Merger Exchange Ratio assumes the prior completion of a share capital restructuring of Arcelor according to which each 7 pre-capital restructuring shares of Arcelor would be exchanged for 8 post-capital restructuring shares of Arcelor. 4.2. Rights of newly issued shares The Arcelor shares to be issued shall rank pari passu with any existing Arcelor shares, including with respect to any undistributed profits and other reserves, provided however that the newly-issued shares shall be entitled only to dividends declared by Arcelor after the effective date of the Merger. Specifically, the newly-issued Arcelor shares will not be entitled either to (i) the last instalment of the dividend decided by the annual general meeting of Arcelor held on April 27, 2007, or (ii) the additional dividend $0.040625 per post-capital restructuring Arcelor share which distribution will be proposed to the extraordinary general meeting of Arcelor convened to approve the Merger, which in the aggregate represents a dividend of $0.325 per post-restructuring Arcelor share. Conversely, as a result of the Merger, Arcelor will assume ArcelorMittals obligation to pay the last instalment of the quarterly dividend decided by the annual general meeting of shareholders of Mittal Steel on June 12, 2007, which, in light of the exchange ratio of the first-step merger and the Merger, will represent $0.325 per Arcelor share newly-issued in the Merger. Therefore, on December 15, 2007, each Arcelor share (whether issued in the merger or previously issued) will be entitled to a dividend payment of $0.325. 4.3. Allocation Upon the effectiveness of the Merger, holders of ArcelorMittal shares shall automatically receive newly-issued Arcelor shares in accordance with the Merger Exchange Ratio and on the basis of their respective holdings as entered in the relevant ArcelorMittal shareholder registry or their respective securities accounts and holders of stock options issued by ArcelorMittal shall automatically receive a newly issued Arcelors stock option with economic terms similar to those prevailing before the Merger. Holders of ArcelorMittal shares whose shares are registered directly in ArcelorMittals Dutch, Luxembourg or New York shareholder registry shall automatically receive newly-issued Arcelor shares through an entry in the corresponding shareholder registry of Arcelor. Holders of ArcelorMittal shares whose shares are registered indirectly, that is through a clearing system, in Arcelors Dutch, Luxembourg or New York shareholder registry, shall automatically receive newly-issued Arcelor shares through a credit to their respective securities accounts. The Merger shall result in the creation of a merger premium account, reflecting the difference between the net asset value contributed to Arcelor and the amount of the share capital increase by Arcelor. The merger premium shall be decreased as a result of the cancellation of Arcelor shares held by ArcelorMittal, as described in the next paragraph. There shall be no impact on goodwill. -13B-68

Upon the effectiveness of the Merger, all Arcelor shares (but excluding any fractions of shares) owned by ArcelorMittal and transferred to Arcelor pursuant to the Merger will be cancelled in accordance with Article 49 (3) of the LSC. Such cancellation shall be offset against the share capital to the extent of the par value of the shares and, for the excess of their book value in ArcelorMittals accounts over their par value, against the merger premium. ArcelorMittal Shares held in treasury by or for the account of Arcelor or ArcelorMittal shall disappear pursuant to Article 274(1)(d) of the LSC. Arcelor shall not issue any shares in consideration of the ArcelorMittal Shares held in treasury by or for the account of Arcelor or ArcelorMittal. 5. Summary of work performed by the rviseur dentreprises 5.1. Responsibility of the Board of Directors of Arcelor In accordance with the LSC, responsibility for the preparation of the detailed written report (Explanatory Memorandum) explaining the draft terms of merger and setting out the legal and economic grounds for them, lies with the Board of Directors. In particular, the choice of the valuation methods to be applied and of the weight to be attributed to each of them as well as the computation of the Merger Exchange Ratio are the responsibility of the Board of Directors. 5.2. Responsibility of the Rviseur dEntreprises Our responsibility is to issue a report on the adequacy of the methods used to determine the Merger Exchange Ratio and the relevance and reasonableness of the Merger Exchange Ratio as determined by the Board of Directors of Arcelor for the purpose of the merger between Arcelor and ArcelorMittal contemplated herein. It is not our responsibility to review the consistency of the Merger Exchange Ratio with the Memorandum of Understanding dated June 25, 2006 between Arcelor, Mittal Steel and the Mittal Controlling Shareholder (as defined therein) or with any written or oral statements made at the time of the public offer made by Mittal Steel for Arcelor shares in 2006 or thereafter, other than those included in the merger proposal, or the explanatory memorandum. Consequently we do not report on these matters nor issue any opinion thereon. Any legal, regulatory, accounting, tax and other matters relating to Arcelor, ArcelorMittal and the Merger and which are not mentioned expressly herein as being our responsibility have been dealt with by the managements of Arcelor and ArcelorMittal and their outside counsels. Their judgment, opinions and advice have not been verified by us and we consequently do not give an opinion thereon. 5.3. Scope of the assignment We conducted our review in accordance with the professional framework of the Institut des Rviseurs dEntreprises which applies to this assignment. Those standards require that we plan and perform the review to obtain moderate assurance as to whether the evaluation methods used are adequate and whether the Merger Exchange Ratio is relevant and reasonable. Our review was limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion. Except where expressly mentioned in this report the documents and information submitted to us in the course of our assignment have not been verified by us and consequently we do not assume any responsibility nor do we make any representation or give any guarantee concerning the accuracy thereof. Our review did not cover any aspects other than those specifically addressed in this report. In particular, it did not comprise: any assessment of the economic justification of the Merger nor any comparison thereof with any alternative business opportunity any review of aspects of the Merger other than those expressly described in this report -14B-69

any analysis or assessment of the tax, legal or other consequences of the Merger to the shareholders, the holders of any class of securities and the creditors of Arcelor and ArcelorMittal and any other party or constituency thereof

Except as otherwise indicated in this report, we have relied on the representations made by the management of Arcelor that the Harmonized Value Plan 2008 and all other financial forecasts prepared by Arcelor and ArcelorMittal, whether publicly available or not, (the Financial Forecasts) have been reasonably prepared, reflecting the best currently available estimates and managements judgment as to the future financial results and condition of each Arcelor and ArcelorMittal, and except as otherwise stated in this report, we express no opinion with respect to such Financial Forecasts or the assumptions on which they are based. In accordance with our professional standards, we have examined additional information included in the merger proposal in order to identify, if necessary, any material internal inconsistencies in that proposal concerning the Merger Exchange Ratio and the valuation methods used to determine the Merger Exchange Ratio. We have no comments concerning such additional information. We had also to rely on the representations of the management of Arcelor (i) that there has been no material change, in the assets, liabilities, financial condition, results of operations, activities or prospects of either Arcelor and ArcelorMittal and any of their respective subsidiaries and affiliates since the date of the most recent financial statements provided to us which would not have been made public or disclosed to us and (ii) that there are no information or facts that would make any of the information reviewed by us incomplete or misleading. We did not carry out any independent valuation or appraisal of the assets and liabilities (including any contingent, derivative or off balance sheet assets and liabilities) of ArcelorMittal or Arcelor or any of their subsidiaries and were not furnished with any such valuation or appraisal carried out in view of determining the Merger Exchange Ratio (except for the purchase price allocation issued by ArcelorMittals independent expert in 2006 prepared for accounting purposes). 5.4 Description of the work performed We have obtained and reviewed the description of the various methods of valuation applied by the Board of Directors of Arcelor as well as the explanations of the reasons why some methods have been disregarded by them. More generally we have read the explanatory memorandum, and in particular section 6 thereof included hereabove. We have reviewed the reasonableness of the assumptions on basis of which the valuations of the companies have been performed. We have also considered the reasons why certain methods such as the trading value and the Revaluated net asset method have not been used by the Board of Directors. (1) Analysis of comparable companies

The purpose of the comparison with other listed companies, active in the steel industry, was to extract average multiples from the sector. These multiples applied on pro-forma EBITDA for 2006 and EBITDA expected from external analysts based on publicly available forecasts or issued from the Harmonised value plan 2008 for 2007 and 2008 provide a range of possible merger exchange ratios. We have reviewed the analysis made by Arcelor on selected listed companies in the steel industry and the reasons given as to why certain companies have been excluded from the selection. We have traced figures used by Arcelor in its analysis to figures given in financial information available on companies selected by the Board of Directors and reviewed the reasonableness of the adjustments made thereto and to that both Arcelor and ArcelorMittal in order to obtain a comparable basis. In order to assess the reasonableness of the choice of the four companies selected by Arcelor as benchmark by Arcelor, we have compared the evolution of their EBITDA per ton during the period from 2005 to June 2007 with the one of Arcelor and ArcelorMittal We have also extrapolated the 2008 figures either based on data from external analysts made on publicly available forecast or on the Harmonised Value Plan 2008. -15B-70

We have reviewed the method performed by Arcelor pursuant to which the share value of Arcelor and ArcelorMittal are calculated based on earning per share multiples (EPS) issued from the selected sample. This analysis is performed using the 2006 pro forma figures for Arcelor and Arcelor Mittal. Due to the fact that the implied EPS multiples issued from the four steel companies are comprised in a large range and that the EPS analysis was only performed on the 2006 pro forma figures, we have considered as limited the interest of this analysis, compared to the one using the average multiples applied on EV/EBITDA of Arcelor and ArcelorMittal on a three year period. As a result of our analysis, we have not noted any material deviation to the range from which the Merger Exchange Ratio has been extracted. (2) Analysis made on discounted cash flows

We have obtained the detailed calculation performed by the company and have analyzed it in order to understand and verify the underlying assumptions of the calculations: - determination of the future unlevered of cash flows, - duration of the analysis, - discount rate, - other assumptions. In theory, this analysis should be performed on an infinite time period, which is usually reduced to a forecast of 5 to 7 years and the endless horizon is limited by a terminal value. The company has estimated the cash flows on a two years period until 2008 based on the 2006 Pro forma accounts and the Harmonized Value Plan 2008 and calculated a terminal value. The reason for this two-year period is that ArcelorMittal has not released profit forecast guidance over a longer period. The perpetuity method used to calculate the terminal value discounts an infinite succession of future cash flows and is thus not limited in time. The exit multiple method is based on the hypothesis that (i) the analyzed company will trade in line with industry multiple at the end of the projection period and (ii) the terminal value, which represents the estimated equity value at the projection end, is obtained by applying a multiple to the estimated future EBITDA. Thus, as far as the exit multiple method is concerned, the terminal value is not the sum of infinite discounted unlevered cash flows, but the expected equity value at a certain point in time. The assumptions and sensitivity analyses performed by the company have been described hereinabove. We have performed an independent DCF analysis in order to extrapolate the activity on a longer period, i.e. until 2011 and considering for each of Arcelor and ArcelorMittal a discount rate of 9.08% which is based on our own assumptions and calculations. We considered two different scenarios: i) Analysts forecasts: By merging different analysts forecasts, we compiled our own consensus for ArcelorMittal and modified on that basis some other components of the cash flow calculation (i.e. EBITDA, synergies and Capex split). The data for Arcelor was derived from the consensus for ArcelorMittal and was assumed to account for 49% of ArcelorMittal EBITDA. ii) Value plan: We also prepared a value plan covering a 2007-2011 period, based on our estimates and assumptions, such as a growth rate of 5.3% and 0.8% from 2008 to 2009 and a flat growth of 0.5% for 2010 and 2011. We have disregarded the exit multiple method as it has a limited time horizon and the multiples may vary too much over time. We believe that actual market multiples are high by historical standards and thus we do not believe that the market evaluation of the company is adequate. The terminal value was calculated applying the Gordon Shapiro ratio with an assumed perpetual growth rate of 0.5% per annum on the perpetual cash flows starting after 2011.

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The results of our analysis are described below: i) Based on analysts forecasts data: The first step in our analysis was to determine the future unlevered free cash flows for a time horizon going up to 2012. To calculate the different cash flows we relied upon data from the consensus of different analysts reports. The terminal value was obtained using the Gordon-Shapiro formula with an expected growth of 0.5% per annum until an indefinite point in time. The resulting cash flows were discounted on a half-year basis (only 6 months were discounted for 2007). The data for Arcelor was derived from the consensus for ArcelorMittal and was assumed to account for 49% of ArcelorMittal EBITDA. On basis of these discounted cash flows, we compiled the adjusted equity value for each of the two companies, which when divided by the fully diluted shares, gave us the share value of each of both companies. ii) Based the value plan data: Same as for the previous analysis, the first step was to determine the future unlevered free cash flows for a time horizon going up to 2011, based on the assumptions mentioned in the introductive part. The terminal value was again obtained by using the Gordon-Shapiro formula with an expected growth of 0.5% per annum from 2012 until an indefinite point in time. The resulting cash flows were discounted on a half-year basis (only 6 months were discounted for 2007). On basis of these discounted cash flows, we compiled the adjusted equity value, which when divided by the fully diluted shares, gave us the share value of each of both companies. The foregoing may be summarized as follows:

ArcelorMittal (/share) Analysts Forecast: Value Plan : 43,88 53.47

Arcelor Exchange (/share) ratio 50,55 57,96 0,868 0,923

Our analysis of discounted cash flows provides for an exchange ratio comprised between 0.868 and 0.923 Arcelor share for every ArcelorMittal share. The proposed Merger Exchange Ratio is comprised within this range. (3) Contribution analysis

We have reviewed the calculation performed by Arcelor based on the EBITDA as well as on the earning per share (EPS). As this method consists in the extrapolation of the share value of a company based on the share value of the second company by taking into account the enterprise value of both companies, their respective EBITDA, we have performed some recomputations at different period of time. We have considered the analysis performed based on earning per share multiples as being less useful than that based on EBITDA and have disregarded the contribution analysis based on EPS, this item being considered only based on 2006 pro forma. As a result of our analysis, we have not noted any material deviation to the range from which the Merger Exchange Ratio has been extracted.

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(4)

Methods disregarded by the Board of directors

Valuation based on the market share price of Arcelor and ArcelorMittal (Historical trading analysis) The Board of Directors has not retained the approach based on market prices for the valuation of both companies for the following reasons: the trading value might have been impacted by market speculation regarding the exchange ratio, and the Arcelor share has a limited liquidity compared to historical averages. Arcelor has estimated the total number of traded Arcelor shares during the following periods as follow: Since the sell-out (17 November 2006) to 11 May 2007 From 26 January 2005 to 26 January 2006

270,900 0,04% of the 669,66 million outstanding shares 4.122,900 0,62% of the 669,66 million outstanding shares

In conclusion, the Board of Directors of Arcelor has considered that the relevance of the share prices was limited. It considers in the circumstances that the fixing of a Merger Exchange Ratio based on historical trading analysis would be too subjective due to the limitation of the trading on the Arcelor shares as well as a potential characteristic of speculation.

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We consider that it is reasonable to disregard this method since the historical share prices between the end of the Offer and the announcement have been highly influenced by market expectations: The market may have been influenced by the possibility of squeeze out in late 2006. Consequently, Arcelor share price remained stable (+1.66%) while during the period from August 1, 2006 and November 17, 2006 the Mittal Steel shares increased by 17%; From mid-January until 15 May 2007, the Arcelor share price has risen by 35.74% when during the same period the ArcelorMittal shares increased by 32.08%.

In addition, it is to note that: Prior to the Offer, the average share price of Arcelor was lower than the average share price of Mittal Steel, resulting in an implied exchange ratio of more than one Arcelor share for every ArcelorMittal share, even before the contemplated share capital restructuring of Arcelor. Conversely, after the Offer, the Arcelor share was traded at a higher price than the Mittal Steel share.

As mentioned hereinabove, we consider that it is reasonable to disregard this method.

Consolidated dividend per share and Analysis of precedent transactions We have reviewed the explanations provided by the Board of Directors of Arcelor on the reasons why these methods has been disregarded. We consider these explanations as reasonable.

Revaluated net asset method According to this method, the valuation of a company is based upon a going-concern valuation of all assets at fair value (in the case in which these can be determined separately) decreased by the total liability. This method has not been considered as appropriate by the Board of Directors of Arcelor for reasons developed hereinabove. We have been provided with revalued value of assets of Arcelor as at August 1, 2006 performed for accounting consolidation purposes but not of ArcelorMittal which was not available. Consequently, we have not been able to perform such an analysis. However, we consider the justification provided by the Board of Directors to exclude this method as reasonable.

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6. Conclusion During the course of our assignment, nothing came to our attention that would cause us to believe that the Merger Exchange Ratio would not be appropriate and reasonable or that the valuation methods used by the Board of Directors to determine the Exchange Ratio would not be adequate. No specific weight has been given by the Board of directors to the three methods used to determine the Merger Exchange Ratio, since the Merger Exchange Ratio retained is in the range resulting from the application of each of the methods used by the Board of Directors. 7. Limitation on the use of our report This report is solely drawn up for the purpose set forth in Article 266 of the LSC. This report is not to be used for any other purpose or to be distributed without our prior written consent. Luxembourg, September 25, 2007

CLERC S.A.

Christophe DESCHAMPS

Jean-Jacques SOISSON

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EXPLANATORY MEMORANDUM TO THE PROPOSAL FOR THE MERGER OF ArcelorMittal Luxembourg public limited liability company (socit anonyme) 19, Avenue de la Libert L-2930 Luxembourg Grand-Duchy of Luxembourg R.C.S. Luxembourg B 102468 AND Arcelor Luxembourg public limited liability company (socit anonyme) 19, Avenue de la Libert L-2930 Luxembourg Grand Duchy of Luxembourg R.C.S. Luxembourg B 82454

BY THE BOARDS OF DIRECTORS OF ARCELORMITTAL AND ARCELOR

September 25, 2007

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THE BOARDS OF DIRECTORS OF: ArcelorMittal, a Luxembourg socit anonyme, having its registered office at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Registry of Trade and Companies under number B 102468 (ArcelorMittal); and Arcelor, a Luxembourg socit anonyme, having its registered office at 19, Avenue de la Libert, L-2930 Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Registry of Trade and Companies under number B 82454 (Arcelor, together with ArcelorMittal, the Merging Companies). WHEREAS: (A) (B) It had been decided, subject to certain conditions precedent, to combine Mittal Steel Company N.V. (Mittal Steel) and Arcelor through a two-step merger process; It had been decided, subject to the prior satisfaction of certain conditions precedent (including shareholders approval) that: (i) as a first step, Mittal Steel shall merge into ArcelorMittal by way of absorption by ArcelorMittal of Mittal Steel and without liquidation of Mittal Steel, pursuant to Dutch and Luxembourg law and in accordance with the terms and conditions of a merger proposal (voorstel tot fusie / projet de fusion) and an explanatory memorandum (toelichting op het voorstel tot fusie/un rapport crit dtaill) subject to Dutch and Luxembourg law (the First-Step Merger); and (ii) as a second step, ArcelorMittal shall merge into Arcelor by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal (following which Arcelor shall be renamed ArcelorMittal), pursuant to Luxembourg law and in accordance with the terms and conditions of a merger proposal (projet de fusion) and an explanatory memorandum (un rapport crit dtaill) subject to Luxembourg law (the Second-Step Merger); (C) (D) (E) The First-Step Merger was completed on September 3, 2007; The Merging Companies have adopted a merger proposal for the Second-Step Merger, dated September 25, 2007 (the Merger Proposal); and The Merging Companies wish to provide further explanation to the Merger Proposal in the form of this explanatory memorandum (the Explanatory Memorandum), as required pursuant to Article 265 of the Luxembourg law on commercial companies dated August 10, 1915, as amended from time to time (the Luxembourg Company Law), for both ArcelorMittal and Arcelor.

NOW, THEREFORE, declare the following concerning the Merger Proposal:

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1.

MERGER

ArcelorMittal shall be merged into Arcelor by way of a merger by absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal (hereinafter the Merger) pursuant to (i) the provisions of section XIV of the Luxembourg Company Law, and (ii) the terms and conditions included in the Merger Proposal and this Explanatory Memorandum ((i) and (ii), together, the Merger Terms & Conditions). Upon effectiveness of the Merger, all the assets and liabilities of ArcelorMittal (as such assets and liabilities shall exist on the date on which the Merger shall become effective (the Effective Date)) shall be transferred to Arcelor by operation of law, ArcelorMittal shall cease to exist and Arcelor shall issue new shares to the (then-former) holders of ArcelorMittal shares, in accordance with the Merger Terms & Conditions. 2. REASONS FOR MERGER

The Merger constitutes the second and final step of the process to combine Mittal Steel and Arcelor into a single legal entity governed by Luxembourg law. The Merger shall further rationalize the corporate structure of the group initiated by the first-step merger of Mittal Steel and ArcelorMittal. 3. CONSEQUENCES FOR ACTIVITIES OF ARCELOR

Arcelor intends to continue its activities and the activities of ArcelorMittal. Arcelor does not intend to discontinue any activities in connection with the Merger. 4. LEGAL, ECONOMIC AND SOCIAL CONSEQUENCES

From a legal perspective, the activities of ArcelorMittal shall be continued by Arcelor. Shareholders of ArcelorMittal shall become shareholders of Arcelor. Employees of ArcelorMittal shall become employees of Arcelor. Creditors of ArcelorMittal shall become creditors of Arcelor. Subject to the terms of such contractual arrangements, contractual arrangements concluded with ArcelorMittal or Arcelor shall remain unchanged. From an economic perspective, the Boards of Directors of ArcelorMittal and Arcelor expect no changes. From a social perspective, the Boards of Directors of ArcelorMittal and Arcelor expect no changes. Shareholders of ArcelorMittal are urged to consult their tax advisors regarding tax consequences of the Merger and of holding and disposing of ArcelorMittal shares. 5. SHARE EXCHANGE RATIO

Subject to the prior completion of the share capital restructuring described in Section 6 (Determination of the Exchange Ratio and Valuation) below, as a consequence of the transfer by operation of law of all the assets and liabilities of ArcelorMittal by way of merger, Arcelor shall on the Effective Date issue to the holders of the ArcelorMittal shares existing at such time one (1) Arcelor share for each one (1) ArcelorMittal share (the Exchange Ratio). As of the Effective Date, the newly-issued Arcelor shares shall rank pari passu with any existing Arcelor shares, including with respect to any undistributed profits and other reserves. For the avoidance of doubt, the newly-issued Arcelor shares shall not be entitled either to (i) the last installment of the dividend decided by the annual general meeting of Arcelor held on April 27, 2007, or (ii) the additional $0.040625 per post-capital restructuring Arcelor share which distribution shall be proposed to the extraordinary general meeting of Arcelor called to approve the Merger, which in the aggregate represents a dividend of $0.325 per postrestructuring Arcelor share. Conversely, as a result of the Merger, Arcelor shall assume ArcelorMittals obligation to pay the last installment of the quarterly dividend decided by the annual general meeting of Mittal Steel on June 12, 2007, which, in light of the exchange ratio of the First-Step Merger and the Merger, shall represent $0.325 per Arcelor share newly issued in the Merger. Therefore, on or around December 15, 2007, each Arcelor share (whether issued in the Merger or previously issued) shall be entitled to a dividend payment of $0.325.

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6.

DETERMINATION OF THE EXCHANGE RATIO AND VALUATION I. Decision process

Merger exchange ratio announced on May 16, 2007 On May 15, 2007, the Boards of Directors of Mittal Steel, ArcelorMittal and Arcelor unanimously decided to propose to the shareholders that the Second-Step Merger be effected on the basis of an exchange ratio of 7 Arcelor shares for every 8 ArcelorMittal shares. To reach their decision, in compliance with applicable laws, the Boards of Directors have relied upon a multi-criteria analysis, including EBITDA multiples and discounted cash flow analyses (as further explained herein below) and have ensured that the exchange ratio adequately reflects the respective relative intrinsic values of the two companies. The Boards of Directors of Mittal Steel, ArcelorMittal and Arcelor have received opinions as to the fairness of this exchange ratio from a financial standpoint, respectively, from Goldman Sachs, with respect to the shareholders of ArcelorMittal (i.e., the shareholders of Mittal Steel prior to completion of the first-step merger of Mittal Steel into ArcelorMittal), and from Morgan Stanley, Socit Gnrale, Fortis and Ricol Lasteyrie with respect to the public shareholders of Arcelor. These opinions will be included in the European prospectus approved by the Commission de Surveillance du Secteur Financier, the Luxembourg securities regulator and in the registration statement on Form F-4 filed with the U.S. Securities Exchange Commission, the U.S. federal securities regulator. The fairness opinions issued to the Boards of Directors of ArcelorMittal and Arcelor, respectively, were delivered before the decision was made to condition the effectiveness of the Second-Step Merger on the completion of the Arcelor share capital restructuring described in the following paragraph. Pre-merger restructuring of the share capital of Arcelor At a meeting held on September 25, 2007, the ArcelorMittal and the Arcelor Boards of Directors decided that it would be advisable to restructure the share capital of Arcelor prior to the effectiveness of the Second-Step Merger so as to have a one-to-one exchange ratio in the merger. The share capital restructuring would take the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 post-restructuring Arcelor shares, thus mechanically resulting in an adjusted exchange ratio of one new Arcelor share for every one ArcelorMittal share without any economic effect on Arcelor or ArcelorMittal shareholders. The sole purpose for the decision of the Boards of Directors to implement such share capital restructuring was to limit the effect of the merger on the ArcelorMittal share price and hence its comparability pre- and post-merger. The share prices of Arcelor and ArcelorMittal are currently not aligned. Given that the trading volume of ArcelorMittal shares is far greater than that of Arcelor, it is anticipated that the trading characteristics of Arcelor (to be renamed ArcelorMittal upon effectiveness of the merger) will immediately upon effectiveness of the merger inherit the pre-merger trading characteristics of ArcelorMittal. Without the share capital restructuring, the 0.875 exchange ratio would necessarily and mechanically cause the ArcelorMittal share price immediately post-merger to be different from the ArcelorMittal share price immediately pre-merger, because the application of the 0.875 ratio would affect the share price in a manner similar to a reverse stock split; effecting the Arcelor share capital restructuring pre-merger resulting in a one-to-one merger exchange ratio will avoid the merger from having this mechanical effect on the post-merger ArcelorMittal share price. As a result of the share capital restructuring, each holder of pre-restructuring Arcelor shares would receive a number of post-restructuring Arcelor shares equal to (i) the number of pre-restructuring Arcelor shares held by that person divided by 0.875 (7 divided by 8) (such quotient being referred to as A) or (ii) if such number is not a whole number, the immediately lower whole number of post-restructuring Arcelor shares (such number being referred to as B) and a number of fractions of a seventh of a post-restructuring Arcelor share equal to seven multiplied by the difference between A and B. The share capital of Arcelor shall be increased by incorporation of free reserves without issuing new shares, but by increasing the par value of the shares in order to round up the par value of the post-restructuring shares to the immediately higher euro cent. B-79

The share capital restructuring and share capital increase will be submitted for approval to the general meeting of Arcelor shareholders convened to approve the Second-Step Merger. Their completion is a condition precedent to the effectiveness of the Second-Step Merger. The contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share. The following developments in paragraphs II to IV below provide for a description of the multicriteria analysis taken into consideration by the Boards of Directors to propose that the Second-Step Merger be implemented based on an exchange ratio of 7 Arcelor shares for every 8 ArcelorMittal shares (or 0.875 Arcelor share for every one ArcelorMittal share). The revised one-to-one exchange ratio merely results from the application of the conversion ratio that will be used in the share capital restructuring of Arcelor (1/0.875) to the exchange ratio proposed by the Boards of Directors on May 15, 2007 (0.875). Absence of material change During the meeting held on September 25, 2007, the ArcelorMittal and the Arcelor Boards of Directors also noted that no event, transaction or new development had occurred since May 15, 2007 that would lead to an adjustment of the merger exchange ratio other than to reflect the share capital restructuring described above. In this respect, the Boards of Directors noted in particular that: the mandatory tender offer for the outstanding shares of Arcelor Brasil, which was completed after the determination of the exchange ratio and which was principally settled in cash, does not impact the exchange ratio, since for the purposes of the intrinsic value analysis supporting the determination of the exchange ratio the Arcelor Brasil minority interest had been valued using the share price of Arcelor Brasil as at 11 May 2007, after the announcement of the terms of the mandatory offer; the divestiture of the Sparrows Point facility, as part of the disposal program related to the offer of Mittal Steel for Arcelor, is being made at fair market value ; the consensus EBITDA estimates derived from Institutional Brokers Estimate System (IBES) following the first half 2007 earnings release is converging with the 2008 target EBITDA of USD 20 billion set forth in the harmonized value plan 2008 communicated to the market on 27 September 2006 (the Harmonized Value Plan 2008), used as basis for the multi-criteria analysis; ArcelorMittal announced on 11 September 2007 an internal growth plan target to increase shipments by more than 20% from 2006 to 2012, to reach 131mt. While the growth plan 2012 does not address operating results, the preparation of the growth plan 2012 has nevertheless confirmed the Harmonized Value Plan 2008 and the respective allocations between ArcelorMittal (ex. Mittal Steel) and Arcelor as mentioned herein below in paragraph II. II. Guidance Methodology

The multi-criteria analysis is based on the following information, which has also been communicated to the market: based on an analysis of the nature of the synergies reflected in the Harmonized Value Plan 2008 and, in particular their allocation among the various segments and geographic areas, approximately 41% of the previously announced synergies generated by the combination of Arcelor and Mittal Steel will be realized at the level of Arcelor; based on the 2008 Arcelor EBITDA estimate taken into account for the purposes of the preparation of the Harmonized Value Plan 2008 (which represents 49% of the 2008 target EBITDA of USD 20 billion for the ArcelorMittal group), Arcelor will contribute approximately 49% of the combined Arcelor/Mittal Steel group EBITDA indicated in the combined Arcelor/Mittal Steel group Harmonized Value Plan 2008; based on an analysis of the capital expenditures taken into account for the purposes of the Harmonized Value Plan 2008, Arcelor will account for approximately 50% of the combined Arcelor/Mittal Steel groups capital expenditures indicated in the Harmonized Value Plan 2008.

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These elements relate to the Harmonized Value Plan 2008. The breakdown of the 2008 target EBITDA of USD 20 billion for the ArcelorMittal group can be summarized as follows: Ex-Arcelor Proforma EBITDA 2005 Brownfield and production growth in the market Value added growth in line with market Management gains and stand alone synergies net of restructuring Mining expansion Merger synergies Regulatory remedies Price cost squeeze EBITDA 2008 target
____________________________ Note: Synergies and costs reflected in this table have been allocated based on where they were expected to be generated or incurred, respectively.

Ex-Mittal Steel 6.7 1.8 1.1 1.9 0.4 0.9 0.0 -2.6 10.2

ArcelorMittal 14.9 4.6 1.1 4.2 0.4 1.6 -0.2 -6.6 20.0

8.2 2.8 0.0 2.3 0.0 0.7 -0.2 -4.0 9.8

The financial information used to assess the terms and conditions of the Second-Step Merger are derived from the consolidated financial statements of ArcelorMittal and Arcelor for accounting year 2006, prepared in accordance with IFRS, pro forma for acquisitions made in 2006 as if such acquisitions had occurred on 1 January 2006. Minority interests in listed entities (Arcelor, Mittal South Africa, Acesita) and listed associates investments (Erdemir, Hunan Valin) have been valued at market value. The value of the Arcelor Brasil minority interest was calculated based on the share price of Arcelor Brasil as at 11 May 2007, after the announcement of the terms of the mandatory offer. All calculations are based on 670.3 million Arcelor shares and 1,389.6 million ArcelorMittal shares, in both cases diluted based on the treasury method applied as of the end of April 2007. Since the first-step merger was to be (and has been) implemented based on a one-to-one exchange ratio, the value of an ArcelorMittal share has been considered equal to the value of a Mittal Steel share. Certain reorganizations have been implemented since the date of the Harmonized Value Plan 2008. However, they were not considered to have any impact on the exchange ratio. Similarly, the mandatory tender offer for the outstanding shares of Arcelor Brasil, which was completed after the determination of the exchange ratio and which was principally settled in cash does not impact the exchange ratio, since for the purposes of the intrinsic value analysis supporting the determination of the exchange ratio the Arcelor Brasil minority interest had been valued using the share price of Arcelor Brasil as at 11 May 2007, after the announcement of the terms of the mandatory offer. A similar conclusion was reached with respect to the contemplated disposal of the Sparrows Point facility, which is made at fair market value. III. Methods that have been disregarded

Trading Value - Valuations based on Arcelor trading value have not been used since when the Boards of Directors made their determination, the Arcelor share price was not believed to represent the intrinsic value of the company since (i) before the announcement of the proposed exchange ratio 16 May 2007, the trading value of Arcelor was heavily impacted by market speculation regarding the timing of the merger and the exchange ratio (which is evidenced in particular by the fact that Arcelor was trading at a higher EBITDA multiple than ArcelorMittal without any justification in light of the growth perspective of their respective businesses) and (ii) the Arcelor share had only a limited liquidity compared to historical averages.

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Analysis of the liquidity of Arcelor share

Average daily trading volume on Euronext Paris Average daily trading volume on Euronext Paris / Total shares (669.8 million as at 31 December 2006) 0.04% 0.62%

Since sell-out (27 November 2006 through 11 May 2007) Last over the month preceding the announcement of the offer (i.e. before 26 January 2006) Source: Bloomberg

270,900 4,122,900

Consolidated dividend per share In the steel industry, dividend yield is not regarded as a relevant valuation criterion given the cyclicality of the industry. As both investors as well as equity research analysis are not focused on this criterion, an analysis based on consolidated dividend per share has not been used. Analysis of precedent transactions Precedent transactions in the steel industry reflect situations where a change of control takes place. As such, prices paid in precedent transactions reflect, in addition to the intrinsic stand-alone value, a so-called control premium reflecting in particular the ability of the purchaser to generate synergies and efficiency gains. As ArcelorMittal already has control over Arcelor and no synergies are expected from the legal merger itself, an analysis of precedent transactions has not been used. Revaluated net asset value As both investors as well as equity research analysis not rely on this valuation method and generally focus on future profitability, an analysis based on revaluated net asset has not been used. IV. (a) Methods that have been used Analysis of comparable companies

Valuations of listed companies in the steel industry are frequently compared on the basis of enterprise value to EBITDA (EV/EBITDA) and price to earnings per share (P/E) multiples. EBITDA is defined as operating profit before depreciation and amortisation. Enterprise value corresponds to the aggregate of the equity market capitalisation, net indebtedness and minority interests. Investments in associates and other financial assets are excluded from enterprise value as the income associated with these assets is generally not included in EBITDA. A number of steel manufacturing conglomerates have been excluded from the analysis as a material part of their operations are not steel related. Company ThyssenKrupp JFE Non steel related operations ThyssenKrupp is an industrial conglomerate with diverse activities unrelated to steel, including submarine and shipbuilding, elevators and automotive components. JFE is an industrial conglomerate with diverse activities unrelated to steel, including microelectronics, engineering for the energy sector and environmental solutions and urban development. Nippon Steel is an industrial conglomerate with diverse activities unrelated to steel, including power supply, chemicals, urban development, construction and engineering. Kobe Steel is an industrial conglomerate with diverse activities unrelated to steel, including titanium, welding equipment and consumables, machinery such as crushers, tire and rubber machines and plastic processing machines, power generation plants, as well as activities in infrastructure construction.

Nippon Steel Corp.

Kobe Steel

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A number of other European and North American steel companies were considered, but excluded for the purpose of trading multiple analysis due to the unique features of their businesses which exhibit less comparability to ArcelorMittal and Arcelor. Company Salzgitter Svenskt Stal (SSAB) Reasons for exclusion Salzgitter is a regional niche steel manufacturer. SSAB is a Nordic focused niche producer of high strength sheets and quenched plate steels with high exposure to the booming mining equipment market, construction equipment and fuel-efficient automotive manufacturing sectors. The strong position in niche products gives SSAB greater pricing power and therefore higher and more sustainable margins and returns. SSAB is therefore not directly comparable to the major steel companies. Rautaruukki is a company in a transition phase from a steel producer to a complete solutions provider for the construction and engineering sectors. As part of this transition, Rautaruukki has acquired companies active in construction systems and total delivery know-how, components for lifting, handling and transportation equipment. It is seeking to exit its long products business. Nucor is entirely focused on the US and exclusively produces steel via the EAF method.

Rautaruukki

Nucor

For the purposes of the comparison, ArcelorMittal and Arcelor have also been disregarded to not influence the outcome of the analysis. Arcelor Brasil was at the time of the determination of the exchange ratio subject to a delisting mandatory offer and has also been excluded as its share price reflected a regulated offer process. In general, investors typically base investment decisions on future profitability. Although, for this reason, 2007 and 2008 should be regarded as the most relevant periods as investors are looking for future profitability and value future cash flows, 2006 should also be considered in light of the lack of up-to-date broker research estimates for Arcelor. The selected comparable companies are covered by numerous equity research analysts and consensus estimates for the periods 2007 and 2008 are widely available. The table below summarizes the EV/EBITDA and P/E multiples for these steel companies based on reported 2006 results and consensus EBITDA estimates derived from IBES and calendarised to reflect a 31 December year end.
EBITDA Multiple 2006 A 6.7 7.2 6.3 10.0 7.6 2007 E 6.3 6.5 6.7 6.9 6.6 2008 E 5.3 6.7 6.6 6.5 6.3 P/E Multiple 2006 A 13.2 11.3 9.7 20.0 13.5 _________________ The companies presented in this table report under different accounting standards. EBITDA is adjusted to exclude total pension expenses recognised during the last twelve-month period for which figures are available. Sources: IBES estimates, financial data based on last published financials.

Posco Voest Alpine US Steel CSN Average Multiple

The application of the relevant average multiple mentioned in the table above to the 2006 pro-forma EBITDA, the 2007 and 2008 EBITDA implied by the Harmonized Value Plan 2008 and IBES estimates and the 2006 pro-forma earnings per share for both ArcelorMittal and Arcelor provide for equity values, share prices and implied exchange ratios as shown in the table below: Share Price () Exchange Ratio
0.845 - 0.965

Equity Value (bn) ArcelorMittal

58.8 - 86.0

ArcelorMittal
42.3 - 61.9

Arcelor
49.3 - 64.1

Arcelor
33.1 - 43.0

____________________________ Note: Exchange ratios based on combination of Arcelor and ArcelorMittal share prices within the minimum and maximum range implied by the application of the valuation described above.

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The main purpose of the analysis is to perform a relative valuation for ArcelorMittal and Arcelor and as such a relatively broad range of valuation multiples has been used. In addition to the table above, a sensitivity analysis has been performed by applying the minimum and maximum valuation multiples of the group of selected comparable companies which resulted in an exchange ratio range of 0.818 to 0.965. (b) Analysis made on discounted cash flows

Arcelor and Mittal Steel performed a discounted cash flow analysis as at May 15, 2007 using publicly available forecast consisting both of (i) the Harmonized Value Plan 2008 communicated to the market, subject to adjustments aimed at including the Sicartsa acquisition1 and related synergies, and (ii) the consensus broker estimates in 2007 and 2008 for ArcelorMittal derived from Institutional Brokers Estimate System (IBES), Arcelor estimates being in the latter case derived from ArcelorMittal broker estimates based on the guidance set forth in paragraph II. above, since most brokers no longer cover the Arcelor share. The discounted cash flow analysis is based on the assumptions described in paragraph II. above and on the following additional assumptions: (i) a tax rate at 25% for each of the two companies; (ii) the same discount rate was applied to the future cash flows of each of the two companies; (iii) the 2007 EBITDA based on the Harmonized Value Plan 2008 represents an average between the 2006 pro forma EBITDA and the 2008 EBITDA reflected in the Harmonized Value Plan 2008; (iv) depreciation and amortization were set as per IBES consensus estimates; (v) ArcelorMittal Capex was set as per Harmonized Value Plan 2008; and (vi) working capital optimization was estimated at 0.9 billion for ArcelorMittal as per Harmonized Value Plan 2008, broken down 50/50 between 2007 and 2008 and at 0.3 billon in 2007 and 2008 for Arcelor as per Arcelors 27 February 2006 investor presentation. The terminal value was calculated both based on EBITDA exit multiples and the perpetual growth method. The table below shows the resulting equity values, share prices and exchange ratios assuming, for each of Arcelor and ArcelorMittal, an exit multiple of 6.5x EBITDA, a perpetuity growth rate of 0% and a discount rate of 9.25%: Equity Value (bn) ArcelorMittal
Harmonized EBITDA Exit Value Plan 2008 Perpetual Growth IBES EBITDA Exit Perpetual Growth 71.7

Share Price () ArcelorMittal

51.6

Exchange Ratio
0.904

Arcelor
38.3

Arcelor
57.1

85.0 63.2 74.3

44.4 35.0 40.3

61.2 45.5 53.5

66.3 52.2 60.2

0.923 0.871 0.889

In addition, a sensitivity analysis was performed, using EBITDA exit multiples ranging from 6.0x EBITDA to 7.0x EBITDA, perpetual growth rates ranging from -1% to 1% and discount rates ranging from 9% to 9.5% which resulted in an exchange ratio range of 0.860 to 0.936 (using identical assumptions for each of Arcelor and ArcelorMittal). (c) Contribution analysis

ArcelorMittal and Arcelor reviewed specific historical earnings per share (EPS) and historical and estimated future EBITDA for Arcelor and ArcelorMittal, based on both the Harmonized Value Plan 2008 and the IBES consensus, Arcelor estimates being in the latter case derived from ArcelorMittal estimates based on the guidance set forth in paragraph II. above, since brokers no longer cover Arcelor. The analysis of the contribution, on a debt-adjusted basis, of Arcelor to the aggregate equity value of ArcelorMittal based on EBITDA or EPS provides for an exchange ratio range comprised between 0.833 and
1

ArcelorMittal announced on December 20, 2006, the acquisition of Sicartsa, a Mexican integrated steel producer from Grupo Villacero. B-84

0.965 Arcelor share for every ArcelorMittal share, ArcelorMittal equity value being determined based on the closing value of the Mittal Steel share (based on Amsterdam listing) on 11 May 2007. The table below illustrates the corresponding values for Arcelor and ArcelorMittal implied by the exchange ratios resulting from this analysis, based on a value of the ArcelorMittal share equal to the closing value of the Mittal Steel share (based on Amsterdam listing) on 11 May 2007: Share Price () Exchange Ratio
0.833-0.965

Equity Value (bn) ArcelorMittal

58.1

ArcelorMittal
41.8

Arcelor
43.3 - 50.2

Arcelor
29.0 - 33.6

(d)

Summary assessment of the exchange ratio based on intrinsic values

The outcome of the multi-criteria valuation analysis based on average multiples as far as the analysis of comparable companies is concerned and the median assumptions described herein above as far as the discounted cash flow analysis is concerned can be summarized as follows.

Share Price () Exchange Ratio

Comparable Companies DCF Analysis Contribution Analysis Average 0.845 - 0.965 0.871 - 0.923 0.833 - 0.965 0.850 - 0.951

Equity Value (bn) ArcelorMittal

58.8 - 86.0 63.2 - 85.0 58.1 60.0 - 76.3

ArcelorMittal
42.3 - 61.9 45.5 - 61.2 41.8 43.2 - 54.9

Arcelor
49.3 - 64.1 52.2 - 66.3 43.3 - 50.2 50.6 - 57.9

Arcelor
33.1 - 43.0 35.0 - 44.4 29.0 - 33.6 33.9 - 38.8

_________________
Note: Exchange ratios based on combination of Arcelor and ArcelorMittal share prices within the minimum and maximum range implied by the application of the valuations described above (based on average multiples as far as the analysis of comparable companies is concerned and the median assumptions described herein above as far as the discounted cash flow analysis is concerned).

The average exchange ratio bracket resulting from the valuations described above, taking into account the sensitivity analyses that have been performed for the comparable companies and discounted cash flows methods, as described in paragraphs (a) and (b) above, is 0.837-0.955, as shown in the table below.

Implied Exchange Ratio

Comparable companies DCF analysis Contribution analysis Average Min 0.818 0.860 0.833 0.837 Max 0.965 0.936 0.965 0.955

The exchange ratio of 0.875 Arcelor share for every ArcelorMittal share is therefore consistent with the analysis of the relative intrinsic value range of Arcelor and ArcelorMittal. None of the methods used for the purposes of the multi-criteria analysis has been given a specific weight compared to the others. As noted above, the exchange ratio of 0.875 Arcelor share for every ArcelorMittal share does not take into consideration the implementation of a share capital restructuring of Arcelor prior to the effectiveness of the Second-Step Merger, in the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 postrestructuring Arcelor shares. The contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share.

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7.

CONSISTENCY OF THE EXCHANGE RATIO WITH PRIOR UNDERTAKINGS AND DISCLOSURE

When determining the exchange ratio to be proposed to the shareholders of ArcelorMittal and Arcelor, the Boards of Directors of Mittal Steel, ArcelorMittal and Arcelor also applied the principles outlined in the Memorandum of Understanding of June 25, 2006 (the MOU) signed in the context of Mittal Steels revised offer for Arcelor securities (Revised Offer) and subsequent public statements2, which provided that the merger exchange ratio will be consistent with the value of Arcelor shares pursuant to the secondary exchange offer as at the date of its settlement and delivery on 1 August 2006. As shown in the following table, the value of the Arcelor share based on the exchange ratio of the revised secondary exchange offer as at the date of its settlement and delivery on 1 August 2006 was between 41.38 and 42.58, depending on the value used as reference for the Mittal Steel share.
Value of the Mittal Steel share as of 1 August 2006 () Opening Based on Mittal Steel NYSE listing
4

VWAP3 26.85 26.81

Closing 26.79 27.05

27.10 26.33

Based on Mittal Steel Euronext Amsterdam listing

Implied value of the Arcelor shareas of 1 August 2006 based on 11:7 secondary exchange offer ratio () Opening Based on Mittal Steel NYSE listing Based on Mittal Steel Euronext Amsterdam listing Source: Bloomberg 42.58 41.38 VWAP 42.19 42.13 Closing 42.10 42.51

This value of the Arcelor share was compared to the market value of the Mittal Steel share on and before 11 May 2007 (i.e., before the date of the determination of the exchange ratio). Several time periods were reviewed for the purposes of determining the value of the Mittal Steel share, including the closing price as of 11 May 2007, 1-month VWAP prior to and including 11 May 2007, 3-month VWAP prior to and including 11 May 2007, 5-month VWAP prior to and including 11 May 2007, and VWAP since the end of the sell-out period following the Revised Offer up to and including 11 May 2007.
Value of the Mittal Steel share (based on Amsterdam listing) () 11 May 2007 (close) 41.79 1-month VWAP 3-month VWAP 39.50 5-month VWAP 37.88 VWAP since the end of the sell-out period 37.32

40.43 Source: Bloomberg

The comparison of the Mittal Steel share value over several time periods and the Arcelor share value determined in accordance with the abovementioned principles resulted in an exchange ratio comprised between 0.876 and 1.01 Arcelor share for every ArcelorMittal share. The ratio of 7 Arcelor shares for every 8 ArcelorMittal shares (or 0.875 Arcelor share for every ArcelorMittal share) was therefore considered consistent with the valuation range resulting from these principles.
2

In the Memorandum of Understanding, as further explained in the Information Document of 4 July 2006 and subsequent public statements, in particular the 14 November 2006 press release, Mittal Steel and Arcelor have agreed to use their best efforts to implement the merger based on a merger ratio consistent with the value of the Arcelor shares pursuant to the secondary exchange offer as at the date of its settlement and delivery on 1 August 2006. In the 14 November 2006 press release, the companies further explained that the merger ratio would be reviewed and validated by independent auditors as required by Dutch and Luxembourg law, considering its fairness for the shareholders of both Mittal Steel and Arcelor and approved by the shareholders of both companies and would take into account a number of facts including, without limitation, corporate reorganizations and the financial statements of both companies for the most recent periods.

3 4

Volume Weighted Average Price (VWAP). As converted based on the spot FX rate for opening and closing. As far as the VWAP is concerned, the value corresponds to the value in Euros provided for the NYSE VWAP on Bloomberg. B-86

As noted above, the abovementioned analysis does not take into consideration the implementation of a share capital restructuring of Arcelor prior to the effectiveness of the Second-Step Merger, in the form of an exchange of every 7 pre-restructuring Arcelor shares for 8 post-restructuring Arcelor shares. The share capital restructuring results in a mechanical adjustment of the exchange ratio of the Second-Step Merger to one postrestructuring Arcelor share for every one ArcelorMittal share. 8. RECOMMENDATION OF THE BOARDS OF DIRECTORS

In reaching their decision to effect the merger of Arcelor and ArcelorMittal, the ArcelorMittal and Arcelor Boards of Directors consulted with management and their advisors and considered a variety of factors including, among others, the following: the completion of the Second-Step Merger would enable ArcelorMittal to comply with the commitments of the MOU which stated that Mittal Steel would merge into Arcelor as soon as practicable following completion of its revised offer for Arcelor, and that the combined entity would be incorporated, domiciled and headquartered in Luxembourg; the Second-Step Merger would further rationalize the corporate structure of the group initiated by the first-step merger of Mittal Steel and ArcelorMittal; the Second-Step Merger would not significantly affect the corporate governance or operational organization of the combined entity; the considerations described above in Sections 6 and 7; as far as the ArcelorMittal Board of Directors is concerned, the fairness opinion of Goldman Sachs, as financial advisor to Mittal Steel and ArcelorMittal stating that as of the date of the fairness opinion and based upon and subject to the factors and assumptions set forth therein, and assuming that the First Step Merger had been consummated, the proposed exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the draft merger agreement provided to them was fair, from a financial point of view, to the holders of the outstanding shares of ArcelorMittal; it being noted by the Board that (i) this fairness opinion was issued before the decision was made to condition the effectiveness of the Second-Step Merger to the completion of the Arcelor share capital restructuring and (ii) the contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share without any economic impact on the ArcelorMittal shareholders; as far as the Arcelor Board of Directors is concerned, the fairness opinions of Morgan Stanley, Socit Gnrale, Fortis and Ricol Lasteyrie, as advisors to Arcelor stating that as of the date of the fairness opinions and based upon and subject to the factors and assumptions set forth therein, and assuming that the First Step Merger had been consummated, the proposed exchange ratio of 0.875 Arcelor shares for every one ArcelorMittal share pursuant to the draft merger agreement provided to them was fair, from a financial point of view, to the holders of the outstanding shares of Arcelor; it being noted by the Board that (i) these fairness opinions were issued before the decision was made to condition the effectiveness of the Second-Step Merger to the completion of the Arcelor share capital restructuring and (ii) the contemplated share capital restructuring of Arcelor leads to an adjustment of the exchange ratio to one Arcelor share for every ArcelorMittal share without any economic impact on the Arcelor shareholders; correspondence from minority shareholders (or their representatives) of Arcelor, including a letter and valuation report dated April 24, 2007 received from the Association de dfense des actionnaires minoritaires (ADAM) setting out ADAMs views on an appropriate exchange ratio for the transaction, which indicated the potential for minority shareholder challenges of the exchange ratio in the merger, as well as legal actions taken and arguments developed by certain minority shareholders; the Second-Step Merger would neither cause any material adverse corporate tax consequences in Luxembourg for ArcelorMittal or Arcelor, nor trigger any Luxembourg capital duty; and it was not anticipated that any of the regulatory requirements to which the Second-Step Merger is subject would hinder, delay or restrict the effectiveness of such merger.

In light of the number and wide variety of factors considered in connection with their evaluation of the transaction, the ArcelorMittal and Arcelor Boards of Directors did not consider it practicable to, and did not B-87

attempt to, quantify or otherwise assign relative weights to the specific factors that they considered in reaching their determination. The ArcelorMittal and Arcelor Boards of Directors viewed their position as being based on all available information and the factors presented to and considered by them. In addition, individual directors may have given different weights to different factors. This explanation of ArcelorMittals and Arcelors reasons for the merger and all other information presented in this document are forward-looking in nature and, therefore, should be read in light of the factors discussed under Cautionary Statement Concerning Forward-Looking Statements, which will be included in the European prospectus approved by the Commission de Surveillance du Secteur Financier, the Luxembourg securities regulator and in the registration statement on Form F-4 filed with the U.S. Securities Exchange Commission, the U.S. federal securities regulator. The ArcelorMittal and Arcelor Boards of Directors realized that there could be no assurance about future results, including results expected or considered in the factors listed above. However, the ArcelorMittal and Arcelor Boards of Directors concluded that the potential benefits of effecting the Second-Step Merger were significant and outweighed any potential risks of Arcelor minority shareholder challenges to, or litigation in respect of, the merger based on the exchange ratio as the Boards believed any such challenges or litigation would be groundless. The ArcelorMittal and Arcelor Boards of Directors also concluded, in particular, that the merger would enable ArcelorMittal and Arcelor to comply with MOU undertakings. 9. SETTLEMENT OF THE MERGER

Upon effectiveness of the Merger, holders of ArcelorMittal shares shall automatically receive newlyissued Arcelor shares in accordance with the Exchange Ratio and on the basis of their respective holdings as entered in the ArcelorMittal shareholder registry (registre des actionnaires) or their respective securities accounts. Holders of ArcelorMittal shares whose shares are registered directly in ArcelorMittals shareholder registry shall automatically receive newly-issued Arcelor shares through an entry in the shareholder registry of Arcelor. Holders of ArcelorMittal shares whose shares are registered indirectly, that is through a clearing system, in ArcelorMittals shareholder registry, shall automatically receive newly-issued Arcelor shares through a credit to their respective securities accounts. 10. LANGUAGE

An unofficial French translation of this Explanatory Memorandum shall be available at the offices of the Merging Companies. For purposes of Luxembourg law, the English language version of this Explanatory Memorandum is binding. IN WITNESS WHEREOF, ArcelorMittal and Arcelor have caused this Explanatory Memorandum to be executed as of the date first written above by their respective directors thereto duly authorized.

ArcelorMittal __________________ /s/ Mr. Georges T.N. Schmit Arcelor __________________ /s/ Mr. Joseph J. Kinsch Chairman of the Board of Directors

B-88

ANNEX C FAIRNESS OPINION OF GOLDMAN SACHS

C-1

15 May 2007 Board of Directors Mittal Steel Company N.V. Berkeley Square House Berkeley Square London W1J 6DA Madam and Gentlemen: You have requested our opinion as to the fairness from a financial point of view to the holders of outstanding shares, par value one thousand euro (EUR 1,000) (the ArcelorMittal Shares), of ArcelorMittal, a Luxembourg company (ArcelorMittal) (which holders are, immediately prior to the consummation of the First Step Merger (as defined below), holders of the Mittal Shares (as defined below)) of the exchange ratio of 0.875 shares of common stock, without designation of par value (the Arcelor Shares), of Arcelor SA (Arcelor) for every outstanding ArcelorMittal Share (the Exchange Ratio) pursuant to the Merger Agreement (as defined below). You have requested that we provide such opinion assuming that the First Step Merger (as defined below) has been consummated. The Exchange Ratio will be received by the holders of ArcelorMittal Shares as the second step of a two-step merger process. Pursuant to the first step of the transaction (the First Step Merger), Mittal Steel Company N.V., a Netherlands Company (Mittal or the Company) will be merged into ArcelorMittal, a wholly-owned subsidiary of the Company (by way of absorption by ArcelorMittal of Mittal and without liquidation of Mittal) and each holder of an outstanding Class A Common Share, nominal value one eurocent (EUR 0.01) per share (the Mittal Class A Shares), and each holder of an outstanding Class B Common Share, nominal value one eurocent (EUR 0.01) per share (the Mittal Class B Shares; together with the Mittal Class A Shares, the Mittal Shares), of Mittal will receive one ArcelorMittal Share, as described in the Merger Agreement, dated 2 May 2007, between Mittal and ArcelorMittal (the First Step Merger Agreement). Pursuant to the second step of the transaction (the Second Step Merger) as described in the Merger Agreement, a draft of which has been presented to us on the date hereof, to be executed promptly hereafter, between ArcelorMittal and Arcelor (the Merger Agreement), after the First Step Merger, ArcelorMittal will be merged into Arcelor (by way of absorption by Arcelor of ArcelorMittal and without liquidation of ArcelorMittal) and the holders of ArcelorMittal Shares will receive Arcelor Shares consistent with the Exchange Ratio. We assume that the definitive Merger Agreement will be executed in the form of the draft thereof furnished to us on the date hereof, except for changes that are not meaningful to our analysis. Goldman Sachs International and its affiliates, as part of their investment banking business, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions as well as for estate, corporate and other purposes. We are acting as financial advisor to the Company in connection with, and have provided advice and input with respect to the negotiations leading to, the transaction contemplated by the Merger Agreement. We expect to receive fees for our services in connection with the Second Step Merger, which became payable upon the request of the Company that we undertake an analysis to determine whether we could provide this opinion, and the Company has agreed to reimburse certain of our expenses and indemnify us against certain liabilities arising out of our engagement. We acted as financial advisor to the Company in connection with the tender offer by the Company for Arcelor first announced on 27 January 2006 (the Offer), including as dealer manager in connection with the U.S. Offer, as defined in the Prospectus Supplement dated 7 July 2006 to the Amended and Restated Exchange Offer Prospectus dated 29 June 2006. In addition, we participated in the financing of the Offer for the Company. We received fees for our services in connection with the Offer, the principal portion of which was contingent upon consummation of the Offer, and the Company agreed to reimburse our expenses and indemnify us against certain liabilities arising out of our engagement. In addition, we have provided and are currently providing certain investment banking services to the Company from time to time, including having acted as lender in connection with the US$4.9 billion acquisition by the Company of OJSC Krivorizky Ore Mining Company and Steel Works Kryvorizstal (renamed Mittal Steel Kryviy Rih) in November 2005, and are acting as financial advisor with respect to the Companys offer for the shares of Arcelor Brasil, S.A. not owned by Arcelor S.A. We have provided certain investment banking services to Arcelor from time to time, including having acted as financial advisor to Aceralia Corporacion Siderurgica SA, one of the predecessor entities of Arcelor, in its December 2001 merger with Arbed SA and Usinor SA. We also may provide investment banking services to the Company and Arcelor in the future. In connection with the above-described services we have received, and may receive, compensation. Board of Directors ArcelorMittal 19, Avenue de la Libert L-2930 Luxembourg Grand Duchy of Luxembourg

C-2

Goldman Sachs International is a full service securities firm engaged, either directly or through its affiliates, in securities trading, investment management, financial planning and benefits counseling, risk management, hedging, financing and brokerage activities for both companies and individuals. In the ordinary course of these activities, Goldman Sachs International and its affiliates may provide such services to the Company, Arcelor and their respective affiliates, may actively trade the debt and equity securities (or related derivative securities) of the Company and Arcelor for their own account and for the accounts of their customers and may at any time hold long and short positions of such securities. In connection with this opinion, we have reviewed, among other things: the First Step Merger Agreement; a Registration Statement on Form F-4 as filed by ArcelorMittal with the SEC on 2 May 2007 in connection with the First Step Merger; the Merger Agreement; a draft Registration Statement on Form F-4 to be filed by Arcelor in connection with the Second Step Merger; annual reports to stockholders of the Company for the three fiscal years ending 31 December 2006 and Arcelor for the four fiscal years ended 31 December 2006; certain interim reports to stockholders of the Company and Arcelor; certain other communications from the Company and Arcelor to their respective stockholders; a draft of a press release to be publicly issued by the Company promptly hereafter, (the Company Press Release); certain research analyst reports with respect to the future financial performance of the Company and Arcelor; certain financial analyses and forecasts for Arcelor prepared by its management that are publicly available; certain internal financial analyses and forecasts for the Company including the 2008 Business Plan for the Company, on a combined basis with Arcelor, and Arcelor announced on 27 September 2006 and reconfirmed on 21 February 2007, prepared by the management of the Company (the Forecasts), including certain cost savings and operating synergies projected by the management of the Company to result from the combination of Mittal and Arcelor (the Synergies); and guidance provided by management of the Company, which will be made public in the Company Press Release, related to the portion of the Synergies allocable to Arcelor, the portion of capital expenditures provided for in the 2008 Business Plan that Arcelor will account for, and the relative contribution of Arcelor to EBITDA indicated in the 2008 Business Plan. We assume that the Company Press Release will not differ in any material respect from the draft thereof furnished to us on the date hereof. We also have held discussions with members of the senior management of the Company regarding their assessment of the strategic rationale for, and the potential benefits of, the Second Step Merger and with members of the senior management of the Company and Arcelor regarding their assessment of the current business operations, financial condition and future prospects of the Company and Arcelor. In addition, we have reviewed the reported price and trading activity for the Mittal Class A Shares and the Arcelor Shares, compared certain financial and stock market information for the Company and Arcelor with similar information for certain other companies the securities of which are publicly traded, and performed such other studies and analyses, and considered such other factors, as we considered appropriate. We have relied without independent verification upon the accuracy and completeness of all of the financial, accounting, legal, tax and other information discussed with or reviewed by us and have assumed such accuracy and completeness for purposes of rendering this opinion. In that regard, we have assumed with your consent that the Forecasts (including the Synergies), and guidance provided by management, have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the Company and Arcelor, respectively. We have also assumed, with your consent, that any transactions between the Company and Arcelor not reflected in the Forecasts have been conducted on an arms-length basis at fair market value. You have advised us that, except for the right of the holders of Mittal Class B Shares to convert those shares into an equal number of Mittal Class A Shares, as provided in the Companys articles of association, the Mittal Class A Shares and the Mittal Class B Shares carry identical economic and voting rights. In addition, we have not made an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities) of the Company or Arcelor or any of their respective subsidiaries and we have not been furnished with any such evaluation or appraisal. We also have assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the First Step Merger and the Second Step Merger will be obtained without any adverse effect on the Company or Arcelor or on the expected benefits of these transactions in any way meaningful to our analysis. Our opinion does not address the First Step Merger or the transactions contemplated by the First Step Merger Agreement, and at your request assumes that the First Step Merger has been consummated. Moreover, our opinion does not address the underlying business decision of the Company to engage in the First Step Merger or the Second Step Merger, nor are we expressing any opinion as to the prices at which the Mittal Class A Shares, the ArcelorMittal Shares or the Arcelor Shares will trade at any time. Our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof. Our advisory services and the opinion expressed herein are provided for the information and assistance of the Board of Directors of the Company and the Board of Directors of ArcelorMittal in connection with their respective consideration of the Second Step Merger and such opinion does not constitute a recommendation as to how any holder of the Mittal Shares should vote with respect to such First Step Merger, or as to how any holder of

C-3

the Common Shares, the ArcelorMittal Shares or the Arcelor Shares should vote with respect to the Second Step Merger. Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Exchange Ratio, pursuant to the Merger Agreement, is fair from a financial point of view to the holders of the ArcelorMittal Shares (which holders are, immediately prior to consummation of the First Step Merger, holders of Mittal Shares). Very truly yours,

GOLDMAN SACHS INTERNATIONAL

Managing Director

C-4

ANNEX D FAIRNESS OPINION OF MORGAN STANLEY & CO.

D-1

15 May 2007 The Board of Directors Arcelor S.A. 19, avenue de la Libert L-2930 Luxembourg Members of the Board: We understand that Mittal Steel Company N.V. (Mittal) and Arcelor S.A. (Arcelor) propose to merge their respective businesses pursuant to a two-step merger process to be carried out as follows: (1) first, Mittal will merge with and into ArcelorMittal, S.A. (ArcelorMittal), a Luxembourg socit anonyme wholly owned by Mittal, with ArcelorMittal being the surviving company (the First-Step Merger), and (2) subsequently, conditional upon the First-Step Merger having been completed, ArcelorMittal will merger with and into Arcelor, with Arcelor being the surviving company in this second merger (the Second-Step Merger and, together with the First-Step Merger, the Merger). As of the date hereof, Mittal holds 94.24% of the issued share capital of Arcelor with the remaining 5.76% of the issued share capital of Arcelor being held by a number of other shareholders (the Public Shareholders). The merger agreement dated May 2, 2007, entered into by and between Mittal and ArcelorMittal with respect to the First-Step Merger (the First Step Merger Agreement) sets forth the terms and conditions of the First-Step Merger and provides that, amongst other things, each issued and outstanding Class A and Class B share of common stock in the capital of Mittal (other than shares held in treasury) will be exchanged for one share of common stock, par value 0.01 per share, in the capital of ArcelorMittal (ArcelorMittal Common Stock). The draft dated May 14, 2007 of the merger agreement to be entered into by and between ArcelorMittal and Arcelor with respect to the Second-Step Merger (the Draft Second-Step Merger Agreement and, together with the First-Step Merger Agreement, the Merger Agreements) sets forth the terms and conditions of the SecondStep Merger and provides that, amongst other things, every eight shares of ArcelorMittal Common Stock, will be converted into the right to receive seven newly issued ordinary shares without nominal value in the capital of Arcelor (Arcelor Common Stock). You have asked for our opinion as to whether the exchange ratio applied to the Second-Step Merger, namely 0.875 shares of Arcelor Common Stock per one share of ArcelorMittal Common Stock (the Exchange Ratio) is fair from a financial point of view to the Public Shareholders. For purposes of the opinion set forth herein, we have: (a) reviewed certain publicly available financial statements and other business and financial information of Mittal and Arcelor, respectively, and the industries in which they operate; (b) reviewed certain financial projections relating to Mittal and Arcelor for the year ending December 31, 2008 prepared by the managements of Mittal and Arcelor and set forth in the Value Plan presented on September 27, 2006 (the Value Plan), taking into account financial information set forth in the Draft Press Release (as defined below) regarding the allocation between Mittal and Arcelor of synergies generated by the combination of the two companies, EBITDA and capital expenditures set forth in the Value Plan; (c) reviewed the reported prices and trading activity for Mittal Common Stock and Arcelor Common Stock; (d) compared the financial and operating performance of Mittal and Arcelor and the prices and trading activity of Mittal Common Stock and Arcelor Common Stock with that of certain other publicly-traded companies comparable with Mittal and Arcelor, respectively, and their securities; (e) reviewed the First Step Merger Agreement and a draft dated May 2, 2007 of the registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission (the SEC) on a confidential basis in relation to the issuance of shares of common stock by ArcelorMittal in the First-Step Merger; (f) reviewed the Draft Second-Step Merger Agreement and a draft dated May 9, 2007 of the registration statement on Form F-4 to be filed with the SEC on a confidential basis in relation to the issuance of shares of common stock by Arcelor in the Second-Step Merger; D-2

(g) reviewed a draft dated May 14, 2007 of the press release to be published by Arcelor on May 16, 2007 announcing details relating to the Merger (the Draft Press Release); and (h) performed such other analyses, reviewed such other information and considered such other factors, as we have deemed appropriate for the purposes of this opinion. In giving our opinion, we have assumed and relied upon, without independent verification, the accuracy and completeness of all information that was publicly available or supplied or otherwise made available to us by or on behalf of Mittal and Arcelor. With respect to the financial projections provided to us, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments by management as to the future financial performance of Mittal and Arcelor, and we express no view on such financial projections or the assumptions on which they were based. In addition, we have assumed that the Merger will be consummated in accordance with the terms set forth in the First-Step Merger Agreement and the Draft Second Step Merger Agreement without any waiver, breach, amendment or delay of any of their respective terms or conditions, and that the definitive Second-Step Merger Agreement will not differ in any material respects from the Draft Second-Step Merger Agreement furnished to us. We have also assumed that the press release that will be published by Arcelor on May 16, 2007 announcing details relating to the Merger will not differ in any material respect from the Draft Press Release furnished to us. Our opinion is limited to whether the Exchange Ratio is fair from a financial point of view to the Public Shareholders and we express no view as to the fairness of the Exchange Ratio or the Merger to any other holders of securities in Arcelor, to any holders of securities in Mittal or ArcelorMittal or to the employees or creditors of any of those companies. Our opinion does not in any manner address or consider the prices at which the Arcelor Common Stock will trade on or at any time after the completion of the Merger. We further express no opinion or recommendation as to how the shareholders of Arcelor, Mittal or ArcelorMittal should vote at any shareholders meetings to be held in connection with the Merger and this letter does not address the relative merits of the Merger as compared to alternative transactions or strategies that might be available to Arcelor nor does it address the underlying business decision to effect the Merger. We are not legal, tax, regulatory or actuarial advisors. Accordingly, this opinion does not address the legal or tax consequences of the proposed Merger to Arcelor, its creditors, or any other party and we have relied upon, without independent verification, the assessment of Arcelor and Mittal and their respective legal, tax and regulatory advisors as to all legal, tax and regulatory matters relating to the proposed Merger and the determination of the Exchange Ratio. We have not made any independent valuation or appraisal of the assets and liabilities (including any contingent, derivative or off-balance sheet assets and liabilities) of Mittal and Arcelor, nor have we been furnished with any such valuations or appraisals. Our opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. Events occurring after the date hereof may affect this opinion and the assumptions used in preparing it, and we do not assume any obligation to update, revise or reaffirm this opinion. We have been retained to provide only a financial opinion letter in connection with the Merger. As a result, we have not been involved in the structuring, planning, negotiation or preparation of the Merger. We will receive a fee for our services upon rendering of this financial opinion. In the past, we and our affiliates have provided financial advisory and financing services for Arcelor and Mittal and have received fees in connection with such services. Such past services include acting as financial advisor to the Board of Directors of Arcelor in connection with Mittals initial unsolicited $22.8 billion offer for Arcelor and in the subsequent 32 billion combination of Mittal and Arcelor. Morgan Stanley may also seek to provide such services to the combined group in the future and will receive fees for the rendering of these services. In the ordinary course of our trading, brokerage, investment management and financing activities, Morgan Stanley or its affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for our own account or the accounts of customers, in debt or equity securities or senior loans of Arcelor, Mittal or any other company or any currency or commodity that may be involved in this transaction. This letter is provided solely for the information of the Board of Directors of Arcelor and may not be used or relied on for any other purpose. This opinion may not be disclosed, referred to or communicated to any third party for any purpose and in any manner whatsoever without our prior written consent, except that a copy of this opinion may be included in its entirety in any filing Arcelor is required to make in connection with this transaction if such inclusion is required by applicable law. D-3

Based on and subject to the foregoing, it is our opinion that, on the date hereof, the Exchange Ratio is fair from a financial point of view to the Public Shareholders.

Very truly yours, MORGAN STANLEY & CO. LIMITED By: /s/ Michael Zaoui
Michael Zaoui Managing Director

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ANNEX E FAIRNESS OPINION OF FORTIS BANK

E-1

Fortis Bank (Nederland) N.V. Rokin 55 P.O. Box 243 1000 AE Amsterdam The Netherlands PERSONAL \ CONFIDENTIAL The Board of Directors of Arcelor S.A. 19, avenue de la Libert L-2930 Luxembourg Date Ref. Subject May 15, 2007 CFCM/BJ Fairness opinion

Dear Members of the Board, You have informed Fortis Bank (Nederland) N.V. (Fortis) that Mittal Steel Company N.V. (Mittal Steel) and Arcelor S.A. (Arcelor) propose to merge their respective businesses pursuant to a two-step merger process to be carried out as follows: (1) first, Mittal Steel will merge with and into ArcelorMittal S.A. (ArcelorMittal I), a Luxemburg socit anonyme wholly owned by Mittal Steel, with ArcelorMittal I being the surviving company (the First-Step Merger), and (2) subsequently, conditional upon the First-Step Merger having been completed, ArcelorMittal I will merge with and into Arcelor, with Arcelor being the surviving company in this second merger (the Second-Step Merger and, together with the First-Step Merger, the Merger). Upon completion of the Merger, the combined entity will be renamed ArcelorMittal S.A. (ArcelorMittal II). As of the date hereof, Mittal Steel holds 94.24% of the issued share capital of Arcelor with the remaining 5.76% of the issued share capital of Arcelor being held by a number of other shareholders (the Public Shareholders). The merger agreement dated May 2, 2007, entered into by and between Mittal Steel and ArcelorMittal I with respect to the First-Step Merger (the First Step Merger Document) sets forth the terms and conditions of the First-Step Merger and provides that, amongst other things, each issued and outstanding Class A and Class B share of common stock in the capital of Mittal Steel (other than shares held in treasury) will be exchanged for one share of common stock, par value 0.01 per share, in the capital of ArcelorMittal I (ArcelorMittal I Common Stock). The draft dated May 14, 2007 of the merger agreement to be entered into by and between ArcelorMittal I and Arcelor with respect to the Second-Step Merger (the Draft Second-Step Merger Document and, together with the First-Step Merger Document, the Merger Documents) sets forth the terms and conditions of the Second-Step Merger and provides that, amongst other things, every eight shares of ArcelorMittal I Common Stock, will be converted into the right to receive seven newly issued ordinary shares without nominal value in the capital of Arcelor (Arcelor Common Stock) (such exchange ratio, the MER). You have requested that Fortis provide you, as the board of directors of Arcelor, with an opinion regarding the fairness from a financial point of view (the Fairness Opinion or the Opinion) to Arcelors Public Shareholders, of the MER. In arriving at the Fairness Opinion, Fortis has used, amongst others, the following methods of analysis: (a) a discounted cash flow valuation of both Mittal Steel and Arcelor; (b) a peer group valuation of both Mittal Steel and Arcelor; and (c) a contribution analysis. E-2

In arriving at the Opinion, Fortis has reviewed and considered the following information: (a) publicly available historical business and financial information relating to the relevant companies, including, but not limited to, the 2005 and 2006 annual reports of Arcelor and Mittal Steel and the 2008 value plan dated September 27, 2006 (the Value Plan); (b) the First Step Merger Document and a draft dated May 2, 2007 of the registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission (the SEC) on a confidential basis in relation to the issuance of shares of common stock by ArcelorMittal I in the First-Step Merger; (c) the Draft Second Step Merger Document and a draft dated May 9, 2007 of the registration statement on Form F-4 to be filed with the SEC on a confidential basis in relation to the issuance of shares of common stock by Arcelor in the Second-Step Merger; (d) a draft dated May 14, 2007 of the press release to be published by Arcelor on May 16, 2007 announcing details relating to the Merger (the Draft Press Release); (e) certain relevant third party equity research analyst reports (the Equity Research Reports); (f) such other financial studies, analyses and investigations as Fortis may deem appropriate;

(g) the financial information set forth in the Draft Press Release regarding the allocation between Mittal Steel and Arcelor of synergies generated by the combination of the two companies, EBITDA and capital expenditures set forth in the Value Plan; and (h) certain clarifications on the financial information on Mittal Steel and Arcelor regarding among others tax rates, working capital improvements, deferred employee benefits and the acquisition of Sicartsa (together with (g) the Assumptions). This Opinion is based on economic, monetary and market and other conditions as in effect on, and the information made available to Fortis as of the date hereof. Accordingly, although subsequent developments may affect this Opinion, Fortis has not assumed any responsibility to update, revise or reaffirm this Opinion once given. This Opinion is also subject to the following: (i) the Opinion is solely intended as an assessment of the MER from a financial point of view and does not assess the MER in respect of any other area, including, but without limitation, relating to tax, accounting, actuarial or legal aspects; the fairness of the MER to the Public Shareholders expressed in this Opinion is only in the context of the Merger and thus this Opinion does not address any other transaction that Arcelor has considered, may consider or could have considered;

(j)

(k) Fortis had been requested to rely only on publicly available business and financial information; however, Fortis has been provided by Arcelor with the Assumptions, as described above. Fortis has also had access to the Equity Research Reports. As a result, Fortis has restricted its review to such publicly available business and financial information as it deemed fit, the Assumptions, the Equity Research Reports and the Merger Documents; (l) Fortis has had no access to Arcelors senior management, advisers and auditors for the purposes of rendering this Opinion;

(m) in arriving at this Opinion, Fortis has not performed an independent investigation as to the tax, accounting, actuarial, legal or regulatory matters relating to the Merger and the determination of the MER and has relied upon, without independent verification, the assessment of Arcelor and Mittal Steel and their respective legal, tax, accounting, regulatory and other advisors for all such matters; (n) Fortis has relied on the accuracy and completeness of all the financial and other information reviewed by it, including the Assumptions and the Equity Research Reports, and assumed such accuracy and completeness for the purposes of rendering this Opinion; E-3

(o) Fortis has not performed any investigation or otherwise undertaken to verify of the accuracy and completeness of the information reviewed by it for the purposes of rendering this Opinion; (p) with respect to financial projections provided to it, Fortis has assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments by management as to the future financial performance of Arcelor and Mittal Steel, and Fortis express no view on such financial projections or the assumptions on which they were based; (q) Fortis has assumed that the Merger will be consummated as described in the First-Step Merger Document and the Draft Second-Step Merger Document, without any waiver, breach, amendment or delay of any terms or conditions, that the definitive Second-Step Merger Document will not differ in any material respect from the Draft Second-Step Merger Document furnished to it, that the press release that will be published by Arcelor on May 16, 2007 announcing details relating to the Merger will not differ in any material respect from the Draft Press Release furnished to us, and that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained, and all other legal requirements will be complied with, without any adverse effect on Arcelor or the Merger and that no divestitures or asset sales from Arcelor will be required as a result of the Merger, in either case that would in any respect be material to Fortiss analysis; (r) Fortis has not made an independent appraisal of the assets and liabilities (contingent or otherwise) of Arcelor or Mittal Steel; and

(s) Fortis has not evaluated the solvency or fair value of Arcelor, Mittal Steel, or any of their respective Affiliates (as defined below), under any law relating to bankruptcy, insolvency, moratorium or similar matters. Fortis has been retained to provide only a fairness opinion in connection with the Merger and has not been involved in the structuring, planning, negotiation or preparation of the Merger. Fortis will receive a fee upon the issue of the Fairness Opinion, irrespective of the contents of the Opinion and/or the Merger being finalised. Furthermore, Fortis has performed certain banking services to Arcelor. In addition, certain departments within Fortis and affiliated entities may maintain business relations with Arcelor and may have performed transactions in shares in Arcelor for their own account or for the account of third parties. These business relations include, without being limited thereto, general lending, trade finance, equity capital markets, hedging arrangements, trust services, employee benefits and custody. Fortis has issued this Fairness Opinion, for the sole use by and benefit of the board of directors of Arcelor (the Board) in connection with the Merger. The Fairness Opinion does not provide any opinion with respect to the underlying business decisions regarding the Merger. The Fairness Opinion is not and must not be considered to be an opinion or a recommendation to Arcelors shareholders as to whether or not to accept the terms and conditions of the Merger or how the shareholders of Arcelor, Mittal Steel or ArcelorMittal I should vote in connection with the Merger. In addition, Fortis has not reviewed the state of affairs, strategy or financing of Arcelor or Mittal Steel. Fortis expresses no opinion herein as to the price at which the shares in ArcelorMittal II will trade. Fortis has not been asked to address and this Opinion does not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of Arcelor other than the Public Shareholders, or the holders of any class of securities, creditors or other constituencies of Mittal or Arcelor Mittal I. Based upon the foregoing set out hereunder, we are of the opinion that, as per the date of this Fairness Opinion, the MER is fair, from a financial point of view, to the Public Shareholders. The term Affiliates within this letter means in relation to any person or entity, any direct or indirect subsidiary or group company, or direct or indirect holding company of that person or entity, and any other direct or indirect subsidiary or group company of such holding company. This Opinion may not be disclosed, referred to, or communicated (in whole or in part) to any third party for any purpose whatsoever except with the prior written approval of Fortis, which approval will not be unreasonably withheld. If required by applicable law, rule or regulation, this Opinion may be reproduced in full in any E-4

disclosure document or proxy statement that Arcelor must file with any relevant securities laws regulatory authority, but may not otherwise be disclosed publicly in any manner without our prior written approval, which approval will not be unreasonably withheld, and then only in full. At the request of Arcelor, we may agree to the publication of this document. This letter and Fortis obligations to the Board hereunder shall be governed by and construed in accordance with Dutch law and any claims or disputes arising out of, or in connection with, this letter shall be subject to the exclusive jurisdiction of the competent Dutch courts. The English text of this Opinion is the only binding text and prevails over any translation. Yours faithfully, Fortis Bank (Nederland) N.V. J.M. Broekmaat P.W. van Echtelt

E-5

ANNEX F FAIRNESS OPINION OF SOCIT GENERAL

F-1

The Board of Directors Arcelor S.A. 19, avenue de la Libert L-2930 Luxembourg Paris, May 15, 2007 To the members of the Board of Directors You have informed us that Mittal Steel Company N.V. (Mittal) and Arcelor S.A. (Arcelor or the Company) propose to merge their respective businesses pursuant to a two-step merger process to be carried out as follows: (1) first, Mittal will merge with and into ArcelorMittal S.A. (ArcelorMittal), a Luxemburg socit anonyme wholly owned by Mittal, with ArcelorMittal being the surviving company (the First-Step Merger), and (2) subsequently, conditional upon the First-Step Merger having been completed, ArcelorMittal will merge with and into Arcelor, with Arcelor being the surviving company in this second merger (the Second-Step Merger and, together with the First-Step Merger, the Merger). Upon completion of the Merger, the combined entity will be redenominated ArcelorMittal. As of the date hereof, Mittal holds 94.24% of the issued share capital of Arcelor with the remaining 5.76% of the issued share capital of Arcelor (the Public Shares) being held by a number of other shareholders (the Public Shareholders). Mittal acquired 93.7% of the issued share capital of Arcelor through a public tender offer which closed on August 17 2006, where the consideration offered was: 13 Arcelor Mittal class A common shares and 150.6 in cash for 12 Arcelor shares tendered in the primary offer; or 40.40 in cash per Arcelor share tendered in the secondary cash offer; or 11 Arcelor Mittal class A common shares for 7 Arcelor shares tendered in the secondary share offer.

Mittal acquired the remaining portion of its shareholding in Arcelor pursuant to a mandatory sell-out procedure under Luxembourg law which closed on November 17, 2006, at a price of 40.40 per Arcelor share. The merger agreement dated May 2, 2007, entered into by and between Mittal and ArcelorMittal with respect to the First-Step Merger (the First Step Merger Agreement) sets forth the terms and conditions of the First-Step Merger and provides that, amongst other things, each issued and outstanding Class A and Class B share of common stock in the capital of Mittal (other than shares held in treasury by Mittal) will be exchanged for one share of common stock, par value 0.01 per share, in the capital of ArcelorMittal (ArcelorMittal Common Stock). The draft dated May 13, 2007 of the merger agreement to be entered into by and between ArcelorMittal and Arcelor with respect to the Second-Step Merger (the Draft Second-Step Merger Agreement and, together with the First-Step Merger Agreement, the Merger Agreements) sets forth the terms and conditions of the SecondStep Merger and provides that, amongst other things, each share of ArcelorMittal Common Stock, will be converted into the right to receive 0.875 newly issued ordinary shares without nominal value in the capital of Arcelor (Arcelor Common Stock) (such exchange ratio, the Merger Ratio). The Board of Directors of Arcelor will submit to the Arcelor Extraordinary General Meeting resolutions to approve the Second-Step Merger. Pursuant and subject to the approval of the Merger by the Arcelor Mittal and the Arcelor Extraordinary General Meetings, Arcelor Mittal Shareholders will receive newly issued shares of Arcelor in exchange for their ArcelorMittal shares on the basis of the Merger Ratio. You have requested our opinion as to the fairness, from a financial point of view, to the Public Shareholders of the Merger Ratio. F-2

For purposes of providing our opinion we have: (i) reviewed certain publicly available business and financial information concerning Mittal and Arcelor as well as other companies in the global steel industry;

reviewed certain financial projections relating to Mittal and Arcelor for the years ending December 31, 2007 to 2008 prepared by the managements of Mittal and Arcelor and set forthin the Value Plan presented on September 27, 2006 (the Value Plan); (ii) analysed Mittal and Arcelor stock trading performance, liquidity and correlation before and since the end of the mandatory sell out period; (iii) performed a comparable companies analysis as well as a contribution analysis based upon financial performance and capitalization; (iv) performed a discounted cash flows valuation of Mittal and Arcelor reflecting, inter alia, (a) the financial information set forth in the Draft Press Release regarding the allocation between Mittal and Arcelor of synergies generated by the combination of the two companies, EBITDA and capital expenditures set forth in the Value Plan, (b) latest completed and pending corporate acquisitions (Sicartsa, buy-out of the minority shareholders in Arcelor Brasil), and (c) research analyst projections; (v) reviewed precedents of back-end mergers subsequent to a public offer; (vi) reviewed the First Step Merger Agreement and a draft dated May 2, 2007 of the registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission (the SEC) on a confidential basis in relation to the issuance of shares of common stock by ArcelorMittal in the First-Step Merger; (vii) reviewed the Draft Second-Step Merger Agreement and a draft dated May 9, 2007 of the registration statement on Form F-4 to be filed with the SEC on a confidential basis in relation to the issuance of shares of common stock by Arcelor in the Second-Step Merger; (viii) reviewed a draft dated May 13, 2007 of the press release to be published by Arcelor on May 16, 2007 announcing details relating to the Merger (the Draft Press Release); (ix) run sensitivity analyses; and (x) performed other financial analyses that we deemed appropriate for the purposes of this opinion. Other than information set forth in the Draft Press Release, the above analyses are exclusively based on publicly available information as of the date hereof. In giving our opinion, we have relied upon and assumed, without assuming responsibility or liability for independent verification, the accuracy and completeness of all information that was publicly available. In that regard, we have assumed that the financial projections, synergies and their allocation have been reasonably prepared reflecting the best currently available estimates and judgments by management as to the future financial performance of Mittal and Arcelor and we express no view on such financial projections or the assumptions on which they were based. We have also assumed that all governmental, regulatory or other consents or approvals necessary for the consummation of the Merger will be obtained without any adverse effect on Arcelor that would have a material impact on our analysis. In addition, we have assumed that the Merger will be consummated in accordance with the terms set forth in the First-Step Merger Agreement and the Draft Second-Step Merger Agreement without any waiver, breach, amendment or delay of any terms or conditions, and that the definitive Second-Step Merger Agreement will not differ in any material respects from the Draft Second-Step Merger Agreement furnished to us. We have also assumed that the press release that will be published by Arcelor on May 16, 2007 announcing details relating to the Merger will not differ in any material respect from the Draft Press Release furnished to us. We are not legal, tax, regulatory or actuarial advisors. Accordingly, this opinion does not address the legal or tax consequences of the proposed Merger to Arcelor, its shareholders, its creditors or any other party and we have relied upon, without independent verification, the assessment of Arcelor and Mittal and their respective legal, tax and regulatory advisors as to all legal, tax and regulatory matters relating to the proposed Merger and the determination of the Exchange Ratio. We have not carried out any independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or off-balance sheet assets and liabilities) of Arcelor Mittal or Arcelor or any of their respective subsidiaries and we have not been furnished with any such evaluation or appraisal. F-3

Our opinion is limited to whether the Merger Ratio is fair from a financial point of view to the Public Shareholders and we express no view as to the fairness of the Merger Ratio or the Merger to any other holders of securities in Arcelor, to any holders of securities in Mittal or ArcelorMittal or to the employees or creditors of any of those companies. Our opinion does not address the relative merits of the Merger as compared to alternative transactions or strategies that might be available to Arcelor nor does it address the underlying business decision of Arcelor to proceed with the Merger. We further express no opinion as to the prices at which Arcelor shares will trade at any time post Merger. Our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof. It should be understood that subsequent developments may affect this opinion and that we do not have any obligation to update, revise, or reaffirm this opinion. Our opinion expressed herein is provided solely for the information and assistance of the Board of Directors of Arcelor in connection with the Merger and may not be used or relied on for any other purpose. We express no opinion or recommendation as to how the shareholders of Arcelor, Mittal or ArcelorMittal should vote at any shareholders meetings to be held in connection with the Merger. We have acted as joint financial advisor to Mittal and bookrunner of a financing facility in relation to its public tender offer for Arcelor in 2006 and as such have received fees from Mittal for our services. We have also been retained by Mittal and Arcelor to advise on the disposal process of assets located in Germany, Poland and Italy and were remunerated accordingly. In addition, Arcelor has agreed to indemnify us for certain liabilities arising out of our engagement. We and our affiliates have provided and provide investment banking and commercial banking services from time to time to Mittal, Arcelor and their respective affiliates. In the ordinary course of business, we and our affiliates may actively trade debt and/or equity securities of Mittal or Arcelor for our own account or for the account of our customers and, accordingly, we may at any time hold long or short positions in such securities. Moreover, Socit Gnrale does not hold any stable stake in Arcelor or Mittal: Socit Gnral holds trading positions in Arcelor (0.02%) and in Mittal (0.2%). Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Merger Ratio is fair, from a financial point of view, to the Public Shareholders. This letter is provided to the Board of Directors of Arcelor and may not be disclosed, referred to, or communicated (in whole or in part) to any third party for any purpose whatsoever except with our prior written approval except in compliance with applicable legal or regulatory obligations. Yours sincerely, Socit Gnrale

F-4

ANNEX G FAIRNESS OPINION OF RLA

G-1

May 15, 2007 Board of Directors Arcelor SA 19, avenue de la Libert L-2930 Luxembourg Gentlemen: We understand that Mittal Steel Company N.V. (Mittal) and Arcelor S.A. (Arcelor, and together with Mittal, the Parties) propose to merge their respective businesses pursuant to a two-step merger process to be carried out as follows: (1) first, Mittal will merge with and into ArcelorMittal S.A. (ArcelorMittal), a Luxemburg socit anonyme wholly owned by Mittal, with ArcelorMittal being the surviving company (the First-Step Merger), and (2) subsequently, conditional upon the First-Step Merger having been completed, ArcelorMittal will merger with and into Arcelor, with Arcelor being the surviving company in this second merger (the Second-Step Merger and, together with the First-Step Merger, the Merger). Upon completion of the Merger, the combined entity will be renamed ArcelorMittal S.A.. As of the date hereof, Mittal holds 94.24% of the issued share capital of Arcelor with the remaining 5.76% of the issued share capital of Arcelor being held by a number of other shareholders (the Public Shareholders). The merger agreement dated May 2, 2007, entered into by and between Mittal and ArcelorMittal with respect to the First-Step Merger (the First Step Merger Agreement) sets forth the terms and conditions of the First-Step Merger and provides that, amongst other things, each issued and outstanding Class A and Class B share of common stock in the capital of Mittal (other than shares held in treasury) will be exchanged for one share of common stock, par value 0.01 per share, in the capital of ArcelorMittal (ArcelorMittal Common Stock). The draft dated May 14, 2007 of the merger agreement to be entered into by and between ArcelorMittal and Arcelor with respect to the Second-Step Merger (the Draft Second-Step Merger Agreement and, together with the First-Step Merger Agreement, the Merger Agreements) sets forth the terms and conditions of the SecondStep Merger and provides that, amongst other things, each share of ArcelorMittal Common Stock, will be converted into the right to receive 0.875 newly issued ordinary shares without nominal value in the capital of Arcelor (such merger exchange ratio, the Exchange Ratio). You have requested our opinion as to the fairness, from a financial point of view, to the Arcelors Public Shareholders of the proposed Exchange Ratio in the Second-Step Merger. For the purposes of this assignment, we have assumed that the Exchange Ratio has been determined in accordance with the requirements of applicable laws and the contractual arrangement between the Parties with respect to the Merger and have relied on the substance of the November 14, 2006 press release of the Parties relating to the Merger. Our opinion is delivered in this context. We have been retained to provide only a financial opinion letter in connection with the Merger. We will receive a fee for our services upon rendering of this financial opinion, and Arcelor has agreed to indemnify us against certain liabilities arising out of our engagement. We have not provided any services to Arcelor, Mittal or any of their respective affiliates over the past two years. For the avoidance of doubt, we are not acting, for the purpose of this opinion, as independent expert pursuant to the provisions of articles 261-1 and seq. of the regulations of the French Autorit des marchs financiers. For the purposes of the opinion set forth herein, we have: (a) reviewed certain publicly available financial statements and other business and financial information of Arcelor and Mittal, including, but not limited to, the 2006 annual reports of Arcelor and Mittal, the 2008 Value Plan presented on September 27, 2006 (the Value Plan), and the combined entitys 2006 full year pro-forma and last quarter results; (b) reviewed the reported prices and trading activity for the Mittal and Arcelors shares, studied brokers notes, compared certain financial and stock market information for Mittal and Arcelor with similar financial and stock market information for certain other publicly-traded companies comparable with Mittal and Arcelor; (c) reviewed the publicly available financial terms of certain recent business combinations in the steel industry; (d) reviewed a draft dated May 14, 2007 of the press release to be published by Arcelor on May 16, 2007 announcing details relating to the Merger (the Draft Press Release); G-2

(e) reviewed the First-Step Merger Agreement and a draft dated May 2, 2007 of the registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission (the SEC) on a confidential basis in relation to the issuance of shares of common stock by ArcelorMittal in the First-Step Merger; (f) reviewed the Draft Second-Step Merger Agreement and a draft dated May 9, 2007 of the registration statement on Form F-4 to be filed with the SEC on a confidential basis in relation to the issuance of shares of common stock by Arcelor in the Second-Step Merger; and

(g) performed such other studies and analyses as we deemed appropriate for the purposes of this opinion. We have not held any discussions with the senior management of Arcelor and Mittal, with the exception of two conference calls on the financial information set forth in the Draft Press Release regarding the allocation between Mittal and Arcelor of synergies generated by the combination of the two companies, EBITDA and capital expenditures set forth in the Value Plan. In giving our opinion, we have assumed and relied upon, without independent verification, the accuracy and completeness of all information that was publicly available or supplied or otherwise made available to us by or on behalf of Arcelor and Mittal. With respect to the financial projections provided to us, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments by management as to the future financial performance of Mittal and Arcelor, and we express no view on such financial projections or the assumptions on which they were based. In addition, we have not made an independent evaluation or appraisal of the assets and liabilities (including any derivative or off-balance-sheet assets and liabilities) of Mittal or Arcelor or any of their respective affiliates and we have not been furnished with any such evaluation or appraisal. This opinion does not address the legal or tax consequences of the proposed Merger, and we have relied upon, without independent verification, the assessment of Arcelor and Mittal and their respective legal, regulatory and tax advisors as to all legal, regulatory and tax matters relating to the proposed Merger and the determination of the Exchange Ratio. We have further assumed that the Merger will be consummated in accordance with the terms set forth in the Merger Agreements without any waiver, breach, amendment or delay of any of their respective terms or conditions, and that the definitive Second-Step Merger Agreement will not differ in any material respects from the Draft Second-Step Merger Agreement furnished to us. We have also assumed that the press release that will be published by Arcelor on May 16, 2007 announcing details relating to the Merger will not differ in any material respect from the Draft Press Release furnished to us. Our opinion is limited to whether the Exchange Ratio is fair from a financial point of view to the Arcelors Public Shareholders and we express no view as to the fairness of the Exchange Ratio or the Merger to any other holders of securities in Arcelor, Mittal or ArcelorMittal, or to the creditors or any other constituencies of any of those companies. Our opinion does not address the relative merits of the Merger as compared to any alternative business strategy or transaction that might be available to Arcelor or Mittal, nor does it address the underlying business decisions of such companies to engage in the Merger. In addition, we are not expressing any opinion herein as to the prices at which the Arcelor shares will trade at any time. Our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof. It should be understood that subsequent developments may affect this opinion and that we do not have any obligation to update, revise, or reaffirm this opinion. This opinion expressed herein is provided for the sole information of the Board of Directors of Arcelor in connection with its evaluation of the proposed Merger and may not be used or relied on for any other purpose. This opinion does not constitute a recommendation to any shareholder of Arcelor, Mittal or ArcelorMittal as to how such shareholder should vote with respect to the Merger or any other matter. This Opinion may not be disclosed, referred, or communicated (in whole or in part) to any third party for any purpose whatsoever except with our prior written approval. This opinion may be reproduced in full in any filing that Arcelor is required to make in connection with the Merger if such inclusion is required by applicable law. Based upon and subject to the foregoing and based upon such other matters as we consider relevant, it is our opinion that, as of the date hereof, the proposed Exchange Ratio for the Second-Step Merger is fair from a financial point of view to the Arcelors Public Shareholders. Very truly yours, Luxembourg, May 15, 2007 /s/ Jean-Charles de Lasteryie Jean-Charles de Lasteyrie G-3

ANNEX H

ArcelorMittal Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2007

H-1

ArcelorMittal AND SUBSIDIARIES \UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2007

December 31, 2006

Unaudited

Audited

(millions of U.S. Dollars, except share and per share data)

ASSETS
Current assets: Cash and cash equivalents, restricted cash and short-term investments Trade accounts receivables Inventories (note 5) Prepaid expenses and other current assets Total current assets Non-current assets: Goodwill and intangible assets (note 4) Property, plant and equipment Investments in affiliates and joint ventures Deferred tax assets Other assets Total non-current assets Total assets 14,954 57,836 4,707 1,503 2,282 81,282 $ 124,849 10,782 54,696 3,492 1,670 2,164 72,804 $ 112,166 $ 6,782 11,246 19,448 6,091 43,567 $ 6,146 8,769 19,238 5,209 39,362

LIABILITIES AND EQUITY

Current liabilities: Payable to banks and current portion of long-term debt Trade accounts payable Accrued expenses and other current liabilities Total current liabilities Non-current liabilities: Long-term debt, net of current portion Deferred tax liabilities Other long-term obligations and deferred employee benefits Total non-current liabilities Total liabilities Equity (note 6): Equity attributable to equity holders of the parent Minority interest Total Equity Total liabilities and equity 48,549 6,398 54,947 $ 124,849 42,127 8,064 50,191 $ 112,166 22,389 7,625 9,677 39,691 69,902 21,645 7,274 8,496 37,415 61,975 $ 7,617 11,853 10,741 30,211 $ 4,922 10,717 8,921 24,560

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

H-2

ArcelorMittal AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Six Months Ended

June 30, 2007 Unaudited June 30, 2006 Unaudited

(millions of U.S. Dollars, except share and per share data) Sales Cost of sales (including depreciation and amortization of, respectively, 1,985 and 699 for six months ended June 30, 2007 and June 30, 2006) Gross margin Selling, general and administrative Operating income Other income net Income from equity method investments Financing costs net Income before taxes (including minority interest) Income tax expense (note 7) Net income (including minority interest) Attributable to : Equity holders of the parent Minority interest Net income (including minority interest) Earnings per common share: Basic Diluted Weighted average common shares outstanding (in millions): Basic Diluted 1,383 1,385 705 706 $3.60 3.59 $2.14 2.13 4,973 933 $5,906 1,507 192 $1,699 $51,699 41,589 10,110 2,423 7,687 83 349 (192) 7,927 2,021 5,906 $17,660 14,792 2,868 557 2,311 1 38 (195) 2,155 456 1,699

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

H-3

ArcelorMittal AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Reserves

(millions of U.S. Dollars, except share and per share data)

Balance at December 31, 2005 1 705 1,385 27 (9) 1,403 $17 ($648) 7 (571) 1,713 31 $27,310 4,973 (901) (41) $19,005 $17 ($84) $25,566 $14,974 $4,973 4,973 (4,973) $$60 ($90) $2,262 $11,601 $(176) 21 8 $487 $1,436 1,118 1,118 $2,554 15 1,507 (1,507) 1,507 (123) 1,507 (28) ($32) ($20) (127) (127) ($147) (123) (28) -

Shares* 704

Share capital $60 Retained Earnings $10,270

Treasury Stock ($111)

Additional Paid-in Capital $2,239 (74) (74) $148 $238 220 220 $458

Net income for the period $Foreign Currency Translation Adjustments $610

Unrealized Gains (Losses) on Derivative Financial Instruments ($4) Unrealized Gains (Losses) on Available for Sale Securities $222

Equity $13,286 (225) 1,507 1,282 15 29 (176) $14,436 $42,127 1,211 4,973 6,184 1,713 (540) (901) (34) $48,549

Minoriy interest $2,171 (58) 192 134 $2,305 $8,064 (2,599) 933 (1,666) $6,398

Total equity $15,457 (58) (225) 1,699 1,416 15 29 (176) $16,741 $50,191 (1,388) 5,906 4,518 1,713 (540) (901) (34) $54,947

Movements with minority shareholders

Items recognized directly in equity

Net income

Recognized income and expenses

Transfer to retained earnings

Treasury stock

Recognition of share-based payment

Dividends (USD 0.25 per share)

Balance at June 30, 2006

Balance at December 31, 2006

Items recognized directly in equity

Net income

Recognized income and expenses

Transfer to retained earnings

Issuance of shares in connection

with the acquisition of minority interest of Arcelor Brasil

Treasury stock

Dividends (USD 0.65 per share)

Other

Balance at June 30, 2007

* in millions, excluding treasury shares.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

H-4

ArcelorMittal AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Six Months Ended

June 30, 2007 Unaudited June 30, 2006 Unaudited

(millions of U.S. Dollars) Operating activities: Net income Adjustments to reconcile net income to net cash provided by operations: Minority interest Depreciation Others Changes in operating assets and liabilities, net of effects from acquisition Net cash provided by operating activities Investing activities: Purchase of property, plant and equipment Acquisition of net assets of subsidiaries, net of cash acquired Net cash used in investing activities Financing activities: Proceeds (payments) from payable to banks and long term debts Dividends paid Other financing activities (net) Net cash provided by (used in) financing activities Net increase in cash and cash equivalents Effect of exchange rate changes on cash Cash and cash equivalents: At the beginning of the period At the end of the period

$4,973 933 1,985 (269) (1,240) 6,382

$1,507 192 699 (173) (118) 2,107

(2,318) (4,573) (6,891)

(611) (957) (1,568)

2,708 (1,158) (534) 1,016 507 157 6,020 $6,684

(164) (241) 2 (403) 136 (50) 2,035 $2,121

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

H-5

ArcelorMittal AND SUBSIDIARIES (millions of U.S. Dollars, except share and per share data) Notes to the Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2007 NOTE 1 NATURE OF BUSINESS, BASIS OF PRESENTATION AND CONSOLIDATION Nature of business ArcelorMittal (ArcelorMittal or the Company), together with its subsidiaries, is a manufacturer of steel and steel related products. ArcelorMittal owns and operates manufacturing facilities in Europe, North and South America, Asia and Africa. ArcelorMittal was formerly known as Mittal Steel Company N.V. (Mittal Steel). These manufacturing facilities, each of which includes its respective subsidiaries, are referred to herein as the Operating Subsidiaries. On September 3, 2007, following approval by the Extraordinary General Meeting of Shareholders of Mittal Steel and by the sole shareholder of ArcelorMittal on August 28, 2007, Mittal Steel merged into ArcelorMittal. With the legal merger becoming effective, Mittal Steel was absorbed by ArcelorMittal, the surviving entity, and therefore no longer exists. As a result of the merger, holders of Mittal Steel shares automatically received one newly issued ArcelorMittal share for every one Mittal Steel share on the basis of their respective holdings in Mittal Steel. For accounting purposes, the merger of Mittal Steel into ArcelorMittal was considered a combination of entities under common control as of January 1, 2007. All recorded assets and liabilities of Mittal Steel and ArcelorMittal were carried forward at their historical book values, and the income of ArcelorMittal includes the income of Mittal Steel as of January 1, 2007. Organization ArcelorMittal was created under Luxembourg law on August 13, 2004 for an unlimited duration of time. ArcelorMittal has no manufacturing operations of its own and its major assets are interests in the common and preferred stock of its Operating Subsidiaries. Basis of preparation The unaudited condensed consolidated financial statements for the six months ended June 30, 2007 have been prepared in accordance with International Accounting Standard No-34, Interim Financial Reporting, as adopted by the European Union, and are presented in U.S. Dollars with all amounts rounded to the nearest million, except for share and per share data. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies are identical to the ones adopted for the preparation of the consolidated financial statements as at December 31, 2006.

Business combinations The Company revised its accounting for subsequent purchases after the Company has obtained control. The Company now records the difference between the book value of the reduction in minority interest and the associated fair value of assets and liabilities acquired as goodwill. Previously this amount was directly charged to equity. This change in policy had no impact on total equity or net income for all periods presented.

H-6

ArcelorMittal AND SUBSIDIARIES (millions of U.S. Dollars, except share and per share data) Notes to the Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2007 NOTE 3 ACQUISITIONS AND DISPOSALS The Company sold 100% of Travi e Profilati di Pallanzeno (TPP) in January 2007 for EUR 117 million (153) and 100% of its subsidiary Stahlwerk Thringen GmbH on March 5, 2007 for EUR 591 million (768). 100% of Huta Bankowa Splka z.o.o. (Huta Bankowa) was sold during the second quarter of 2007. On April 20, 2007, the Company acquired 100% of Siderurgia Lzaro Crdenas las trunchas S.A. de C.V. (Sicartsa) (Long Carbon, Mexico), from Grupo Villacero for an enterprise value of 1,400. The following table presents the preliminary purchase price allocation of the net assets of Sicartsa acquired:
Preliminary purchase accounting adjustments

in USD million Current assets Property, plant and equipment Other assets Total assets acquired Current liabilities Long-term debt Other long-term obligations and deferred employee benefits Deferred tax liabilities Minority interest Total liabilities assumed Net asset acquired Cash paid Preliminary goodwill Reimbursement of debt to previous shareholder Total cash outflow

Historical

Fair value

$514 1,576 39 2,129 648 1,016 159 185 77 2,085 $44

$10 10 400 (109) 291 ($281)

$524 1,576 39 2,139 648 1,016 559 76 77 2,376 (237) 515 752 926 $1,441

On June 5, 2007, the Company announced the result of its offer for the minority interest (free float) of Arcelor Brasil, thereby increasing its previous 67.1% shareholding in Arcelor Brasil to 96.6%. The Company paid for the shares with 3,500 in cash and approximately 27.0 million common shares, representing a total consideration of 5,200. As of August 8, 2007, the Company had paid an additional 434 in cash for additional shares of Arcelor Brasil after the close of its tender offer. These purchases were made pursuant to the sell-out procedures under applicable Brazilian regulations that required that the remaining Arcelor Brasil shareholders have the opportunity to sell their shares to the Company for R$53.89 per share in cash (the same price offered to Arcelor Brasil shareholders in the all-cash option of the tender offer) plus an interest component from June 8, the date of the settlement of the all-cash option of the tender offer, until settlement of such sales. On August 8, 2007, a general Arcelor Brasil shareholders meeting was held which approved the redemption by Arcelor Brasil of the remaining shares of Arcelor Brasil not held by the Company. On August 17, 2007, Arcelor Brasil paid a total of 132.7 in cash to the remaining shareholders and redeemed all the remaining shares of Arcelor Brasil for R$53.89 per share plus an interest component for the period from June 8, 2007, the date of the settlement of the all-cash option of the tender offer, until August 17, 2007, the date the funds were made available to the remaining shareholders. On August 20, 2007, Mittal Steel Brasil Participaes S.A., a wholly owned subsidiary of the Company that was incorporated in order to acquire the Arcelor Brasil shares in the context of the tender offer, was merged with and into Arcelor Brasil S.A. Following this merger, on August 31, 2007, Arcelor Brasil was merged into Belgo Siderurgia S.A. (Belgo), which was then renamed ArcelorMittal Brasil S.A. The combined entity is now 100% owned by ArcelorMittal subsidiaries.

H-7

ArcelorMittal AND SUBSIDIARIES (millions of U.S. Dollars, except share and per share data) Notes to the Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2007 The Company has updated its preliminary purchase price allocation for its acquisition of Arcelor as follows:
Preliminary purchase accounting adjustments Updated purchase accounting adjustments

in USD million Intangible assets Current assets Property, plant and equipment Other assets Total assets acquired Current liabilities Long-term debt Other long-term obligations and deferred employee benefits Deferred tax liabilities Minority interest Total liabilities assumed Minority interest Net asset acquired Fair value of shares issued Cash paid - net Purchase price - net Impact of foreign exchange since acquisition date Goodwill

Arcelor historical

Arcelor at fair value

$21,292 22,480 6,356 50,128 16,178 8,830 5,532 1,276 3,303 35,119 1,147 $13,862

$1,060 11,770 1,607 14,437 80 699 4,029 144 4,952 614 $8,871

$719 88 (6) 801 545 (251) 15 309 21 $471

$719 22,352 34,338 7,957 65,366 16,178 8,910 6,776 5,054 3,462 40,380 1,782 23,204 23,240 5,841 29,081 361 $6,238

H-8

ArcelorMittal AND SUBSIDIARIES (millions of U.S. Dollars, except share and per share data) Notes to the Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2007 NOTE 4 GOODWILL Goodwill acquired in a business combination is allocated, at the acquisition date, to the cash generating unit(s) that is or are expected to benefit from synergies expected to be realized as a result of that business combination (generally the plant or the plants acquired).The carrying amount of goodwill recognized in the year or period ended December 31, 2006 and six-months June 30, 2007 is specified as follows :

Mittal Steel Kryviy Rih Arcelor * Arcelor Brasil Sicartsa * Others Total

Net Value December 31, 2006 $1,332 6,552 136 $8,020

Acquisitions $3,147 752 $3,899

Purchase accounting adjustment $(471) ($471)

Exchange rate and other $15 157 75 $247

Net value June 30, 2007 $1,347 6,238 3,147 752 211 $11,695

* Subject to completion of purchase price allocation

NOTE 5 INVENTORIES Inventory at June 30, 2007 and December 31, 2006, net of allowance for slow moving, excess, or obsolete inventory, is comprised of the following :
June 30, 2007 December 31, 2006

Finished products Production in process Raw materials Manufacturing supplies, spare parts and other Total

$ 7,075 4,332 6,377 1,664 $ 19,448

$ 7,131 3,914 6,491 1,702 $ 19,238

H-9

ArcelorMittal AND SUBSIDIARIES (millions of U.S. Dollars, except share and per share data) Notes to the Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2007 NOTE 6 EQUITY Issued capital and share premium Following the legal merger with Mittal Steel on September 3, 2007 there were 1,403,603,957 issued and outstanding common shares of ArcelorMittal as of June 30, 2007 with a par value of 0.01, giving effect to the merger as if it had occurred on January 1, 2007. Share buy-back programs On March 30, 2007, the Board of Directors of the Company unanimously approved the start of a share buy-back program of class A common shares. This share buy-back program was scheduled to end at the earliest of (i) December 31, 2007, (ii) the moment on which the aggregate value of class A common shares repurchased by Mittal Steel since the start of this share buy-back program reached 590, (iii) the moment on which Mittal Steel and its subsidiaries held 10% of the total number of the then-issued class A and class B common shares, or (iv) the moment on which ArcelorMittal no longer had any corporate authorization to repurchase its shares. As of June 30, 2007, the Company had bought back an amount of approximately 577. This share buy-back program was completed on September 4, 2007 as the 590 limit was reached. Mittal Steel and ArcelorMittal, as its successor, purchased an aggregate of 9,493,304 Mittal Steel class A common shares and ArcelorMittal shares under the program. On June 12, 2007, the Company announced its intention to start a share buy-back program for up to a maximum of 27 million class A common shares, immediately following the completion of the 590 share buy-back program summarized above. This new share buy-back program was designed to offset the issuance of shares as partial consideration for the acquisition of the outstanding minority interests in Arcelor Brasil. This share buy-back program commenced upon the termination of the 590 buy-back program described above and will end at the earliest of the moment at which (i) the aggregate number of shares purchased under this program reaches the 27 million share limit, (ii) ArcelorMittal and its subsidiaries will hold 10% of the then-issued ArcelorMittal shares, or (iii) ArcelorMittal no longer has corporate authorization to repurchase its shares. Under the share buy-back program, the price per ArcelorMittal share, which will be paid in cash, will not exceed 125% of the trading price on the New York Stock Exchange, Euronext Amsterdam by NYSE Euronext, Euronext Brussels by NYSE Euronext, Euronext Paris by NYSE Euronext, the Luxembourg Stock Exchange or the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, depending on the market on which the transactions are effected, and will not be less than the par value of the share at the time of repurchase. Dividends Two three-month interim dividends of USD 0.325 per share were paid on March 15, 2007 and June 15, 2007. NOTE 7 INCOME TAX The income tax provision for the six months ended June 30, 2007 reflects an estimated annual effective tax rate of 25% (six months ended June 30, 2006 was 21%). The tax charge for the period is based on an estimated annual effective rate, which requires management to make its best estimate of annual forecast pretax income for the year. During the year, management regularly updates forecast estimates based on changes in various factors such as prices, shipments, product mix, plant operating performance and cost estimates, including labor, raw materials, energy and pension and other postretirement benefits. To the extent that actual pretax results for domestic and foreign income in 2007 vary from forecast estimates applied at the end of the most recent interim period, the actual tax provision recognized in 2007 could be materially different from the forecast annual tax provision as of the end of the six months ended June 30, 2007. As of June 30, 2007, the amount of net deferred tax assets recorded in the six months ended June 30, 2007 was 1,503. As of December 31, 2006, the amount of net deferred tax assets recorded was 1,670.

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ArcelorMittal AND SUBSIDIARIES (millions of U.S. Dollars, except share and per share data) Notes to the Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2007 NOTE 8 SEGMENT REPORTING The Companys primary segment is defined as the business segment. Sales between activities are calculated at market price. The operating result is shown after eliminations. The different activities are presented in accordance with the breakdown applied by ArcelorMittal.
June 30, 2007 Arcelo Mittal Steel Solution an Service Eliminatio

(in USD million unless otherwise stated) Financial information Sale Operating income Depreciation and amortization Capital expenditures Total assets as of June 30, 2007 Total liabilities as of June 30, 2007 Operational information Employees (000's)

Long Carbon Flat Carbon Flat Carbon Americas and Africa America Europ Asia, CIS Europe

Stainles Stee

Tota

11,023 1,43 49 69 17,642 5,36

17,072 2,24 65 64 32,369 11,706

11,645 2,07 32 44 25,615 8,72

8,78 1,76 26 34 17,424 3,00

4,98 61 12 11 5,81 2,55

7,19 30 6 83 4,50 3,14

(9,008) (745 5

51,699 7,68 1,98 2,318

21,486 35,406

124,849 69,902

12

31

June 30, 2006 Arcelor Mittal Steel Solutions Long Carbon and Flat Carbon Flat Carbon Americas and Africa, Europe (in USD million unless otherwise stated) Americas Europe Asia, CIS Services Elimination Financial information Sales Operating income Depreciation and amortization Capital expenditure Total assets as of June 30, 2006 Total liabilities as of June 30, 2006 Operational information Employees (000's) 21 28 21 105 46 221

Total

7,321 691 206 161 10,895 2,926

1,894 170 98 63 2,904 537

4,324 487 124 164 10,934 2,858

6,598 987 235 216 14,005 2,120

33 (93) 43 7 -

(2,510) 69 (7)

17,660 2,311 699 611

(3,008) 10,663

35,730 19,104

H-11

ArcelorMittal AND SUBSIDIARIES (millions of U.S. Dollars, except share and per share data) Notes to the Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2007 NOTE 9 CONTINGENT LIABILITIES Legal Claims The Company is a party to various legal actions arising from the ordinary course of business. An update of the principal legal actions for the six months ended June 30, 2007 is disclosed below. United States In July 2007, Viga Investments Inc. (Viga) filed a lawsuit seeking damages and other relief against ArcelorMittal USA alleging a failure to comply with terms of a stock purchase agreement for the purchase of certain steel assets (the Viga SPA). The suit alleged breaches relating to post-closing purchase price adjustment procedures under the agreement. In a related transaction, the Company and ArcelorMittal Mexico Holdings B.V. purchased the stock of Sicartsa in Mexico owned by Siderurgica Del Pacifico, S.A. De C.V. and Conjunto Siderurgico Del Balsas, S.A. de C.V. pursuant to a separate stock purchase agreement (the Sicartsa SPA). The Sicartsa SPA and the Viga SPA were interrelated (each refers to the other) and part of an overarching, integrated transaction. The Sicartsa sellers similarly dispute the validity of the closing balance sheet under the Sicartsa SPA. Both the Sicartsa and the Viga SPAs have identical terms requiring the parties to arbitrate any dispute under the SPAs relative to post-closing purchase price adjustments. The Company believes Viga breached this term by filing a lawsuit in New York state court and seeking a judicial determination of the appropriate purchase price adjustment. Due to the interrelatedness of the two transactions, ArcelorMittal USA, the Company and ArcelorMittal Mexico Holdings B.V. asserted counterclaims against the Sicartsa sellers in the Viga litigation. The Company is unable to assess the outcome of these proceedings or to reasonably estimate the amount of ArcelorMittal USA, ArcelorMittal Mexico Holdings B.V. or the Companys liabilities relating to these matters, if any. Canada Mittal Steel North America Inc. and Mittal Steel Roman are involved in a dispute with Canadian Natural Resources Limited (CNRL). The Company has learned that on March 30 and April 3, 2007, CNRL filed complaints in Calgary, Alberta for negligence seeking damages of approximately 56.4 and 25.4, respectively. As of this time, the complaints have not been served on either ArcelorMittal entity. The plaintiff alleges that it purchased defective pipe manufactured by Mittal Steel Roman and sold by Mittal Steel Roman and Mittal Steel North America Inc. ArcelorMittal is unable to reasonably estimate the amount of Mittal Steel North America Inc.s and Mittal Steel Romans liabilities relating to this matter, if any. Mexico Sicartsa is involved in a dispute with Ejido Santa Maria of the Municipality of La Union Guerrero over the payment of materials and related damages under a Joint Venture Agreement between the parties. In October 2006, the Agrarian Unity Tribunal entered a judgment ordering Sicartsa to pay the plaintiff damages of 54. In April 2007, upon appeal by Sicartsa, a higher court set aside the judgment and ordered further expert evidence relating to the matters in dispute. The Company and other subsidiaries, as purchasers under the Sicartsa SPA, have served notice on Pacifico, S.A. de C.V., and Conjunto Siderrgico del Balsas, S.A. de C.V., as sellers under the Sicartsa SPA seeking indemnity for any damages that may be incurred with respect to this claim, since it was not disclosed in connection with the acquisition.

H-12

ArcelorMittal AND SUBSIDIARIES (millions of U.S. Dollars, except share and per share data) Notes to the Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2007 South America In May 2007, the Brazilian Federal Revenue Service issued a 726 tax assessment to Belgo to recover taxes primarily related to credit settlements in the context of the 2003 financial reorganization and acquisition of Mendes Jnior Siderurgia S.A. In June 2007, Belgo filed a defense against this assessment through an administrative proceeding. In September 2007, Belgo received an administrative decision on the tax assessment pursuant to which it was determined that the amount of tax payable under the assessment should be 14. This decision is subject to mandatory review by an Administrative Court which may modify the decision and also is subject to appeal by Belgo. Europe On April 23, 2007, the Company received a decision of the Financial Directorate in Ostrava, Czech Republic, in which it ordered ArcelorMittal Ostrava to pay approximately 106 for allegedly abusing its economic position and, as a result, acquiring unjustified profits in respect of prices of blast furnace coke produced by ArcelorMittal Ostrava and delivered in 2004. The Financial Directorate subsequently ordered ArcelorMittal Ostrava to pay an additional fine of 24.7 for the period from January to March 2005. After its previous decision in October 2006 was cancelled by the Czech Republic Ministry of Finance, the matter was returned to the Financial Directorate in Ostrava for new investigation and decision. ArcelorMittal Ostrava received notice on June 14, 2007 that the Ministry of Finance had upheld the Financial Directorate of Ostravas decision. ArcelorMittal Ostrava filed a petition against the decision with the Municipal Court, Prague, on June 29, 2007. Filing the petition had the effect of suspending payment of the fines. Several minority shareholders of Arcelor or their representatives have made allegations regarding or brought legal proceedings relating to the merger process and more specifically the proposed exchange ratio in the merger. Their principal actions have been the following: writing letters to the Boards of Directors of Arcelor and the Company; seeking to instigate investigations or actions by market regulatory authorities; and seeking injunctions from Dutch and French courts. Arcelor and ArcelorMittal each believe that the allegations made and claims brought by the minority shareholders regarding the proposed exchange ratio are without merit and that such exchange ratio complies with the requirements of applicable law, is consistent with previous guidance on the principles that would be used to determine the exchange ratio in the second-step merger and is relevant and reasonable to shareholders of ArcelorMittal and Arcelor. To date, the courts and regulators that have ruled on the claims brought by minority shareholders have rejected the claims. It is possible that additional claims may be brought before regulators or courts prior to the ArcelorMittal and Arcelor extraordinary general meetings that will be convened to vote on the second-step merger. Mittal Steel South Africa Mittal Steel South Africa is involved in a dispute with Harmony Gold Mining Company Limited and Durban Roodeport Deep Limited alleging that Mittal Steel South Africa is in violation of the Competition Act. On March 27, 2007, the Competition Tribunal decided that Mittal Steel South Africa had contravened Section 8(a) of the Competition Act by charging an excessive price. On September 6, 2007, the Competition Tribunal imposed a penalty on Mittal Steel South Africa of approximately 97, other behavioral remedies designed to prevent Mittal Steel South Africa imposing or agreeing with customers any conditions on the resale of flat steel products and ordered that Mittal Steel South Africa pay the costs of the case. Mittal Steel South Africa has already appealed the decision of the Competition Tribunal on the merits and also intends to appeal its decision on the remedies. The Competition Commission has stated that it will not seek to recover the penalty pending the outcome of the appeals.

H-13

ArcelorMittal AND SUBSIDIARIES (millions of U.S. Dollars, except share and per share data) Notes to the Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2007 NOTE 10 SUBSEQUENT EVENTS On July 26, 2007, the Company announced that it had reached an agreement with the Polish Government to acquire the outstanding 25.2% shares of ArcelorMittal Poland (the Polish Company) currently held by the Polish State and Treasury Ministry. The Company agreed to acquire the shares for approximately 436 million Polish zloty or approximately 157. The Company initially acquired approximately 69% of the Polish Company in March 2004 and as part of that agreement received an option to purchase a further 25% from the Polish state, which was exercised in this transaction. On August 28, 2007, the Company sold 13,400,000 class A common shares for an aggregate amount of 616 million pursuant to a block trade transaction and simultaneously bought a call option giving it the right to a purchase the equivalent number of shares (or the shares substituted for them in the merger of Mittal Steel into ArcelorMittal or in the proposed merger of ArcelorMittal into Arcelor, as the case may be). The call option was transferred to ArcelorMittal as a result of the first-step merger. ArcelorMittal expects to use any shares that would be purchased pursuant to the call option for share deliveries under the ArcelorMittal employee stock option plan. The purchase price for the call option was 315 million and the strike price was 22.975 per share. The call option expires on November 28, 2007. On August 31, 2007, the Company announced that it had signed an agreement with RAG Beteiligungs-AG, Essen, for the acquisition of the 76.88% stake directly held by RAG in Saar Ferngas AG, Saarbrcken on August 30. The sale is subject to board approval and also to approval by the European antitrust authorities. The purchase price under the agreement is approximately EUR 367 million (503). The transaction is expected to be completed in the fourth quarter of 2007. On September 5, 2007, ArcelorMittal announced that it would acquire all of the outstanding interests of Wabush Mines, an iron ore and pellet producer in northeastern Canada. The Company will acquire the remaining interests it does not own in the joint venture through the exercise of a right of first refusal over such interests held by its subsidiary Dofasco Inc.. Dofasco, which already held 28.6% of the mining venture, will acquire the interests of Stelco (44.6%) and Cleveland Cliffs (26.8%) for an aggregate cash element of approximately 67 and the assumption of certain liabilities. The transaction, which is subject to regulatory approval, is expected to close in December 2007. On September 6, 2007, ArcelorMittal announced that it had received approval from the United States Department of Justice (DOJ) to sell its Sparrows Point steel mill located near Baltimore, Maryland and related railroad, intellectual property and other assets to a joint venture entity sponsored by Esmark Incorporated and Wheeling-Pittsburgh Corporation, with participation by industry and institutional investors, for an enterprise value of 1,350. The transaction is expected to close in the fourth quarter of 2007. On September 10, 2007, ArcelorMittal announced the proposed acquisition of 51% of the shares of Rozak A.S., the main Turkish steel stockholding company. The transaction is subject to the approval of antitrust authorities, and is expected to be completed by December 31, 2007.

H-14

ANNEX I INDEX TO FINANCIAL STATEMENTS

Page

Report of Deloitte Accountants B.V.

...................................................................

I-2

Audited Consolidated Financial Statements (including corresponding notes) of Mittal Steel Company N.V. and subsidiaries, including a board and corporate governance report, the consolidated balance sheets at December 31, 2005 and 2006, and the consolidated statements of income, changes in equity and cash flows for the years ended December 31, 2005 and 2006, prepared in accordance with IFRS and the Mittal Steel Company N.V. parent company only financial statements (including corresponding notes) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Report of Deloitte Accountants B.V.
...................................................................

I-3 I-105

Audited Consolidated Financial Statements (including corresponding notes) of Mittal Steel Company N.V. and subsidiaries, including the consolidated balance sheets at December 31, 2004 and 2005, and the consolidated statements of income, changes in equity and cash flows for the years ended December 31, 2004 and 2005, prepared in accordance with IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assurance Report of Deloitte SA relating to the Unaudited Pro Forma Condensed Combined Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I-106 I-162

I-1

To the Board of Directors and shareholders of Mittal Steel Company N.V. Auditors Report Report on the financial statements We have audited the accompanying financial statements 2006 of Mittal Steel Company N.V., Rotterdam. The financial statements consist of the consolidated financial statements as set out on pages I-29 to I-98 and the company financial statements as set out on pages I-99 to I-106. The consolidated financial statements comprise the consolidated balance sheet as at December 31, 2006, consolidated statement of income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. The company financial statements comprise the company balance sheet as at December 31, 2006, the company statement of income for the year then ended and the notes. Managements responsibility Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code, and for the preparation of the management board report in accordance with Part 9 of Book 2 of the Netherlands Civil Code. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with Dutch law. This law requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion with respect to the consolidated financial statements In our opinion, the consolidated financial statements give a true and fair view of the financial position of Mittal Steel Company N.V. as at December 31, 2006, and of its result and its cash flow for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code. Opinion with respect to the company financial statements In our opinion, the company financial statements give a true and fair view of the financial position of Mittal Steel Company N.V. as at December 31, 2006, and of its result for the year then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code. Emphasis of matter We draw attention to the fact that the accounting principles used in the preparation of the consolidated financial statements can vary in significant respects from accounting principles generally accepted in the United States of America. The effect of the principal differences in the determination of net income (loss) and shareholderss equity is set out in Note 28 to the consolidated financial statements. Our opinion is not qualified in respect of this matter.

I-2

Report on other legal and regulatory requirements Pursuant to the legal requirement under 2:393 sub 5 part e of the Netherlands Civil Code, we report, to the extent of our competence, that the management board report is consistent with the financial statements as required by 2:391 sub 4 of the Netherlands Civil Code. Deloitte Accountants B.V. E.R. Termaten RA Rotterdam, The Netherlands April 16, 2007 Audited Consolidated Financial Statements (including corresponding notes) of Mittal Steel Company N.V. and subsidiaries, including a board and corporate governance report, the consolidated balance sheets at December 31, 2005 and 2006, and the consolidated statements of income, changes in equity and cash flows for the years ended December 31, 2005 and 2006, prepared in accordance with IFRS and the Mittal Steel Company N.V. parent company only financial statements (including corresponding notes)

I-3

INDEX
Page

Board Report

............................................................................................ ...................................................................................

I-5 I-15 I-28 I-30 I-32 I-33 I-34 I-98 I-99 I-100 I-104

Corporate Governance

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Income

...................................................................... ...........................................................

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to the Consolidated Financial Statements Company Balance Sheets
..........................................................

................................................................................ .........................................................................

Company Statements of Income

Notes to the Company Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional Information

..................................................................................

I-4

BOARD REPORT ARCELOR MITTAL: A WINNING STRATEGY Mittal Steel Company N.V. (Arcelor Mittal, the Company, the Group) is the number one steel company in the world, with 320,000 employees in more than 60 countries. Created from the merger between Arcelor and Mittal Steel, the Group is the leader in all major global customer segments, including automotive, construction, household appliances and packaging. Arcelor Mittal has leading Research & Development (R&D) and technology, sizeable captive supplies of raw materials, and outstanding distribution networks to support its production process forming a truly integrated business model. With an industrial presence in 26 European, Asian, African and American countries, the Company has a substantial presence in all the key steel markets providing geographic as well as product diversity. Arcelor Mittal will now be looking to further build on its leading position both organicaly and by acquisition, particularly in high-growth markets such as India and China. The Company believes that globalisation and consolidation are the way forward to ensure long-term sustainability and maintain profitability, throughout variable steel cycles. Such a global presence brings considerable social responsibility. Arcelor Mittal is a responsible, communityminded organization which places considerable emphasis on critical functions including health and safety, environment and corporate social responsibility. In 2006 consolidated sales and operating income were US$ 58.9 billion and US$ 7.5 billion, respectively, as compared with US$ 28.1 billion and US$ 4.7 billion, respectively, in 2005. Net income for 2006 was US$ 5.2 billion, as compared with US$ 3.3 billion in 2005. On a pro forma basis, as if the merger with Arcelor occurred at the beginning of the period presented, sales for 2006 were US$ 88.6 billion, with a pro forma crude steel production of 118 million tonnes, representing around 10 per cent of world steel output. Also on a pro forma basis, the company has reported EBITDA of approximately US$ 15 billion for the past three years, demonstrating how the newly diversified geographic and product profile is helping deliver sustainable results. Quality is another area of particular focus for the Company. The Groups investments in R&D provide opportunities for worldwide operations, so as to enhance and share best practices. The Company recognizes the importance of intelligence sharing and exchanging ideas between business units to improve business performance. Furthermore, innovation and R&D benefit customers and drive improved competitiveness. Arcelor Mittal produces a diversified portfolio of quality products and services to meet a wide range of customers needs across all steel consuming industries. Strong relationships with customers are further strengthened by innovative R&D facilities satisfy the most sophisticated customer demands. Arcelor Mittal believes this winning strategy has not only created the market leading position enjoyed today, but ideally positions the company to lead the steel industry into a new phase of quality and sustainability. COMPANY PROFILE AND GLOBAL BUSINESS STRATEGY A consistent strategy is driving Arcelor Mittal. That strategy has three dimensions: Product diversity Integrated business model Geographic reach The strategy has proved successful in creating one of the worlds lowest cost and highest margin steelmakers one demonstrating sustained profitability, reduced risk and substantial growth opportunities. The Arcelor Mittal merger marks one more step along that path. Product diversity reducing risk Arcelor Mittal is the only producer offering the full range of steel products and services. From commodity steels to value-added products, from long products to flat, from standard to specialty products, from carbon steel to stainless steel and alloys, Arcelor Mittal offers a complete spectrum of steel products and supports it with continuous investment in process and product research. I-5

Product diversity is important in two respects. First, the requirements of mature and developing markets differ. Steel consumption in mature economies is weighted towards flat products and higher value-added mix. In developing economies, there is greater demand for long products and commodity grades. Second, a broad presence across all product areas provides a natural hedge against volume fluctuations in particular countries or market segments. Product breadth also reduces the impact of price cyclicality. In the US market, for instance, the spot price of hot rolled coil fluctuated by as much as to 40% between early 2004 and early 2007 almost twice the rate of fluctuation witnessed in the average base price for all US steel products. Price risk is further reduced by the volume of steel Arcelor Mittal sells on long-term contract. Around 35% of flat carbon output is sold under contracts of a year or longer. In addition, one-third of long products in Europe are sold under scrap surcharge indexation. With its leadership position in North America and Europe, the company also enjoys high exposure to stable markets. Value-added and specialty products represent about 60% of Group shipments. Arcelor Mittal will continually seek to grow the value-added proportion of its product mix over time as demand increases for these products in emerging countries. This will be achieved through continued investment in product enhancement in existing plants, new projects in high-growth markets and acquisitions that reinforce and expand product leadership and offer high synergy potential. Integrated business model increasing the sustainability of profits Arcelor Mittal is not only a steel producer but also an integrated metals and mining operation. At the other end of the value chain, it has a powerful distribution arm which transforms and trades finished products. Upstream and downstream integration increases the sustainability of profits by allowing a steel company to capture opportunities wherever they arise in the value chain. Upstream integration allows steel companies to hedge against raw material price fluctuations. Arcelor Mittals strategy is to expand its already substantial captive resources of iron and coal to increase levels of raw material self-sufficiency. Major investments are underway to expand iron ore output from existing mines most notably in Ukraine. In addition, since the merger, Arcelor Mittal has announced two significant new initiatives: A new mining development agreement with the Government of Liberia that paves the way for a 15 million tonnes-a-year iron ore mine. Agreements with the State of Senegal in February 2007 to develop a 750 million tonne iron ore resource in the Faleme region and build associated rail and port infrastructure at a cost of US$2.2 billion.

Downstream integration, through the ownership and management of distribution channels, allows steel companies to capture a greater share of value-added activities, particularly for high-end customers, such as automotive manufacturers, that are outsourcing more and more of their operations. It also brings steel makers closer to their end customers, giving them better market intelligence. That, in turn, allows them to better manage inventories in the supply chain to reduce volatility and improve working capital management. Finally, captive distribution channels provide a buffer against falling demand during an economic downturn particularly in Europe where steelmakers tend to own distribution channels. Geographic reach delivering cost leadership and growth With an industrial network spanning 26 countries on four continents, and representation in a total of 60 countries, Arcelor Mittal benefits from unique geographical diversification. Approximately 25% of production is from plants that figure among the lowest-cost producers in the world. Around three-quarters of production is at less than global average cost, giving the company the regional cost leadership that is essential to ensuring profitability throughout the economic cycle. Arcelor Mittal is committed to maintaining that cost leadership. In the short term, that will be achieved by realising the maximum synergies in purchasing, marketing and trading from the merger. Over the longer term, the focus will be on continuing to use scale and global presence to achieve greater production efficiencies, operational synergies and cost savings across the business. The Groups Western European and U.S. operations are among the most productive in the steel industry. Arcelor Mittal is embarking on a five-year programme designed to bring a number of its plants sited in emerging economies, and acquired over recent years, up to the same standard. Together with selective investments, I-6

efficiency improvements across the Group are designed to reduce headcount by around 40,000 over the period 2005-2008 through a combination of natural attrition and a voluntary retirement scheme. While the worldwide breadth of Arcelor Mittals sales reduces its exposure to wide price or demand fluctuations in any one market, its leading position in Brazil, Mexico, Central and Eastern Europe, Africa and Central Asia, enables it to benefit from the anticipated strong growth in domestic steel demand among developing countries. A major investment programme to expand the companys low-cost operations in emerging markets is underway (see below). In addition, since the merger, Arcelor Mittal has announced a number of new initiatives: The US$1.4 billion acquisition of Sicartsa, the leading Mexican long steel producer with annual production of around 2.5 million tonnes. The combination of Sicartsa with Arcelor Mittals existing Mexican business, Lazaro Cardenas, offers significant synergy potential and the opportunity to leverage the Groups expertise in value-added products. The signing of a Memorandum of Understanding to build a 12 million tonne capacity greenfield steel plant in Orissa, India. A joint venture with the Bin Jarallah Group of companies to construct a state-of-the-art seamless tube mill at Jubail Industrial City in Saudi Arabia. The mill will have a capacity of 500,000 tonnes a year.

OPERATIONAL REVIEW Flat Carbon Americas Arcelor Mittals Flat Carbon Americas division comprises substantial operations in Brazil, Mexico, the US and Canada. Combined, they represent the largest and most diverse flat-rolled supplier in the hemisphere, spanning a mix of mature and developing markets. These operations share markets and technologies and thus offer significant opportunities for synergies and performance improvements. Sales in the Flat Carbon Americas segment increased 56% to $17.6 billion for the year ended December 31, 2006 from $11.2 billion for the year ended December 31, 2005, primarily due to the inclusion of Arcelor and Mittal Steel USA ISG Inc. Excluding the effects of these acquisitions, sales decreased 6% to $5.0 billion for the year ended December 31, 2006 from $5.3 billion for the year ended December 31, 2005. The decrease was primarily due to the marginal reduction of average steel selling prices, lower steel shipment and lower non-steel revenues. Total steel shipments in the Flat Carbon Americas segment increased 49% to 24.0 million tonnes for the year ended December 31, 2006 from 16.2 million tonnes for the year ended December 31, 2005, primarily due to the acquisitions of Arcelor and Mittal Steel USA ISG Inc. Excluding the effects of these acquisitions, steel shipments decreased by 1% to 7.8 million tonnes for the year ended December 31, 2006 as compared to 7.9 million for the year ended December 31, 2005. This decrease was primarily due to the weak market environment for our products, in particular in the United States. Average steel selling price in the Flat Carbon Americas segment increased 7% for the year ended December 31, 2006, as compared with the year ended December 31, 2005, primarily due to the acquisitions of Arcelor and Mittal Steel USA ISG Inc with higher average steel selling prices. Excluding the effects of these acquisitions, average steel selling price for the year ended December 31, 2006 were marginally lower as compared with the year ended December 31, 2005. Flat Carbon Europe Sales in the Flat Carbon Europe segment nearly quadrupled to $14.4 billion for the year ended December 31, 2006 from $3.7 billion for the year ended December 31, 2005, primarily due to the inclusion of Arcelor. Excluding the effects of this acquisition, sales increased 14% to $4.2 billion for the year ended December 31, 2006 from $3.7 billion for the year ended December 31, 2005. This increase was primarily due to a 6% increase in average steel selling price and 3% increase in total steel shipments as the demand for our products was strong in Central and Eastern Europe. Total steel shipments in the Flat Carbon Europe segment increased 175% to 17.4 million tonnes for the year ended December 31, 2006 from 6.3 million tonnes for the year ended December 31, 2005, primarily due to the inclusion of Arcelor. Excluding the effects of this acquisition, steel shipments increased 3% to 6.5 million tonnes for the year ended December 31, 2006 from 6.3 million tonnes for the year ended December 31, 2005. This increase was a result of generally stronger demand for our products in Central and Eastern Europe. Average steel selling prices in the Flat Carbon Europe segment increased 26% for the year ended December 31, 2006, as compared with the year ended December 31, 2005, primarily due to the inclusion of Arcelor. Excluding I-7

the effects of this acquisition, average selling price increased 6% from 2005 to 2006. This increase was primarily due to the ability to pass along to customers certain increases in the input costs and improved market environment for our products. Long Carbon Americas and Europe Sales in the Long Carbon Americas and Europe segment nearly doubled to $13.1 billion for the year ended December 31, 2006 from $7.7 billion for the year ended December 31, 2005, primarily due to the acquisitions of Arcelor and Mittal Steel USA ISG Inc. Excluding the effects of these acquisitions, sales increased 16% to $8.2 billion for the year ended December 31, 2006, from $7.1 billion for the year ended December 31, 2005. This increase was primarily due to a 14% increase in shipments and a 7% increase in average steel selling prices. Total steel shipments in the Long Carbon Americas and Europe segment increased 73% to 17.0 million tonnes for the year ended December 31, 2006 from 9.8 million tonnes for the year ended December 31, 2005, primarily due to the acquisitions of Arcelor and Mittal Steel USA ISG Inc. Excluding the effects of these acquisitions, shipments increased 14% to 10.5 million tonnes for the year ended December 31, 2006 from 9.2 million tonnes for the year ended December 31, 2005. This increase was primarily due to an improved market demand for our products, particularly wire rod and bars. Average steel selling price in the Long Carbon Americas and Europe segment increased 13% for the year ended December 31, 2006 as compared to the year ended December 31, 2005, primarily due to the acquisitions of Arcelor and Mittal Steel USA ISG Inc. Excluding the effects of these acquisitions, average steel selling price increased 7% from 2005 to 2006. This increase was primarily due to a strong demand, especially from the construction industry, and the ability to pass along increased scrap prices to customers. Asia, Africa and CIS (AACIS) Sales in the AACIS segment increased 45% to $14.4 billion for the year ended December 31, 2006 from $9.9 billion for the year ended December 31, 2005, primarily as a result of the inclusion of Arcelor and Mittal Steel Kryviy Rih. Excluding the effects of these acquisitions, sales increased 19% to $11.6 million for the year ended December 31, 2006 as compared with $9.7 billion for the year ended December 31, 2005. This increase was primarily due to a 10% increase in shipments and a 5% increase in average steel selling price. Total steel shipments in the AACIS segment increased 60% to 19.7 million tonnes for the year ended December 31, 2006 from 12.3 million tonnes for the year ended December 31, 2005, primarily due to the inclusion of Arcelor and Mittal Steel Kryviy Rih. Excluding the effects of these acquisitions, steel shipments increased 10% to 13.1 million tonnes for the year ended December 31, 2006 from 11.9 million tonnes for the year ended December 31, 2005. This increase was primarily the result of strong demand for our products, particularly in the long products division of the CIS, Middle East and African countries. Average steel selling price in the AACIS segment decreased 6% for the year ended December 31, 2006 as compared to the year ended December 31, 2005, primarily due to the inclusion of Arcelor and Mittal Steel Kryviy Rih, the latter of which had lower average selling prices, being primarily an exports-based business. Excluding the effects of these acquisitions, average steel selling price increased 5% for the year ended December 31, 2006 as compared to the year ended December 31, 2005. This increase was primarily due to a strong market environment for our products in the CIS, Middle East and African countries, itself reflecting increased activity in the construction and infrastructure sectors, which was offset in part by a price decrease for flat products as a result of Chinese steel producers satisfying their local demand and consequently turning China into a net steel exporter in 2006. Stainless Steel The results of the Stainless Steel segment correspond solely to the operations of Arcelor, whose results are included from August 1, 2006. In the Stainless Steel segment, sales were $3.3 billion and shipments were 0.9 million tonnes for the year ended December 31, 2006. AM3S The results of the AM3S segment correspond solely to the operations of Arcelor, whose results are included from August 1, 2006. Sales in the AM3S segment were $5.2 billion for the year ended December 31, 2006.

I-8

The following table provides a summary of sales at Mittal Steel by operating segment for the year ended December 31, 2006 as compared to the year ended December 31, 2005:
Sales for the Year Ended December 31(1) 2005 (in $ millions) 2006 (in $ millions) Sales (%) Changes in Average Steel Selling Price (%)

Steel Shipments (%)

Segments(1) Flat Carbon Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . Flat Carbon Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long Carbon Americas and Europe . . . . . . . . . . . . . . AACIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stainless Steel(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AM3S(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) (2)

11,241 3,676 7,676 9,909 N/A N/A

17,585 14,366 13,120 14,388 3,261 5,221

56 291 71 45 N/A N/A

49 175 73 60 N/A N/A

7 26 13 (6) N/A N/A

(3)

Amounts are prior to inter-company eliminations and include non-steel sales. Includes results of operations of Mittal Steel USA ISG Inc. from April 15, 2005, Mittal Steel Kryviy Rih from November 26, 2005 and Arcelor from August 1, 2006. The results of the Stainless Steel and AM3S segments correspond solely to the operations of Arcelor, whose results are included from August 1, 2006. Consequently, there are no comparable business operations for the Stainless Steel and AM3S segments for 2005.

Recent Developments In January 2007, the Company sold Travi e Profilati di Pallanzeno (TPP) and its 49.9% stake in San Zeno Acciai to Duferco for an enterprise value of 117 million. Such divestment was pursuant to a commitment made to the European Commission in connection with the Companys acquisition of Arcelor. In 2006, TPP generated sales of approximately 190 million with an annual production of approximately 500,000 tonnes of long carbon steel products. On January 19, 2007, the Company announced that it had agreed to sell Huta Bankowa Splka z.o.o. (Huta Bankowa) to Alchemia SA Capital Group for an enterprise value of approximately 37 million (approximately $48 million). Such divestment was pursuant to a commitment made to the European Commission in connection with the Companys acquisition of Arcelor. Huta Bankowa, a wholly-owned subsidiary of the Company, is located in Dabrowa Gornicza in southern Poland. The transaction is expected to close in 2007, subject to European Commission approval and applicable antitrust clearances. On February 2, 2007, the Companys Board of Directors declared an interim dividend of $0.325 per share. The cash dividend was paid on March 15, 2007 to Euronext Amsterdam, Euronext Brussels, Euronext Paris, the Luxembourg Stock Exchange and Spanish Stock Exchange shareholders of record on February 27, 2007, and to NYSE shareholders of record on March 2, 2007. On February 14, 2007, the Company signed a joint venture agreement with the Bin Jarallah Group of companies for the design and construction of a seamless tube mill in Saudi Arabia. This facility will be located in Jubail Industrial City, north of Al Jubail on the Persian Gulf. The mill will have a capacity of 500,000 tonnes per year. Construction is planned to commence at the end of the first quarter of 2008 and to be completed by the fourth quarter of 2009. the Company will hold a 51% interest in the company established for this project, with the Bin Jarallah Group holding the remaining 49%. On February 23, 2007, the Company announced that it had signed agreements with the State of Senegal in West Africa to develop iron ore mines in the Faleme region of South East Senegal. The project is expected to require an investment of approximately $2.2 billion. The project is an integrated mining project that will encompass the development of the mine, the building of a new port near Dakar and the development of approximately 750 kilometers of rail infrastructure to link the mine with the port. The Company expects the mine to produce approximately 750 million tonnes of iron ore. The Company expects to commence production of the mines in 2011. The agreements will become effective upon the fulfillment of certain conditions by the State of Senegal. On March 2, 2007, The Company was included in the AEX index and the FTSE4Good Index Europe indexes. On September 18, 2006, The Company was included in the CAC 40 index. On March 2, 2007, the Company announced that 385,340,210 Mittal Steel class B common shares owned by Mittal Investments S..r.l. had been converted into 385,340,210 Mittal Steel class A common shares. This I-9

conversion had no impact on the total number of shares (1,392,308,490 shares, consisting of 1,320,158,490 class A common shares and 72,150,000 class B common shares). On March 5, 2007, the Company sold Stahlwerk Thringen GmbH (SWT) to Grupo Alfonso Gallardo for an enterprise value of 591 million (approximately $768 million). Such divestment was pursuant to a commitment made to the European Commission in connection with the Companys acquisition of Arcelor. SWT, which was a wholly-owned subsidiary of the Company, is located at Unterwellenborn, Thringen, Germany. In 2005, SWTs sales were approximately 400 million. SWT employs approximately 700 people and produces steel sections of up to 550 millimeters in width used in building and construction. On March 16, 2007, the Company announced that it was investing in a new steel service center in Krakow, Poland. Incorporating two de-coiling lines and a slitting line, this facility will have a processing capacity of 450,000 tons per year and will strengthen the Companys network of steel service centers in Poland. Operation is expected to commence in the fall of 2007. On March 16, 2007, the Company announced that it had signed a definitive agreement with Noble International, Ltd. (Noble) for the combination of their laser-welded tailored blanks businesses. In exchange for its laserwelded blanks business in western and eastern Europe, China, India and the United States, the Company will receive $300 million from Noble, including $131,250,000 in a combination of cash, a Noble note and the assumption of certain financial obligations, and 9,375,000 shares of Noble common stock. The Company and Noble are also seeking to include in the transaction the tailored blanks business of Powerlasers, a unit of Dofasco, for additional consideration of approximately $50 million, subject to the approval of the trustees of Dofasco. Upon completion of the transaction, which is expected to occur in June 2007, the Company will become the largest shareholder of Noble, with approximately 40% of its issued and outstanding common shares and four of the nine seats on its Board of Directors. On April, 2, 2007, the Company announced the commencement of a share buy-back program to repurchase up to a maximum aggregate amount of $590 million of its class A common shares. The share buy-back program will end at the earliest of (i) December 31, 2007 (provided that the Companys shareholders, at the annual general meeting of shareholders to be held on May 15, 2007, renew the current authorization for the Company Board of Directors for a period of 18 months, ending on November 15, 2008), (ii) the moment on which the aggregate value of class A common shares repurchased by the Company since the start of this share buy-back program reaches $590 million, or (iii) the moment on which the Company and its subsidiaries hold ten percent of the total number of the then-issued class A and class B common shares. On September 25, 2006, the Comisso de Valores Mobiliros (the CVM), the Brazilian securities regulator, ruled that, as a result of the Companys acquisition of Arcelor, the Company was required to carry out a public offer to acquire all the outstanding shares in Arcelor Brasil not owned by Arcelor or any other affiliate of the Company. Pursuant to the ruling, the value to be offered to Arcelor Brasils shareholders is to be determined on the basis of the value of the part of the overall consideration paid for Arcelor by the Company that was attributable to Arcelor Brasil. On October 26, 2006, the Company filed with the CVM a request for registration with respect to such offer, and filed amended requests on January 11, 2007, February 27, 2007, and April 5, 2007. As per the amended request for registration filed by the Company on April 5, 2007, the consideration to be offered per Arcelor Brasil share is R$11.70 in cash and 0.3568 Mittal Steel Class A common shares, subject to certain adjustments. As of April 4, 2007, the total value offered per Arcelor Brasil share would be 18.89. Tendering Arcelor Brasil shareholders may also accept an all-cash option, pursuant to which they will receive cash in an amount equivalent to the value of the cash and share consideration described above, calculated in the manner set forth in the request for registration. On the basis of the closing price for the Companys shares on the New York Stock Exchange on April 4, 2007, the maximum amount of cash that may be paid by the Company will be approximately 4.0 billion (assuming 100% acceptance of the cash option). The maximum number of the Company shares that may be issued will be approximately 76 million shares, representing 5% of the share capital of the Company on a fully diluted basis (assuming 100% acceptance of the mixed option). The request for registration is subject to the approval of the CVM. Outlook For the first quarter of 2007, the Company expects overall shipments levels to remain in line with fourth quarter 2006 levels. Flat Carbon Americas, profitability is expected to continue to suffer from oversupply of inventory while performance for the Flat Carbon Europe segment is expected to remain positive. The performance of the Long Carbon Americas and Europe is expected to increase. The performance of the Stainless Steel segment is expected to remain at high levels, while the performance of AM3S and AACIS is expected to remain stable. The Company expects an effective tax rate of approximately 25% for the year. I-10

For the full year 2007, the Company expects operating performance to improve over the 2006 levels in all segments, assuming no material changes in the scope of consolidation. Liquidity and capital resources The Companys principal sources of liquidity are cash generated from its operations, its credit lines at the corporate level and various working capital credit lines at its operating subsidiaries. In managements opinion, the Companys financing facilities are adequate for its present requirements. Because the Company is a holding company, it is dependent upon the earnings and cash flows of, and dividends and distributions from, its operating subsidiaries to pay expenses and meet its debt service obligations. Some of these operating subsidiaries have debt outstanding or are subject to acquisition agreements that impose restrictions or prohibitions on such operating subsidiaries ability to pay dividends. As of December 31, 2006, the Companys cash and cash equivalents, restricted cash and short-term investments amounted to $6.1 billion as compared to $2.1 billion as of December 31, 2005. In addition, the Company, including its operating subsidiaries, had available borrowing capacity under its various credit lines, including receivable factoring and securitization facilities, of $9.0 billion as of December 31, 2006 as compared to $1.9 billion as of December 31, 2005. As of December 31, 2006, the Companys total debt, which includes long-term debt, short-term debt and borrowings under working capital facilities, was $26.6 billion as compared to $8.3 billion as of December 31, 2005. Most of the external debt is borrowed by the parent company on an unsecured basis. As of December 31, 2006, the Companys external debt bore interest at varying levels based on a combination of fixed and variable interest rates. In addition, some of the debt of the Companys operating subsidiaries is secured by liens on specified assets of the relevant subsidiary. Under some of the loan agreements and bonds outstanding, the Companys operating subsidiaries are required to comply with certain financial covenants. As of December 31, 2006, the Companys operating subsidiaries were in compliance with all such covenants. HUMAN RESOURCES Human Resources has played a key role in driving the integration of the Group in the wake of the merger, establishing the organisational structure and overseeing management appointments down to General Manager level. That process continued into early months of the new year with the announcement of the 2007 bonus plan detailing the way in which people will be measured and rewarded and the completion of a comprehensive job evaluation, benchmarking and salary review process covering the top management tiers. The primary focus going forward is talent management. Harnessing and developing the skills of its 320,000 employees is an integral part of the Arcelor Mittal vision to be the most admired steel institution in the world. Enabling employees at all levels to contribute to the best of their ability is a duty on any good employer. It also makes good business sense. In the case of the steel industry, there is an added incentive to identify and encourage talent from within. With its difficult history, the industry finds itself with a shortage of leaders at both executive and general management levels. Demographic trends suggest all industries will find it harder to find and keep top management talent in the coming years. Along with many international companies, there is huge competition to develop and attract talented people with multi-country experience. Finding managers with both business and international experience remains a key challenge. In addition, as a global leader, Arcelor Mittal is tasked with making careers in the resurgent steel sector attractive. Ensuring there is sufficient talent for the future leadership needs of the Company is a primary focus of the existing senior Executives, supported by proactive HR initiatives. The response of Arcelor Mittal has been to invest heavily in the fostering and developing of internal talent through a multi-pronged Leadership Development Programme. The Leadership Development Programme combines several tiers of internal and external training with a continuous review process designed to identify and develop a long-term pool of talent. Arcelor Mittal University One of the key priorities in the wake of the merger was the establishment of the Arcelor Mittal University (the University). Building on the best of the two predecessor companies learning and development programmes, the Arcelor Mittal University constitutes one of the most advanced skills development resources in the corporate world. Its objectives are to develop the potential of everyone in the Group and bring on the next generation of leaders. I-11

It encourages people to: Acquire new skills and competences. Meet and exchange ideas and share best practice. Allow themselves to be intellectually stretched and challenged. Develop a bottom-up flow of ideas so proposals for change are driven not only from the top down. The new University held its first event at the end of November 2006. It combines the former Arcelor University training centre at Maisires-ls-Metz in North-Eastern France with the extensive e-learning and localised modular training courses created by Mittal Steel in an integrated, global offering. With blended programmes now available for the entire Arcelor Mittal workforce, the University is additionally playing a valuable role in the process of integration and the building of an Arcelor Mittal culture. The 2007 course programme includes the Open Your Steel, Emerging Talent, Operations Managers and Campus programmes, traditionally run by the former Arcelor University as well as more advanced modules on change management and strategic marketing. The distance learning courses will be used to help introduce new technologies rapidly and effectively. A global English language training programme, delivered online and targeted at second and third level managers, is already being accessed by several hundred people. Once mastered, the additional language skill is designed to act as a stepping stone to other programmes broadening the base for future management assignments. The University is designed to provide development opportunities for everyone with people management responsibilities, spanning professional, functional or technical activities, and will be used to help identify promising talent at every level. It will be closely aligned with performance management. Targeted at managers across the Group, it is designed to accelerate leadership development and capability, engage employees in career planning, and strengthen the Groups position as an employer of choice. Leadership Development The Global Executive Development Process (GEDP) has been deployed across the Arcelor Mittal Group in 2006. GEDP is a performance management review process that not only assesses the quality of leadership within all business units and functions but identifies the potential leaders of tomorrow the so-called high potentials or Hipos. The process covers every level of management down to General Manager, assessing performance and potential, mobility, English language capability and seeks nominations for Arcelor Mittal University programmes. The succession management component targets a minimum of ten to 15 key positions in each business unit, identifying two successors for each position, and between five and 15 Hipos. For each successor or Hipo, it puts in place, a personal development plan is created, and it picks out those considered ripe for internal mobility. The GEDP lies at the heart of Arcelor Mittals performance management process. It is the key to succession planning, salary increase, annual performance bonus payout, long-term incentive plans and the nomination of candidates for advanced management development programmes. As part of the GEDP, young talent is groomed for higher roles. In 2006, around 150 managers were nominated to attend management and leadership programmes at six leading business schools in the US and Europe. Every effort is also being made to identify managers prepared to move across borders and encourage mobility. The scale of the new organisation has transformed career opportunities, providing unparalleled opportunities for staff to progress via multiple functions, countries and regions. International mobility is now viewed as a key component of personal development and a prerequisite for career advancement. As part of the process of encouraging mobility, Arcelor Mittal is committed to making its internal job market as transparent as possible. A preliminary Intranet site Job Offers for Managers was launched in December 2006. It allows anyone within the new perimeter of the Group to apply for a vacancy in any country, profession or plant. An expanded Job Market Online tool will be launched in the second quarter of 2007. In addition to fostering internal development, Arcelor Mittal continues to look beyond the boundaries of the steel industry for future talent. Its global MBA recruitment programme continued in 2006 with the recruitment of 15 people. Partnership with Employees and their Representatives Both Arcelor and Mittal Steel have in recent years adopted a partnership approach with trades unions. Building and maintaining good relations with employee representatives everywhere is one of managements key goals. I-12

Voluntary Retirement/Separation Schemes Continued efficiency improvements remain a key focus for management. Arcelor Mittal has completed a comprehensive productivity benchmarking programme for all operating units, and work on restructuring and productivity improvement will be progressed throughout 2007. Through benchmarking and knowledge transfer the overall employment efficiency will be continuously improved and with that the viability of individual plants strengthened. CORPORATE SOCIAL RESPONSIBILITY (CSR) Sustainable Steel means building a stable global institution with the resources to deliver the products that customers want, while respecting the needs of the communities in which Arcelor Mittal operates. Arcelor Mittal has grown rapidly over recent years by acquiring steel making operations around the world and has inherited a wide range of values, principles and management approaches to addressing sustainability challenges. The challenge and opportunity during the integration phase has been to identify the strengths, best practices and areas for improvement in order to fulfil Arcelor Mittals commitment to Sustainable Development including the management of health, safety and environmental issues, as well as those areas covered by the developing Group CSR strategy. Given the Companys diversity, focus in 2006 has been on: Benchmarking global and regional performance in CSR; Understanding the challenges and initiatives of country operations; Responding to key stakeholders such as Socially Responsible Investment (SRI) Funds regarding the impacts of the Arcelor Mittal merger; and Developing a Group framework (strategy, policies, standards and tools) to promote the consistent treatment of Sustainable Development throughout the company.

Even as Arcelor Mittal develops its Group Sustainable Development framework, the country and regional operations have demonstrated a continuing commitment to social and environmental responsibility within the communities in which the Group operates. This commitment takes the form of stakeholder engagement efforts, community partnerships and community development programmes. Moving into 2007, activities at both Group and country levels will be emphasized. For the Group, the key elements of the Group Sustainable Development framework will be completed and moved toward reporting on performance by the end of 2007. Arcelor Mittal will also continue to respond to its key stakeholders, in particular to gather feedback as the company moves forward with this framework. The Group will also continue to support and develop programmes and partnerships in its country operations. To accomplish this, the investment placed in communities through operations must be conducted in a manner that is also sensitive to the economic well-being of those communities, the sustainability of the resources used and the integral role of Arcelor Mittals products in society. 2006 Highlights During the year, priority areas have progressed: Completion of a 2006 CSR Country Level Risk & Opportunity Register to better understand the social challenges faced by the communities and the Company; Provision of a Group-wide environmental framework and guidance to facilities; Assessment of sponsorship and social investment activities across all business units to inform the strategy of the newly formed Arcelor Mittal Foundation; Coordination of Group-wide environmental reporting and analysis; Development and roll-out of a framework to assess the organisational structures in place in all regions to address CSR impacts;

Evolving Sustainable Development Framework In a diverse culture such as Arcelor Mittal, it is the responsibility of the Group to provide a consistent framework within which the various country and regional operations can continue to provide social and economic benefit to the communities in which they operate. Therefore, a Sustainable Development framework is evolving so that it will provide consistent standards and values in the form of tools and knowledge sharing, whilst allowing operations to determine what is most important in their own communities. In 2006, this evolution has centred on policy development, standards development and the introduction of key mechanisms to improve performance. I-13

Policy Development During 2006, Arcelor Mittal has sought to evolve the CSR policies and commitments of Arcelor and Mittal Steel by integrating best practice aspects from both to form an Arcelor Mittal CSR policy series. This will address the broad scope of CSR activities within Arcelor Mittal and will align with the Health & Safety, Environment and Human Resources policies. Together, these policies will underpin the delivery of Sustainable Development strategy. Standards Development To measure its success, Arcelor Mittal has developed a unique internal benchmarking system designed to drive improvement in CSR throughout the Company. The system assesses policies; forward planning; allocation of responsibilities; internal communication; external communication; management systems and auditing. During 2006, it has been benchmarked through many of Arcelor Mittal global operations in order to create a robust methodology that is applicable across the range of socio-economic conditions. Introducing Key Mechanisms to Improve Performance The final focus of the evolving Sustainable Development framework has been developing specific mechanisms to improve performance. Primarily, Arcelor Mittal has been actively engaged in developing support tools that can be used at sites covering various CSR aspects, as well as building a community of champions across the business. Both will be crucial in ensuring sufficient organisational capacity to deliver a successful CSR programme. Stakeholders Dialogue, Engagement and Partnership Building and maintaining trust amongst the many and varied stakeholder groups relies upon action rather than words and much of the detailed work is rightly led from within country operations. Therefore, it is no surprise that even as the Group Sustainable Development Framework is being built, the country operations have demonstrated significant commitment to responsible behaviour within their own communities. Each site manager is responsible for engaging with their local stakeholders and partners, both internal and external. Arcelor Mittal also recognises that a multi-stakeholder approach offers the best hope of increasing capacity to pre-empt, manage and mitigate global risks. Throughout 2006, engagement at sites have been characterised by a wide range of positive activities and initiatives. Examples include: Arcelor Mittal South Africa held regular meetings with Municipal Authorities in order to understand the needs of local communities and will be building on this by proactively setting up forums for consultation with local communities, even where no specific concerns have been identified. Arcelor Mittal Brasil continued its systematic approach to stakeholder dialogue through their Stakeholder Engagement Programme, which has included a mapping of key stakeholders views to ensure that these are fed into the business decision-making processes on strategy and future projects.

At the Group level, these regional engagement programmes are being built by integrating the learning and best practice elements into the Group Sustainable Development Framework, which will include a systematic assessment of stakeholders expectations around non-financial impacts. The outcome of which will include a list of material issues and areas of concern for each stakeholder. Going forward, Arcelor Mittal will look to establish systematic stakeholder dialogue at all levels of the company to inform the development of the Arcelor Mittal strategy, policies and public disclosure. During 2006, the Group also implemented many projects in partnership with institutions and non-governmental organisations (NGOs). Examples include: In Algeria, the Company is working with an environmental NGO, Association for Protection of Environment and Fight against Pollution (ANPEP) on several projects in the Annaba area. These have focused on increasing the green belt around the plant and a local river cleanup. In Brazil, the Environmental Communication Programme (PCA) is a long term partnership initiative with primary, secondary and higher education institutions in Great Vitria. Since 1997, the programme has focused on improving environmental education and awareness of sustainability to students, teachers and educators. The activities are developed in-line with school curricula and include workshops; guided visits to the plant and educational vegetable gardens.

These types of projects will be increasingly evaluated and pursued in a more strategic manner. Moving forward, Arcelor Mittal will emphasize country partnerships that match both the needs of the community and society as well as the values of Arcelor Mittal. I-14

2007 Sustainable Development Priorities Moving into 2007, Arcelor Mittal has established the following priorities in Sustainable Development: Continue to support and develop responsible social and environmental practices within our country operations; Draft CSR policies and integrate these with the existing Health and Safety, Environment and Human Resources Policies to develop the Sustainable Development Policy Series; Continue to develop specific mechanisms, tools and communication networks to enhance the sharing of best practice and to improve performance; Identify the Groups top ten sustainability issues and use these to agree and draft the Sustainable Development strategy in line with the overall business strategy; Continue to focus on communication with key stakeholders such as Socially Responsible Investment (SRI) Funds whilst expanding stakeholder engagement practices at Group and country levels; Publicly report on Sustainable Development performance by the end of the year; Develop more responsive products that address the needs of current and future society. CORPORATE GOVERNANCE Board Practices In June 2001, the Company adopted corporate governance guidelines in line with best practices on corporate governance. The Company has since continued to monitor diligently new, proposed and final U.S. and Dutch corporate regulatory requirements, and it will make adjustments to its corporate governance controls and procedures to stay in compliance with these requirements on a timely basis. The Company is committed to meeting the corporate governance and requirements under applicable current and proposed SEC and New York Stock Exchange listing standards and the laws of The Netherlands. The Dutch Corporate Governance Code was published on December 9, 2003 and incorporated in Dutch law in 2004. During the Companys annual general meeting of shareholders held on May 5, 2004, the implications of the Dutch Corporate Governance Code were discussed with its shareholders and certain proposed changes to the Companys Articles of Association to bring them in line with the requirements of the Dutch Corporate Governance Code were approved by the shareholders. Finally, the Companys general meeting of shareholders, in which Mr. Lakshmi N. Mittal and his wife, Mrs. Usha Mittal (the Significant Shareholder) can determine the outcome of votes, also approved one deviation from the Dutch Corporate Governance Code, i.e., the separation of the posts of Chairman and Chief Executive Officer, as it approved that Mr. Lakshmi N. Mittal could remain the Companys Chairman and Chief Executive Officer. Because this deviation was approved by the general meeting of shareholders, the Company is in compliance with the Dutch Corporate Governance Code and the relevant provisions of Book 2 of the Dutch Civil Code in this regard. At the Companys annual general meeting of shareholders held on May 26, 2005, the shareholders approved an amendment to the Companys Articles of Association stipulating a clear division of responsibility for setting a remuneration policy for the Board of Directors and individual members of the Board of Directors between the Board of Directors, the Remuneration Committee (since then replaced by the Appointments, Remuneration and Corporate Governance Committee) and shareholders. In addition, the Companys Articles of Association were updated to reflect changes in Dutch law. Each year the Board of Directors will submit for approval by the general meeting of shareholders a proposal regarding the arrangements for the remuneration in the form of shares or rights to acquire shares. The proposal will at least set out the maximum number of shares or rights to subscribe for shares to be granted to the members of the Board of Directors and the applicable criteria for such grant or for any change thereto. A lack of approval by the general meeting of shareholders of such proposal will not affect the representative authority of the Board of Directors in connection with the grant of rights to subscribe for shares. In accordance with the Dutch Corporate Governance Code, non-executive members of the Board of Directors will not receive any share options, and no options have been awarded after 2002. Finally, on June 30, 2006, the general meeting of shareholders of the Company resolved to amend the Companys Articles of Association to eliminate all differences between the rights attached to Mittal Steels class A common shares and class B common shares (except for the right of the holders of the class B common shares to convert their class B common shares on a share-per-share basis into class A common shares). Following the implementation of the amendment, which took effect on September 7, 2006, all shareholders hold shares carrying the same voting and economic rights; each share one vote, irrespective of the time it has been held. As a result of the amendment, the holders of class B common shares no longer have the right to make a binding nomination for I-15

the appointment of directors to the Board of Directors. All directors are elected by the general meeting of shareholders to serve three-year terms by a simple majority of the votes cast. The following explanation provides details of the Company board practices and corporate governance. Mittal Steel / Arcelor Memorandum of Understanding Pursuant to the Memorandum of Understanding, certain special governance mechanisms designed to promote the integration of Mittal Steel and Arcelor have been put in place for an initial three-year transitional period beginning as from August 1, 2006, which is referred to as the Initial Term. Mittal Steel and Arcelor agreed to change and unify their respective corporate governance structure and rules until Mittal Steel is merged into Arcelor, following which the name of the top-entity of the group will be ArcelorMittal. Since the implementation of the Memorandum of Understanding, the Company has been governed by a Board of Directors and a Group Management Board. Until Mittal Steel is merged into Arcelor, the composition and operation of each of Mittal Steel and Arcelors Board of Directors, Group Management Board and Management Committee will be identical. Board of Directors, Group Management Board and Management Committee of the Company The Board of Directors is in charge of the overall management of the Company. Mr. Lakshmi N. Mittal is the Chairman of the Board of Directors. The members of the Board of Directors are appointed and removed by the general meeting of shareholders. The Board of Directors is currently comprised of 17 non-executive directors and one executive director. The Chairman and Chief Executive Officer of the Company, Mr. Lakshmi N. Mittal is the sole executive director. Pursuant to the Memorandum of Understanding, Mr. Joseph J. Kinsch is President of the Board of Directors of the Company. Mr. Joseph J. Kinsch is currently the Chairman of the Board of Directors of Arcelor, while Mr. Lakshmi N. Mittal is currently the President of the Board of Directors and CEO of Arcelor. Following the merger of Mittal Steel into Arcelor, Mr. Kinsch shall be the Chairman of the Board of Directors of ArcelorMittal and Mr. Mittal shall be the President of the Board of Directors and CEO of ArcelorMittal. Article 18, paragraph 3 of the Mittal Steel Articles of Association stipulates that directors are appointed for a period of three years starting on the day after the day of the annual general meeting of shareholders on which they are appointed and ending on the day of the annual general meeting of shareholders that will be held in the third year after their appointment. The Group Management Board is entrusted with the day-to-day management of the Company. Mr. Lakshmi N. Mittal, the Chief Executive Officer, is the Chairman of the Group Management Board. The members of the Group Management Board are appointed and dismissed by the Board of Directors. As the Group Management Board is not a corporate body created by Dutch law or the Companys Articles of Association, the Group Management Board exercises authority granted to it by the Board of Directors. (Any references in the Companys Articles of Association to managing board are references to its Board of Directors.) In establishing the Companys strategic direction and corporate policies, Mr. Lakshmi N. Mittal is supported by members of senior management team who have substantial professional and worldwide steel industry experience. A number of senior management team members are members of the Group Management Board. The Group Management Board is assisted by a Management Committee, comprised of the members of the Group Management Board and 20 other senior executives. The Management Committee discusses and prepares group decisions on matters of group-wide importance, integrates the geographical dimension of the group, ensures in-depth discussions with the Companys operational and resources leaders and shares information about the situation of the group and its markets. Operation of the Board of Directors The required quorum for meetings of the Board of Directors is a majority of the directors, including at least the Chairman, the President and a majority of the independent directors being present or represented. Each director has one vote and no director has a casting vote. Decisions of the Board of Directors are made by a majority of the directors present and represented at a quorate meeting, except as otherwise required by Dutch law. During the Initial Term as defined in the Memorandum of Understanding, the agenda of each meeting of the Board of Directors will be jointly agreed by the Chairman and the President of the Board of Directors and will include any matters proposed to be included on the agenda jointly by the Chairman and the President. In the I-16

event of a disagreement, the Chairman and the President will work together to try to resolve any such disagreement. After the expiration of the Initial Term, the Chairman and the President will use their reasonable best efforts to agree on the agenda. Director Independence Thirteen of the 18 members of the Board of Directors are independent. A director is considered to be independent if (a) he or she is independent within the meaning of the Listed Company Manual of the New York Stock Exchange, Inc., which is referred to as the Listed Company Manual, as it may be amended from time to time, or any successor provision, subject to the exemptions available for foreign private issuers with respect to the director independence requirements under the Listed Company Manual, and (b) he or she is unaffiliated with any shareholder owning or controlling more than two percent of the total issued share capital of the Company. For these purposes, a person is deemed affiliated to a shareholder if he or she is an executive officer, a director who also is an employee, a general partner, or a managing member of such shareholder. Separate Meeting of Non-Executive Directors The non-executive members of the Board of Directors schedule meetings without the presence of management. There is no minimum number of meetings that the non-executive directors must hold per year. During 2006, the non-executive directors of the Company held three meetings separate from the executive director(s). The presiding independent director at each of these meetings was chosen at the meeting. Communications with the Board of Directors Pursuant to a process adopted by the Board of Directors, a shareholder or any other person may send communications directly to the Board of Directors through the Companys website at http://www.mittalsteel.com/dynamic/dynamicdefault.asp?id=questionable. Significant shareholder Right of Opposition During the Initial Term, with respect to Board of Directors decisions that require shareholders approval, the Significant shareholder will vote in accordance with the position expressed by the Board of Directors, unless the Significant shareholder opposes any such position, in which case the Significant shareholder can vote as it wishes, subject to the following requirements. During the Initial Term, if Mr. Lakshmi N. Mittal opposes any decision of the Board of Directors on a matter that does not require shareholders approval and that was not proposed by him, Mr. Lakshmi N. Mittal will have the right to request that such action first be approved by a shareholders meeting and the Significant shareholder will have the right to vote at such meeting as it sees fit. The Board of Directors will not approve any action that has been rejected by such shareholders meeting. Board of Directors Committees Following the implementation of the Memorandum of Understanding, the Board of Directors has two committees: an Audit Committee and an Appointments, Remuneration and Corporate Governance Committee. Audit Committee. The Audit Committee is composed of four independent directors. The members are appointed by the Board of Directors. The Audit Committee makes decisions by a simple majority with no member having a casting vote. The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing: the financial reports and other financial information provided by the Company to any governmental body or the public; the Companys system of internal control regarding finance, accounting, legal compliance and ethics that the Board of Directors and members of management have established; and the Companys auditing, accounting and financial reporting processes generally. The Audit Committees primary duties and responsibilities are to: serve as an independent and objective party to monitor the Companys financial reporting process and internal controls system; review and appraise the audit efforts of the Companys independent accountants and internal assurance department; provide an open avenue of communication among the independent accountants, financial and senior management, the internal auditing department and the Board of Directors; approve the appointment and fees of the independent auditors; and monitor the independence of the external auditors. I-17

The current members of the Audit Committee are: Messrs. Narayanan Vaghul, Jos Rmon lvarez-Rendueles, Wilbur L. Ross and Edmond Pachura, all of whom are independent under the Companys Corporate Governance guidelines, the New York Stock Exchange (NYSE) standards and the Dutch Corporate Governance Code. The Chairman of the Audit Committee is Mr. Vaghul, who has significant experience and financial expertise. Mr. Vaghul is the Chairman of ICICI Bank, a company that is listed on the NYSE and the Mumbai Stock Exchange. Mr. lvarez-Rendueles, as former Governor of the Bank of Espaa and former President of the Bank Zaragozano, also has significant experience and financial expertise. Both Mr. Ross and Mr. Pachura have considerable experience in managing companies affairs. The charter of the Audit Committee is available at http://www.mittalsteel.com/Investor+Relations/Corporate+Governance. The Audit Committee is required to meet at least four times a year. During 2006, the Audit Committee met nine times, five of which were physical meetings and four of which were meetings held by teleconference. Appointments, Remuneration and Corporate Governance Committee. Until October 30, 2006, the Board of Directors had a Nomination Committee and a Remuneration Committee. As of October 30, 2006, these two committees have been replaced by the Appointments, Remuneration and Corporate Governance Committee. The Appointments, Remuneration and Corporate Governance Committee is comprised of four directors, all of whom are independent, as were all directors in the two predecessor committees. The members are appointed by the Board of Directors. The Appointments, Remuneration and Corporate Governance Committee makes decisions by a simple majority with no member having a casting vote. The Board of Directors has established the Appointments, Remuneration and Corporate Governance Committee to: determine on its behalf and on behalf of the shareholders within agreed terms of reference, the Companys framework of remuneration and compensation, including stock options for the Chief Executive Officer and the Chief Financial Officer of the Company, the members of the Group Management Board and the members of the Management Committee; to consider any appointment or reappointment to the Board of Directors at the request of the Board of Directors; to provide advice and recommendations to the Board of Directors on such appointment; and to develop, monitor and review corporate governance principles applicable to the Company. The Appointments, Remuneration and Corporate Governance Committees principal responsibility in compensating executives is to encourage and reward performance that will lead to long-term enhancement of shareholder value. The Appointments, Remuneration and Corporate Governance Committee will, at the request of the Board of Directors, consider any appointment or reappointment to the Board of Directors. It will provide advice and recommendations to the Board of Directors on such appointment. The Appointments, Remuneration and Corporate Governance Committee is also responsible for developing, monitoring and reviewing Corporate Governance principles applicable to the Company. The current members of the Appointments, Remuneration and Corporate Governance Committee are: Messrs. Joseph Kinsch, Sergio Silva de Freitas, Lewis Kaden and Jean-Pierre Hansen, all of whom are independent under the Companys Corporate Governance guidelines, the NYSE standards as well as the Dutch Corporate Governance Code. The Chairman of the Appointments, Remuneration and Corporate Governance Committee is Mr. Kaden. The charter of the Appointments, Remuneration and Corporate Governance Committee is available at http://www.mittalsteel.com/Investor+Relations/Corporate+Governance. The Appointments, Remuneration and Corporate Governance Committee is required to meet at least twice a year. Its two predecessors, the Mittal Steel Nomination Committee and the Mittal Steel Remuneration Committee, were also required to meet twice a year. During 2006, each of these three committees met three times. Process for Handling Complaints about Accounting Matters As part of the procedures of the Board of Directors for handling complaints or concerns about the Companys financial accounting, internal controls and auditing issues, the Companys Code of Business Conduct encourages I-18

all employees to bring such issues to the Audit Committees attention. Concerns relating to such issues may be communicated through the Companys website at http://www.mittalsteel.com/dynamic/dynamicdefault.asp?id=questionable. During 2006, employees reported no complaints of this nature. Internal Assurance The Company has an Internal Assurance function. Until December 19, 2006, the function was solely the responsibility of the Director Internal Assurance, who reported to the Audit Committee. Since December 19, 2006, the Director-Internal Assurance of Mittal Steel was made jointly responsible for the function along with the Head of Internal Audit at Arcelor. The function is staffed by full time professional staff located at each of the principal operating subsidiaries and at the corporate level. Recommendations and matters relating to internal control and processes are made by the Internal Assurance function, and their implementation is regularly reviewed by the Audit Committee. External Auditors Independence The appointment and approval of fees of the external auditors is the direct responsibility of the Audit Committee. The Audit Committee is further responsible for obtaining annually a written statement from the external auditors that their independence has not been impaired. The Audit Committee has obtained a confirmation from the principal external auditors that none of its former employees is in a position with the Company that may impair the principal external auditors independence. Ethics and Conflicts of Interest Ethics and conflicts of interest are governed by the Companys Code of Business Conduct. The Code of Business Conduct sets out standards for ethical behavior that are to be followed by all employees and directors of the Company in the discharge of their duties. They must always act in the best interests of the Company and must avoid any situation in which their personal interests conflict, or could conflict, with their obligations to the Company. As employees, they must not acquire any financial or other interest in any business or participate in any activity that could deprive the Company of the time or the attention needed to devote to the performance their duties. Any behavior that deviates from the Code of Business Conduct is to be reported to the employees supervisor, a member of the management, the head of the legal department or the head of the internal audit/ internal assurance department. The Code of Business Conduct is available at http://www.mittalsteel.com/Investor+Relations/Corporate+Governance. Risk Management and Internal Controls The management is responsible for internal control in the Company and it has implemented a risk management and control system, which is designed to ensure that significant risks are identified and are monitored. Furthermore the system is designed to ensure compliance with relevant laws and regulations. The Company has mapped its internal control system in accordance with the recommendations of the Committee of Sponsoring Organizations of the Treadway Commission (COSO), which recommendations are aimed at providing a reasonable level of assurance. The Companys risk management and internal control system is designed to determine risks in relation to the achievement of business objectives and appropriate risk responses. The risk management is an integral part of the Companys approach towards risk management and includes, management reviews, reviews of the design and implementation of the Companys risk management approach and reviews in business and functional audit committees. On the basis thereof, the management confirms that internal controls over financial reporting provide a reasonable level of assurance that the financial reporting does not contain any material inaccuracies. The financial statements fairly represent the financial condition and result of operations of the Company and provide the required disclosures. It should be noted, however, that the above does not imply that these systems and procedures provide certainty as to the realization of operational and financial business objectives, nor can they prevent all misstatements, inaccuracies, errors, fraud and non compliances with rules and regulations. In view of the foregoing, the management believes that it is in compliance with the requirements of recommendation II.1.4 of the Dutch Corporate Governance Code, taking into account the recommendation of the Corporate Governance Code Monitoring Committee on the application thereof. This statement cannot be construed as a statement in accordance with the requirements of section 404 of the US Sarbanes-Oxley Act. I-19

Share Capital and Articles of Association Capital structure As at December 31, 2006, the authorized common shares of Mittal Steel consisted of 5,000,000,000 Class A common shares, par value of 0.01 per share, and 721,500,000 Class B common shares, par value of 0.01 per share. At December 31, 2006, 934,818,280 (December 31, 2005: 255,401,673) class A common shares and 457,490,210 (December 31, 2005: 457,490,210) class B common shares were issued and 927,778,733 (December 31, 2005: 246,572,889) class A common shares (excluding treasury shares) and 457,490,210 (December 31, 2005: 457,490,210) class B common shares were outstanding. Form and Transfer of Shares Both the class A common shares and the class B common shares of Mittal Steel are in registered form. Class A common shares are available in the form of an entry in the share register of Mittal Steel with or without the issuance of a share certificate, at the option of the shareholder concerned. No share certificates will be issued in respect of class B common shares. The class A common shares are freely transferable. The class A common shares have no conversion rights. Each class B common share is convertible at any time and from time to time at the option of the holder thereof into one class A common share. Issuance of Common Shares Pursuant to the Articles of Association, the general meeting of shareholders can designate Mittal Steels Board of Directors as the authorized corporate body for the purpose of resolving upon the issuance of shares by Mittal Steel and to determine the price and further conditions of such share issuance. Such a designation can only be valid for a specific period of no more than five years and may from time to time be extended for a period of not more than five years. A resolution to resolve upon the issuance of shares, including the designation of Mittal Steels Board of Directors as the authorized corporate body for the purpose of resolving upon the issuance of shares, requires a simple majority of the votes cast, without a quorum requirement. At the annual general meeting of shareholders held on May 9, 2006, Mittal Steel shareholders extended the authority to Mittal Steels Board of Directors for a period of one year (until the annual general meeting of shareholders to be held in 2007) to issue and/or grant rights to subscribe for shares with respect to ten percent of the unissued class A common shares in which the authorized share capital of Mittal Steel is divided at the time the resolution to issue or grant rights to subscribe for common shares taken by Mittal Steels Board of Directors. Preemptive Rights Unless limited or excluded by Mittal Steels shareholders or Board of Directors as described below, holders of each class of common shares have a pro rata preemptive right to subscribe for any newly-issued common shares of such class, except for common shares issued for consideration other than cash or issued to Mittal Steel employees or employees of any of its operating subsidiaries. A resolution to exclude or limit preemptive rights, including the designation of Mittal Steels Board of Directors as the authorized corporate body for the purpose of resolving upon the exclusion or limitation of preemptive rights, requires the approval of at least an absolute majority of the votes cast and, if less than one-half of the issued share capital is represented at the meeting at which the vote is taken, the approval of at least two-thirds of the votes cast. At the extraordinary meeting of shareholders held on December 15, 2004, shareholders delegated authority to Mittal Steels Board of Directors to limit or exclude preemptive rights in respect of issuances of Mittal Steel class A common shares for a period of five years (the maximum permitted by the laws of The Netherlands). At the annual general meeting of shareholders held on May 26, 2005, Mittal Steel shareholders resolved to reduce such authority to a period of one year (until the annual general meeting of shareholders to be held in 2006). At the annual general meeting of shareholders held on May 9, 2006, this authority was extended until the annual general meeting of shareholders to be held in 2007. Repurchase of Shares Mittal Steel may acquire its own common shares, subject to certain provisions of the laws of The Netherlands and of its Articles of Association. Purchases by Mittal Steel of its common shares may be effected by Mittal Steels Board of Directors only if the shareholders have authorized Mittal Steels Board of Directors to effect such repurchases and such authorization has been granted within 18 months (the maximum permitted by the laws of The Netherlands) prior to the date of purchase. I-20

A resolution to resolve upon the repurchase of shares, including the designation of Mittal Steels Board of Directors as the authorized corporate body for the purpose of resolving upon the repurchase of shares, requires a simple majority of the votes cast, without a quorum requirement. At the extraordinary meeting of shareholders held on December 15, 2004, shareholders granted the authority to Mittal Steels Board of Directors to repurchase up to 10 percent of the issued share capital of Mittal Steel, in the form of class A common shares and class B common shares, for a period of 18 months effective from the date of the extraordinary meeting of shareholders until June 14, 2006. At the annual general meeting of shareholders held on May 9, 2006, Mittal Steel shareholders resolved to authorize Mittal Steels Board of Directors, with effect from the date of the annual general meeting of shareholders held on May 9, 2006, to cause Mittal Steel to acquire up to ten percent of its own share capital issued at the time of acquisition, in the form of class A common shares, on the NYSE, Euronext Amsterdam or otherwise, for a period of 18 months (ending on November 8, 2007), for a purchase price per class A common share to be paid in cash, of not more than 125% of the share price on the NYSE or Euronext Amsterdam and no less than the par value of the share at the time of repurchase. The price on the NYSE or Euronext Amsterdam will be the higher of: (i) the average of the final listing price per class A common share according to the Official Price List (Officile Prijscourant) of Euronext Amsterdam during the 30 consecutive days on which Euronext Amsterdam is open for trading preceding the three trading days prior to the date of repurchase, and (ii) the average of the closing price per class A common share on the NYSE during the 30 consecutive days on which the NYSE is open for trading preceding the three trading days prior to the date of repurchase. Capital Reduction The shareholders of Mittal Steel may reduce its issued share capital by canceling common shares held by Mittal Steel, by canceling all common shares of a specific class or by reducing the par value of common shares, subject to certain statutory provisions. A resolution to reduce the issued share capital requires the approval of at least an absolute majority of the votes cast and, if less than one-half of the issued share capital is represented at the meeting at which the vote is taken, the approval of at least two-thirds of the votes cast. In addition, the prior or simultaneous approval of each class of common shares to which the capital reduction relates is required. Mittal Steel is required to file any resolution of shareholders reducing its share capital with the Commercial Register in Rotterdam and to publish the filing in a national daily newspaper. During the two-month period after the filing is made, creditors of Mittal Steel may oppose such reduction of share capital. General Meeting Each shareholder of Mittal Steel has the right to attend a general meeting of shareholders, either in person or by proxy, to address shareholder meetings and to exercise voting rights, subject to the provisions of Mittal Steels Articles of Association. There is no minimum shareholding required to be able to attend or vote at a general meeting of shareholders. An annual general meeting of shareholders will be held within six months after the end of each financial year in The Netherlands, in Amsterdam, Haarlemmermeer (Schiphol Airport), The Hague or Rotterdam. An extraordinary general meeting of shareholders may be held as often as Mittal Steels Board of Directors deems necessary. In addition, one or more shareholders and other persons entitled to attend such meetings jointly representing at least ten percent of the issued share capital may request that a general meeting of shareholders be convened. Mittal Steel will give notice of each meeting of shareholders by notice published by advertisement, which shall be published in at least one national daily newspaper distributed throughout The Netherlands and in the Official Price List (Officile Prijscourant) of Euronext Amsterdam and, if required, elsewhere. In addition, holders of registered shares who have their ownership recorded directly in Mittal Steels shareholders register shall be notified by letter that the meeting was convened. Such notices will be given no later than on the 15th day prior to the day of the meeting and will include, or be accompanied by, an agenda (or state where such agenda may be obtained) identifying the business to be considered at the meeting. Mittal Steels Board of Directors may set a record date to establish which shareholders are entitled to attend and vote at the meeting of shareholders. The agenda is to contain the items selected by the person(s) convening the meeting and required by Dutch law or Mittal Steels Articles of Association. In addition, unless it would be detrimental to the vital interests of Mittal Steel, the agenda must also contain the items requested in writing by one or more shareholders or other persons entitled to attend general meetings of shareholders, alone or together representing at least 1% of the issued share capital or representing the amount of market capitalization set by law (at present being 50 million). Such request must have been received by Mittal Steel not later than on the sixtieth day prior to that of the meeting. I-21

Voting Rights Each Mittal Steel class A common share and each Mittal Steel class B common share entitles its holder to one vote on each matter to be voted upon by shareholders. Shareholders will vote as a single class on all matters submitted to a vote of the general meeting of shareholders, including, without limitation, the appointment of Class A, B, and C directors to Mittal Steels Board of Directors and any proposed amendment of Mittal Steels Articles of Association. Mittal Steels Articles of Association currently provide that the Board of Directors must consist of five or more Class A, B and C directors, and must have at all times one Class A director and at least two Class C directors. All directors are appointed for a period of three years. The entire Board of Directors acting jointly can represent and bind Mittal Steel. In addition, each Class A director can represent and bind Mittal Steel individually. A Class B director acting jointly with another Class B director can represent and bind Mittal Steel, and a Class C director acting jointly with two Class B directors or one Class A director can represent and bind Mittal Steel. Unless otherwise required by Mittal Steels Articles of Association or the laws of The Netherlands, resolutions of the general meeting of shareholders will be validly adopted by a simple majority of the votes cast. Except in limited circumstances provided for in Mittal Steels Articles of Association or under the laws of The Netherlands, there is no quorum requirement for the valid adoption of shareholder resolutions. Major shareholders in Mittal Steel have no special or enhanced voting rights as a result of their larger shareholdings; their voting rights correspond to the number of class A and/or class B common shares they hold and the votes attached to such shares. In addition, directors can be removed and suspended by the general meeting of shareholders by a simple majority of the votes cast. Amendment to the Articles of Association Mittal Steels Articles of Association may be amended by resolution of the shareholders upon a proposal by Mittal Steels Board of Directors. The resolution of the shareholders to amend the Articles of Association shall require the prior or simultaneous approval of each class whose rights are prejudiced by the amendment to the Articles of Association. A resolution of the general meeting of shareholders and each class whose rights are prejudiced by the amendment to the Articles of Association to resolve upon an amendment to the Articles of Association requires a simple majority of the votes cast, without a quorum requirement.

I-22

Board of Directors The members of the Companys Board of Directors as of December 31, 2006 are as set forth below: Name Lakshmi N. Mittal Age(4) Date Joined Board Class/Term 56 May 1997 Class A 2009 73 26 70 69 64 70 66 63 53 72 59 60 58 61 43 43 73 October 2006 December 2004 July 1997 April 2005 April 2005 June 2006 October 2006 October 2006 October 2006 October 2006 October 2006 October 2006 October 2006 October 2006 October 200 October 2006 October 2006 Position within Mittal Steel Chairman of Mittal Steels Board of Directors and Chief Executive Officer Class C 2009 President of Mittal Steels Board of Directors Class A 2009 Member of Mittal Steels Board of Directors Class C 2009 Member of Mittal Steels Board of Directors Class C 2009 Member of Mittal Steels Board of Directors Class C 2009 Member of Mittal Steels Board of Directors Class C 2009 Member of Mittal Steels Board of Directors Class C 2009 Class C 2009 Class C 2009 Class C 2009 Class C 2009 Class C 2009 Class C 2009 Class C 2009 Class C 2009 Class C 2009 Class C 2009 Member of Mittal Steels Board of Directors Member of Mittal Steels Board of Directors Member of Mittal Steels Board of Directors Member of Mittal Steels Board of Directors Member of Mittal Steels Board of Directors Member of Mittal Steels Board of Directors Member of Mittal Steels Board of Directors Member of Mittal Steels Board of Directors Member of Mittal Steels Board of Directors Member of Mittal Steels Board of Directors Member of Mittal Steels Board of Directors

.............

Joseph J. Kinsch(2)(3)

........... .......... .........

Vanisha Mittal Bhatia Narayanan Vaghul(1)(3) Wilbur L. Ross(1)(3) Lewis B. Kaden(2)(3)

............. ............

Franois H. Pinault(3) . . . . . . . . . . . Jos Rmon lvarez Rendueles(1)(3) . . . . . . . . . . . . . . . . . . Board of Directors Sergio Silva de Freitas(2)(3) Georges Schmit

.....

................ ........... ..........

Edmond Pachura(1)(3) Michel Angel Marti(3)

Manuel Fernndez Lpez(3) . . . . . Jean-Pierre Hansen(2)(3)

.........

John Castegnaro(3) . . . . . . . . . . . . . . Antoine Spillmann

.............

HRH Prince Guillaume de Luxembourg(3) . . . . . . . . . . . . . . . . . Romain Zaleski . . . . . . . . . . . . . . . .

(1) (2) (3) (4)

Audit Committee Appointments, Remuneration and Corporate Governance Committee Non-executive and independent director Age as of December 31, 2006

The Company continues to put strong emphasis on corporate governance. The Company has thirteen independent directors on its Board of Directors. Mittal Steels Audit Committee and Mittal Steels Appointments and Remuneration and Corporate Governance Committee are each comprised exclusively of four independent members. Compensation of Board of Directors Remuneration principles The Mittal Steel Remuneration Committees principal responsibility in compensating executives is to encourage and reward performance that will lead to long-term enhancement of shareholder value. The Remuneration Committee reviews the remuneration of executive members of the Companys Board of Directors, the Chief Financial Officers, and the Chief Executive Officers of operating subsidiaries and designated senior management at the corporate level. None of the members of the Companys Board of Directors currently have entered into any contracts with the Company or any of its subsidiaries that provide benefits upon termination of employment. I-23

By a resolution passed on May 26, 2005, the shareholders of the Company adopted a policy regarding the remuneration of the members of the Board of Directors. The remuneration of the members of the Board of Directors will, with due observance of such policy, be determined by the Board of Directors upon a proposal of the Mittal Steel Remuneration Committee. Each year the Board of Directors will submit for approval by the general meeting of shareholders a proposal regarding the arrangements for the remuneration in the form of shares or rights to acquire shares. The proposal shall at least set out the maximum number of shares or rights to subscribe for shares to be granted to the members of the Board of Directors and the applicable criteria for such grant or for any change thereto. A lack of approval by the general meeting of shareholders of such proposal shall not affect the representative authority of the Board of Directors in connection with the grant of rights to subscribe for shares. Options were granted to executive members of the Companys Board of Directors for 2005 in accordance with the Mittal Steel Global Stock Option Plan (MittalShares) as approved by the shareholders. Options granted under MittalShares vest ratably upon each of the first three anniversaries of the grant date, or, in total, upon death, disability or retirement of the participant. In accordance with the Dutch Corporate Governance Code, independent non-executive members of the Companys Board of Directors will no longer receive any share options. Remuneration The total annual compensation of the members of the Companys Board of Directors for 2005 and 2006 was as follows: Year ended December 31, 2005 2006 $ 4,369 235,000 $ 3,760 3,288 175,000

(Amounts in $ thousands except option information) Base salary and/or directors fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short term performance related bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long term incentives (number of options) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The annual compensation of the members of the Companys Board of Directors was as follows: 2005 Short term Performance Related I-24 2006 Short term Performance Related 1,677 1,611 3,288 2005 Long term Number of Options 100,000 75,000 60,000 235,000 2006 Long term Number of Options 100,000 75,000 175,000

(Amounts in $ thousands except option information)

2005

2006 $2,005 942 23 139 142 119 82 105 123 80 3,760

Lakshmi N. Mittal . . . . . . . . . . . . . . . . $2,194 Aditya Mittal(1) . . . . . . . . . . . . . . . . . . . 1,245 Vanisha Mittal Bhatia . . . . . . . . . . . . 18 Malay Mukherjee(2) . . . . . . . . . . . . . . . 311 109 Narayanan Vaghul . . . . . . . . . . . . . . . Ambassador Andrs Rozental(3) . . . 134 Fernando Ruiz Sahagun(4) . . . . . . . . 22 110 Muni Krishna T. Reddy(5) . . . . . . . . . Ren Lopez(6) . . . . . . . . . . . . . . . . . . . . 74 Wilbur L. Ross, Jr.(7) . . . . . . . . . . . . . . 73 79 Lewis B. Kaden(8) . . . . . . . . . . . . . . . . Franois H. Pinault(9) . . . . . . . . . . . . . Joseph Kinsch(10) . . . . . . . . . . . . . . . . . Jos Ramn lvarez-Rendueles Medina(11) . . . . . . . . . . . . . . . . . . . . . . . . Sergio Silva de Freitas(12) . . . . . . . . . Georges Schmit(13) . . . . . . . . . . . . . . . . Edmond Pachura(14) . . . . . . . . . . . . . . Michel Angel Marti(15) . . . . . . . . . . . . Manuel Fernndez Lpez(16) . . . . . . Jean-Pierre Hansen(17) . . . . . . . . . . . . John Castegnaro(18) . . . . . . . . . . . . . . . Antoine Spillmann(19) . . . . . . . . . . . . . HRH Prince Guillaume de Luxembourg(20) . . . . . . . . . . . . . . . . . . . Romain Zaleski(21) . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,369

(1)

(2)

(3) (4) (5) (6) (7) (8) (9) (10)

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(19) (20)

(21)

Mr. A. Mittal resigned from Mittal Steels Board of Directors on October 30, 2006, but continued in his role as Chief Financial Officer of Mittal Steel. His compensation is included only for the period from January 2006 to October 2006. Mr. Mukherjee resigned from Mittal Steels Board of Directors on April 12, 2005, but continued in his role as Chief Operating Officer of Mittal Steel. His compensation is included only for the period from January 2005 to March 2005. Mr. Rozental resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Ruiz resigned from Mittal Steels Board of Directors on April 12, 2005. Mr. Reddy resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Lopez resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Ross was elected to Mittal Steels Board of Directors on April 12, 2005. Mr. Kaden was elected to Mittal Steels Board of Directors on April 12, 2005. Mr. Pinault was elected to Mittal Steels Board of Directors on June 30, 2006. Mr. Kinsch was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Kinsch has been paid as Chairman of Arcelors Board of Directors in 2006. Mr. lvarez-Rendueles Medina was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. lvarez-Rendueles Medina has been paid as Vice-Chairman of Arcelors Board of Directors in 2006. Mr. Silva de Freitas was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Silva de Freitas has been paid as an Arcelor Board Member in 2006. Mr. Schmit was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Schmit has been paid as an Arcelor Board Member in 2006. Mr. Pachura was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Pachura has been paid as an Arcelor Board Member in 2006. Mr. Marti was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Marti has been paid as an Arcelor Board Member in 2006. Mr. Fernndez Lpez was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Fernndez Lpez has been paid as an Arcelor Board Member in 2006. Mr. Hansen was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Hansen has been paid as an Arcelor Board Member in 2006. Mr. Castegnaro was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Castegnaro has been paid as an Arcelor Board Member in 2006. Mr. Spillmann was elected to Mittal Steels Board of Directors on October 30, 2006. HRH Prince Guillaume de Luxembourg was elected to Mittal Steels Board of Directors on October 30, 2006. HRH Prince Guillaume de Luxembourg has been paid as an Arcelor Board Member in 2006. Mr. Zaleski was elected to Mittal Steels Board of Directors on October 30, 2006.

The remuneration for the board members for the year 2006, nominated from Arcelor, will be paid after their approval by shareholders in the annual general meeting of Arcelor which will be held on April 27, 2007. As of December 31, 2005 and 2006, the Company did not have outstanding any loans or advances to members of its Board of Directors, and, as of December 31, 2006, the Company had not given any guarantees for the benefit of any member of its Board of Directors.

I-25

The following table provides a summary of the options outstanding and the exercise of the options granted to the Companys Board of Directors (in 2001, 2003 and 2004, no options were granted to members of the Companys Board of Directors). The stock option plan is described in Note 16 of the consolidated financial statements. Weighted Average Exercise Total Price 440,000 190,000 190,000 3,333 823,333 $18.35 $25.78 $13.99 $ 2.26 $18.99

Granted in 1999

Granted Granted Granted in in 2000 in 2002 2005

Granted in 2006

Lakshmi N. Mittal . . . . . . . 80,000 80,000 80,000 100,000 100,000 Aditya Mittal(1) . . . . . . . . . . 7,500 7,500 25,000 75,000 75,000 Vanisha Mittal Bhatia . . . Malay Mukherjee(2) . . . . . . 40,000 40,000 50,000 60,000 Narayanan Vaghul(3) . . . . . Ambassador Andrs Rozental(4)(5) . . . . . . . . . . . . . Fernando Ruiz Sahagun(6)(7) . . . . . . . . . . . . . 3,333 Muni Krishna T. Reddy(8) Ren Lopez(9) . . . . . . . . . . . Wilbur L. Ross(10) . . . . . . . Lewis B. Kaden(11) . . . . . . Franois H. Pinault(12) . . . Joseph Kinsch(13) . . . . . . . . Jos Ramn lvarezRendueles Medina(14) . . . . Sergio Silva de Freitas(15) . . . . . . . . . . . . . . . . Georges Schmit(16) . . . . . . . Edmond Pachura(17) . . . . . Michel Angel Marti(18) . . . Manuel Fernndez Lpez(19) . . . . . . . . . . . . . . . . Jean-Pierre Hansen(20) . . . John Castegnaro(21) . . . . . . Antoine Spillmann(22) . . . . HRH Prince Guillaume de Luxembourg(23) . . . . . . . Romain Zaleski (24) . . . . . . Total . . . . . . . . . . . . . . . . . . . . 127,500 127,500 158,333 235,000 175,000 Exercise price . . . . . . . . . . . $ 11.94 $ 8.57 $ 2.26 $ 28.75 $ 33.755 Term (in years) . . . . . . . . . . 10 10 10 10 10 Expiration date . . . . . . . . . . September 14, June 1, April 5, August 23, September 1, 2009 2010 2012 2015 2016
(1)

(2)

(3) (4) (5)

(6) (7) (8) (9) (10) (11) (12)

Mr. A. Mittal resigned from Mittal Steels Board of Directors on October 30, 2006, but continued in his role as Chief Financial Officer of Mittal Steel. Mr. Mukherjee resigned from Mittal Steels Board of Directors on April 12, 2005, but continued in his role as Chief Operating Officer of Mittal Steel. Mr. Vaghul exercised all his vested options in 2005. Mr. Rozental resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Rozental exercised the majority of his vested options in 2005, except for 3,333 options granted in 2002 which were exercised in 2006. Mr. Ruiz resigned from Mittal Steels Board of Directors on April 12, 2005. Mr. Ruiz exercised the majority of his vested options in 2005, except for 3,333 options granted in 2002. Mr. Reddy resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Lopez resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Ross was elected to Mittal Steels Board of Directors on April 12, 2005. Mr. Kaden was elected to Mittal Steels Board of Directors on April 12, 2005. Mr. Pinault was elected to Mittal Steels Board of Directors on June 30, 2006. I-26

(13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23)

(24)

Mr. Kinsch was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. lvarez-Rendueles Medina was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Silva de Freitas was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Schmit was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Pachura was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Marti was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Fernndez Lpez was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Hansen was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Castegnaro was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Spillmann was elected to Mittal Steels Board of Directors on October 30, 2006. HRH Prince Guillaume de Luxembourg was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Zaleski was elected to Mittal Steels Board of Directors on October 30, 2006.

I-27

Consolidated Balance Sheets December 31, 2005* 2006 (millions of U.S. Dollars, except share data) ASSETS Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets held for sale (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivables (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories (note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and other current assets (note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets
..........................................................

2,035 100 14 2,287 5,994 925 11,355

6,020 120 6 1,267 8,769 19,238 3,942 39,362

Non-current assets: Goodwill and intangible assets (note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment (note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments accounted for using the equity method (note 10) . . . . . . . . . . . . . . . . Other investments (note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets (note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non-current assets Total assets
..................................................... .................................................................

1,806 19,045 947 277 318 119 22,512 33,867

10,782 54,696 3,492 1,151 1,670 1,013 72,804 112,166

Commitments and contingencies (note 22 and 23)

The accompanying notes are an integral part of these consolidated financial statements. * The 2005 comparative information has been adjusted retrospectively for the adoption of IFRIC 4 which occurred as of January 1, 2006 (see note 1) as well as the finalization of purchase price allocations on ISG and Mittal Steel Kryviy Rih (see note 3). I-28

Consolidated Balance Sheets (Continued) December 31, 2005* 2006 (millions of U.S. Dollars, except share data) LIABILITIES AND EQUITY Current liabilities: Payable to banks and current portion of long-term debt (note 13) . . . . . . . . . . . . . Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term provisions (note 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities held for sale (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and other liabilities (note 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current liabilities: Long-term debt, net of current portion (notes 13 and 14) . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities (note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred employee benefits (note 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term provisions (note 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non-current liabilities Total liabilities
.......................................... ......................................................

334 2,504 109 2,169 483 5,599 7,974 2,174 1,054 611 988 12,811 18,410

4,922 10,717 569 239 7,579 534 24,560 21,645 7,274 5,285 1,880 1,331 37,415 61,975

Equity (note 16): Common shares: Class A shares (EURO 0.01 par value per share, 5,000,000,000 shares authorized, shares issued and outstanding: 255,401,673 at December 31, 2005 and 934,818,280 at December 31, 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Class B shares, (EURO 0.10 par value per share (2005), EURO 0.01 par value per share (2006), 721,500,000 shares authorized, 457,490,210 shares issued and outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Treasury stock (8,828,784 class A shares at December 31, 2005 and 7,039,547 class A shares at December 31, 2006, at cost) . . . . . . . . . . . . . . . . . . . . . Additional paid-in-capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity attributable to the equity holders of the parent . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total equity
....................................................... .........................................

11

58 (111) 2,239 10,270 828 13,286 2,171 15,457 33,867

6 (84) 25,566 14,974 1,654 42,127 8,064 50,191 112,166

Total liabilities and equity

Commitments and contingencies (notes 22 and 23)

The accompanying notes are an integral part of these consolidated financial statements. * The 2005 comparative information has been adjusted retrospectively for the adoption of IFRIC 4 which occurred as of January 1, 2006 (see note 1) as well as the finalization of purchase price allocations on ISG and Mittal Steel Kryviy Rih (see note 3). I-29

Consolidated Statements of Income Year Ended December 31, 2005* 2006 (millions of U.S. Dollars, except share and per share data) SALES (Including 2,339 in 2005 and 3,847 in 2006 of sales to related parties) . . . . . . . Cost of sales (including depreciation and amortization of 1,113 in 2005 and 2,296 in 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Including 914 in 2005 and 1,740 in 2006 of purchases from related parties) Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income net (including negative goodwill of 147 in 2005, and nil in 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financing costs net (note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense (note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income (including minority interest)
..................................

28,132 22,341 5,791 1,062 4,729 214 86 (353) 4,676 881 3,795 3,301 494 3,795

58,870 48,411 10,459 2,960 7,499 49 301 (654) 7,195 1,109 6,086 5,226 860 6,086

Attributable to: Equity holders of the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income (including minority interest)
..................................

The accompanying notes are an integral part of these consolidated financial statements. * Prior period information has been adjusted retrospectively for the adoption of IFRIC 4 which occurred as of January 1, 2006 (see note 1) as well as the finalization of purchase price allocations on ISG and Mittal Steel Kryviy Rih (see note 3). I-30

Consolidated Statements of Income (Continued) Year Ended December 31, 2005* 2006 (millions of U.S. Dollars, except share and per share data) Earnings per common share Basic: Class A common shares Class B common shares Diluted: Class A common shares Class B common shares

........................................... ........................................... ........................................... ...........................................

4.80 4.80 4.79 4.79

5.29 5.29 5.28 5.28

Weighted average common shares outstanding (in millions) Basic: Class A common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Class B common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted: Class A common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Class B common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

230 457 687 232 457 689

531 457 988 533 457 989

The accompanying notes are an integral part of these consolidated financial statements. * Prior period information has been adjusted retrospectively for the adoption of IFRIC 4 which occurred as of January 1, 2006 (see note 1) as well as the finalization of purchase price allocations on ISG and Mittal Steel Kryviy Rih (see note 3). I-31

Consolidated Statements of Changes in Equity

(millions of U.S. Dollars, except share and per share data) *Balance at December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Movement with minority shareholders . . . . . . . . . . . . . . . . . . . . . . . Items recognized directly in equity . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recognized income and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer to retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recognition of share based payments . . . . . . . . . . . . . . . . . . . . . . . . Issuance of shares in connection with ISG acquisition (net of capital duties of 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Treasury Stock (note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends (0.30 per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 1 60 (52) 9 17 680 1 1,385 *Balance at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Movement with minority shareholders . . . . . . . . . . . . . . . . . . . . . . . Items recognized directly in equity . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recognized income and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer to retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recognition of share based payments . . . . . . . . . . . . . . . . . . . . . . . . Voting right reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Issuance of shares in connection with Arcelor acquisition . . . . . . . . Treasury Stock (note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends (0.50 per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance at December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704 12 (111) 27 (84) 643 59 (123)

Shares**

Share capital 552 3 1,693 (9) 2,239 29 52 23,231 15 25,566

Treasury Stock

Additional Paid-in Capital

Retained Earnings 7,199 (17) 3,301 (213) 10,270 5,226 (522) 14,974

Net income for the year 3,301 3,301 (3,301) 5,226 5,226 (5,226)

Foreign Currency Translation Adjustments 1,368 (758) (758) 610 826 826 1,436

Reserves Unrealized (Losses) on Gains Derivative Financial Instruments

Unrealized Gains on Available for Sale Securities

Equity

Minority Interest

Total equity

6 (10)

135 87

9,196 (17) (681) 3,301

1,875 11,071 (198) (215) (681) 494 3,795

(10)

87

2,620 3

494

3,114 3

1,694 3 (213)

1,694 3 (213)

(4) (16)

222 16

13,286 826 5,226

2,171 5,033 860

15,457 5,859 6,086

I-32 * **

(16) (20)

16 238

6,052 29 23,240 42 (522) 42,127

5,893 8,064

11,945 29 23,240 42 (522) 50,191

The accompanying notes are an integral part of these consolidated financial statements. Prior period information has been adjusted retrospectively for the adoption of IFRIC 4 which occurred as of January 1, 2006 (see note 1) as well as the finalization of purchase price allocations on ISG and Mittal Steel Kryviy Rih (see note 3). Excludes treasury shares.

Consolidated Statements of Cash Flows Year Ended December 31, 2005* 2006 (millions of U.S. Dollars) Operating Activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Negative goodwill released to income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non-cash operating expenses (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in operating assets and liabilities, net of effects from acquisition: Trade accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other working capital movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash provided by operating activities
....................................

3,795 1,113 503 (246) 1,110 (892) (147) (330)

6,086 2,296 1,124 (867) 925 (1,083) (733)

406 33 15 (1,486) 3,874

(128) (584) 854 (768) 7,122

Investing activities: Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of net assets of subsidiaries, net of cash acquired of 816 and 4,599, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other investing activities (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash used in investing activities
.........................................

(1,181) (6,120) (211) (7,512)

(2,935) (5,842) 201 (8,576)

Financing activities: Proceeds from bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from long-term debt, net of debt issuance costs . . . . . . . . . . . . . . . . . . . . . Payments of payable to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sale of treasury stock for stock option exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends paid (includes 245 and 122 of dividends paid to minority shareholders in 2005 and 2006, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financing activities (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of exchange rate changes on cash
.....................................

1,678 8,318 (1,807) (2,740) 3 (2,092) (11) 3,349 (171) (460) 2,495 2,035

959 29,910 (5,906) (18,820) 8 (660) (46) 5,445 (6) 3,985 2,035 6,020

Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents: At the beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At the end of the year
.............................................

Supplemental disclosures of cash flow information Non-cash activity: Issuance of common shares in connection with the acquisition of ISG, net of capital duty of 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Issuance of common shares in connection with the acquisition of Arcelor . . . .

1,694

23,240

The accompanying notes are an integral part of these consolidated financial statements. * Prior period information has been adjusted retrospectively for the adoption of IFRIC 4 which occurred as of January 1, 2006 (see note 1) as well as the finalization of purchase price allocations on ISG and Mittal Steel Kryviy Rih (see note 3). I-33

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Millions of U.S. Dollars, except share data and per share data) NOTE 1: NATURE OF BUSINESS, BASIS OF PRESENTATION AND CONSOLIDATION Nature of business Mittal Steel Company N.V. (Mittal Steel) or (the Company), together with its subsidiaries, is a manufacturer of steel and steel related products. Mittal Steel owns and operates manufacturing facilities in Europe, North and South America, Asia and Africa. These manufacturing facilities, each of which includes its respective subsidiaries, are referred to herein as the Operating Subsidiaries. On December 17, 2004, Ispat International N.V. completed its acquisition of Mittal Steel Holdings N.V., formerly LNM Holdings N.V. and changed its name to Mittal Steel Company N.V. On December 28, 2005, Mittal Steel Holdings N.V. was redomiciled to Switzerland and changed its name to Mittal Steel Holdings A.G. As Ispat International N.V. and LNM Holdings N.V. were affiliates under common control, the acquisition of LNM Holdings N.V. was accounted for on the basis of common control accounting, which is similar to a previously permitted method of accounting known as a pooling-of-interests. All costs associated with this transaction were expensed as incurred. Therefore, these consolidated financial statements reflect the financial position for those assets and liabilities and results of operations of Mittal Steel from the accounts of Ispat International N.V. and LNM Holdings N.V., as though Mittal Steel had been a stand alone legal entity during 2004. The consolidated financial statements for the year ended December 31, 2004 have been prepared using the historical basis in the assets and liabilities and the historical results of operations relating to Ispat International N.V. and LNM Holdings N.V. based on the separate records maintained for each of these businesses. Organization Mittal Steel is formed and organized under the laws of the Netherlands to hold directly or indirectly certain subsidiaries involved in the steel manufacturing activities described above. Mittal Steel has no manufacturing operations of its own and its major assets are interests in the common and preferred stock of its Operating Subsidiaries. Basis of preparation The consolidated financial statements have been prepared on a historical cost basis, except for available for sale financial assets and derivative financial instruments, which are measured at fair value. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union and are presented in U.S. Dollars with all amounts rounded to the nearest million, except for share and per share data. IFRS as endorsed by the European Union differs in certain respects from IFRS as issued by the International Accounting Standards Board (IASB). However, these consolidated financial statements would be no different if IFRS, as issued by the IASB, had been applied. Hereafter, references to IFRS should be construed as reference to IFRS as adopted by the European Union. New IFRS standards and interpretations applicable in 2006 In the current year, the Company has adopted all of the new and revised standards, amendments and interpretations to existing standards issued by the IASB and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods from January 1, 2006. The adoption of IFRIC 4, Determining whether an Arrangement contains a Lease, has resulted in changes to the Companys accounting policies reported for the current and prior periods. IFRIC 4, which requires that if fulfillment of an arrangement is dependent on the use of a specific asset and conveys a right to use, the arrangement contains a lease. Upon adoption of this Interpretation as of January 1, 2006, the Company applied the guidance to all arrangements in existence as of January 1, 2005 and has retrospectively adjusted the prior period financial information presented herein so as to comply with the requirements of the Interpretation. As a result, the Company increased its total assets by 101, total liabilities by 108 and reduced retained earnings by 7. The adoption of all other new and revised standards and interpretations did not have a significant impact on the Companys financial statements. Basis of consolidation The consolidated financial statements include the accounts of the Company, its Operating Subsidiaries, and its respective interest in associated companies and jointly controlled entities. Subsidiaries are fully consolidated from the date of acquisition, the date the Company obtains control until the date control ceases. Control is defined as the power to govern the financial and operating policies of an entity, so as to obtain benefits derived from its activities. Control is presumed to exist, when the Company holds more than half of the voting rights. I-34

Associated companies are those companies over which the Company has the ability to exercise significant influence on the financial and operating policy decisions which are not Operating Subsidiaries. Significant influence is presumed to exist when the Company holds more than 20% of the voting rights. In addition, jointly controlled entities are companies over whose activities the Company has joint control under a contractual agreement. The consolidated financial statements include the Companys share of the total recognized gains and losses of associates and jointly controlled entities on an equity accounted basis from the date that significant influence commences until the date significant influence ceases, adjusted for any impairment loss. Adjustments to the carrying amount may also be necessary for changes in the investors proportionate interest in the investee arising from changes in the investees equity that have not been recognized in the investees profit or loss. The investors share of those changes is recognized directly in the Companys shareholders equity. Other investments are classified as available for sale and are stated at fair value when their fair value can be reliably measured. When fair value cannot be measured reliably, the investments are carried at cost less impairment. Intra-company balances and transactions, including income, expenses and dividends, are eliminated in the preparation of the consolidated financial statements. Gains and losses resulting from intra-company transactions that are recognized in assets are eliminated in full. Gains and losses on internal transfers with associates and jointly controlled entities are eliminated to the extent of the Companys interest in the associate or jointly controlled entity, only to the extent that there is no indication if impairment. Minority interests represent the portion of profit or loss and net assets not held by the Company and are presented separately on the income statement and within shareholders equity in the consolidated balance sheet. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of estimates and critical accounting judgements The preparation of financial statements in conformity with IFRS recognition and measurement principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and of revenues and expenses. Management reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances may result in revised estimates, and actual results could differ from those estimates. The critical accounting judgements and significant estimates made by management in the preparation of these financial statements are provided below. Purchase Accounting Accounting for acquisitions requires Mittal Steel to allocate the cost of the enterprise to the specific assets acquired and liabilities assumed based on their estimated fair values at the date of the acquisition. In connection with each of its acquisitions, the Company undertakes a process to identify all assets and liabilities acquired, including acquired intangible assets. The judgments made in identifying all acquired assets, determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations. Accordingly, for significant items, we typically obtain appraisals and actuarial or other valuations in order to aid in determining the estimated fair value of assets acquired and liabilities assumed. The valuations are based on information available near the acquisition date and on expectations and assumptions that have been deemed reasonable by management. There are several methods that can be used to determine the fair value of assets acquired and liabilities assumed. For intangible assets, we typically use the income method. This method starts with our forecast of all of the expected future net cash flows. These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams. Some of the more significant estimates and assumptions inherent in the income method or other methods include: the amount and timing of projected future cash flows; the discount rate selected to measure the risks inherent in the future cash flows (weighted average cost of capital); the assessment of the assets life cycle and the competitive trends impacting the asset, including consideration of any technical, legal, regulatory, or economic barriers to entry.

I-35

The most common purchase accounting adjustments relate to the following assets and liabilities, whose fair value is estimated as indicated: The fair value of identifiable intangible assets (generally, patents, customer relationships and favorable and unfavorable contracts) is estimated as described above. Property, plant and equipment is recorded at replacement cost, which is generally estimated with the assistance of independent valuation experts. The fair value of pension and other post-employment benefits is determined separately for each plan, with the assistance of actuaries, using assumptions valid as of the acquisition date regarding the population of employees involved and the latest market data for the valuation of plan assets. The fair value of inventories is estimated based on expected selling prices for inventory on hand at the date of acquisition reduced by an estimate of selling expenses and an appropriate gross margin. Adjustments are recorded to deferred tax assets and liabilities of the acquiree to reflect purchase price adjustments, other than goodwill. Determining the estimated useful lives of tangible and intangible assets acquired also requires judgment, as different types of assets will have different useful lives and certain intangible assets may even be considered to have indefinite useful lives. For example, the useful life of an intangible asset recognized associated with a favorable contract will be finite and will result in amortization expense being recorded in our results of operations over a determinable period. Finally, when the fair value of the assets acquired exceeds their cost, the excess is recognized immediately as a gain in the statement of income, making the amount initially assigned to all assets and liabilities more important. Deferred Tax Assets Mittal Steel charges tax expenses or accounts for tax credits based on the differences between the financial statement amounts and the tax base amounts of assets and liabilities. Deferred tax assets are also recognized for the estimated future effects of tax losses carried forward. Mittal Steel reviews the deferred tax assets in the different jurisdictions in which it operates annually to assess the possibility of realizing such assets based on projected earnings, the expected timing of the reversals of existing temporary differences, and the implementation of tax-planning strategies. It is probable that the deferred tax assets of 1,670 recognized as of December 31, 2006 will be fully realized. The amount of future taxable income required to be generated by Mittal Steels Operating Subsidiaries is approximately 5,278. For each of the years ended December 31, 2005 and 2006, these Operating Subsidiaries generated approximately 62% and 43%, respectively, of the Companys consolidated taxable income of 4,676 and 7,195 respectively. Historically, the Company has been able to generate taxable income in sufficient amounts to permit it to realize tax benefits associated with net operating loss carry forwards and other deferred tax assets that have been recognized in its consolidated financial statements. At December 31, 2006, the Company had total estimated net tax loss carry forwards of 9,019. Such amount includes net operating losses of 2,425 primarily related to Mittal Steels Operating Subsidiaries in the United States, Spain, Canada and the Mexican operating subsidiaries which expire as follows: Year Expiring 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60 70 44 82 40 2,129

The remaining tax loss carry forwards of 6,594 are indefinite lived and are principally attributable to the Companys operations in Luxembourg, Belgium, Germany, Brazil, France, Trinidad and Tobago and South Africa. Mittal Steel had unrecognized deferred tax assets relating to tax loss carry forwards and other temporary differences, amounting to 1,468 as of December 31, 2006 (163 as of December 31, 2005). As per December 31, 2006, most of these temporary differences relate to tax loss carry forwards attributable to our operating subsidiaries in Brazil, Belgium, Luxembourg and the United States. The majority of unrecognized tax losses have no expiration date. The utilization of tax loss carry forwards is, however, restricted to the taxable income of the subsidiary generating the losses. I-36

Provisions for Pensions and Other Post Employment Benefits Mittal Steels operating subsidiaries have different types of pension plans and post-employment benefit plans, primarily post-employment health care, for their employees. The expense associated with these pension plans and employee benefits, as well as the carrying amount of the related liability/asset on the balance sheet, is based on a number of assumptions and factors such as discount rates, rate of compensation increase, expected return on plan assets, health care cost trend rates, mortality rates, and retirement rates. Discount rates. The discount rate reflects the current rate at which the pension liabilities could be effectively settled at the measurement date. In setting these rates, we utilize several high quality bond indexes in the appropriate jurisdictions (rated AA or higher by a recognized rating agency). Nominal interest rates vary worldwide due to exchange rates and local inflation rates. The weighted average assumed discount rate for Mittal Steels worldwide defined benefit plans and other post employment benefit plans was 4.43%-10.97% and 4.5%-8.75%, respectively, at December 31, 2006. Rate of compensation increase. The rate of compensation increase reflects our long-term actual experience and our outlook, including contractually agreed upon wage rate increases, for represented hourly employees. Expected return on plan assets. Our expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated long-term performance of individual asset classes, risks (standard deviations), and correlations of returns among the asset classes that comprise the plans asset mix. While the studies give appropriate consideration to recent plan performance and historic returns, the assumptions are primarily long-term, prospective rates of return. Health care cost trend rate. Our healthcare cost trend rate is based on historical retiree cost data, near-term health care outlook, including appropriate cost control measures implemented by us, and industry benchmarks and surveys. Mortality and retirement rates. Mortality and retirement rates are based on actual and projected plan experience.

In accordance with IFRS, actual gains or losses resulting from changes in actuarial assumptions are recognized in Mittal Steels income statement only if the net cumulative unrecognized actuarial gains and losses at the end of the previous reporting period exceeded the greater of 10% of the present value of the defined benefit obligation at that date and 10% of the fair value of any plan asset at that date. The fraction exceeding 10% is then recognized over the expected average remaining working lives of the employees participating in the plan. Such accumulated unrecognized costs amounted to 831 for pensions and 351 for other post-employment benefits as of December 31, 2006. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect Mittal Steels pension and other postretirement obligations and future expense. The following information illustrates the sensitivity to a change in certain assumptions for pension plans (as of December 31, 2006 the projected benefit obligation (PBO) for pension plans was 8.6 billion): (in millions of US Dollars) Change in assumption 100 basis point decrease in discount rate 100 basis point increase in discount rate
................... ...................

Effect on 2007 Pre-Tax Pension Expense 18 (22)

Effect of December 31, 2006 PBO 703 (620)

The following table illustrates the sensitivity to a change in the discount rate assumption related to Mittal Steels OPEB plans (as of December 31, 2006 the PBO for post-employment benefit plans was 2.6 billion): (in millions of US Dollars) Change in assumption 100 basis point decrease in discount rate . . . . . . . . . . . . . . . . . . . 100 basis point increase in discount rate . . . . . . . . . . . . . . . . . . . 100 basis point decrease in healthcare cost trend . . . . . . . . . . . 100 basis point increase in healthcare cost trend . . . . . . . . . . . . Effect on 2007 Pre-Tax OPEB Expense 6 (5) (6) 7 Effect of December 31, 2006 APBO 586 (365) (136) 160

The above sensitivities reflect the effect of changing one assumption at a time. Actual economic factors and conditions often affect multiple assumptions simultaneously, and the effects of changes in key assumptions are not necessarily linear. Valuation of Long-Lived Assets, Intangibles and Goodwill At each reporting date, Mittal Steel reviews the carrying amounts of its non-current assets (excluding goodwill) to determine whether there is any indication that the carrying amount of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to I-37

determine the amount of the impairment, if any. The recoverable amount is the higher of its net selling price (fair value reduced by selling costs) and its value in use. In assessing its value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets corresponding to our operating segments that generates cash inflows. If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, an impairment loss is recognized. An impairment loss recognized in prior years is reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognized. However, the increased carrying amount of an asset due to a reversal of an impairment loss will not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized in income immediately. Goodwill is reviewed for impairment annually at the cash generating unit level or whenever changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amounts of the cash generating units are determined from value in use calculations, as described above. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the cash generating units. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on historical experience and expectations of future changes in the market. Cash flow forecasts are derived from the most recent financial budgets approved by management for the next five years. Beyond the specifically forecasted period, the Company extrapolates cash flows for the remaining years based on an estimated growth rate. This rate does not exceed the average long-term growth rate for the relevant markets. Once recognized, impairment losses recognized for goodwill are not reversed. Based on our impairment review during 2006, we recorded 41 (2005: nil) of impairment losses for long-lived assets and goodwill. At December 31, 2006, we had 10,782 of intangible assets, of which 8,020 represented goodwill. An impairment to our intangible assets could result in a material, non-cash expense in our consolidated statement of income. Translation of financial statements denominated in foreign currency The functional currency of each of the major Operating Subsidiaries is the local currency, except for Mittal Steel Kryviy Rih, Mittal Steel Lzaro Crdenas, and Mittal Steel Galati, whose functional currency is the U.S. Dollar. Transactions in currencies other than the functional currency of a subsidiary are recorded at the rates of exchange prevailing at the date of the transaction. Monetary assets and liabilities in currencies other than the functional currency are remeasured at the rates of exchange prevailing at the balance sheet date and the related transaction gains and losses are reported in the consolidated statements of income. Upon consolidation, the results of operations of Mittal Steels subsidiaries and associates whose functional currency is other than the U.S. Dollar are translated into U.S. Dollars at average exchange rates for the year and assets and liabilities are translated at year-end exchange rates. Translation adjustments are recognized directly in shareholders equity and are included in net earnings only upon sale or liquidation of the underlying foreign subsidiary or associated company. Impairment of non-current assets (excluding goodwill) At each reporting date, Mittal Steel reviews the carrying amounts of its non-current assets to determine whether there is any indication that the carrying amount of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of the impairment loss (if any). The recoverable amount of an asset is the higher of its net selling price and its value in use. In assessing its value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If the recoverable I-38

amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognized as an expense immediately as part of operating income in the income statement. An impairment loss recognized in prior years is reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognized. However, the increased carrying amount of an asset due to a reversal of an impairment loss will not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized immediately as part of operating income in the income statement. The recoverable amount of investments in held-to-maturity securities and receivables is calculated as the present value of the expected future cash flows, discounted at the original effective interest rate inherent in the asset. Business combinations Business combinations are accounted for using the purchase accounting method. This involves recognizing identifiable assets (including previously unrecognized intangible assets) and liabilities (including contingent liabilities and excluding future restructuring) of the acquired business at fair value. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by Mittal Steel in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquirees identifiable assets, liabilities and contingent liabilities are recognized at their fair values at the acquisition date. The interest of minority shareholders in the acquiree is initially measured at the minoritys proportion of the net fair value of the assets, liabilities and contingent liabilities recognized. Acquisitions from minority shareholders are considered transactions with shareholders and decreases or increases between the cost and the net value are recorded directly in shareholders equity. When an acquisition is completed by a series of successive transactions, each significant transaction is considered individually for the purpose of the determination of the fair value of the identifiable assets, liabilities and contingent liabilities acquired and hence for the goodwill associated with the acquisition. The fair values of the identifiable assets and liabilities acquired can vary at the date of each transaction. When a transaction results in taking control over the entity the interests previously held in that entity are re-valued on the basis of the fair values of the identifiable assets and liabilities at that date. The contra posting for this revaluation is recorded directly in shareholders equity. Subsequent purchases, after the Company has obtained control, are treated as the acquisitions of shares from minority shareholders: the identifiable assets and liabilities of the entity are not subject to a further revaluation and the positive or negative difference between the cost of such subsequent acquisitions and the net value of the additional proportion of the company acquired is recorded directly in shareholders equity. Cash and cash equivalents Cash and cash equivalents, consists of cash and short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less at the time of purchase and are carried at cost plus accrued interest, which approximate fair value. Restricted cash Restricted cash represents the required collateral primarily with various banks as margin for revolving letters of credit and guarantees. Trade accounts receivable Trade accounts receivable are initially recorded at their fair value and do not carry any interest. If applicable, trade accounts receivable are subsequently measured at amortized cost using the effective interest rate method and reduced by allowances for any impairment. Mittal Steel maintains an allowance for doubtful accounts at an amount that it considers to be a sufficient estimate of losses resulting from the inability of its customers to make required payments. An allowance is recorded and charged to expense when an account is deemed to be uncollectible. In judging the adequacy of the allowance for doubtful accounts, Mittal Steel considers multiple factors including historical bad debt experience, the current economic environment and the aging of the receivables. Recoveries of trade receivables previously reserved in the allowance for doubtful accounts are credited to income. Inventories Inventories are carried at the lower of cost and net realizable value. Cost is determined using the first-in, first-out (FIFO) method and average cost method, which approximates FIFO. Costs of production in process and I-39

finished goods include the purchase costs of raw materials and conversion costs such as direct labor and an allocation of fixed and variable production overheads. Raw materials and spare parts are valued at cost inclusive of freight, shipping and handling costs. Net realizable value represents the estimated selling price at which the inventories can be realized in the normal course of business after allowing for the cost of conversion from their existing state to a finished condition and for the cost of marketing, selling, and distribution. Goodwill and negative goodwill Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over Mittal Steels interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. Goodwill is reviewed for impairment annually at the cash generating unit level or whenever changes in circumstances indicate that the carrying amount may not be recoverable. The impairment analysis is principally based on an estimate of discounted future cash flows at the operating unit level. Impairment losses recognized for goodwill are not reversed. On disposal of a subsidiary, joint venture or associate any residual amount of goodwill is included in the determination of the profit or loss on disposal. Mittal Steel has historically purchased under performing steel assets, principally those involved in various privatization programs in former government controlled economies. Businesses with these characteristics typically have been purchased for an amount that does not exceed net asset fair value, thus producing negative goodwill for accounting purposes. In a business combination in which the fair value of the identifiable net assets acquired exceeds the cost of the acquired business, the Company reassesses the fair value of the assets acquired. If, after reassessment, Mittal Steels interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess (negative goodwill) is recognized immediately in the income statement. Intangible assets Intangible assets are those assets for which future economic benefits are likely to flow to the Company and whose costs can be measured reliably. Intangible assets acquired separately by Mittal Steel are initially measured at cost. These primarily include the cost of technology and licenses purchased from third parties. The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. Intangible assets acquired separately and in business combinations are amortized on a straight-line basis over their estimated economic useful lives which typically does not exceed five years. Costs incurred on individual development products are recognized as intangible assets from the date that all of the following conditions are met: (i) completion of the development is considered technically feasible and commercially viable; (ii) it is the intention and ability of the Company to complete the intangible asset and use or sell it; (iii) it is clear that the intangible asset will generate future economic benefits; (iv) adequate technical, financial, and other resources to complete the development and to use or sell the intangible asset are available; and (v) it is possible to reliably measure the expenditure attributable to the intangible asset during its development. The intangible asset capitalized includes the cost of materials, direct labor costs and an appropriate proportion of overheads incurred during its development. Capitalized development expenditures are stated at cost less accumulated amortization and impairment losses. Other development expenditures that do not meet the conditions for recognition as an asset are recognized as an expense as part of operating income in the income statement in the period in which it is incurred. To date, costs incurred on individual development projects, which meet the above criteria, are not significant. Research and development costs expensed amounted to 39, and 96 in the years ended December 31, 2005, and 2006, respectively. Property, plant and equipment Property, plant and equipment are recorded at cost less accumulated depreciation and any recognized impairment loss. Cost includes professional fees, and, for assets constructed by the Company, any related works to the extent that these are directly attributable to the acquisition or construction of the asset. All property, plant and equipment except land are depreciated using the straight line method over the useful lives of the related assets, ranging from 10 to 50 years for buildings and improvements and 2 to 45 years for machinery and equipment. Major improvements, which add to productive capacity or extend the life of an asset, are capitalized, while repairs and maintenance are charged to expense as incurred. Where a tangible fixed asset comprises major components having different useful lives, these components are accounted for as separate items. I-40

The cost of mining production assets is depreciated on a unit-of-production basis. The rate of depreciation is determined based on the rate of depletion of the proven developed reserves in the coal deposits mined. Proven developed reserves are defined as the estimated quantity of product which can be expected to be profitably extracted, processed and used in the production of steel under current and foreseeable economic conditions. Depletion of mineral properties is based on rates which are expected to amortize cost of the estimated tonnage of minerals to be removed. Property, plant and equipment under construction are recorded as construction in progress until they are ready for their intended use; thereafter they are transferred to the related category of property, plant and equipment and depreciated over their estimated useful lives. Interest incurred during construction is capitalized to property, plant and equipment under construction until the assets are ready for their intended use. Gains and losses on retirement or disposal of assets are determined as the difference between net disposal proceeds and carrying amount and are reflected in the statement of operations. Property, plant and equipment acquired by way of finance leases are stated at an amount equal to the lower of the fair value and the present value of the minimum lease payments at the inception of the lease. Each lease payment is allocated between the finance charges and a reduction of the lease liability. The interest element of the finance cost is charged to the income statement over the lease period so as to achieve a constant rate of interest on the remaining balance of the liability. The depreciation policy of capitalised leased assets is similar to that applied to owned property, plant and equipment. If there is no reasonable certainty that the lessee will obtain ownership at the end of the lease term, the asset is depreciated over the shorter of its estimated useful life or the lease term. Where a significant portion of the risks and rewards of ownership are retained by the lessor, leases are classified as operating leases. Payments made under operating leases are recognized as an expense in the income statement of the period. In accordance with IFRIC 4, the same accounting treatment applies to agreements that do not take the legal form of a lease, but convey the right to use a tangible fixed asset in return for a payment or series of payments. Investment in associates, joint ventures and other entities Investments in associates and joint ventures, in which Mittal Steel has the ability to exercise significant influence, are accounted for under the equity method whereby the investment is carried at cost of acquisition, plus Mittal Steels equity in undistributed earnings or losses since acquisition, less dividends received. Mittal Steel reviews all of its investments in associates and joint ventures at each reporting date to determine whether there is any evidence that the investment may be impaired. If objective evidence indicates that the investment is impaired, Mittal Steel calculates the amount of the impairment as being the difference between the fair value of the investment and its acquisition cost. The amount of any write-down is included in operating expense in the income statement. Investments in other entities, over which the Company and/or its Operating Subsidiaries do not have the ability to exercise significant influence and have a readily determinable fair value, are accounted for at fair value with any realized gain or loss included in equity. To the extent that these investments do not have a readily determinable fair value, they are accounted for under the cost method. Assets held for sale Non-current assets, and disposal groups, are classified as held for sale and are measured at the lower of carrying amount and fair value less costs to sell. Assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset, or disposal group, is available for immediate sale in its present condition and is marketed for sale at a price that is reasonable in relation to its current fair value. Assets held for sale are presented separately on the balance sheet and are not depreciated while classified as held for sale. Borrowings Interest-bearing borrowings are initially measured at fair value, net of transaction costs incurred, and are subsequently measured at amortized cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognized over the term of the borrowings in accordance with Mittal Steels accounting policy for borrowing costs. Capitalized interest Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the I-41

cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in the income statement in the period in which they are incurred. Deferred employee benefits Defined contribution plans are those plans where Mittal Steel pays fixed contributions to an external life assurance or pension fund for certain categories of employees. Contributions are paid in return for services rendered by the employees during the period. They are expensed as they are incurred in line with the treatment of wages and salaries. No provisions are established in respect of defined contribution plans, as they do not generate future commitments for Mittal Steel. Defined benefit plans are those plans that provide guaranteed benefits to certain categories of employees, either by way of contractual obligations or through a collective agreement. This guarantee of benefits represents a future commitment of Mittal Steel and, as such, a liability is calculated. The provision is calculated by estimating the benefits accumulated by employees in return for services rendered during the period and during prior periods. The calculation takes into account demographic assumptions relating to the future characteristics of the previous and current personnel (mortality, personnel turnover etc.) as well as financial assumptions relating to future salary levels or the discount rate applied to services rendered. Benefits are discounted in order to determine the present value of the future obligation resulting from this type of plan. They are shown in the balance sheet after the deduction of the fair value of the assets that serve to cover them. The discount rate applied is the yield, at the balance sheet date, on highly rated bonds that have maturity dates similar to the terms of Mittal Steels pension obligations. In principle, a qualified actuary performs the underlying calculations annually, using the projected unit credit method. The actuarial assumptions (both demographic and financial) are reviewed at year end, which may give rise to actuarial gains or losses. In calculating Mittal Steels obligation in respect of a plan, to the extent that any unrecognized actuarial gain or loss exceeds ten percent of the greater of the present value of the defined benefit obligation and the fair value of the plan assets, it is recognized in the income statement over the expected average remaining working lives of the employees participating in the plan (corridor policy). Otherwise, the actuarial gain or loss is not taken into consideration. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise on a straight-line basis over the average period until the benefits become vested. Where the calculation results in a benefit to the Company, the recognized asset is limited to the net total of any unrecognized actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan. Within the Company, early retirement plans primarily correspond to the practical implementation of social plans or are linked to collective agreements signed with certain categories of employees. Early retirement plans are those plans that primarily correspond to terminating an employees contract before the normal retirement date or to encouraging voluntary redundancy. Early retirement plans are considered effective when the affected employees have formally been informed and when liabilities have been determined using an appropriate actuarial calculation. Liabilities relating to the early retirement plans are calculated annually on the basis of the effective number of employees likely to take early retirement and are discounted using an interest rate which corresponds to that of highly-rated bonds that have maturity dates similar to the terms of the Companys early retirement obligations. Other long-term employee benefits include various plans that depend on the length of service, such as long service and sabbatical awards, disability benefits and long term compensated absences such as sick leave. The amount recognized as a liability is the present value of benefit obligations at the balance sheet date, and all movements in the provision (including actuarial gains and losses or past service costs) are recognized in the income statement. Provisions and accruals Mittal Steel recognizes provisions for liabilities and probable losses that have been incurred as of the balance sheet date when it has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a financing cost. For provisions, where the effect of the time value of money is not material, they are stated at face value in the balance sheet. Environmental costs Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation or cost reduction, are expensed. Liabilities are recorded when environmental assessments and or remedial efforts are probable, and the cost can be reasonably estimated based on ongoing I-42

engineering studies, discussions with the environmental authorities and assumptions as to the areas that may have to be remediated along with the nature and extent of the remediation that may be required. The ultimate cost to Mittal Steel is dependent upon factors beyond its control such as the scope and methodology of the remedial action requirements to be established by environmental and public health authorities, new laws or government regulations, rapidly changing technology and the outcome of any potential related litigation. Environmental liabilities are discounted if the aggregate amount of the obligation and the amount and timing of the cash payments are fixed or reliably determinable. Asset retirement obligations Mittal Steel records asset retirement obligations (ARO) initially at the fair value of the legal liability in the period in which it is incurred and capitalizes the ARO by increasing the carrying amount of the related long lived asset. The fair value of the obligation is determined as the discounted value of the expected future cash flows. The liability is accreted to its present value each period and the capitalized cost is depreciated in accordance with the Companys depreciation policies for property, plant and equipment. Income taxes The provision for income taxes includes income taxes currently payable or receivable and those deferred. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are also recognized for the estimated future effects of tax loss carry forwards. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable income nor the accounting income. Deferred tax assets and liabilities are measured using substantively enacted statutory tax rates in effect for the year in which the differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the income statement in the period in which the changes are enacted or substantively enacted. Current and deferred tax are recognized as expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognized directly in equity or when they arise from the initial accounting in a business combination. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Financial liabilities Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Derivative financial instruments Derivative instruments are utilized by Mittal Steel to manage its exposure to commodity prices, fluctuations in foreign exchange rates, and interest rates. The Company has established a control environment, which includes policies and procedures for risk assessment and the approval and monitoring of derivative instrument activities. Mittal Steel does not enter into foreign currency hedging contracts related to its investment in associated companies. The Company and its subsidiaries selectively use various financial instruments, primarily forward exchange contracts, interest rate swaps and commodity future contracts, to manage exposure to price fluctuations. All derivatives, whether designated in hedging relationships or not, are recorded on the balance sheet at fair value. At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the Company will assess the hedging instruments effectiveness in offsetting the exposure to changes in the hedged items fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective through the financial reporting periods for which they were designated. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged item are recognized in earnings. I-43

If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded in equity and are recognized in the statements of income when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings. The fair value gains or losses as a result of the change in fair value of derivatives that do not qualify for hedge accounting are recognized in cost of sales or other operating expenses. Gains and losses related to financial instruments that are utilized to manage exposures to fluctuations in the cost of energy and raw materials used in the production process are recognized as a part of the cost of the underlying product when the contracts mature or expire. Emission rights Mittal Steels industrial sites regulated by the European Directive on CO2 emission rights, effective as of January 1, 2005, are located primarily in Germany, Belgium, Spain, France and Luxembourg. The emission rights allotted to the Company on a no charge basis pursuant to the annual national allocation plan, are recorded on the balance sheet at nil value. Mittal Steel continuously monitors rights that have expired and that will have to be surrendered. The number of rights to be surrendered is equal to the total emissions over a given period. These emissions are submitted to an annual certification, performed by a certified external expert in accordance with applicable national regulation. Excess allowances sold are recognized in the income statement. Allowance purchases or sales are recorded at cost. Revenue recognition Sales of goods and services Revenue is measured at the fair value of the consideration received or receivable. Revenue from the sale of goods is recognized in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognized in the income statement in proportion to the stage of completion of the related transaction at the balance sheet date. The stage of completion is assessed according to the work performed. No revenue is recognized if there are significant uncertainties regarding recovery of the amount due, associated costs or the possible return of goods. Shipping and handling costs Mittal Steel classifies all amounts billed to a customer in a sale transaction related to shipping and handling costs as sales and all other shipping and handling costs as cost of sales. Financing costs Financing costs include interest, amortization of discounts or premiums on borrowings, amortization of costs incurred in connection with the arrangement of borrowings and net gain or loss from foreign exchange on translation of long-term debt, net of unrealized gains and losses on foreign exchange contracts. Earnings per common share The Company follows the provisions of IAS 33, Earnings Per Share, which requires companies to report both basic and diluted per share data for all periods for which a statement of income is presented. Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing income available to shareholders and assumed conversion by the weighted average number of common shares and potential common shares from convertible debt and outstanding stock options. Potential common shares are calculated using the treasury stock method and represent incremental shares issuable upon exercise of the Companys outstanding stock options. The following table provides a reconciliation of the denominators used in calculating basic and diluted net income per share for the years ended December 31, 2005 and 2006: Year Ended December 31, 2005* 2006 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plus: Interest on Pension Benefit Guaranty Corporation (PBGC) note, net of tax . . . Income available to shareholders and assumed conversion . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average common shares outstanding (in millions) . . . . . . . . . . . . . . . . . . . . . . . Plus: Incremental shares from assumed conversions Stock options (in millions) . . . . 6% PBGC note (in millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average common shares assuming conversions (in millions) . . . . . . . . . . . . . 3,301 1 3,302 687 1 1 689 5,226 5,226 988 1 989

* Prior period information has been adjusted retrospectively for the adoption of IFRIC 4 which occurred as of January 1, 2006. (see note 1) as well as the finalization of purchase price allocations on ISG and Kryviy Rih (see note 3). I-44

Diluted weighted average shares outstanding excludes 3,704,940 and nil potential common shares from stock options outstanding for the years ended December 31, 2005 and 2006, respectively, because the exercise prices of such stock options were higher than the average closing price of the Companys common shares as quoted on the New York Stock Exchange (NYSE) during the periods stated and, accordingly, their effect would be antidilutive. Stock option plan/share-based payments Mittal Steel issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Companys estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. Fair value is measured using the BlackScholes pricing model. The expected life used in the model has been adjusted, based on managements best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. Treasury shares held by the Company are deducted from equity. Segment reporting As a result of Mittal Steels acquisition of Arcelor, Mittal Steel has changed its segment structure to a structure that comprises six major business segments: Flat Carbon Americas, Flat Carbon Europe, Long Carbon Americas and Europe, Asia/Africa & CIS (AACIS), Stainless Steel, and Arcelor Mittal Steel Solutions and Services (AM3S). These business segments are used as the primary format for segmental reporting. They include attributable goodwill, intangible assets, property, plant and equipment, and equity method investments. They do not include cash and short-term deposits, short-term investments, tax assets, and other current financial assets. Segment liabilities are also those resulting from the normal activities of the segment, excluding tax liabilities and indebtedness but including post retirement obligations where directly attributable to the segment. Financing items are managed centrally for the Company as a whole and so are not directly attributable to individual business segments. Geographical sectors are used as the secondary format for segmental reporting. Those areas separately disclosed represent Mittal Steels most significant regional markets. Segment assets are operational assets employed in each region and include items such as tax and pension balances that are specific to a country. They also include attributable goodwill but exclude cash and short-term deposits and short-term investments. Segment liabilities are those arising within each region, excluding indebtedness. Financing items are managed centrally for the Company as a whole and so are not directly attributable to individual geographical segments. New IFRS standards and interpretations applicable from 2007 onward IFRS 7 In August 2005, the IASB issued IFRS 7, Financial Instruments: Disclosures, which provides expanded disclosure requirements on the significance of financial instruments and qualitative and quantitative information about risk exposure related to these instruments. This statement supersedes the disclosure requirements outlined in both IAS 30, Disclosures in the Financial Statements of Banks and Similar Financial Institutions and IAS 32, Financial Instruments: Disclosure and Presentation and is effective for annual periods beginning on or after January 1, 2007. The Company is in the process of assessing whether there will be any significant changes to its financial statement disclosures upon the adoption of IFRS 7. IFRS 8 In November 2006, the IASB issued IFRS 8, Operating Segments, which specifies how an entity should report information about its operating segments in annual financial statements, and amends IAS 34, Interim Financial Reporting, to require an entity to report selected information about its operating segments in interim financial reports. This statement defines operating segments as components of an entity about which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources in assessing performance. This statement also outlines the requirements for related disclosures about products and services, geographical areas, and major customers and is effective for annual periods beginning on or after January 1, 2009. The Company believes that the adoption of IFRS 8 will not have a significant impact on its financial statement disclosures. AMENDMENT TO IAS 1 In August 2005, the IASB issued an amendment to IAS 1, Presentation of Financial Statements Capital Disclosures, which requires an entity to provide additional qualitative and quantitative disclosures so as to enable users of the financial statements to be able to evaluate its objectives, policies and processes for managing I-45

capital. The amendment is effective for annual periods beginning on or after January 1, 2007. The Company is in the process of assessing whether there will be any significant changes to its financial statement disclosures upon the adoption of this amendment. IFRIC 7 In November 2005, the IFRIC issued Interpretation 7, Applying the Restatement Approach under IAS 29, Financial Reporting in Hyper-Inflationary Economies, to clarify that the restatements required under IAS 29 should be made retrospectively if an economy becomes hyperinflationary during a reporting period. An entity shall apply the Interpretation for annual periods beginning on or after March 1, 2006. The Company is in the process of assessing whether there will be any material changes to its financial statements upon the adoption of IFRIC 7. IFRIC 8 In January 2006, the IFRIC issued Interpretation 8, Scope of IFRS 2, which requires consideration of transactions involving the issuance of equity instruments where the identifiable consideration received is less than the fair value of the equity instruments issued to establish whether or not they fall within the scope of IFRS 2, Share-based Payment. An entity shall apply the Interpretation for annual periods beginning on or after March 1, 2006. The Company is in the process of assessing whether there will be any material changes to its financial statements upon the adoption of IFRIC 8. IFRIC 9 In March 2006, the IFRIC issued Interpretation 9, Reassessment of Embedded Derivatives, which requires an entity to assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when the entity first becomes a party to the contract. An entity shall apply the Interpretation for annual periods beginning on or after June 1, 2006. The Company is in the process of assessing whether there will be any material changes to its financial statements upon the adoption of IFRIC 9. IFRIC 10 In July 2006, the IFRIC issued Interpretation 10, Interim Financial Reporting and Impairment, to clarify whether interim impairment losses should ever be reversed. An entity is required to assess goodwill for impairment at every reporting date, to assess investments in equity instruments and in financial assets carried at cost for impairment at every balance sheet date and, if required, to recognise an impairment loss at that date in accordance with IAS 36 and IAS 39. However, at a subsequent reporting or balance sheet date, conditions may have so changed that the impairment loss would have been reduced or avoided had the impairment assessment been made only at that date. This Interpretation provides guidance on whether such impairment losses should ever be reversed. IFRIC 10 concluded an entity shall not reverse an impairment loss recognized in a previous interim period in respect of goodwill or an investment in either an equity instrument or a financial asset carried at cost. An entity shall not extend this consensus by analogy to other areas of potential conflict between IAS 34 and other standards. An entity shall apply the Interpretation for annual periods beginning on or after November 1, 2006. The Company is in the process of assessing whether there will be any material changes to its financial statements upon the adoption of IFRIC 10. IFRIC 11 In November 2006, the IFRIC issued Interpretation 11, Group and Treasury Share Transactions, to clarify the accounting for certain share-based payment arrangements involving an entitys own equity instruments (treasury shares) and share-based payment arrangements that involve two or more entities within the same group. This Interpretation provides that share-based payment transactions in which an entity receives services as consideration for its own equity instruments shall be accounted for as equity-settled. This applies regardless of whether (i) the entity chooses or is required to buy those equity instruments from another party to satisfy its obligations to its employees under the share-based payment arrangement; (ii) the employees rights to the entitys equity instruments were granted by the entity itself or by its shareholders; or (iii) the share-based payment arrangement was settled by the entity itself or by its shareholders. With regard to share-based payment transactions that involve two or more entities within the same group, this Interpretation provides that in the instance of a parent granting rights to its equity instruments to the employees of its subsidiary, if the share-based payment arrangement is accounted for as equity-settled in the consolidated financial statements of the parent, the subsidiary shall measure the services received from its employees in accordance with the requirements applicable to equity-settled share-based payment transactions, with a corresponding increase recognized in equity as a contribution from the parent. In the event that a subsidiary grants rights to equity instruments of its parent to its employees, this Interpretation requires that the subsidiary shall account for the transaction with its employees as cash-settled. This requirement applies irrespective of how the subsidiary obtains the equity instruments to satisfy I-46

its obligations to its employees. An entity shall apply the Interpretation for annual periods beginning on or after March 1, 2007. The Company is in the process of assessing whether there will be any material changes to its financial statements upon the adoption of IFRIC 11. IFRIC 12 In November 2006, the IFRIC issued Interpretation 12, Service and Concession Arrangements, which provides guidance on the accounting by operators for public-to-private service concession arrangements. This Interpretation sets out general principles on recognizing and measuring the obligations and related rights in service concession arrangements and in doing so focuses on the following issues: (i) treatment of the operators rights over the infrastructure,; (ii) recognition and measurement of arrangement consideration, (iii) construction or upgrade services, (iv) operation services; (v) borrowing costs; (vi) subsequent accounting treatment of a financial asset and an intangible asset; and (vii) items provided by the operator to the grantor. An entity shall apply the Interpretation for annual periods beginning on or after 1 January 2008. The Company is in the process of assessing whether there will be any material changes to its financial statements upon the adoption of IFRIC 12. NOTE 3: ACQUISITIONS Significant acquisitions made during the years ended December 31, 2005 and 2006 include: International Steel Group (ISG) On April 15, 2005, Mittal Steel acquired 100% of the outstanding common shares of International Steel Group Inc. (ISG) (renamed Mittal Steel USA ISG Inc.). Mittal Steel USA ISG is one of the largest steel producers in North America, shipping a variety of steel products from 13 major steel producing and finishing facilities in 8 states. As a result of the acquisition Mittal Steel is the leading steel provider in North America. The aggregate purchase price of approximately 3,833 including cash of 2,128 (1,472 net of cash acquired and 56 of acquisition cost) and Class A common Shares valued at 1,705. The fair value of the 60,891,883 Class A common shares was determined based on the market-price of Mittal Steels Class A common shares on the date of acquisition. Intangible assets identified as a result of purchase accounting relate to 4 assigned to patents and 384 assigned to favorable supply and sales contracts that are being amortized over the term of the associated contracts ranging from one to six years or 2 years on a weighted average basis. Intangible liabilities consist of 1,095 assigned to unfavorable supply and sales contracts that are being amortized over the term of the associated contracts ranging from one to 15 years or 3.2 years on a weighted average basis. The company recognized 383 of income during 2006 (137 in 2005) related to the net amortization of these intangibles. The Company finalized the purchase price allocation for ISG in 2006. The results of Mittal Steel USA ISGs operations have been included in the consolidated financial statements since April 15, 2005. Kryvorizhstal On November 25, 2005, the Company acquired 93.02% of the outstanding common stock of OJSC Krivorizky Ore Mining Company and Steel Works Kryvorizhstal (renamed Mittal Steel Kryviy Rih) from the governmentally run State Property Fund of Ukraine. Mittal Steel Kryviy Rih is the largest producer of carbon steel long products in the Ukraine and the nearby region. As a result of the acquisition, the Company is the leading provider of steel products in the region. The Company also expects to achieve synergies and increase productivity through integration with its operations. Mittal Steel Kryviy Rih was acquired for 4,908 in cash (4,632 net of cash acquired). In connection with the acquisition, the Company has committed to make capital expenditures of 500 until 2010. The Company finalized the purchase price allocation for Kryvorizhstal in 2006. In 2006, the Company increased its interest in Mittal Steel Kryviy Rih to 93.77%. Based on the purchase price allocation for Kryviy Rih, the Company has identified approximately 1,323 of excess purchase price over the fair value of the assets acquired. The results of Mittal Steel Kryviy Rih have been included in the consolidated financial statements since November 26, 2005. Arcelor On August 1, 2006, Mittal Steel acquired 91.9% of the share capital of Arcelor (on a fully diluted basis). Through subsequent transactions Mittal Steel increased its ownership to 94.2% of the issued and outstanding shares of Arcelor and 19.9 million of Arcelors Convertible bonds. Arcelor is a global steel producer and holds leading positions in its main markets: automotive, construction, household appliances and packaging as well as general industry. I-47

The total purchase price, including acquisition costs, was 33,675, which was funded through a combination of cash and 680 million newly-issued Class A common shares. Total cash consideration for the transactions was 10,435 (5,841 net of 4,594 of cash acquired). The fair value of the Class A common shares issued was determined based on the market price of Mittal Steels Class A common shares at the date of the acquisition, which was 34.20 per share, based on the weighted average closing price on August 1, 2006 and September 4, 2006 (the dates of the issuance of Mittal Steel shares as consideration). The acquisition has been accounted for using the purchase method of accounting and, accordingly, the assets acquired and liabilities assumed have been recorded at their estimated fair values as of the date of acquisition. The allocation of the total purchase price is preliminary as at December 31, 2006 and remains subject to modification. Appraisals of intangible and tangible assets as well as identification of contingent liabilities are still underway. Intangible assets recognized as a result of purchase accounting relate to 920 assigned to favorable supply contracts on raw materials and energy that are being amortized over the term of the associated contracts ranging from two to five years. The acquired liabilities also include 583 assigned to unfavorable sales contracts that are being amortized over the term of the associated contracts ranging from half a year to nine years. The acquisition of Arcelor resulted in the consolidation of total assets of 64,565 and total liabilities of 36,624, excluding minority interest. The fair value of the net assets acquired (net of cash acquired) amounts to 22,733, excluding minority interest. The resulting goodwill is 6,348 at the acquisition date. The results of Arcelor have been included in the consolidated financial statements since August 1, 2006. The table below summarizes the estimated fair value of the assets acquired and liabilities assumed for significant acquisitions. 2005* ISG** Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant & equipment . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets acquired
...........................

KryviyRih** 347 4,454 4,801 258 200 782 1,240 3,561 249 3,312 4,635 4,635 1,323

Arcelor (2006)*** Purchase Arcelor Accounting at fair Historical Adjustments value 21,292 22,480 6,356 50,128 16,178 8,830 5,532 1,276 3,303 35,119 15,009 1,147 13,862 1,060 11,770 1,607 14,437 80 699 4,029 144 4,952 9,485 614 8,871 22,352 34,250 7,963 64,565 16,178 8,910 6,231 5,305 3,447 40,071 24,494 1,761 22,733 23,240 5,841 29,081 6,348

3,024 4,001 506 7,531 1,590 844 1,613 104 4,151 3,380 3,380 1,705 1,528 3,233 (147)

Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . Total net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value of shares issued . . . . . . . . . . . . . . . . . . . . . Cash paid, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase price, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill/ (negative goodwill) . . . . . . . . . . . . . . . . . * **

Historical IFRS information as of the date of acquisition was not available for the acquired entities. During 2006, the Company finalized the purchase price allocation for ISG and Kryviy Rih, which resulted in a charge of 131 to the consolidated statement of income for the year ending December 31, 2005, primarily due to lower negative goodwill than initially recognized. See the table below for adjustments. Prior period information has been adjusted retrospectively. *** Based on a preliminary purchase price allocation, which is subject to change. The amount of profit attributable to Arcelor since the date of acquisition is 1.7 billion. I-48

ISG Preliminary allocation Current assets . . . . . . . . . . Property, plant & equipment . . . . . . . . . . . Other assets . . . . . . . . . . . . Total assets acquired
...

Kryviy Rih Final allocation 3,024 4,001 506 7,531 1,590 844 1,613 104 4,151 3,380 3,380 3,233 (147) Preliminary allocation 332 4,177 4,509 125 151 807 1,083 3,426 239 3,187 4,632 1,445 Adjustments 15 277 292 133 49 (25) 157 135 10 125 3 (122) Final allocation 347 4,454 4,801 258 200 782 1,240 3,561 249 3,312 4,635 1,323

Adjustments (65) (92) (157) (23) 53 (61) (31) (126) (126) 4 130

3,024 4,066 598 7,688 1,613 844 1,560 165 4,182 3,506 3,506 3,229 (277)

Current liabilities . . . . . . . Long-term loan . . . . . . . . . Other long-term liabilities . . . . . . . . . . . . . Deferred tax liabilities . . . . . . . . . . . . . Minority interest . . . . . . . . Total liabilities assumed . . . . . . . . . . . . . Total net assets . . . . . . . . . Minority interest . . . . . . . . Net assets acquired . . . . . Purchase price, net . . . . . . (Negative) goodwill
....

Goodwill recorded in connection with the above acquisitions is principally attributable to the assembled workforces of the acquired businesses and the synergies expected to arise after the Companys acquisition of those businesses. Any negative goodwill arising from these acquisitions is included in other income in the income statement. The total purchase price for ISG, Kryviy Rih, and Arcelor consists of the following: ISG Cash paid to stockholders, gross . . . . . . . . . . . . . . . . . . . . . . . . . Transaction related fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total purchase price, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total purchase price, net
................................

Kryviy Rih 4,904 4 4,908 (273) 4,635

Arcelor 10,247 188 23,240 33,675 (4,594) 29,081

2,072 56 1,705 3,833 (600) 3,233

Pro Forma Results (unaudited) The following pro forma financial information presents the combined results of operations of Mittal Steel for 2006, with Arcelor, as if the acquisition had occurred as of the beginning of the periods presented. The 2005 pro forma information also includes the results of operations of Mittal Steel Kryviy Rih and Mittal Steel USA on the same basis. The pro forma financial information is not necessarily indicative of what our consolidated results of operations actually would have been had we completed the acquisition at the dates indicated. In addition, the pro forma financial information does not purport to project the future results of operations of the combined company. Pro Forma for the year ended December 31, 2005 2006 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Per share amounts Basic earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-49 80,171 8,263 5.97 5.97 88,576 7,973 5.76 5.76

NOTE 4: ASSETS HELD FOR SALE Following Mittal Steels bid for Arcelor, the European commission identified competition concerns in certain steel production segments. As a result, the Company has identified the following entities to be disposed of: Travi e Profilati di Pallanzeno, San Zeno Acciai Duferco, Stahlwerk Thringen Gmbh, and Huta Bankowa, all of which reside in its Long Carbon Europe segment. In response, the Company announced, on December 13, 2006, that it had agreed to sell its wholly-owned subsidiary Travi e Profilati di Pallanzeno as well as its 49.9% stake in San Zeno Acciai Duferco, to Duferco for an enterprise value of 117 million (153). The transaction closed in January 2007. At December 31, 2006, the disposal group comprises assets of 143 and liabilities of 55. In addition, on December 6, 2006, Mittal Steel agreed to sell Stahlwerk Thringen GmbH to Grupo Alfonso Gallardo for an enterprise value of 591 million (768). The transaction closed on March 5, 2007. At December 31, 2006, the disposal group comprised assets of 736 and liabilities of 127. Furthermore, on January 19, 2007, Mittal Steel announced that it had agreed to sell its wholly-owned subsidiary Huta Bankowa to Alchemia SA Capital Group. At December 31, 2006, the disposal group comprised assets of 57 and liabilities of 9. The transaction is expected to be closed in second quarter of 2007. On October 27, 2006, Noble and Arcelor signed a binding letter of Intent for the combination of Arcelors laserwelded tailor blank business (Flat Carbon Europe segment) with Noble. On March 16, 2007, Mittal Steel and Noble signed a definitive agreement for the combination of their laser-welded tailored blanks businesses. Under the terms of the transaction, Mittal Steel, will sell its laser-welded blanks business in western and eastern Europe, China, India and United States (TBA) for aggregate consideration of 300, which will consist of approximately 131 in a combination of cash, a note receivable, and assumption of certain TBA financial obligations by Noble and 9,375,000 shares of Noble common stock (with an agreed value of 18 per share). Upon completion, Mittal Steel will become the largest stockholder of Noble, owning approximately 40% of the issued and outstanding common shares. Arcelor will also obtain four of nine seats on Nobles board of directors. Completion of the transaction is expected to occur in June 2007, and is subject to a number of conditions, including Noble shareholder approval, receipt by Noble of not less than 165 in debt financing, anti-trust clearance in the United States, Canada and Europe and other customary conditions. In addition, Arcelor and Noble will seek to include in the transaction as soon as practicable the tailored blanks business operated by Powerlasers, a subsidiary of Dofasco, Inc., for additional consideration to be determined based upon the 2006 financial performance of Powerlasers, estimated at 50. The common shares of Dofasco are held in a Dutch trust, the trustees of which control any decision to sell Dofasco assets. At December 31, 2006, the disposal group comprises assets of 331 and liabilities of 47. Assets classified as held for sale:* December 31, 2006 Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,045 65 129 28 1,267 Liabilities classified as held for sale:* December 31, 2006 Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181 58 239 * As of December 31, 2005, the Company did not have any assets or liabilities classified as held for sale.

On February 20, 2007, the U.S. Department of Justice (DOJ) informed the Company that the DOJ has identified the Sparrows Point steel mill located near Baltimore Maryland for divestiture under the consent decree filed by the DOJ in August 2006. As the announcement of the divestiture of Sparrows Point was made after the balance sheet date, the assets and liabilities of Sparrows Point are not classified as held for sale.

I-50

NOTE 5: TRADE RECEIVABLES The trade receivables balances are the following as of December 31, 2005 and 2006: 2005 Trade accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,528 (241) 2,287 2006 9,197 (428) 8,769

The provision charged to the income statement is 23 and 241 for 2005 and 2006, respectively. NOTE 6: INVENTORIES Inventory at December 31 2005 and 2006, net of allowance for slow moving, excess, or obsolete inventory of 269 and 359, respectively, is comprised of the following: 2005 Finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Production in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manufacturing supplies, spare parts and other . . . . . . . . . . . . . . . . . . . . . . . 1,956 1,138 2,321 579 5,994 2006 7,131 3,914 6,491 1,702 19,238

The amount of inventory pledged as collateral is nil and 148 as of December 31, 2005 and 2006, respectively. NOTE 7: PREPAID EXPENSES AND OTHER CURRENT ASSETS The prepaid expenses and other current assets are the following as of December 31, 2005 and 2006: 2005 Other advance payments to public authorities . . . . . . . . . . . . . . . . . . . . . . . Financial loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables from sale of tangible and intangible assets . . . . . . . . . . . . . . Prepaid and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327 598 925 NOTE 8: GOODWILL AND INTANGIBLE ASSETS Goodwill and intangible assets are summarized as follows: Goodwill on acquisition Cost At December 31,2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange differences . . . . . . . . . . . . . . . . . . . . Transfers and other movements . . . . . . . . . . . . . . . . . . At December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of Arcelor . . . . . . . . . . . . . . . . . . . . . . . . . . . Other acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange differences . . . . . . . . . . . . . . . . . . . . Transfers and other movements . . . . . . . . . . . . . . . . . . At December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . I-51 49 1,342 1,391 6,348 67 205 9 8,020 Concessions patents and licenses 7 28 (1) 34 710 17 (11) 4 18 772 Favourable contracts 384 384 920 30 1,334 2006 1,692 354 490 166 1,240 3,942

Other 187 22 (17) 192 912 60 30 5 1,199

Total 243 1,754 21 (17) 2,001 8,890 144 (11) 269 32 11,325

Goodwill on acquisition Accumulated amortization and impairment losses At December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange differences . . . . . . . . . . . . . . . . . . . . At December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange differences . . . . . . . . . . . . . . . . . . . . Transfers and other movements . . . . . . . . . . . . . . . . . . At December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . Carrying amount At December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . At December 31, 2006
...........................

Concessions patents and licenses

Favourable contracts

Other

Total

1,391 8,020

2 5 7 (11) 11 106 23 1 137 27 635

162 162 177 2 341 222 993

23 6 (3) 26 (1) 44 (4) 65 166 1,134

25 173 (3) 195 (11) 10 327 21 1 543 1,806 10,782

Goodwill acquired in a business combination is allocated, at the acquisition date, to the cash generating unit(s) that is or are expected to benefit from synergies expected to be realized as a result of that business combination (generally the plant (or plants) acquired). Before recognition of subsequent impairment losses, the carrying amount of goodwill recognized in each of the years ended December 31, 2005 and 2006, has been allocated as follows: Net value December 31, 2005 Acquisitions** Mittal Steel Kryviy Rih . . . . . . . . . . . . . . . . . . . Arcelor* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total * **
.....................................

Exchange rate differences and Net value other December 31, movements 2006 9 204 1 214 1,332 6,552 136 8,020

1,323 68 1,391

6,348 67 6,415

Includes all subsidiaries, mainly located in Europe and South America as purchase price allocation has not been finalized. Subject to change upon finalization of purchase price allocation

Mittal tests goodwill annually, in the fourth quarter, for impairment or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of the cash generating units are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the cash generating units. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. Mittal prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next five years and extrapolates cash flows for the following five years based on an estimated growth rate. This rate does not exceed the average long-term growth rate for the relevant markets.

I-52

NOTE 9: PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are summarized as follows: Land, buildings and Machinery improvements and equipment Cost At December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition through business combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange differences . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . At December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition through business combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange differences . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . At December 31, 2006
......................

Construction in progress 626 128

Total 15,836 1,181

3,608 184 416 (189) 4,019 477 8,669 503 (306) 200 782 14,344

11,602 869 7,856 (221) (292) (9) 19,805 721 22,115 1,067 (544) 1,094 37 44,295

183 8,455 (32) (442) (292) (9) 905 24,729 1,737 2,935 3,466 34,250 (66) 1,504 (194) (1,044) (1,294) (94) 725 4,460 63,099

Accumulated depreciation and impairment At December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . Depreciation charge for the year . . . . . . . . . . . . . Foreign exchange differences . . . . . . . . . . . . . . . Other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . At December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . Depreciation charge for the year . . . . . . . . . . . . . Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange differences . . . . . . . . . . . . . . . Other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . At December 31, 2006 Carrying amount At December 31, 2005 At December 31, 2006
......................

711 321 1,032 633 3 (96) 201 105 1,878 2,987 12,466

3,854 781 15 4,650 1,506 38 (403) 573 153 6,517 15,155 37,778

8 (6) 2 7 (1) 8 903 4,452

4,573 1,102 (6) 15 5,684 2,146 41 (499) 774 257 8,403 19,045 54,696

...................... ......................

During the period, the Company carried out a review of the recoverable amount of its manufacturing plant and equipment. The recoverable amount of the relevant assets has been determined on the basis of their value in use. As a result of the assessment, the Company determined that the recoverable amount for certain of its plant, property and equipment located in its US Operating Subsidiary was less than its carrying amount. Accordingly, a 41 (2005: 0) impairment loss was recognized immediately as an expense as part of operating income in the income statement. The Company has pledged 292 and 1,146 in land and buildings as of December 31, 2005 and 2006, respectively, to secure banking facilities granted to the Group. These facilities are further disclosed in note 13 and 14.

I-53

NOTE 10: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD The Companys investments in associates and joint ventures are as follows: Ownership % at December 31, 2006 Investee Equity method investments: PCI Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I/N Tek(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I/N Kote(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gallatin(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DHS Group (3)
.................................... ...........

Net asset value at December 31, 2005 2006

Location USA USA USA USA Germany South Africa Poland China Spain Spain Spain Italy Turkey Luxembourg South Korea Various

50% 60% 50% 50% 51.3% 50% 33% 29.49% 35% 35% 35% 35% 40.3% 33.3% 50%

23 82 159 130 40 344 169 947

15 88 175 192 998 124 67 382 238 175 101 152 83 63 133 506 3,492

Macsteel International Holdings B.V.(4) Zaklad Przetworstwa Hutniczego Hunan Valin(5)

.................

....................................

Gestamp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gonvarri Industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holding Gonvarri SRL . . . . . . . . . . . . . . . . . . . . . . . . . . . . CLN

.............................................. .......................................... ....................................... ............................

Borcelik

CFL Cargo

TrefilArbed Kiswire(6) Other

.............................................

(1)

(2)

(3)

(4)

I/N Tek, a general partnership formed for a joint venture between the Company and Nippon Steel Corporation (NSC), owns and operates a cold-rolling facility. I/N Tek is 60% owned by the Company. The Company does not exercise control over I/N Tek as all significant management decisions require agreement by both partners. The Company has rights to the productive capacity of the I/N Tek facility, except in certain limited circumstances and, under a tolling arrangement, has an obligation to use the facility for the production of cold rolled steel. See note 12 for a further discussion of transactions with related parties. Mittal Steel USA and NSC own and operate another joint venture which consists of a 500,000 ton electro galvanizing line and a 500,000 ton hot-dip galvanizing line adjacent to the I/N Tek facility. I/N Kote, the general partnership formed for this joint venture, is owned 50% by the Company. The Company and NSC have each guaranteed the share of long-term financing attributable to their respective interest in the partnership. The I/N Kote joint venture is required to buy all of its cold rolled steel from the Company. See note 12 for a further discussion of transactions with related parties. The Company owns a 51.3% interest in Dillinger Hutte Saarstahl AG (DHS). The Company does not exercise control over DHS as it is unable to appoint a majority of the members of the supervisory board of DHS and decisions voted on by shareholders are required to be approved with at least a 70% affirmative vote. Macsteel International Holdings B.V. (Macsteel) is an equity method investment owned by Mittal Steel South Africa. Mittal Steel South Africas steel products are marketed internationally through Macsteel, a joint venture in which the Mittal Steel South Africas holds a non-controlling 50% interest. The Company recognized 29 in equity income from Macsteel in 2006 (42 in 2005).

I-54

(5)

(6)

On September 27, 2005, Mittal Steel completed the acquisition of 36.67% of the outstanding shares of Hunan Valin Steel Tube and Wire Co., Ltd (Hunan Valin), for a aggregate consideration of 338 (excluding acquisition related fees of 6). Following the conversion of bonds into shares of Hunan Valin, the Companys interest in Hunan Valin was diluted to 31.43 % as of December 31, 2005. During January 2006, the conversion of all remaining convertible bonds occurred and, as a result, the shareholdings of the Company were diluted to 29.49%. As of December 31, 2006, the investment had a market value of 357 (2005: 391). These investments are under common control between Arcelor Mittal and joint venture partners. As a result, the Company does not have the power to govern the financial and reporting policies of these entities, and therefore, accounts for the investments under the equity method.

Summarized financial information, in the aggregate, for the Companys investments accounted for using the equity method follows: Years ended December 31, 2005 2006 Condensed statement of income data Gross revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,446 137 8,734 533

Years ended December 31, 2005 2006 Condensed balance sheet data Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 11: OTHER INVESTMENTS The Company holds the following other investments: December 31, 2005 2006 Available-for-sale securities: Erdemir . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments accounted for at cost: Carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total accounted for at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total other investments
.....................................................

2,487 1,570

12,148 6,797

277 277

424 81 505

277

646 646 1,151

As of December 31, 2006, the Company owned approximately 14.2% of the outstanding shares of Erdemir, a publicly-traded company located in Turkey (the largest iron and steel producer in the Republic of Turkey). In addition to its interest in Erdemir, the Company also owned stakes in the following companies, which were also classified as available-for-sale securities as of December 31, 2006: Aos Villares (part of the Sidenor Group, producer of special steels and rolls for rolling mills, publicly traded on the Brazilian stock market). Fortis (international financial services provider engaged in banking and insurance, publicly traded on Amsterdam, Brussels and Luxembourg stock markets). Kiswire (special steel wire manufacturer whose shares are publicly traded on the South Korean stock market). The change in fair value of available-for-sale securities for the period (unrealized gain of 16, net of income tax and minority interests) is recorded directly in shareholders equity. I-55

NOTE 12: BALANCES AND TRANSACTIONS WITH RELATED PARTIES Transactions with related parties, all of which are associates and joint ventures of the Company, were as follows: Year ended December 31, 2005 2006 Sales 1,369 361 77 153 70 68 63 23 155 2,339 1,084 380 376 221 207 205 150 105 72 55 52 50 890 3,847 At December 31, 2005 2006 Receivables 51 4 45 20 13 6 4 25 168 26 13 64 143 49 18 20 8 8 28 20 12 300 709

Transactions Macsteel Intl Holding & Subsidiaries . . . . . . . . . . I/N Kote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Polski Koks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Coils Lamiere Nastri (CLA) SPA . . . . . . . . . . . . . . . Gonvarri Industrial SA . . . . . . . . . . . . . . . . . . . . . . . . . WDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zaklad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Straprofil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sorevco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lamines Marchands Europeens SA . . . . . . . . . . . . . Borecelik Celik Sanayii Ticret . . . . . . . . . . . . . . . . . . Florin Centrum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions Polski Koks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E.I.M.P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forges et Acieries de Dilinger . . . . . . . . . . . . . . . . . . I/N Tek (Tolling charges) . . . . . . . . . . . . . . . . . . . . . . . Mac Steel Intl Holding & Subsidiaries . . . . . . . . . Pea Colorada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PCI Associates (Tolling Fees) . . . . . . . . . . . . . . . . . . Eko Recycling GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . Lindsay International (Pvt) Ltd. . . . . . . . . . . . . . . . . . Orind Refractories & Subsidiaries . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year ended December 31, 2005 2006 Sales Purchases of raw material & others 217 188 144 53 54 57 66 135 914 258 255 186 166 106 66 65 62 36 35 505 1,740

At December 31, 2005 2006 Receivables Payables 50 1 27 (5) 6 5 41 125 56 27 10 27 17 3 3 376 519

The Companys principal subsidiaries, categorized by operating segment and location, are as follows. Name of Subsidiary Flat Carbon Americas Companhia Siderrgica de Tubaro S.A. Dofasco Inc. Mittal Steel Lzaro Crdenas S.A. de C.V. Mittal Steel USA Inc. Flat Carbon Europe Aceria Compacta de Bizkaia S.A. Arcelor Atlantique et Lorraine SAS Arcelor Bremen GmbH Arcelor Eisenhttenstadt GmbH Arcelor Espaa S.A. Arcelor Mditerrane SAS Arcelor Steel Belgium N.V. Arcelor Piombino S.p.a. Cockerill Sambre S.A. Industeel Belgium S.A. Abbreviation CST Dofasco Mittal Steel Lzaro Crdenas Mittal Steel USA Country Brazil Canada Mexico USA

Aceria Compacta de Bizkaia Arcelor Atlantique et Lorraine Arcelor Bremen Arcelor Eisenhttenstadt Arcelor Espaa Arcelor Mditerrane Arcelor Steel Belgium Arcelor Piombino Cockerill Sambre Industeel Belgium I-56

Spain France Germany Germany Spain France Belgium Italy Belgium Belgium

Name of Subsidiary Industeel France S.A. Mittal Steel Galati S.A. Mittal Steel Ostrava a.s. Mittal Steel Poland S.A. Long Carbon Americas and Europe Acindar Industria Argentina de Aceros S.A. Arcelor Bergara, S.A. Arcelor Huta Warszawa Sp.z.o.o. Arcelor Madrid, S.L. Arcelor Olaberra, S.L. Arcelor Profil Luxembourg S.A. Arcelor Rodange S.A. Belgo Siderurgia S.A. Mittal Canada Inc. Mittal Steel Hamburg GmbH Mittal Steel Hochfeld GmbH(1) Mittal Steel Ostrava a.s. Mittal Steel Point Lisas Ltd. Mittal Steel Poland S.A. Mittal Steel Ruhrort GmbH(1) Asia, Africa and CIS (AACIS) JSC Mittal Steel Temirtau Mittal Steel Annaba Spa Mittal Steel Liberia Limited Mittal Steel South Africa Ltd. OJSC Mittal Steel Kryviy Rih Socit Nationale de Sidrurgie, S.A. Stainless Steel Acesita S.A. Ugine & Alz Belgium N.V. Ugine & Alz France S.A. Arcelor Mittal Steel Solutions and Services (AM3S) Arcelor Construction France S.A. Arcelor International America, LLC Arcelor Auto Processing France SAS Produits dUsines Mtallurgiques, Pum-Station Service Acier S.A. Raven Schfer GmbH

Abbreviation Industeel France Mittal Steel Galati Mittal Steel Ostrava Mittal Steel Poland

Country France Romania Czech Republic Poland

Acindar Arcelor Bergara Arcelor Huta Warszawa Arcelor Madrid Arcelor Olaberra Arcelor Profil Luxembourg Arcelor Rodange Belgo Mittal Canada Mittal Steel Hamburg Mittal Steel Hochfeld Mittal Steel Ostrava Mittal Steel Point Lisas Mittal Steel Poland Mittal Steel Ruhrort

Argentina Spain Poland Spain Spain Luxembourg Luxembourg Brazil Canada Germany Germany Czech Republic Trinidad and Tobago Poland Germany

Mittal Steel Temirtau Mittal Steel Annaba Mittal Steel Liberia Mittal Steel South Africa Mittal Steel Kryviy Rih Sonasid

Kazakhstan Algeria Liberia South Africa Ukraine Morocco

Acesita Ugine & Alz Belgium Ugine & Alz France

Brazil Belgium France

Arcelor Construction France Arcelor International America Arcelor Auto Processing France Pum Service Acier Raven Schfer

France USA France France Germany

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated in consolidation and are not disclosed in this note. Refer to note 26 for disclosure of transactions with key management personnel. NOTE 13: PAYABLE TO BANKS Payable to banks, including the current portion of long-term debt, consisted of the following as of December 31, 2005 and 2006: 2005 Short term bank loans and other credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current portion of long-term debt and lease obligations (see note 14) . . . . . . . . . . 144 190 334 Payable to banks includes short term loans., overdrafts and commercial paper. I-57 2006 1,229 3,693 4,922

Multi-currency Letter of Credit Facility On December 30, 2005 the Company entered into a multi-currency revolving letter of credit facility in an aggregate amount equal to 800 with a consortium of lenders. This facility is used by the Company and its subsidiaries for the issuance of letters of credit and financial guarantees. The terms of the letter of credit and financial guarantees contain 0certain restrictions as to duration. Commercial paper The Company assumed a commercial paper program from Arcelor enabling borrowings of up to 2,000 million (2,621). NOTE 14: LONG-TERM DEBT Long-term debt is comprised of the following as of December 31: Year of maturity Corporate 3.2 billion Credit Facility . . . . . . . . . . . . . . . . . . . . . . . 3.5 billion Bridge Finance Facility . . . . . . . . . . . . . . 17 billion Credit Facility . . . . . . . . . . . . . . . . . . . . . . . IFA Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBRD Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Corporate
.................................

Type of Interest Floating Floating Floating Floating Floating Floating Fixed

Interest Rate(1) 5.4% 4.2%-5.7% 3.5%-3.7% 6%-6.2% 6%-6.2% 6.5%

2005 2,750 3,500 51 67 16 6,384

2006 2,100 15,828 89 250 59 13 18,339 8 21 420 391 500 8 633 222 2,517 2,622 11 751 779 4,163 150 10 29 189 25,208 3,663 21,545 100 21,645

2010 2007 2008 2011 2030 2035 2009 2013 2009 2013 2009

Americas Subordinated convertible notes . . . . . . . . . . . . . . . . . . Senior secured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior secured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior secured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . Senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . Senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . PBGC convertible notes . . . . . . . . . . . . . . . . . . . . . . . . . Asset acquisition loans . . . . . . . . . . . . . . . . . . . . . . . . . . Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Europe Secured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debenture loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debenture loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asia & Africa Government Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Asia & Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less current portion of long-term debt . . . . . . . . . . . Total long-term debt (excluding lease obligations) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lease obligations (net of 30 of current portion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total long-term debt, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)

2011 2010 2010 2014 2008 2017 2014 2007 2018 2007 2007 2018 2007 2014

Fixed Floating Floating Fixed Fixed Fixed Floating Fixed Fixed Fixed

6% 12.2% 9.75% 5% -9.81% 6.5% 3.9% 5%-11.1% 5.8%-7.1%

150 420 500 35 152 119 1,376 82 35 42 159 150 17 36 203 8,122 180 7,942 32 7,974

2006 2008 2014 2020 2006 2015 2007 2015

Fixed Fixed Floating Floating Fixed

3.4%-6.4% 4.1%-6.1% 3.3%-6% 3.5%-7.5%

2011 2013 2007 2012

Fixed Fixed Floating

5% 16% 6.8%

The effective interest rate for the fixed rate debt approximates the normal interest rate. The effective rate for the 17 billion Credit Facility amounts to 4,54% in 2006 I-58

Corporate 3.2 billion Credit Facility On April 7, 2005, Mittal Steel and certain subsidiaries signed a five-year 3,200 credit facility with a consortium of banks. At December 31, 2006, 2,100 was outstanding. 3.5 billion Bridge Facility On October 19, 2005, the Company signed a 3,000 loan agreement with Citigroup. The facility was subsequently increased by 500 to 3,500. The 2005 Bridge Facility was repaid in full on June 26, 2006 and cancelled subsequently. Funding was provided from a 3,000 million (3,932) Refinancing Facility entered into on January 30, 2006. 17 billion Credit Facility On January 30, 2006, the Company entered into a 5,000 million credit agreement with a group of lenders to finance the cash portion of the offer for Arcelor along with related transaction costs (Acquisition Facility) and a 3,000 million credit agreement to refinance the 2005 Bridge Facility. On May 23, 2006, the Company entered into a 2,800 million agreement with a group of lenders to finance the cash portion of the increased offer for Arcelor along with related transaction costs (Acquisition Facility). On November 30, 2006, the Company entered into a 17,000 million credit agreement with a group of lenders to refinance Mittal Steels Refinancing Facility and Acquisition Facilities, along with Arcelor 4,000 million term loan facility and 3,000 million revolving credit facility agreement. All of these refinanced facilities were repaid and cancelled in December 2006. The outstanding under 17 billion credit facility at December 31, 2006 was 15,828. EBRD Loans The secured loan is for capital expenditures and working capital requirements at Mittal Steel Galati. The loan is guaranteed by the Company and certain of its subsidiaries, and is secured by a pledge of certain assets of Mittal Steel Galati. The outstanding amount of the loan is 50 as of December 31, 2006. On April 4, 2006, Mittal Steel signed a 200 loan agreement with the European Bank for Reconstruction and Development for on-lending to Mittal Steel Kryviy Rih. The outstanding amount of the loan was 200 as of December 31, 2006. Americas Senior Secured Notes On March 25, 2004, Ispat Inland ULC issued senior secured notes with an aggregate principal amount of 800: 150 of floating rate notes bearing interest at LIBOR plus 6.75% due April 1, 2010 and 650 of fixed rate notes bearing interest at 9.75% (issued at 99.212% to yield 9.875%) due April 1, 2014 (the Senior Secured Notes), of which 420 (net of 3 of discount) are outstanding as of December 31, 2006. The Senior Secured Notes are secured by First Mortgage Bonds (relating to certain assets of the former Ispat Inland Inc.) originally totaling 800 and by a second position lien on the inventory of Mittal Steel USA. As further credit enhancement, the Senior Secured Notes are fully and unconditionally guaranteed by Mittal Steel USA, certain of its subsidiaries as well as by Mittal Steel and certain other associates. The terms of the Senior Secured Notes place certain limitations on the ability of Mittal Steel USA and its subsidiaries to incur additional indebtedness, pay dividends or make other distributions and various other activities. The indenture also contains limited covenants that are applicable to Mittal Steel. These limitations are subject to a number of exceptions and qualifications. Mittal Steel USA was in compliance with all covenants at December 31, 2006. The Senior Secured Notes became investment grade rated as of January 19, 2006. As a result, many of the above limitations were suspended, including restrictions on paying dividends or making other distributions to shareholders. Senior Unsecured Notes On April 14, 2004, Mittal Steel USA (formally ISG) issued 600 of senior, unsecured debt securities due in 2014. The debt securities bear interest at a rate of 6.5% per annum and were issued at a discount of 5, which is amortized as interest expense over the life of the senior unsecured notes. On July 22, 2005, Mittal Steel USA repurchased 100 of unsecured notes leaving an outstanding balance of 500. These bonds are fully and unconditionally guaranteed by certain wholly-owned subsidiaries of Mittal Steel USA and, as of March 9, 2007, by Mittal Steel. I-59

On October 1, 2001, Dofasco issued Canadian Dollar (CAD) 125 million of 7.55% unsecured, non-callable notes maturing October 1, 2008. On June 15, 2005, pursuant to the Short Form Shelf Prospectus dated November 24, 2004, Dofasco issued CAD 250.0 million of 4.961% Series A Medium Term Notes. The unsecured, non-redeemable notes will mature June 15, 2017 with interest payable semi-annually on June 15 and December 15. The principal will be repaid in four equal annual installments of CAD 62.5 million commencing June 15, 2014. Asset Acquisition Loans In May 2005, ISG Inc. (since renamed Mittal Steel USA) took ownership of a coke oven battery at Burns Harbor that was previously leased under a capital lease. The related loan amounts to 140 as of December 31, 2006. CST, Vega do Sul and Belgo Mineira contracted loans mainly with Banco Nacional de Desenvolvimento and Banco Bradesco S.A. for a total amount of 489 in order to finance their expansion of capacity. Together the outstanding as at December 31, 2006 was 633 including accrued interest. Other loans The other loans relate mainly to loans contracted by Acesita, CST and Vega do Sul with different counterparties. Redemptions On August 18, 2006, Mittal Steel USA redeemed the 38 principal amount of its outstanding Pollution Control Revenue Bonds (Inland Steel Company Project No.13) Series 1996 at par. On April 20, 2006, the Pension Benefit Guaranty Corporation converted the entire 35 outstanding principal amount plus accrued interest of the convertible note issued by ISG into 1,268,719 Class A common shares of Mittal Steel. On April 1, 2006, Ispat Inland ULC redeemed the 150 floating rate notes. The floating rate notes were redeemed at a price of 103.0% of the principal plus accrued interest. On December 28, 2005, Ispat Inland redeemed the 23 principal amount of its outstanding City of East Chicago, Indiana Pollution Control Refunding Revenue Bonds (Inland Steel Company Project No. 10) Series 1993 at par plus accrued and unpaid interest and the 11 principal amount of its outstanding Indiana Development Finance Authority Pollution Control Refunding Revenue Bonds (Inland Steel Company Project No. 12) Series 1995 at 102% plus accrued and unpaid interest. On February 1, 2006, Mittal Steel USA redeemed the 17 principal amount of its outstanding City of East Chicago, Indiana Pollution Control Revenue Bonds (Inland Steel Company Project No. 5) Series 1977 at par. On October 5, 2005, Ispat Inland redeemed the 28 principal amount of its outstanding First Mortgage 7.9% Bonds, Series R, due January 15, 2007 at par plus accrued and unpaid interest. Contingent Liability In 1998, Ispat Inland entered into an agreement with the PBGC to provide certain financial assurances with respect to its pension plan. Under the terms of this agreement, the PBGC was granted a first priority lien on certain assets and Ispat Inland was required to make certain minimum contributions to its pension plan. In 2003, the agreement was amended and under the amended terms, Ispat Inland contributed 175 in 2005 and pledged 160 of non-interest bearing First Mortgage Bonds. The agreement terminated on December 31, 2005 when Mittal Steel USA met certain financial measures but the pledge of the 160 of bonds continues until Mittal Steel USA meets certain other measures, including the funding level of its pension plan. Attorneys for the parties are finalizing documentation for the release of the first priority liens on the remaining assets. Europe OCEANE 2017 3% In December 2006, Arcelor completed the early redemption of Arcelors OCEANEs. This early redemption was completed on December 15, 2006 in accordance with the terms and conditions of the OCEANEs set forth in the prospectus approved by the Luxembourg Commission de Surveillance du Secteur Financier on June 28, 2002, for cash equal to the principal amount of the OCEANEs plus the accrued and unpaid interest amounting to 0.27055 (0.35461) per OCEANE. Senior Secured Notes On December 19, 2005, Mittal Steel Europe called the outstanding amount of the euro-denominated senior secured notes due February 2011, which bore interest at 11.875% per annum. The outstanding note was repaid on February 1, 2006 at 105.938% of par value. I-60

Debenture loans In 2001, Usinor issued 600 in two tranches (500 million on April 10 and 100 million on July 31). Both principal amounts of unsecured and unsubordinated fixed rated notes bear interest at 6.125% (issued at 99.695%) due April 10, 2008. On December 20, 2002, the general assembly of the bondholders approved the substitution of Arcelor Finance for Usinor as primary obligor under the outstanding bonds. In 2003, Arcelor Finance issued 600 million, (500 on September 24 and 100 million on December 4). Both principal amounts of unsecured and unsubordinated fixed rated notes bear interest at 5.125% (issued at 99.536%) due September 24, 2010. Both issuances were consolidated to form a single series. On July 15, 2004, Arcelor Finance issued 100 million principal amount of unsecured and unsubordinated fixed rated notes bearing interest at 5.50% (issued at 101.97%) due July 15, 2014. On November 7, 2004, Arcelor Finance issued 500 million principal amount of unsecured and unsubordinated fixed rated bonds bearing interest at 4.625% (issued at 99.195%) due November 7, 2014. On December 10, 2004, Arcelor Finance issued 100 million principal amount of unsecured and unsubordinated fixed rated bonds bearing interest at 3.395% (issued at 100.00%) due December 10, 2014. Other Loans Between 2003 and 2006, Arcelor Finance issued 556 principal amount of loans maturing between 2008 and 2015. Interest rates are based on 3 month EURIBOR, 6 month EURIBOR, or 6 month LIBOR. In 2006, Arcelor Ambalaj Celigi Sanayi ve Ticaret issued 19 principal amount of loan maturing in 2007 bearing interest at the 6 month LIBOR average. 408 principal amount of loans maturing between 2008 and 2015 bearing interest between 3.75% and 6.4% were issued between 1996 and 2005. On December 31, 2006 367 was outstanding. Asia & Africa Mittal Steel Annaba has a 150 ten-year term loan agreement with the government of Algeria. The loan is guaranteed by Mittal Steel. The loan has been repaid in full during first quarter of 2007. Other Certain debt agreements of the Company or its subsidiaries provide for various covenants requiring certain consent from lenders in specified circumstances, to declare or pay any dividends, make certain restricted payments, incur additional indebtedness, make certain investments, create liens, guarantee indebtedness, sell or acquire assets with certain exceptions, enter into any merger or consolidation or reorganization, as well as require compliance with other financial maintenance tests, which includes financial ratios and minimum levels of net worth. The Company is in compliance with the financial covenants contained within the amended agreements related to all of its non-current borrowings. Scheduled maturities of long-term debt including lease obligations at December 31, 2006 are as follows: Year ended December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subsequent years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
..................................................

3,693 4,615 4,239 6,537 3,797 2,457 25,338

NOTE 15: FINANCIAL INSTRUMENTS AND CREDIT RISK Fair Value of Financial Instruments The estimated fair values of certain financial instruments have been determined using available market information or other valuation methodologies that require considerable judgment in interpreting market data and I-61

developing estimates. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair values. The carrying amounts of the Companys cash and cash equivalents, accounts receivable and accounts payable approximate their fair values due to the short-term nature of these instruments. The Companys short and long-term debt consists of debt instruments which bear interest at fixed rates and variable rates tied to market indicators. The fair value of the Companys variable rate debt approximates its carrying amount given the floating rate nature of the debt. The fair value of fixed rate debt is based on estimated future cash flows discounted using the current market rates for debt of the same remaining maturities and credit risk. The estimated fair values of the Companys short and long-term debt are as follows as of December 31, 2005 and 2006: 2005
Carrying Value Estimated fair Value

2006
Carrying Value Estimated fair Value

Instruments payable bearing interest at variable rates . . . . . . . . . . . . . . . . . . Instruments payable bearing interest at fixed rates . . . . . . . . . . . . . . . . . . . . Long-term debt, including current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payable to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,589 1,575 8,164 144

6,594 1,649 8,243 144

20,674 4,664 25,338 1,229

20,674 4,756 25,430 1,229

Derivative Financial Instruments The Company uses foreign currency exchange contracts to manage the risk of foreign currency fluctuations on projected cash flows relating to purchase and sales contracts. The Company uses futures and swap contracts to manage fluctuations in the cost of input commodities in the steel-making process such as natural gas, electricity, oil and oil products and non-ferrous metals. Timing of these transactions corresponds to the expected need for the underlying physical commodity and is intended as a hedge. The effective portion of the unrealized gains or losses on cash flow hedges are recorded in equity and recorded in the income statement upon realization of the cash flows if they meet the criteria of IAS 39. Unrealized gains and losses on ineffectiveness were recognized immediately in earnings. The amount of gains or losses reclassified from equity into earnings, as a result of the discontinuance of cash flow hedges, was not material. Unrealized gains or losses from foreign currency derivatives and commodity swaps and options that do not qualify for hedge accounting are recognized in cost of sales or other operating expenses. The amounts of derivative financial assets and liabilities (all classified as current) recognized in the balance sheet as of December 31, 2005 and 2006 are not material. These are all short-term. Credit Risk Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Financial instruments that potentially subject the Company to credit risk primarily consist of trade accounts receivable and derivative contracts. The Company does not anticipate non-performance by counterparties. The Company generally does not require collateral or other security to support financial instruments with credit risk. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. The Company considers its credit risk associated with trade accounts receivable to be limited due to a large number of customers comprising the Companys customer base and their geographic dispersion. The Company sells a significant amount of products pursuant to orders throughout its main markets. The Company grants credit based on evaluations of its customers financial situation, in certain cases, without requiring guarantees or letters of credit, and monitors the exposure of potential losses from granting credit. To reduce risk the Company I-62

routinely assesses the financial strength of its customers and as a consequence, believes that its accounts receivable credit risk exposure is limited. In addition, the Company has entered into insurance policies for a number of subsidiaries. The counterparties to derivative contracts are generally major financial institutions and credit risk is generally limited to the unrealized gains and losses on such contracts should the counterparties fail to perform as contracted. The credit risk exposure to each counterparty is capped in function of its credit rating and our business volume. As a result, the Company considers the risk of counterparty default to be minimal. NOTE 16: EQUITY As at December 31, 2006, the authorized common shares of Mittal Steel consisted of 5,000,000,000 Class A common shares, par value of 0.01 per share, and 721,500,000 Class B common shares, par value of 0.01 per share. At December 31, 2006, 934,818,280 (December 31, 2005: 255,401,673) class A common shares and 457,490,210 (December 31, 2005: 457,490,210) class B common shares were issued and 927,778,733 (December 31, 2005: 246,572,889) class A common shares (excluding treasury shares) and 457,490,210 (December 31, 2005: 457,490,210) class B common shares were outstanding. The Companys share capital at December 31, 2006 is comprised as follows: Class A December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of ISG . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . Voting right reduction . . . . . . . . . . . . . . . . . . . . . . Acquisition of Arcelor . . . . . . . . . . . . . . . . . . . . . . December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 2 9 11 Class B 58 58 (52) 6 Total 59 1 60 (52) 9 17

As of December 31, 2006, the preference and relative rights of the Mittal Steel Class A common shares and Mittal Steel Class B common shares are substantially identical except for conversion rights. Each Mittal Steel Class B common share is convertible, at the option of the holder, into one Mittal Steel Class A common share. Under Mittal Steels Articles of Association, each Mittal Steel Class B common share is convertible at any time and from time to time at the option of the holder thereof into one Mittal Steel Class A common share. The Mittal Steel Class A common shares have no conversion rights. On August 1, 2006, Mittal Steel acquired 91.9% of the share capital of Arcelor (on a fully diluted basis). Through subsequent transactions, Mittal Steel increased its ownership to 94.2% of the issued and outstanding shares of Arcelor and 19.9 million of Arcelors Convertible bonds. The acquisition was funded through a combination of cash and 680 million newly issued Class A common shares. In September 2006, the nominal value of class B shares changed from 0.10 per share to 0.01 per share. This was approved by the shareholders during the shareholders meeting of June 30, 2006. At the same time the voting rights for Class B shares reduced from 10 votes per share to 1 vote per share. At December 31, 2006, the Company held 7,039,547 of its own Class A shares which it purchased on the open market for aggregate consideration of 84 (at December 31, 20058,828,784 for aggregate consideration of 111). In 2006, the Company received 9 upon the exercise of options by employees. Dividends All calculations to determine the amounts available for dividends are based on Mittal Steels Dutch statutory accounts, which are different from its consolidated accounts. Mittal Steel has no manufacturing operations of its own. Accordingly, it can only pay dividends or distributions to the extent it is entitled to receive cash dividend distributions from its subsidiaries recognized gains, from the sale of its assets or records share premium from the issuance of (new) common shares. Certain of the Companys operating subsidiaries are subject to restrictions under the terms of their debt agreements with respect to the payment dividends. As a result, subsidiaries of Mittal Steel had 13.1 billion in retained earnings which are free of restriction for the payment of dividend at December 31, 2006. Dividends are payable by Mittal Steel in either U.S. Dollars or in Euros. On September 27, 2006, Mittal Steel announced that its Board of Directors had agreed upon a new dividend and cash distribution policy. The new policy will be proposed to Mittal Steels shareholders at the next general I-63

meeting. The new policy aims to return 30% of Mittal Steels prior years annual net income to shareholders every year through an annual base dividend, supplemented by share buy-backs. Mittal Steels Board of Directors proposed an annual base dividend of $1.30 per share. This base dividend has been designed to provide a minimum payout per year and would rise in order to reflect Mittal Steels underlying growth. Payment of this dividend will be made on a quarterly basis. In addition to this dividend, Mittal Steels Board of Directors proposed a share buy-back program tailored to achieve the 30% distribution pay-out commitment. Based on the annual net income announced for the twelve months ended December 31, 2006, Mittal Steel will implement a 590 share buy-back and a cash dividend of approximately 1.8 billion. This new distribution policy will be implemented as of January 1, 2007 for the 2006 results, subject to shareholder approval. Further to the September 27, 2006 announcement described above, Mittal Steel announced on April, 2, 2007, the commencement of a share buy-back program to repurchase up to a maximum aggregate amount of 590 of its class A common shares. It is Mittal Steels intention to either use the repurchased class A common shares exclusively for future share issuances in view of current or future employee stock option plans and other allocations of shares to employees or cancel the repurchased class A common shares in due course. The share buy-back program will end at the earliest of (i) December 31, 2007 (provided that Mittal Steels shareholders, at the annual general meeting of shareholders to be held on May 15, 2007, renew the current authorization for the Mittal Steel Board of Directors for a period of 18 months, ending on November 15, 2008), (ii) the moment on which the aggregate value of class A common shares repurchased by Mittal Steel since the start of this share buy-back program reaches 590, or (iii) the moment on which Mittal Steel and its subsidiaries hold ten percent of the total number of the then-issued class A and class B common shares. The dividend for 2006 amounted to 522 (0.50 cents per share) and was paid during the year. On February 2, 2007 an interim dividend was declared of 0.325 cents per share or 452 in total. Share Retention Agreements Mittal Steel Temirtau has entered into share retention agreements with the European Bank for Reconstruction and Development (EBRD) and International Finance Corporation (IFC), whereby until the date on which the EBRD and IFC loans have been repaid in full, Mittal Steel Temirtaus holding company or its nominee shall not, unless EBRD and IFC otherwise agree in writing, transfer, assign, pledge, dispose or encumber 67% of the share holding in Mittal Steel Temirtau. The Company has pledged 20% of the outstanding shares of Mittal Steel Galati towards its commitment to pay the remaining purchase price owed to APAPS relating to the Companys acquisition of Mittal Steel Galati. Further, the Company has also pledged 50% of the outstanding shares of Mittal Steel Galatis towards the Companys ten-year capital expenditure commitment at Mittal Steel Galati which commenced November 2001. The Company has pledged 44.8% of the outstanding shares of Mittal Steel Iasi towards its commitment to pay the remaining purchase price owed to APAPS relating to the Companys acquisition of Mittal Steel Iasi. The Company has entered into a share pledge agreement with APAPS for 51.1% of its share holding in Mittal Steel Romans share capital with respect to its commitment to pay the purchase price for Mittal Steel Roman. The Company has also entered into a share pledge agreement with APAPS for 49.9% of its share holding in Mittal Steel Romans share capital towards its capital expenditure commitment for five years commencing December 2003. The Company has entered into a share pledge agreement with APAPS for 1.4% of its share holding in Mittal Steel Hunedoaras share capital with respect to its commitment to pay the purchase price for Mittal Steel Hunedoara. The Company has also entered into a share pledge agreement with APAPS for 51.7% of its share holding in Mittal Steel Hunedoaras share capital towards its capital expenditure commitment for five years commencing April 2004. The Company has entered into a share retention agreement with IFC to retain at least 51% of the registered share holding in Mittal Steel Annaba with respect to the commitment for repayment of loans to IFC by Mittal Steel Annaba. The Company is obliged to establish a registered pledge in favor of the State Treasury of Poland over such number of the Companys shares of Mittal Steel Poland which is equal to the difference between: (i) the number I-64

of shares in the Company held by MSH and (ii) 50% of the Companys shares plus one share. As a result, the number of the shares to be pledged equals to 32,440,972 shares, which constitutes about 12.17% of the entire Companys share capital and about 19.58% of all shares/capital held by the Company. Stock Option Plan In 1999, the Company established the Mittal Steel Global Stock Option Plan (MittalShares). Under the terms of MittalShares, Mittal Steel may grant options to purchase common stock to senior management of Mittal Steel and its associates for up to 20,000,000 shares of common stock (increased from 6,000,000 shares to 10,000,000 shares of common stock after shareholder approval in 2003 and increased from 10,000,000 shares to 20,000,000 shares of common stock after shareholder approval in 2006). The exercise price of each option equals not less than the fair market value of Mittal Steel stock on the grant date, with a maximum term of 10 years. Options are granted at the discretion of the Mittal Steels Appointments, Remuneration and Corporate Governance Committee or its delegate. The options vest either ratably upon each of the first three anniversaries of the grant date, or, in total, upon the death, disability or retirement of the participant. On August 23, 2005, Mittal Steel granted 3,908,773 options to a group of key employees at an exercise price of 28.75. The options expire on August 23, 2015. On September 1, 2006, Mittal Steel granted 3,999,223 options to a group of key employees at an exercise price of 33.755. The options expire on September 1, 2016. Pursuant to the transitional provisions of IFRS 2, Share-Based Payments, only options granted after November 7, 2002 were recognized as an expense at their fair value. The Company determines the fair value of the options at the date of grant using the Black-Scholes model. The fair values for options and other share-based compensation is recorded as an expense in the consolidated statement of income over the relevant resting or service periods, adjusted to reflect actual and expected levels of vesting. The fair value of each option grant to purchase Mittal Steel common shares is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions (based on year of grant): Year of grant 2005 2006 Exercise price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected annualized volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discount rate - Bond equivalent yield . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average share price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected life in years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value of options (per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.75 1.44% 52% 4.50% 28.75 6 13 33.76 1.45% 60% 4.63% 33.76 6 30

The expected life of the options is estimated by observing general option holder behaviour and actual historical lives of Mittal Steel stock option plans. In addition, the expected annualized volatility has been set by reference to the implied volatility of options available on Mittal Steel shares in the open market, as well as, historical patterns of volatility. The compensation expense recognized for stock option plans was 9, and 28 for each of the years ended December 31, 2005, and 2006, respectively.

I-65

Option activity with respect to MittalShares is summarized below as of and for each of the years ended December 31, 2005, and 2006: Range of Exercise Prices 2.26 - 11.94 28.75 2.26 11.94 2.26 28.75 2.26 - 28.75 33.76 2.26 28.75 8.57 11.95 33.76 2.26 33.76 2.26 - 28.75 2.26 - 28.75 Weighted Average exercise price (per option) 6.72 28.75 5.87 27.87 22.92 33.76 17.83 10.26 33.76 28.27 17.27 6.96

Number of Options Outstanding, December 31, 2004 . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding, December 31, 2005 . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding, December 31, 2006
.............

1,711,216 3,908,773 (351,850) (210,833) 5,057,306 3,999,223 (523,304) (4,000) (78,257) 8,450,968 2,062,787 1,352,366

Exercisable, December 31, 2006 . . . . . . . . . . . . . . Exercisable, December 31, 2005 . . . . . . . . . . . . . .

The following table summarizes information about stock options as of December 31, 2006: Options Outstanding Exercise prices 11.94 8.57 2.26 28.75 33.76 2.26 33.76 Weighted average contractual life (in years) 2.71 3.42 5.27 8.65 9.67 8.52 Options exercisable (number of options) 315,599 330,100 442,118 974,970 2,062,787

Number of Options 315,599 330,100 442,118 3,442,185 3,920,966 8,450,968

In addition, Arcelor S.A. has stock option plans with 1,485,393 options outstanding as of December 31, 2006 with an exercise price ranging from 9.67 to 34.43 per option. The Company recorded compensation expense of 4 with respect to these stock option plans during 2006. NOTE 17: FINANCIAL INCOME AND EXPENSE Financial income and expense recognized in the years ended December 31, 2005 and 2006 is as follows: 2005 Recognized in profit and loss Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net foreign exchange result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in fair value of derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other net financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total net financing costs recognized in profit and loss . . . . . . . . . . . . . . . . . . . . . . . . . Recognized in equity Net change in fair value of available for sale financial assets . . . . . . . . . . . . . . . . . . Effective portion of changes in fair value of cash flow hedge . . . . . . . . . . . . . . . . . . Foreign currency translation differences for foreign operations . . . . . . . . . . . . . . . . Total net financing costs recognized in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (503) 110 40 (353) 2006 (1,124) 251 340 (11) (110) (654)

87 (10) (758) (681)

16 (16) 826 826

I-66

NOTE 18: PENSIONS AND OTHER POST-EMPLOYMENT PLANS Arcelor Mittals Operating Subsidiaries have different types of pension plans for their employees. Also, some of the Operating Subsidiaries offer post-employment benefits, including post-employment health care. The expense associated with these pension plans and employee benefits, as well as the carrying amount of the related liability/ asset on the balance sheet is based on a number of assumptions and factors such as the discount rate, expected wage increases, expected return on plan assets, future health care cost trends and market value of the underlying assets. Actual results that differ from these assumptions are accumulated and amortized over future periods and, therefore, will affect recognized expense and the recorded obligation in future periods. The total accumulated unrecognized losses amounted to 901 for pensions and 389 for other post retirement benefits as of December 31, 2006. A summary of the significant defined benefit plans is as follows: Americas U.S. Mittal Steel USAs Pension Plan and Pension Trust is a non-contributory defined benefit plan covering approximately 40% of its employees. Benefits for most non-represented employees are determined under a Cash Balance formula as an account balance which grows as a result of interest credits and of allocations based on a percentage of pay. Benefits for other non-represented salaried employees are determined as a monthly benefit at retirement depending on final pay and service. Benefits for wage and salaried employees represented by the United Steelworkers of America are determined as a monthly benefit at retirement based on fixed rate and service. The Company also has established defined contribution benefit trusts to fund pensions and retiree medical and death benefits as well as qualified savings plans. The amount recognized as expense for the defined contribution plans to 123 and 232 for the years ended December 31, 2005, and 2006, respectively. Canada The primary pension plans are the ones from Hamilton and QCM. The Hamilton pension plan is a hybrid plan providing the better of a defined benefit and defined contribution pension. The defined contribution component is financed by both employer and employee contributions. The employer also contributes a percentage of profits in the defined contribution plan. The QCM defined benefit plan provides salary related benefit for non-union employees and a flat dollar pension depending on employee length of service. Brazil The primary defined benefit plans, financed through trusted funds, have been closed to new entrants. Brazilian entities have all established defined contribution plans that are financed by employer and employee contributions. Europe Certain European Operating Subsidiaries maintain primarily unfunded defined benefit pension plans for a certain number of employees the benefits of which are based on such employees length of service and applicable pension table under the terms of individual agreements. Some of these unfunded plans have been closed to new entrants and replaced for active members by defined contributions pension plans financed by employer and employee contributions. A limited number of funded defined benefit plans are in place in countries where funding collective company pension plans is mandatory. Plan Assets The weighted-average asset allocations for the Funded Pension Plans at December 31 2005, and 2006, by asset category are as follows: December 31, 2006 December 31, 2005 U.S. CANADA OTHERS U.S. CANADA BRAZIL EUROPE OTHERS Equity Securities . . . . . . . . . . Fixed Income (including cash) . . . . . . . . . . . . . . . . . . . Real Estate . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . 62% 17% 21% 100% 61% 39% 100% 49% 38% 13% 100% I-67 62% 17% 21% 100% 56% 38% 6% 100% 9% 89% 2% 100% 18% 73% 9% 100% 40% 47% 13% 100%

The respective Finance and Retirement Committees of the Board of Directors have general supervisory authority over the respective trust funds. These committees have established the following asset allocation targets: December 31, 2006 CANADA BRAZIL EUROPE OTHERS 60% 40% 100% 20% 80% 100% 20% 80% 100% 49% 38% 13% 100%

U.S. Equity Securities . . . . . . . . . . . . . . . . . . Fixed Income (including cash) . . . . . Real Estate . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63% 23% 14% 100%

Summary of changes in the benefit obligation and of the change in plan assets: December 31, 2005 CANADA EUROPE

TOTAL Change in benefit obligation Benefit obligation at beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business combinations . . . . . . . . . . . . . . . . . . . . . . Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan participants contribution . . . . . . . . . . . . . . . Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefit obligation at end of the period . . . . . Change in plan assets Fair value of plan assets at beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business combinations . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . . . Actuarial gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . Employer contribution . . . . . . . . . . . . . . . . . . . . . . Plan participants contribution . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value of plan assets at end of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Unfunded) funded status of the plans . . . . . . . Unrecognized net actuarial loss (gain) . . . . . . . Unrecognized transition asset . . . . . . . . . . . . . . . Unrecognized past service cost . . . . . . . . . . . . . . Net amount recognized
....................

U.S.

OTHER

3,268 134 52 195 2 246 (243) 9 3,663

2,672 134 38 160 179 (218) 2,965

463 9 28 1 62 (21) 19 561

71 2 3 5 (2) (10) 69

62 3 4 1 (2) 68

2,327 69 212 32 202 2 (243) 11 2,612 (1,051) 1,103 (1) 92 143

1,923 69 180 25 182 (218) 2,161 (804) 971 167

304 24 12 17 1 (21) 11 348 (213) 154 84 25

2 (2) (69) (69)

100 8 (5) 1 1 (2) 103 35 (22) (1) 8 20

I-68

TOTAL Change in benefit obligation Benefit obligation at beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business combinations . . . . . . . . . . . . . . . Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . Plan amendments . . . . . . . . . . . . . . . . . . . . Plan participants contribution . . . . . . . . Curtailments and settlements . . . . . . . . . Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate differences . . . . . . . . . . . . . . . . . . . . . . . . Benefit obligation at end of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in plan assets Fair value of plan assets at beginning of the period . . . . . . . . . . . . . . . . . . . . . . . Business combinations . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . Actuarial gain (loss) . . . . . . . . . . . . . . . . . . Employer contribution . . . . . . . . . . . . . . . Plan participants contribution . . . . . . . . Curtailments and settlements . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate differences . . . . . . . . . . . . . . . . . . . . . . . . Fair value of plan assets at end of the period . . . . . . . . . . . . . . . . . . . . . . . . . (Unfunded) funded status of the plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognized net actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognized transition asset . . . . . . . . Unrecognized past service cost . . . . . . . Employer Contribution after measurement date . . . . . . . . . . . . . . . . . Net amount recognized Asset Ceiling
.............

U.S.

December 31, 2006 CANADA BRAZIL

EUROPE

OTHER

3,663 2,965 4,762 19 103 38 319 168 (1) 3 3 (14) (14) 151 114 (382) (218) (12) 8,592 3,075

561 2,165 41 84 (1) 1 27 (69) (79) 2,730

461 4 20 1 1 (11) 5 481

69 2,117 17 42 (3) 6 (82) 62 2,228

68 3 5 1 3 (2) 78

2,611 2,161 2,828 12 338 206 154 123 181 64 3 (13) (13) (326) (218) (47) 5,729 (2,863) 901 (70) 6 (2,026) 2,335 (740) 891 151

348 1,771 87 39 83 1 (69) (67) 2,193 (537) 5 6 (526)

520 27 3 5 1 (11) 6 551 70 (3) (70) (3)

525 9 1 28 (26) 14 551 (1,677) 4 (1,673)

102 9 (12) 1 1 (2) 99 21 4 25

The amount not recognized in the fair value of plan assets due to the asset ceiling was nil and 5 at December 31, 2005 and 2006 respectively. Accumulated Benefit Obligation The accumulated benefit obligation for all defined benefit pension plans was 3,584 and 7,972 at December 31, 2005 and 2006, respectively. Information for pension plans with accumulated benefit obligations in excess of plan assets: December 31, 2005 U.S. CANADA 2,965 2,942 2,161 I-69 561 559 348

TOTAL Projected benefit obligation . . . . . . . . . . . Accumulated benefit obligation . . . . . . . Fair value of plan assets . . . . . . . . . . . . . . . 3,595 3,584 2,509

EUROPE 69 83

TOTAL Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . Accumulated benefit obligation . . . . . . . . . . . . . . . . . Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . 8,033 7,972 5,079

December 31, 2006 U.S. CANADA 3,075 3,049 2,335 2,730 2,697 2,193

EUROPE 2,228 2,226 551

The following table details the components of net periodic pension cost: December 31, 2005 CANADA EUROPE 9 28 (24) 38 1 52 1 3 (3) 1

TOTAL Net periodic cost (benefit) Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . . . Amortization of past service cost . . . . . . . . . . . . Amortization of net (gain) loss . . . . . . . . . . . . . . 51 195 (212) 38 52 124

U.S. 38 160 (180) 55 73

OTHER 3 4 (8) (1) (2)

TOTAL Net periodic cost (benefit) Service cost . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . Effect of asset ceiling . . . . . . . . . Curtailments and settlements . . . . . . . . . . . . . . . . . Amortization of past service cost . . . . . . . . . . . . . . . . . . . . . . . . Amortization of net (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . 102 320 (338) 5 2 6 76 173

U.S. 38 168 (206) 2 69 71

December 31, 2006 CANADA BRAZIL 41 84 (87) 6 6 50 3 20 (27) 5 1 2

EUROPE 17 43 (9) 51

OTHER 3 5 (9) (1)

Post-employment benefits Arcelor Mittals Operating Subsidiaries in the U.S., Canada and Europe provide post-employment benefits, including medical benefits and life insurance benefits to retirees. Substantially all of the U.S. Operating Subsidiarys employees are covered under post-employment life insurance and medical benefit plans that require deductible and co-insurance payments from retirees. The post-employment life insurance benefit formula used in the determination of post- employment benefit cost is primarily based on applicable annual earnings at retirement for salaried employees and specific amounts for hourly employees. The U.S. Operating Subsidiary does not pre-fund most of these post- employment benefits. Effective January 1, 1994, a Voluntary Employee Benefit Association Trust was established for payment of health care benefits to United Steel Workers of America. Funding of the Trust is made as claims are submitted for payment.

I-70

Summary of changes in the post employment benefit obligation and the change in plan assets: TOTAL Change in post-employment benefit obligation Benefit obligation at beginning of period . . . . Business combinations . . . . . . . . . . . . . . . . . . . . . . Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate changes . . . . . Benefits obligation at end of period . . . . . . . . Fair value of assets (from acquisition) . . . . . . . Funded (unfunded) status of the plans . . . . Unrecognized net loss . . . . . . . . . . . . . . . . . . . . . . . Unrecognized past service cost (benefit) . . . . . Net amount recognized
....................

U.S.

December 31, 2005 CANADA EUROPE

OTHER

937 315 12 66 (279) 57 (78) (2) 1,028 23 (1,005) 180 (154) (979)

882 315 12 64 (279) 56 (75) 975 23 (952) 167 (41) (826)

25 1 4 (2) 1 29 (29) 13 (113) (129)

4 (2) 2 (2) (2)

26 1 (1) (1) (3) 22 (22) (22)

TOTAL Change in post-employment benefit obligation Benefit obligation at beginning of period . . . . . . . . Business combinations . . . . . . . . Service cost . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . Plan amendment . . . . . . . . . . . . . . Actuarial loss (gain) . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . Foreign currency exchange rate changes . . . . . . . . . . . . . . . . Benefits obligation at end of period . . . . . . . . . . . . . . . . . . . . . Fair value of assets (from acquisition) . . . . . . . . . . . . . . . . Funded (unfunded) status of the plans . . . . . . . . . . . . . . . . . . Unrecognized net loss . . . . . . . . Unrecognized past service cost (benefit) . . . . . . . . . . . . . . . Net amount recognized
......

U.S.

December 31, 2006 CANADA BRAZIL

EUROPE

OTHER

1,028 1,377 30 92 (5) 227 (116) (19) 2,614 48

975 3 9 54 207 (79) 1,169 32

29 897 9 27 (2) 22 (15) (32) 935 1 (934) 32 (2) (904)

7 (1) 6 (6) (6)

2 468 8 9 (3) (2) (20) 12 474 15 (459) (5) (3) (467)

22 2 4 2 (1) 1 30 (30) (30)

(2,566) (1,137) 389 362 (38) (2,215) (33) (808)

The net periodic post-employment cost: TOTAL Components of net periodic cost (benefit) Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . . . Amortization of past service cost . . . . . . . . . . . . Amortization of net (gain) . . . . . . . . . . . . . . . . . . . Net periodic benefit cost
...................

U.S. 12 63 (1) (5) 1 70

December 31, 2005 CANADA EUROPE 2 (283) (281) 1 (1)

OTHER (1) (1)

12 66 (1) (288) (1) (212) I-71

TOTAL Components of net periodic cost (benefit) Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . Amortization of past service cost . . . . . Amortization of net (gain) . . . . . . . . . . . . Net periodic benefit cost
............

U.S.

December 31, 2006 CANADA BRAZIL

EUROPE

OTHER

25 91 (2) (8) 12 118

9 55 (2) (8) 12 66

9 27 36

5 7 12

2 2 4

Weighted-average assumptions used to determine benefit obligations at December 31, Pension Benefits 2005 2006 Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of compensation increase . . . . . . . . . . . . . . . . . . 4.25%-7.75% 2%-8% 4.43%-10.97% 2.22%-7.5% Other Benefits 2005 2006 4.25%-7.25% 2%-8% 4.5%-8.75% 3%-7.5%

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31, Pension Benefits 2005 2006 Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of compensation increase . . . . . . . . . . . . . . . . . . Expected long-term rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.25%-7.75% 2%-8% 6.5%-9% 4.43%-10.97% 2.22%-7.5% 3.54%-12.71% Other Benefits 2005 2006 4.25%-7.75% 2%-8% 6.5%-9% 4.5%-8.75% 3%-7.5% 5%-10%

An increase of 1% in the discount rate would decrease the pension obligation by 620 and the annual net periodic cost by 22. It would decrease the post employment benefit obligation by 365 and the annual net periodic cost by 5. A 1% decrease would increase the pension obligation by 703 and the annual net periodic cost by 18. It would increase the post employment benefit obligation by 586 and the annual net periodic cost by 6. Health Care Cost trend December 31, 2005 2006 Health care cost trend rate assumed for next year . . . . . . . . . . . . . . . . . . . . . . . 4.5%-11.2% 2.03% -10.7%

An increase of 1% in the health care cost trend rate would increase the post employment benefit obligation by 160 and the annual net periodic cost by 7. A 1% decrease would reduce the post-employment benefit obligation by 136 and the annual net periodic cost by 6. Cash Flows Contributions The Company expects to contribute 414 to defined benefit pension plans in 2007. This includes an expected contribution of about 260 to the US Trust in 2006 pursuant to ERISA minimum funding requirements. Estimated Future Pension and Post-Employment Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid: TOTAL Expected benefit payments 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . Five years thereafter . . . . . . . . . . 628 632 649 649 654 3,415 U.S. 309 321 333 334 339 1,702 I-72 Years ended December 31 CANADA BRAZIL EUROPE 101 106 109 113 117 640 12 12 12 12 12 63 46 46 46 45 47 241 OTHER 160 147 149 145 139 769

Total long-term employee benefits Together with plans and obligations that do not constitute pension or other post employment benefits the total long-term employee benefits are as follows: At December 31, 2005 2006 Pension obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other post-employment benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for early retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term employee benefits (jubilee, leave, compensation) . . . . . . . . . . . . . (143) 979 218 1,054 NOTE 19: INCOME TAX EXPENSE The breakdown of the income tax expense (benefit) for each of the years ended December 31, 2005 and 2006, respectively, is summarized as follows: Year ended December 31, 2005 2006 Total current income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total deferred tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total income tax expense
.....................................................

2,026 2,215 610 434 5,285

663 218 881

1,267 (158) 1,109

The following table xreconciles the income tax expense (benefit) to the statutory tax expense as calculated: Year ended December 31, 2005 2006 Net income: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before tax and income from equity method investments: . . . . . . . . . . Tax at the domestic rates applicable to profits in the countries . . . . . . . . . . . . . . . . . Permanent items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefit arising from interest in partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in measurement of deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Re-characterization of capital loss to ordinary loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefit of tax holiday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effects on foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange loss on Canadian dollar currency swap . . . . . . . . . . . . . . . . . . . . . Tax deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,301 494 (86) 881 4,590 1,008 136 (39) (22) (28) (226) (21) 10 54 9 881 5,226 860 (301) 1,109 6,894 1,656 56 (34) 6 (43) (211) (14) (51) (57) (42) (41) 31 (147) 1,109

During 2004, our Mexican Operating Subsidiary, in two separate transactions, transferred shares of two of its subsidiaries and realized capital losses for tax purposes of approximately 755 and 668, respectively. At December 31, 2005, deferred tax assets of 226 related to the capital loss of 755 were recognized based on the decision of the Mexican federal court to allow utilization of such capital loss against operating income. At Mittal Steel Lzaro Crdenas, the Mexican federal court approved a petition in 2006 to utilize 668 loss against operating income. Since the loss was incurred in 2004 and it was denominated in Mexican Pesos, fluctuations in currency exchange rate along with annual inflationary adjustments, resulted in an increase in the US dollar equivalent value of the loss from 668 to 729. Accordingly, a deferred tax asset of 211 was recognized in 2006. I-73

The tax deduction relates to federal governmental incentives granted to our subsidiary CST in Brazil as part of a program to promote the development of the Brazilian northeast region including part of Espirito Santo state. The tax credits are attributable to our operating subsidiaries in Spain. They relate to credits claimed on capital gain reinvested in fixed assets and research and development credit. Deferred Income Tax Deferred tax assets and (liabilities) are summarized as follows: December 31 2005 2006 Net deferred tax assets/liabilities consists of the following: Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax loss carried forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision: employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision: other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,072) 422 351 317 126 (1,856) (9,152) 2,175 1,092 (96) 359 18 (5,604)

Mittal Steel had unrecognized deferred tax assets relating to tax loss carry forwards and other temporary differences, amounting to 1,468 as of December 31, 2006 (163 as of December 31, 2005). As per December 31, 2006, most of these temporary differences relate to tax loss carry forwards attributable to our operating subsidiaries in Brazil, Belgium, Luxembourg and the U.S. The majority of unrecognized tax losses have no expiration date. The utilization of tax loss carry forwards is, however, restricted to the taxable income of the subsidiary generating the losses. At December 31, 2006, based upon the level of historical taxable income and projections for future taxable income over the periods in which the temporary timing differences are anticipated to reverse, management believes it is more likely than not that Mittal Steel will realize the benefits of the deferred tax assets recognized. However, the amount of the deferred tax asset considered realizable could be adjusted in the future if estimates of taxable income are revised. Mittal Steel has not provided any deferred income taxes on the undistributed earnings of its foreign subsidiaries based upon its determination that such earnings will be indefinitely reinvested. If such earnings were not considered indefinitely reinvested, deferred foreign income taxes would have been provided, after consideration of estimated foreign tax credits. However, determination of the amount of deferred foreign income taxes on reinvested earnings is not practicable. Secondary Taxation on Companies (STC) is a tax levied on South African companies at a rate of 12.5% of dividends distributed. STC is not included in the computation of current or deferred tax as these amounts are calculated at the statutory company tax rate on undistributed earnings. On declaration of a dividend, the South African Operating Subsidiary includes the tax of 12.5% in its computation of the income tax expense. If the South African Operating Subsidiary distributed all of its undistributed retained earnings, of which 1,954 and 2,267 in 2005 and 2006, respectively, would be subject to STC, additional taxes of 217 and 252 (or 206 if the dividend is declared after October 1, 2007, since the tax rate will be reduced to 10%) in 2005 and 2006, respectively, would be owed. STC on dividends declared in 2005 and 2006 were 29.8 and 23.9, respectively and are included in Other Taxes in the effective rate reconciliation. As provided in certain agreements related to acquisitions and capital investments undertaken by the Company, income from operating activities in certain countries is subject to reduced tax rates, or, in some cases is wholly exempt from taxes. Such arrangements expire over various fiscal years through 2011. The Kazakhstan Operating Subsidiary and the Government of Kazakhstan signed an agreement that fixed its corporate income tax payments for the years 2005 through 2009. The fixed corporate income tax payments are dependent upon the Kazakhstan Operating Subsidiarys completion of required capital investments by December 31, 2004, which was subsequently extended to December 31, 2006. As per December 31, 2006, Kazakhstan Operating Subsidiary has fulfilled the requirement of capital investments.

I-74

Tax loss carry forward position At December 31, 2006, the Company had total estimated net tax loss carry forwards of 9,019. Such amount includes net operating losses of 2,425 primarily related to Operating Subsidiaries in the United States, Spain, Canada and Mexico which expire as follows: Year Expiring 2007 . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . 2011 . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . 2018 . . . . . . . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . . . . . . . 2020 . . . . . . . . . . . . . . . . . . . . . . 2021 . . . . . . . . . . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . . . . . . . . . . 2023 . . . . . . . . . . . . . . . . . . . . . . 2024 . . . . . . . . . . . . . . . . . . . . . . 2025 . . . . . . . . . . . . . . . . . . . . . . 2026 . . . . . . . . . . . . . . . . . . . . . . Total
.....................

60 70 44 82 40 38 50 713 37 112 69 89 93 149 301 37 272 73 1 95 2,425

The remaining tax loss carry forwards of 6,594 are indefinite and attributable to the Companys operations in Luxembourg, Belgium, Germany, Brazil, France, Trinidad and Tobago and South Africa. Tax loss carry forwards are denominated in the currency of the countries in which the respective subsidiaries are located and operate. Fluctuations in currency exchange rates could reduce the U.S. Dollar equivalent value of these tax loss carry forwards in future years. NOTE 20: PROVISIONS AND ALLOWANCES The movements by provision are as follows: Foreign Balance at currency Balance deductions/ December 31, and other December 31, 2005 Additions Releases Acquisitions movements 2006 Environmental (see note 23) Asset retirement obligations . . . . . . . . . . . . . . Restructuring* . . . . . . . . . . . . . Litigation . . . . . . . . . . . . . . . . . . Other** . . . . . . . . . . . . . . . . . . . . Short-term provisions Long-term provisions 442 198 80 720
...... ......

118 2 20 65 268 473

(91) (33) (41) (129) (218) (512)

319 130 545 680 1,674

39 2 (8) (47) 108 94

827 169 181 434 838 2,449 569 1,880 2,449

109 611 720

I-75

Foreign Balance at currency Balance December 31, deductions/ and other December 31, 2005 Additions Releases Acquisitions movements 2006 Environmental (see note 23) . . . . . . . . . . . . . Asset retirement obligations . . . . . . . . . . . . . . Restructuring . . . . . . . . . . . . . . Short-term provisions Long-term provisions 199 114 119 432
...... ......

75 5 30 110

(46) (13) (61) (120)

232 100 332

(18) (8) (8) (34)

442 198 80 720 109 611 720

159 273 432

The provisions will be used in a period of 2 to 4 years; for the environmental provisions until 20 years. *Employee termination cost As of December 31, 2006, included in the restructuring contingency above is a liability for employee termination cost with regard to the Polish Operating Subsidiary of 80. Prior to the acquisition of the controlling interest in Mittal Steel Poland, this company entered into a head-count reduction plan in order to comply with the Act on Restructuring of Polish Steel Industry dated August 12, 2001 and Protocol 8 of the Republic of Poland Accession Treaty to the European Union. As part of the acquisition of the controlling interest in Mittal Steel Poland, the Company agreed to provide certain entitlements for personnel whose employment with the Company will be terminated in conjunction with required restructuring plans. In total, the Company plans on terminating approximately 3,500 employees under the head-count reduction plan. The total cost expected to be incurred relating to this head-count reduction plan has been recorded at its present value as part of the Companys initial purchase price allocation of its acquisition of Mittal Steel Poland. The components of the accrued employee termination cost are as follows: December 31, 2005 2006 Beginning balance at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reassessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance as of December 31
...................................................

106 (52) 26 (8) 72

72 (35) 35 8 80

**Other Other includes provisions for warranties and guarantees as well as other disputes, losses on onerous contracts and provisions for disputes with local and/or national authorities. Valuation and Qualifying Accounts Balance at December 31, 2005 Additions Allowance for doubtful accounts . . . Inventory obsolescence . . . . . . . . . . . . . 241 269 241 179 Deductions Releases (238) (140) Deductions Releases (105) (33) Balance at December 31, 2006 428 359 Balance at December 31, 2005 241 269

Acquisitions 184 51

Balance at December 31, 2004 Additions Allowance for doubtful accounts . . . Inventory obsolescence . . . . . . . . . . . . . 267 244 I-76 23 58

Acquisitions 56

NOTE 21: ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses were comprised of the following at December 31: December 31, 2005 2006 Advances from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued payroll and employee related expenses . . . . . . . . . . . . . . . . . . . . . Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other trade accounts payable to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . Polish government dues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
...............................................................

140 471 7 121 1,430 2,169

625 2,238 107 501 177 131 762 3,038 7,579

NOTE 22: COMMITMENTS Operating leases Mittal Steel leases various facilities, land and equipment under non-cancellable lease arrangements. In most cases, management expects that in the normal course of business, leases that expire will be renewed or replaced by other leases. Future minimum lease payments required under operating leases that have initial or remaining non-cancellable terms in excess of one year are as follows: Year ending 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total minimum lease payments
...................

108 98 77 67 36 178 564

Rent expense was 82 and 226 for the years ended December 31, 2005 and 2006, respectively. Commitments given 2006 Purchase commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property pledged and guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Guarantees on third-party financial loans and credit lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other commitments given . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total commitments given Commitments received 2006 Endorsements and guarantees received from non-consolidated companies . . . . . . . . . . . . Other commitments received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total commitments received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486 1,839 2,325
............................................................

31,274 3,297 2,927 782 1,406 190 39,876

Purchase commitments Mittal Steel USA entered into various supply agreements and tolling arrangements for services, utilities, natural gas, transportation, industrial gases and certain raw materials. One of these agreements is an umbrella agreement with Cleveland Cliffs Inc., dated March 1, 2007, that covers significant price and volume matters under three separate pre-existing iron ore pellet supply agreements with I-77

Cleveland Cliffs Inc. for Mittal Steel USAs Cleveland and Indiana Harbor West, Indiana Harbor East and Weirton facilities. Under the terms of the umbrella agreement, the three agreements are modified to aggregate Mittal Steel USAs purchases during the years 2006 through and including 2010. During this period, Mittal Steel USA is obligated to purchase specified minimum tonnages of iron ore pellets on an aggregate basis. In February 2005 Mittal Steel Duisburg signed an agreement with ThyssenKrupp Stahl AG for the purchase of between 1.3 - 1.5 million tonnes of hot metal each year for a 20 year term commencing October 2007. Mittal Steel Lzaro Crdenas has committed through 2010 for the supply of 500,000 tons per year of pellet feed. Arcelor Mittal Purchasing SAS has entered into contracts extending to 2010 for the purchase of iron ore (approximately 260 million tons), coking coal (approximately 515 million tons), PCI (approximately 300 million tons), anthracite (approximately 90 million tons) and coke (approximately 1,150 million tons) at specified prices per tonne for 2006 and thereafter at prices to be agreed in accordance with specified formulae, in line with customary international practice for the sale and purchase of these materials. Arcelor Mittal Purchasing SAS has also entered into energy contracts for the purchase of 876 GWH per year based on competitive price formulae as well as freight contracts through 2010 for a total volume of 208 million tons. Significant Capital Commitments Mittal Steel Kryviy Rih has committed to invest at least 500 through 2010, which includes certain innovation, investment and environment-related undertakings. Mittal Steel Poland committed to make capital expenditures of 587 through December 2009. Through December 31, 2006, Mittal Steel Poland has spent 434 towards this commitment. Mittal Steel Ostrava has committed to invest 243 including 20 for environmental investment, from 2003 to 2012, out of which 135 is to be invested by 2007. Mittal Steel Ostrava has spent 99 through December 31, 2006 towards this commitment. Mittal Steel Galati has committed to invest approximately 251 from November 2001 through December 2006, of which 76 is to be used for environmental projects, as well as a further 100 in capital expenditures from 2007 through 2011. Mittal Steel Zenica has committed to invest 135 (including environmental protection) at Mittal Steel Zenica over a ten year period ending in 2014. The amount committed to be spent is 65 over the first three years, 35 over the next three years, and 35 over the final four years. Mittal Steel Zenica has spent nil through December 31, 2006. On December 26, 2001, Mittal Steel Temirtau had signed a contract with the Committee on Investments of the Ministry of Foreign Affairs of the Republic of Kazakhstan. Under this contract the Company, subject to market conditions, is required to invest in projects totaling 580 through 2006. The Company has invested 584 through December 31, 2006. Other capital commitments outstanding against major contracts as of December 31, 2006 totaled 50. In addition to these specific capital commitments associated primarily with Sale Purchase Agreements at the time of acquisitions, Mittal Steel entered into various capital commitments for PP&E in the ordinary course of business. Property pledged and guarantees Property pledges and guarantees mainly relate to mortgages entered into by the Companys Operating Subsidiaries in the Americas and guarantees issued in respect of external debt financing. Guarantees on third party financial loans and credit lines Guarantees on third-party loans consist of guarantees hedging financial loans and credit lines granted to non-consolidated subsidiaries and subsidiaries accounted for using the equity method, primarily by Mittal Steel USA. In the ordinary course of its business, Mittal Steel USA has guaranteed certain debts of its subsidiaries amounting to 458. I-78

Other guarantees Other guarantees consist of letters of credit in the ordinary course of business, guarantees provided to governmental authorities such as customs authorities and for advances received. Other commitments given Other commitments given comprise commitments incurred for the long-term use of goods belonging to a third party, commitments incurred under operating leases and commitments undertaken within the framework of securitization programs. Other commitments received Other commitments received include undrawn credit lines available to the Company and guarantees and/or letters of credit from suppliers. NOTE 23: CONTINGENCIES In addition, Mittal Steel is a party to various legal actions arising in the ordinary course of business. Environmental Liabilities Mittal Steels operations are subject to a broad range of laws and regulations relating to the protection of human health and the environment at its multiple locations and operating subsidiaries. As of December 31, 2006, Mittal Steel had established reserves of approximately 830 million for environmental liabilities. Previous owners of Mittal Steels facilities expended in the past, and Mittal Steel expects to expend in the future, substantial amounts to achieve or maintain ongoing compliance with applicable environmental laws and regulations. United States In 1990, Mittal Steel USAs Indiana Harbor (East) facility was party to a lawsuit filed by the United States Environmental Protection Agency (the EPA) under the RCRA. In 1993, Mittal Steel USA entered into a consent decree, which, among other things, requires facility-wide RCRA corrective action and Indiana Harbor Ship Canal sediment assessment and remediation. Mittal Steel USAs properties in Lackawanna, New York are subject to an Administrative Order on Consent with the EPA requiring facility-wide RCRA corrective action. The Administrative Order, entered into in 1990 by the former owner, Bethlehem Steel, requires Mittal Steel to perform a Remedial Facilities Investigation (RFI) and corrective measures study, to complete corrective measures, and to perform any required post-remedial activities. In 2004, the RFI was completed, and the New York State Department of Environmental Conservation and Mittal Steel USA executed an Order on Consent to perform interim corrective measures at a former benzol storage tank area. In 1997, Bethlehem Steel, the EPA and the Maryland Department of the Environment agreed to a phased RFI as part of a comprehensive multimedia pollution Consent Decree for investigation and remediation at Mittal Steel USAs Sparrows Point, Maryland facility. Mittal Steel USA has assumed Bethlehem Steels ongoing obligations under the Consent Decree. The Consent Decree requires Mittal Steel USA to address compliance, closure and post-closure care matters and implement corrective measures associated with two on-site landfills, perform a sitewide investigation, continue the operation and maintenance of a remediation system at an idle rod and wire mill and address several pollution prevention items. The potential costs, as well as the time frame of possible remediation activities, which Mittal Steel currently considers probable, relating to the site-wide investigation at Sparrows Point, cannot be reasonably estimated until more of the investigations required by the Consent Decree have been completed and the data therefrom analyzed. Mittal Steel USA is required to prevent acid mine drainage from discharging to surface waters at closed mining operations in southwestern Pennsylvania. In 2003, Mittal Steel USA entered into a Consent Order and Agreement with the Pennsylvania Department of Environmental Protection (the PaDEP) addressing the transfer of required permits from Bethlehem Steel to Mittal Steel USA and providing financial assurance for long-term operation and maintenance of the wastewater treatment facilities associated with these mines. As required by this Consent Order and Agreement, Mittal Steel USA submitted an operational improvement plan to improve treatment facility operations and lower long-term wastewater treatment costs. The Consent Order and Agreement also required Mittal Steel USA to propose a long-term financial assurance mechanism. In 2004, Mittal Steel USA entered into a revised Consent Order and Agreement outlining a schedule for implementation of capital improvements and requiring the establishment of a treatment trust that the PaDEP has estimated to be the net present value of all future treatment cost. Mittal Steel USA expects to fund the treatment trust over a period of up I-79

to ten years at a current target value of approximately 20 until the improvements are made and the treatment trust is fully funded. After the treatment trust is fully funded, the treatment trust will then be used to fund the cost of treatment of acid mine drainage. Although remote, Mittal Steel USA could be required to make up any deficiency in the treatment trust in the future. On August 8, 2006, the EPA issued Mittal Steel USAs Burns Harbor, Indiana facility a Notice of Violation (NOV) alleging that in early 1994 the facility (then owned by Bethlehem Steel, from whom the assets were acquired out of bankruptcy) commenced a major modification of its #2 Coke Battery without obtaining a Prevention of Significant Deterioration (PSD) permit and has continued to operate without the appropriate PSD permit. In October and November 2006, Mittal Steel USA met with the EPA to obtain a preliminary understanding of the allegations and the EPAs technical bases for the NOV. Further communication and discussion with the EPA is planned. Legal Claims Mittal Steel is a party to various legal actions. As of December 31, 2006, Mittal Steel has established reserves of approximately 440 for such actions. The principal legal actions are disclosed below. United States In January 2005, Indiana Harbor (East) received a third party complaint by Alcoa Incorporated alleging that Indiana Harbor (East) was liable as successor to the interests of Hillside Mining Co. (Hillside), a company that Indiana Harbor (East) acquired in 1943, operated until the late 1940s and then sold the assets of in the early 1950s. On October 26, 2006, the Madison County, Illinois circuit court dismissed that complaint, with there being no opportunity of its being re-filed, thus terminating the action. In a separate proceeding, the Illinois Environmental Protection Agency (the IEPA) has identified Indiana Harbor (East) as a potentially responsible party in connection with alleged contamination relating to the abovereferenced matter. The IEPA is requesting that Indiana Harbor (East) and other potentially responsible parties conduct an investigation of certain areas of potential contamination. Indiana Harbor (East) intends to defend itself fully in this matter. As of December 31, 2006, it is not possible to reasonably estimate the amount of environmental liabilities relating to this matter. Canada In March 2004, a group of residents in Nova Scotia brought a potential class action in the Supreme Court of Nova Scotia against various parties, including Mittal Canada, alleging various torts for damage allegedly caused by the steel plant and coke ovens formerly owned and occupied by Dominion Steel and Coal Corporation from 1927 to 1967. Mittal Steel acquired Mittal Canada in 1994, and the plaintiffs are attempting to establish that Mittal Canada thereby assumed the liabilities of the former occupiers. The plaintiffs seek to have the claim approved as a class action, though the court has not yet issued a decision on this matter. As of December 31, 2006, Mittal Steel is unable to assess the outcome of these proceedings or to reasonably estimate the amount of Mittal Canadas liabilities relating to this matter, if any. All of the matters discussed above are legacy environmental matters arising from acquisitions. South America The Brazilian Federal Revenue Service has claimed that Belgo owes certain amounts for IPI (Manufactured Goods Tax) concerning its use of tax credits on the purchase of raw materials that were non-taxable, exempt from tax or subject to a 0% tax rate and the disallowance of IPI credits recorded five to ten years after the relevant acquisition. In September 2000, two construction companies filed a complaint with the Brazilian Economic Law Department against three long steel producers, including Belgo. The complaint alleged that these producers colluded to raise prices in the Brazilian rebar market, thereby violating applicable antitrust laws. In September 2005, the Brazilian Antitrust Council (CADE) issued a decision against Belgo that resulted in Belgos having to pay a penalty of 36. Belgo has appealed the decision to the Brazilian Federal Court. In September 2006, Belgo offered a letter guarantee and obtained an injunction to suspend enforcement of this decision pending the courts judgment. As a result of the foregoing decision by CADE, customers of Belgo commenced civil proceedings for damages. There is also a related class action commenced by the Federal Public Prosecutor of the state of Minas Gerais against Belgo for damages based on the alleged violations investigated by CADE.

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In 2003, the Brazilian Federal Revenue Service granted CST a tax benefit for certain investments. CST had received certificates from SUDENE, the former Agency for the Development of the Northeast Region of Brazil, confirming CSTs entitlement to this benefit. In September 2004, CST was notified of the annulment of these certificates. CST has pursued its right to this tax benefit though the courts against both ADENE, the successor to SUDENE, and against the Brazilian Federal Revenue Service. Europe In late 2002, three subsidiaries of Mittal Steel (Trfileurope, Trfileurope Italia S.r.l. and Fontainunion S.A.), and two former subsidiaries of Arcelor Espaa (Emesa and Galycas), along with other European manufacturers of pre-stressed wire and strands steel products, received notice from the European Commission that it was conducting an investigation into possible anti-competitive practices by these companies. In 2004, Emesa and Galycas were sold. Mittal Steel and its subsidiaries are cooperating fully with the European Commission in this investigation. The European Commission has not yet notified a Statement of Objections to Mittal Steel or any of its subsidiaries. The European Commission can impose fines of up to a maximum of 10% of annual revenues for breaches of EU competition law. Mittal Steel is currently unable to assess the ultimate outcome of the proceedings before the European Commission or the amount of any fines that may result. Arcelor is contractually required to indemnify the present owner of Emesa and Galycas if a fine is imposed on it for any matters under the ownership of Arcelor. The Competition Council of Romania has commenced investigations against Mittal Steel Galati and Mittal Steel Hunedoara with respect to certain commercial practices. Mittal Steel is cooperating fully with the authorities but cannot at present determine the outcome of the investigations or estimate the amount or range of a potential fine that may be imposed. In June 2005, the Competition Council of Romania began an investigation concerning alleged state aid received by Mittal Steel Roman in connection with its privatization. Since 2001, Mittal Steel Ostrava has been involved in a dispute with Kaiser Netherlands B.V. (Kaiser), the contractor for phase 1 of a mini-mill works project (rolling mill P1500), and its parent company, Kaiser Group International. Kaiser Group International and certain of its affiliates (collectively, KGI) filed an action in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court) (where these companies commenced Chapter 11 bankruptcy proceedings) seeking monetary awards against Mittal Steel Ostrava, which has been stayed. On January 6, 2004, Kaiser filed arbitration claims against Mittal Steel Ostrava with the International Court of Arbitration of the ICC in Paris. On May 16, 2006, the arbitration panel awarded Kaiser 7.3 in favor of its claims and Mittal Steel Ostrava 10.5 in favor of its claims, resulting in a net award, including costs, of approximately 4.1 to Mittal Steel Ostrava. As a result of the award, Mittal Steel Ostrava is seeking to enforce its award against Kaiser. Mittal Steel Ostrava has also filed a motion for summary judgment in its favor in the action commenced in the Bankruptcy Court. KGI have opposed that motion. KGI have also filed a motion for summary judgment in the Bankruptcy Court to enforce a portion of the arbitration award against Mittal Steel Ostrava without set-off. In 2004, La Direction Gnrale de la Consommation et de la Repression des Fraudes (the French competition authority) commenced an investigation into alleged anti-competitive practices in the steel distribution sector in France, including Arcelor Ngoce Distribution, a subsidiary of Arcelor. The case has been referred to the Conseil de la Concurrence (the French competition council), which is now in charge of the investigation procedure. Any potential fine that might be imposed will depend on the entity that will be considered liable for the alleged practices. No Statement of Objections has yet been issued against Mittal Steel or any of its subsidiaries. Various retired or present employees of certain Arcelor subsidiaries commenced lawsuits to obtain compensation for asbestos exposure in excess of the amounts paid by French social security. 421 such suits are still pending. Spanish tax authorities have claimed that amortization recorded by Arcelor Planos Seguntos SL in 1995, 1996 and 1997 is non-deductible for corporation tax purposes. Spanish tax authorities seek payment of 49, including the amount of tax, interest and penalties. The case is pending before the court (the Audiencia Nacional), administrative procedures having been exhausted. South Africa Mittal Steel South Africa is involved in a dispute with Harmony Gold Mining Company Limited and Durban Roodeport Deep Limited alleging that Mittal Steel South Africa is in violation of the Competition Act. On March 27, 2007, the Competition Tribunal decided that Mittal Steel South Africa had contravened Section 8(a) of I-81

the Competition Act by charging an excessive price. The Tribunal has not yet decided upon the relief to be granted, which will be determined at a later hearing on a date to be fixed. Decisions of the Competition Tribunal are appealable to the Competition Appeals Court and the Supreme Court of Appeal. The decision of the Competition Tribunal may impact the pricing formulas used by Mittal Steel South Africa and may result in a fine not exceeding 10% of Mittal Steel South Africas annual sales for 2003. In February 2007, the complaint previously filed with the South African Competition Commission by Barnes Fencing, a South African producer of galvanized wire, alleging that Mittal Steel South Africa, as a dominant firm, discriminated in its pricing of low carbon wire rod, was referred to the Competition Tribunal. The complainant seeks, among other sanctions, a penalty of 10% on Mittal Steel South Africas sales for 2006 in respect of low carbon wire rod and an order that Mittal Steel South Africa cease its pricing discrimination. The complaint is under review by the Competition Tribunal. Mittal Steel is unable to assess the outcome of this proceeding or the amount of Mittal Steel South Africas potential liability, if any. Mittal Steel South Africa is involved in a dispute with the South African Revenue Service in respect of the tax treatment of payments made under a Business Assistance Agreement of 88 in 2003 and 105 in 2004. NOTE 24: SEGMENT AND GEOGRAPHIC INFORMATION Mittal Steel has a high degree of geographic diversification relative to other steel companies. During 2006, Mittal Steel shipped its products to customers in approximately 187 countries, with its largest markets in the Flat Carbon Europe and Flat Carbon Americas segments. Mittal Steel conducts its business through its operating subsidiaries. Many of these operations are strategically located with access to on-site deep water port facilities, which allow for cost-efficient import of raw materials and export of steel products. As of December 31, 2006, Mittal Steel had approximately 320,000 employees. Prior to its acquisition of Arcelor in August 2006, Mittal Steel reported operations based on their geographic location (America, Europe and Asia/Africa). Following the acquisition, Mittal Steel restructured its operations to align them with the structure in place at Arcelor, and the new management structure. Mittal Steel now reports its operations in six operating segments: Flat Carbon Americas, Flat Carbon Europe, Long Carbon Americas and Europe, Asia, Africa and CIS (AACIS), Stainless Steel and AM3S (trading and distribution). The following table summarizes certain financial data relating to our operations in different reportable segments:
Flat Flat Carbon Carbon Americas Europe Long Asia & Africa Stainless Others/ CIS Steel AM3S Elimination Consolidated

Year ended December 31, 2005 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,241 Operating income . . . . . . . . . . . . . . . . . 1,289 Depreciation and amortization . . . . 283 Capital expenditures . . . . . . . . . . . . . . 304 Total assets at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,180 Year ended December 31, 2006 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,585 Operating income . . . . . . . . . . . . . . . . . 1,904 Depreciation and amortization . . . . 658 759 Capital expenditures . . . . . . . . . . . . . . Total assets at December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,160

3,676 367 174 190

7,676 641 226 206

9,909 2,335 318 479

3,261 363 89 61 4,775

5,221 174 39 62 3,995

(4,370) 97 112 2 (3,782) (9,071) (290) 60 121 22,482

28,132 4,729 1,113 1,181 33,867 58,870 7,499 2,296 2,935 112,166

3,028 10,283 13,158 14,366 13,120 14,388 959 1,805 2,584 618 385 447 818 577 537 26,586 21,221 15,947

See also Note 26 to the consolidated financial statements.

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The following table sets out selected financial data relating to our operations in different reportable segments:
Americas Europe Asia & Africa Others/Elimin Consolidated

Year ended December 31, 2005 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . Total assets at December 31, 2005 . . . . . . . . . . Year ended December 31, 2006 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . Total assets at December 31, 2006 . . . . . . . . . .

12,467 1,676 341 335 24,204 22,798 2,612 808 1,375 39,482

9,762 933 312 391 46,092 29,156 3,141 1,174 1,588 142,802

7,683 2,219 273 455 9,738 9,987 1,664 310 369 13,703

(1,780) (99) 187 (46,167) (3,071) 82 4 (397) (83,821)

28,132 4,729 1,113 1,181 33,867 58,870 7,499 2,296 2,935 112,166

The table below sets out the sales per significent country: Sales for the Year Ended December 31, 2004 2005 2006 Americas United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . Europe France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Romania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Poland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asia & Africa South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Asia & Africa . . . . . . . . . . . . . . . . . . . . . . . . Eliminations(1) Total
.............................

3,158 3,402 6,560 679 1,301 2,087 3,563 2,275 9,905 2,015 4,046 6,061 (1,914) 20,612

9,186 3,281 12,467 645 1,356 2,192 3,118 2,451 9,762 2,448 5,235 7,683 (1,780) 28,132

15,653 7,145 22,798 4,033 3,170 4,543 1,840 3,065 12,505 29,156 2,891 7,096 9,987 (3,071) 58,870

.......................................

(1) Eliminations relate to inter-region NOTE 25: FACTORING OF RECEIVABLES Certain of our Operating Subsidiaries have entered into Factoring Agreements with certain banks/financial institutions under which they are entitled to sell eligible accounts receivables from the customers up to an agreed limit. The bank/financial institution buys these receivables without recourse to the seller. The proceeds from the sale of trade accounts receivables are included in the cash flows from operating activities in the Consolidated Statements of Cash Flows. Factoring Proceeds from trade receivables sold under factoring agreement . . . . . . . . . . . . Nominal of trade receivables sold under factoring agreement . . . . . . . . . . . . . . . Discounts incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 1,554 1,605 6 2006 8,906 8,910 50

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NOTE 26: EMPLOYEES AND KEY MANAGEMENT PERSONNEL The table below sets forth the breakdown of the total year-end number of employees by segment for the past two years. Year Ended December 31, 2005 2006 Segment Flat Carbon Americas(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Flat Carbon Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asia, Africa, CIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stainless Steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AM3S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) Including Dofasco for 2006 Arcelor (2) Includes corporate and other employees Year Ended December 31, 2005 2006 Employee information Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)

21,046 29,811 20,050 153,235 224,286

36,700 67,238 40,893 148,291 11,542 11,560 319,578

3,247 60(1) 3,307

6,870 328 7,198

In 2005, a change in a post employment benefit plan in the US resulted in a decrease of the pension obligation to an amount of 212.

The total annual remuneration of the members of Mittal Steels Board of Directors for 2005 and 2006 was as follows: Year ended December 31, 2005 2006 (All amounts in $ thousands except option information) 4,369 3,760 3,288 235,000 175,000

Base salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term performance-related bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term incentives (number of options) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I-84

The annual remuneration of the members of Mittal Steels Board of Directors was as follows: 2005 Short- 2006 Short- 2005 Long- 2006 Longterm term term term Performance Performance Number of Number of Related Related Options Options

2005 (All amounts in $ thousands except option information) Lakshmi N. Mittal . . . . . . . . . . . . . . . . . . . . . 2,194 Aditya Mittal(1) . . . . . . . . . . . . . . . . . . . . . . . . 1,245 Vanisha Mittal Bhatia . . . . . . . . . . . . . . . . . 18 Malay Mukherjee(2) . . . . . . . . . . . . . . . . . . . 311 Narayanan Vaghul . . . . . . . . . . . . . . . . . . . . 109 Ambassador Andrs Rozental(3) . . . . . . . 134 Fernando Ruiz Sahagun(4) . . . . . . . . . . . . . 22 Muni Krishna T. Reddy(5) . . . . . . . . . . . . . 110 Ren Lopez(6) . . . . . . . . . . . . . . . . . . . . . . . . . 74 Wilbur L. Ross, Jr.(7) . . . . . . . . . . . . . . . . . . 73 Lewis B. Kaden(8) . . . . . . . . . . . . . . . . . . . . . 79 Franois H. Pinault(9) . . . . . . . . . . . . . . . . . . Joseph Kinsch(10) . . . . . . . . . . . . . . . . . . . . . . Jos Ramn lvarez-Rendueles Medina(11) . . . . . . . . . . . . . . . . . . . . . . . . . . Sergio Silva de Freitas(12) . . . . . . . . . . . . . . Georges Schmit(13) . . . . . . . . . . . . . . . . . . . . Edmond Pachura(14) . . . . . . . . . . . . . . . . . . . Michel Angel Marti(15) . . . . . . . . . . . . . . . . Manuel Fernndez Lpez(16) . . . . . . . . . . . Jean-Pierre Hansen(17) . . . . . . . . . . . . . . . . . John Castegnaro(18) . . . . . . . . . . . . . . . . . . . . Antoine Spillmann(19) . . . . . . . . . . . . . . . . . HRH Prince Guillaume deLuxembourg(20) . . . . . . . . . . . . . . . . . . . Romain Zaleski(21) . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,369
(1)

2006

2,005 942 23 139 142 119 82 105 123 80 3,760

1,677 1,611 3,288

100,000 75,000 60,000 235,000

100,000 75,000 175,000

(2)

(3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20)

(21)

Mr. A. Mittal resigned from Mittal Steels Board of Directors on October 30, 2006, but continued in his role as Chief Financial Officer of Mittal Steel. His renumeration is included only for the period from January 2006 to October 2006. Mr. Mukherjee resigned from Mittal Steels Board of Directors on April 12, 2005, but continued in his role as Chief Operating Officer of Mittal Steel. His remuneration is included only for the period from January 2005 to March 2005. Mr. Rozental resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Ruiz resigned from Mittal Steels Board of Directors on April 12, 2005. Mr. Reddy resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Lopez resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Ross was elected to Mittal Steels Board of Directors on April 12, 2005. Mr. Kaden was elected to Mittal Steels Board of Directors on April 12, 2005. Mr. Pinault was elected to Mittal Steels Board of Directors on June 30, 2006. Mr. Kinsch was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. lvarez-Rendueles Medina was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Silva de Freitas was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Schmit was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Pachura was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Marti was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Fernndez Lpez was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Hansen was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Castegnaro was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Spillmann was elected to Mittal Steels Board of Directors on October 30, 2006. HRH Prince Guillaume de Luxembourg was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Zaleski was elected to Mittal Steels Board of Directors on October 30, 2006. I-85

The remuneration for the board members for the year 2006, nominated from Arcelor, will be paid after their approval by shareholders in the annual general meeting of Arcelor which will be held on April 27, 2007. The amount outstanding at December 31, 2006 in respect of loans and advances to members of Mittal Steels Board of Directors was 0 (December 31, 2005: 0 ). In addition, Mittal Steel has not given any guarantees for the benefit of any member of Mittal Steels Board of Directors. The following table provides a summary of the options outstanding and the exercise of the options granted to Mittal Steels Board of Directors (in 2001, 2003 and 2004 no options were granted to members of Mittal Steels Board of Directors): Weighted exercise average Total price 18.35 25.78 13.99 2.26

Granted in Granted in Granted in Granted in Granted in 2000 2002 2005 2006 1999 Lakshmi N. Mittal . . . . . . . 80,000 Aditya Mittal(1) . . . . . . . . . . 7,500 Vanisha Mittal Bhatia . . . Malay Mukherjee(2) . . . . . 40,000 Narayanan Vaghul(3) . . . . Ambassador Andrs Rozental(4)(5) . . . . . . . . . . Fernando Ruiz Sahagun(6)(7) . . . . . . . . . . Muni Krishna T. Reddy(8) . . . . . . . . . . . . . . Ren Lopez(9) . . . . . . . . . . . Wilbur L. Ross(10) . . . . . . . Lewis B. Kaden(11) . . . . . . Franois H. Pinault(12) . . . Joseph Kinsch(13) . . . . . . . . Jos Ramn lvarezRendueles Medina(14) . . . . . . . . . . . . Sergio Silva de Freitas(15) . . . . . . . . . . . . . Georges Schmit(16) . . . . . . Edmond Pachura(17) . . . . . Michel Angel Marti(18) . . Manuel Fernndez Lpez(19) . . . . . . . . . . . . . . Jean-Pierre Hansen(20) . . . John Castegnaro(21) . . . . . . Antoine Spillmann(22) . . . HRH Prince Guillaume de Luxembourg(23) . . . . Romain Zaleski(24) . . . . . . . Total . . . . . . . . . . . . . . . . . . . . 127,500 Exercise price . . . . . . . . . . . 11.94 Term (in years) . . . . . . . . . . 10 Expiration date . . . . . . . . . . September 14, 2009
(1)

80,000 7,500 40,000

80,000 25,000 50,000 3,333

100,000 75,000 60,000

100,000 440,000 75,000 190,000 190,000 3,333

127,500 8.57 10 June 1, 2010

158,333 2.26 10 April 5, 2012

18.99

235,000 175,000 823,333 28.75 33.755 10 10 August 23, September 1, 2015 2016

(2)

(3) (4) (5)

Mr. A. Mittal resigned from Mittal Steels Board of Directors on October 30, 2006, but continued in his role as Chief Financial Officer of Mittal Steel. Mr. Mukherjee resigned from Mittal Steels Board of Directors on April 12, 2005, but continued in his role as Chief Operating Officer of Mittal Steel. Mr. Vaghul exercised all his vested options in 2005. Mr. Rozental resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Rozental exercised the majority of his vested options in 2005, except for 3,333 options granted in 2002 which were exercised in 2006. I-86

(6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23)

(24)

Mr. Ruiz resigned from Mittal Steels Board of Directors on April 12, 2005. Mr. Ruiz exercised the majority of his vested options in 2005, except for 3,333 options granted in 2002. Mr. Reddy resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Lopez resigned from Mittal Steels Board of Directors on October 30, 2006. Mr. Ross was elected to Mittal Steels Board of Directors on April 12, 2005. Mr. Kaden was elected to Mittal Steels Board of Directors on April 12, 2005. Mr. Pinault was elected to Mittal Steels Board of Directors on June 30, 2006. Mr. Kinsch was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. lvarez-Rendueles Medina was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Silva de Freitas was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Schmit was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Pachura was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Marti was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Fernndez Lpez was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Hansen was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Castegnaro was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Spillmann was elected to Mittal Steels Board of Directors on October 30, 2006. HRH Prince Guillaume de Luxembourg was elected to Mittal Steels Board of Directors on October 30, 2006. Mr. Zaleski was elected to Mittal Steels Board of Directors on October 30, 2006.

Senior management personnel The total annual compensation of Mittal Steels senior management for 2006 was $16 million in base salary and $21 million in short-term performance related bonuses. As of December 31, 2006, $2.0 million was accrued by Mittal Steel to provide pension benefits to its senior management. During 2006, no loans or advances to Mittal Steels senior management were outstanding. As of December 31, 2005, $0.2 million of such loans was outstanding, which was also the maximum amount outstanding during 2005. NOTE 27: SUBSEQUENT EVENTS On December 20, 2006, Mittal Steel announced the acquisition of Sicartsa, a Mexican integrated steel producer, from Grupo Villacero. Sicartsa is a fully integrated producer of long steel, with an annual production capacity of approximately 2.7 million tonnes from its facilities in Mexico and Texas, USA. Mittal Steel has also entered into a 50/50 commercial joint-venture with Grupo Villacero for the distribution and trading of Mittal Steel long products in Mexico and in the southwest of the United States, capitalizing on Villaceros commercial network. Sicartsa is sharing its production site with Mittal Steel Lzaro Crdenas, offering significant synergy potential, once reunited. Prior to the privatization in 1991 which led to its separation in two entities, the Lzaro Crdenas steelworks operated as one single integrated site producing both flat and long carbon products. The transaction values Sicartsa at 1,439. In addition to the integrated steel making facility at Lzaro Crdenas, the acquisition also includes Metaver, a mini-mill, Sibasa and Camsa, two rolling mills in Celaya, Guanajuato (Sibasa) and Tultitln, State of Mexico as well as Border Steel, a mini-mill in Texas, USA. The closing of this transaction is expected during in the second quarter of 2007. On December 22, 2006, ThyssenKrupp AG initiated summary legal proceedings against Mittal Steel in the District Court in Rotterdam alleging that Mittal Steel had breached a letter agreement between Mittal Steel and ThyssenKrupp, dated January 26, 2006, with respect to the sale of Dofasco Inc., a North American steelmaker, to ThyssenKrupp. On January 23, 2007, the District Court in Rotterdam denied ThyssenKrupps petition for an order. The time for ThyssenKrupp to appeal the Rotterdam Courts order has expired. On January 19, 2007, Mittal Steel announced that it agreed to the sale of Huta Bankowa to Alchemia SA Capital Group, as part of Mittal Steels commitments to the European Commission during the recommended merger of Arcelor S.A. and Mittal Steel. Huta Bankowa, a 100% subsidiary of Mittal Steel, is located in Dabrowa Gornicza (southern Poland). On February 2, 2007, Mittal declared an interim dividend at 0.325 cents per share or 452 in total. On February 14, 2007, Mittal Steel signed a joint venture agreement with the Bin Jarallah Group of companies for the design and construction of a seamless tube mill in Saudi Arabia. This state of the art facility will be located in Jubail Industrial City, north of Al Jubail on the Persian Gulf. The mill will have a capacity of 500,000 tonnes per year. Construction is planned to commence at the end of the first quarter of 2008 and to be completed by the fourth quarter of 2009. Mittal Steel will hold a 51% interest in the company established for this project, with the Bin Jarallah Group holding the remaining 49%. I-87

On February 20, 2007, the U.S. Department of Justice (DOJ) informed the Company that it has selected the Sparrows Point steel mill located near Baltimore Maryland for divestiture under the consent decree filed by the DOJ in August 2006. According to the decree, any such divestiture must take place within ninety days from February 20, 2007, subject to possible extensions by the DOJ. The selection of Sparrows Point by the DOJ ends the period during which Mittal Steel must hold Dofasco separate from its operations. On February 23, 2007, Mittal Steel, announced that it has signed various Agreements with the State of Senegal in West Africa to develop iron ore mining in the Faleme region of South East Senegal. The project is expected to require an investment of approximately 2.2 billion. The total estimated reserves are approximately 750 million tonnes, located in 4 locations in the Faleme region and comprising both haemetite and magnetite deposits. The project is an integrated mining project and will encompass the development of the mine, the building of a new port near Dakar and the development of approximately 750 km of rail infrastructure to link the mine with the port. The mine is expected to commence production in 2011. The agreements will become effective upon fulfillment of certain conditions precedent by the State of Senegal. The Company has also pledged its support to the community and the people of Senegal as part of its commitment to Corporate Social Responsibility in the countries in which it operates. On March 2, 2007, Mittal Steel was included in the AEX index and the FTSE4Good Index Europe indexes. On September 18, 2006, Arcelor Mittal was included in the CAC 40 index. On March 2, 2007, Mittal Steel announced that 385,340,210 Mittal Steel Class B shares owned by Mittal Investments S..r.l. have been converted into 385,340,210 Mittal Steel Class A common shares. This conversion has no impact on the total number of shares (1,392,308,490 shares of which 1,320,158,490 Class A shares and 72,150,000 Class B shares). On March 5, 2007, Mittal Steel sold Stahlwerk Thringen GmbH (SWT) to Grupo Alfonso Gallardo for an enterprise value of 591 million (approximately 768). Such divestment was pursuant to a commitment made to the European Commission in connection with Mittal Steels acquisition of Arcelor. SWT, which was a whollyowned subsidiary of Mittal Steel, is located at Unterwellenborn, Thringen, Germany. In 2005 SWTs sales were approximately 400 million. SWT employs approximately 700 people and produces steel sections of up to 550 millimeters in width used in building and construction. On March 16, 2007, Mittal Steel and Noble signed a definitive agreement for the combination of their laserwelded tailored blanks businesses. Under the terms of the transaction, Mittal Steel, will receive from Noble, in exchange for its laser-welded blanks business in western and eastern Europe, China, India and United States (TBA), consideration of 300, which will consist of approximately 131.25 in a combination of cash, a Noble note and assumption of certain TBA financial obligations and 9,375,000 shares of Noble common stock with an agreed value of 18 per share. Upon completion, Mittal Steel will become the largest stockholder of Noble, owning approximately 40% of its issued and outstanding common shares. Arcelor will also obtain four of nine seats on Nobles board of directors. Completion of the transaction is expected to occur in June 2007, and is subject to a number of conditions, including Noble shareholder approval, receipt by Noble of not less than 165 in debt financing, anti-monopoly clearances in the United States, Canada and Europe and other customary conditions. On March 16, 2007, Mittal Steel announced that as part of its expansion strategy in Central & Eastern Europe, it will invest in a new steel service centre (SSC) in Krakow. With a processing capacity of 450 000 tons per year, this facility will strengthen the existing network of SSC operations in Poland, in Huta Sendzimira (Krakow) and in Bytom (near Katowice). It will start operating early in 4th quarter 2007. Further to the September 27, 2006 announcement, Mittal Steel announced on April, 2, 2007, the commencement of a share buy-back program to repurchase up to a maximum aggregate amount of 590 of its class A common shares. It is Mittal Steels intention to either use the repurchased class A common shares exclusively for future share issues in view of current or future employee stock option plans and other allocations of shares to employees or cancel the repurchased class A common shares in due course. The share buy-back program will end at the earliest of (i) December 31, 2007 (provided that Mittal Steels shareholders, at the annual general meeting of shareholders to be held on May 15, 2007, renew the current authorization for the Mittal Steel Board of Directors for a period of 18 months, ending on November 15, 2008), (ii) the moment on which the aggregate value of class A common shares repurchased by Mittal Steel since the start of this share buy-back program reaches 590, or (iii) the moment on which Mittal Steel and its subsidiaries hold ten percent of the total number of the then-issued class A and class B common shares. I-88

On September 25, 2006, the Comisso de Valores Mobiliros (the CVM), the Brazilian securities regulator, ruled that, as a result of Mittal Steels acquisition of Arcelor, Mittal Steel was required to carry out a public offer to acquire all the outstanding shares in Arcelor Brasil not owned by Arcelor or any other affiliate of Mittal Steel. Pursuant to the ruling, the value to be offered to Arcelor Brasils shareholders is to be determined on the basis of the value of the part of the overall consideration paid for Arcelor by Mittal Steel that was attributable to Arcelor Brasil. On October 26, 2006, Mittal Steel filed with the CVM a request for registration with respect to such offer, and filed amended requests on January 11, 2007, February 27, 2007, and April 5, 2007. As per the amended request for registration filed by Mittal Steel on April 5, 2007, the consideration to be offered per Arcelor Brasil share is R$11.70 in cash and 0.3568 Mittal Steel class A common shares, subject to certain adjustments. As of April 4, 2007, the total value offered per Arcelor Brasil share would be 18.89. Tendering Arcelor Brasil shareholders may also accept an all-cash option, pursuant to which they would receive cash in an amount equal to the value of the cash and share consideration described above, calculated in the manner set forth in the request for registration. On the basis of the closing price for Mittal Steels shares on the New York Stock Exchange on April 4, 2007, the maximum amount of cash that may be paid by Mittal Steel will be approximately 4.0 billion (assuming 100% acceptance of the cash option). The maximum number of Mittal Steel class A common shares that may be issued will be approximately 76 million shares, representing 5% of the share capital of Mittal Steel on a fully-diluted basis (assuming 100% acceptance of the mixed option). The request for registration is subject to the approval of the CVM. NOTE 28: RECONCILIATION FROM IFRS TO US GAAP The Companys consolidated financial statements have been prepared in accordance with IFRS, which, differs in certain significant respects from accounting principles generally accepted in the United States of America (U.S. GAAP). The effects of the application of U.S. GAAP on consolidated net income for each of the years ended December 31, 2005 and 2006, as determined under IFRS, are set out in the table below: For the Year Ended December 31, 2005 2006 Net income (including minority interests) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: minority interests, as reported under IFRS . . . . . . . . . . . . . . . . . . . . . . . . Net income attributable to equity holders of parent, as reported under IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.S. GAAP adjustments: (a) Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Business combination-related adjustments: (1) Negative goodwill and measurement date . . . . . . . . . . . . . . . . . . . . . . (2) Revaluation of minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) Restructuring provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) Finalization of purchase price allocation . . . . . . . . . . . . . . . . . . . . . . . (c) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) Effect of minority interests on adjustments . . . . . . . . . . . . . . . . . . . . . . . (e) Deferred income tax effect on adjustments . . . . . . . . . . . . . . . . . . . . . . . Total U.S. GAAP adjustments
........................................ ........................

3,795 (494) 3,301 (232) 60 10 40 131 21 (26) 60 64 3,365

6,086 (860) 5,226 47 280 161 80 (153) (121) (115) 179 5,405

Net income, as determined under U.S. GAAP

Earnings per share (Class A and Class B), as determined under U.S. GAAP: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.90 4.89

5.47 5.46

I-89

The effects of the application of U.S. GAAP on consolidated shareholders equity as of December 31, 2005 and 2006, as determined under IFRS, are set out in the table below: As of December 31, 2005 2006 Consolidated shareholders equity, as reported under IFRS . . . . . . . . . . . . . . . . . . . . . . . . . Less: minority interest, as reported under IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated shareholders equity excluding minority interest, as determined under IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.S. GAAP adjustments: (a) Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Business combination-related adjustments: (1) Negative goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) Revaluation of minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) Restructuring provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) Finalization of purchase price allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) Effect of minority interests on adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (e) Deferred income tax effect on adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total U.S. GAAP adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholders equity, as determined under U.S. GAAP (a) Employee benefits The aggregate adjustments included in the tables above as of December 31, 2005 and 2006 and for each of the three years in the period ended December 31, 2006 consist of the following: As of December 31, 2005 2006 Recognition of funded status (SFAS 158) . . . . . Recognition of minimum pension liability . . . . Prior service costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total U.S. GAAP adjustments (before income taxes and minority interest)
...... .............................

15,457 (2,171) 13,286 (1,322) (3,269) (212) 200 8 336 1,123 (3,136) 10,150

50,191 (8,064) 42,127 (1,225) (5,373) (1,586) 80 121 (161) 1,098 1,798 (5,248) 36,879

For the Year Ended December 31, 2005 2006 (232) (232) 5 42 47

(1,103) (219) (1,322)

(1,012) (213) (1,225)

Recognition of funded status (SFAS 158) Under U.S. GAAP, the Company accounts for its pensions and post-retirement benefit plans in accordance with Statement of Financial Accounting Standards (SFAS) 87, Employers Accounting for Pensions and SFAS 106, Employers Accounting for Post-retirement Benefits and, from December 31, 2006, SFAS 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R). Effective December 31, 2006, SFAS 158 requires the Company to recognize the funded status of employee benefit plans on the balance sheet. Prior to the adoption of SFAS 158, the Company recognized an additional minimum pension liability as described below. Due to the adoption of SFAS 158, actuarial gains and losses and past service costs, (which remain unrecognized under IFRS) are recognized as of December 31, 2006 directly in equity, net of deferred income taxes. Recognition of minimum pension liability Under U.S. GAAP, prior to the adoption of SFAS 158 as of December 31, 2006, an additional minimum pension liability was required when, as a result of unamortized actuarial losses, prior service costs and transition obligations, the accrued liability reflected in the Companys balance sheet (before adjustment for minimum pension liability) was lower than the excess of the accumulated benefit obligation over the fair value of the plan assets. The adoption of SFAS 158 eliminates the need for minimum pension liability adjustments from December 31, 2006. Prior service costs Under IFRS, in accordance with IAS 19, Employee Benefits, where pension benefits have already vested, past service costs are recognized immediately. Under U.S. GAAP, in accordance with SFAS 87, prior service costs are amortized over the remaining service period for both vested and unvested rights. I-90

We expect to recognize losses of 89 and prior service costs of 11 for pension in 2007, and we expect to recognize losses of 27 and prior service credits of 68 for other benefits in 2007. (b) Business combination-related adjustments (1) Negative goodwill and measurement date Under IFRS 3, Business Combinations, any excess of the fair value of acquired net assets over the acquisition cost (negative goodwill) is recognized immediately as income. Under U.S. GAAP, in accordance with SFAS 141, Business Combinations, any excess of the fair value of acquired net assets over the acquisition cost (negative goodwill) is allocated on a pro rata basis to reduce the amount allocated to non-current, non-monetary assets until such assets are reduced to zero. Any remaining excess is recognized immediately as an extraordinary gain. During the year ended December 31, 2005, 147 (as adjusted, see b(4)) was recognized in the statements of income, under IFRS relating to negative goodwill. Under U.S. GAAP, these amounts reduced the underlying long-lived assets, thereby reducing depreciation and amortization expense on the related assets during the years ending December 31, 2005 and 2006, by 277 and 280. Under IFRS, the guidance of IFRS 3 requires that securities issued as consideration in a business combination be recorded at their fair value as of the date of exchange the date on which an entity obtains control over the acquirees net assets and operations. Under U.S. GAAP, in accordance with Emerging Issues Task Force (EITF) 99-12: Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination, the measurement date used to determine the fair value of securities issued as consideration in a business combination is the date when the terms of the transaction are agreed to and announced. The following adjustments related to measurement date differences between IFRS and U.S. GAAP as of and for the years ended December 31, 2005 and 2006 are set out below: 2005 ISG Value of Mittal Steel shares issued as determined under U.S. GAAP purposes . . . . . . . . Value of Mittal Steel shares issued as determined under IFRS . . . . . . . . . . . . . . . . . . . . . . . . Total U.S. GAAP difference on measurement date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.S. GAAP income statement adjustment for negative goodwill . . . . . . . . . . . . . . . . . . . Cumulative translation adjustment related to goodwill difference . . . . . . . . . . . . . . . . . . . . . U.S. equity adjustment for measurement date
.....................................

2006 Arcelor 21,172 23,240 (2,068) (65) (2,133)

1,922 1,705 217 (217)

Acquisition of Arcelor Under IFRS, the 679.4 million Mittal Steel common shares issued in connection with the acquisition of Arcelor were valued at a weighted average price of 34.20 per share, resulting in an aggregate consideration for this component of the purchase price of 23,240. Under U.S. GAAP, the 679.4 million Mittal Steel common shares issued in connection with the acquisition of Arcelor were valued at a weighted average price of 31.16 per share, resulting in an aggregate consideration for this component of the purchase price of 21,172. The resulting difference in fair value assigned to the Mittal Steel common shares issued in connection with the acquisition of Arcelor amounts to 2,068 and is included in the reconciliation of consolidated shareholders equity as of December 31, 2006. Acquisition of ISG Under IFRS, the 60.9 million Mittal Steel common shares issued in connection with the acquisition of ISG were valued at a weighted average price of 27.99 per share, resulting in an aggregate consideration for this component of the purchase price of 1,705. Under U.S. GAAP, the 60.9 million Mittal Steel common shares issued in connection with the acquisition of ISG were valued at 31.56 per share, resulting in an aggregate consideration for this component of the purchase price of 1,922. The resulting difference in fair value assigned to the Mittal Steel common shares issued in connection with the acquisition of ISG amounts to 217. Under IFRS, the differential in purchase consideration resulted in a corresponding adjustment to the amount of negative goodwill recognized immediately in the statement of income which is not recognized for U.S. GAAP purposes. Therefore the 217 is I-91

included in the reconciliation of consolidated net income for the year ended December 31, 2005. The difference had no impact on consolidated shareholders equity between IFRS and U.S. GAAP. However, in reconciling from IFRS to U.S. GAAP, a reclassification adjustment is necessary within equity from retained earnings under IFRS to additional paid in capital under U.S. GAAP for this difference. (2) Revaluation of minority interests Under IFRS, when a company acquires less than 100% of a subsidiary, the minority (non-controlling) interests are recorded in the acquirers balance sheet at the minoritys proportion of the fair value of the assets acquired and liabilities assumed. Under U.S. GAAP, when a company acquires less than 100% of a subsidiary, the minority (non-controlling) interests are recorded in the acquirers balance sheet at the minoritys proportion of the historical book value of the assets acquired and liabilities assumed. Fair values are only assigned to the parent companys share of the net assets acquired. The aggregate adjustments included in the tables above as of December 31, 2005 and 2006 and for each of the three years in the period ended December 31, 2006 consist of the following: As of December 31, 2005 2006 U.S. GAAP adjustments: Minority interest in Arcelor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interest in subsidiaries of Arcelor . . . . . . . . . . . . . . . . . . . . . Minority interest in Kryviy Rih . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total U.S. GAAP adjustments (before income taxes and minority interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of income taxes on adjustments . . . . . . . . . . . . . . . . . . . . . . . . . Effect of minority interests on adjustments . . . . . . . . . . . . . . . . . . . . . Total U.S. GAAP adjustments (after income taxes and minority interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (212) (212) 85 127 (731) (617) (238) (1,586) 525 1,061 For the Year Ended December 31, 2005 2006 10 10 (4) (6) 59 92 10 161 (53) (108)

(3) Restructuring provisions Under IFRS, the Company may recognize restructuring provisions as part of the acquired liabilities only if the Company has an existing liability at the acquisition date for a restructuring plan recognized in accordance with International Accounting Standards (IAS) 37, Provisions, contingent liabilities, and contingent assets. Under U.S. GAAP, EITF 95-3, Recognition of Liabilities in Connection with a Business Combination, requires the Company to recognize a restructuring liability at the acquisition date if specific criteria are met. Mittal Steel must have a plan to exit an activity as of the acquisition date, and communication of such a plan should have occurred. Acquisition of ISG In conjunction with the acquisition of ISG, a restructuring provision was recognized under U.S. GAAP, which could not be recognized for IFRS. Therefore, under IFRS, the net assets acquired were higher than those recognized under U.S. GAAP in the opening balance sheet, resulting in a corresponding adjustment to the amount of negative goodwill recognized immediately in the statement of income under IFRS, which is not recognized for U.S. GAAP purposes. The difference had no impact on consolidated shareholders equity in total between IFRS and U.S. GAAP, however, in reconciling from IFRS to U.S. GAAP, a reclassification adjustment is necessary within equity from retained earnings under IFRS to additional paid in capital under U.S. GAAP for this difference. During the year ended December 31, 2006, ISG recorded a restructuring provision of 80 under IFRS, which was previously recognized under U.S. GAAP through the purchase accounting during the year ending December 31, 2005. Accordingly, the provision recorded under IFRS has been reversed during the year ended December 31, 2006 for U.S. GAAP.

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(4) Finalization of purchase price allocation (PPA) The aggregate adjustments included in the tables above as of December 31, 2005 and 2006 and for each of the three years in the period ended December 31, 2006 consist of the following: As of December 31, 2005 2006 U.S. GAAP adjustments: Finalization of ISG PPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finalization of Kryviy Rih PPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total U.S. GAAP adjustments (before income taxes and minority interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of income taxes on adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of minority interests on adjustments . . . . . . . . . . . . . . . . . . . . . . . . Total U.S. GAAP adjustments (after income taxes and minority interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 18 200 (79) 10 131 130 (9) 121 10 131 For the Year Ended December 31, 2005 2006 130 1 131 131

Under IFRS and U.S. GAAP, the period that is allowed for finalizing the identification and measurement of the fair value of assets acquired and liabilities assumed in a business combination ends when the acquiring entity is no longer waiting for information that it has arranged to obtain and that is known to be available or obtainable. That allocation period should usually not exceed one year from the consummation of a business combination. Accordingly, the measurement and recognition of certain items that were recorded on a preliminary basis as of December 31, 2005, have been subsequently adjusted to take into account information obtained in 2006 regarding the facts and circumstances that existed as of the acquisition date and that, if known, would have affected the measurement or recognition of the amounts as of that date. Under IFRS, the prior period financial statements were modified to reflect these adjustments from the date of acquisition, as disclosed in Note 3. Under U.S. GAAP, the prior period financial statements were not modified to reflect these adjustments. Accordingly, the negative goodwill adjustment along with the impact of other changes applied retrospectively under IFRS, were reversed as of and for the year ended December 31, 2005 under U.S. GAAP. The final U.S. GAAP purchase price adjustments were recorded during the year ended December 31, 2006, with no impact on the consolidated statement of income. (c) Other The aggregate adjustments included in the tables above as of December 31, 2005 and 2006 and for each of the three years in the period ended December 31, 2006 consist of the following: As of December 31, 2005 2006 Inventory valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in discount rates for asset retirement obligations . . . . . . . . . . Embedded leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in consolidation method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total U.S. GAAP adjustments (before income taxes and minority interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10) 34 11 (27) 8 (154) 15 9 (31) (161) For the Year Ended December 31, 2005 2006 (10) 34 (1) (2) 21 (144) 10 (1) (18) (153)

Inventory valuation Under IFRS, inventory is measured on the basis of first in first out (FIFO). Under U.S. GAAP, the Company measures certain inventory on the basis of last in first out (LIFO). Change in discount rates for asset retirement obligations Under IFRS, the discount rate applied is adjusted at each reporting period, with a corresponding adjustment to the cost of the property, plant and equipment asset and to the liability. Under U.S. GAAP, the original discount rate is not adjusted.

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Embedded leases Under IFRS, from January 1, 2005, the Company applied the accounting requirements of IFRIC 4, Determining Whether an Arrangement Contains a Lease. In accordance with the transition provisions of IFRIC 4, the Company was required to analyze all existing arrangements and to account for them in accordance with IFRIC 4 irrespective of when the arrangement was entered into or last modified. Under U.S. GAAP, EITF 01-08, Determining Whether an Arrangement Contains a Lease, is required to be applied only to contracts containing embedded leases which have been entered into, last modified or acquired in a business combination after January 1, 2004 (the Companys first reporting period beginning after May 28, 2003). Retroactive application of EITF 01-08 is not permitted. Accordingly, the adjustments included in the reconciliation of consolidated shareholders equity and consolidated net income as of and for each of the years ended December 31, 2006 reflect the elimination of the lease accounting impacts of embedded leases entered into, last modified or acquired in a business combination prior to December 31, 2003. (d) Effect of minority interests on adjustments This adjustment reflects the portion of the aforementioned adjustments attributable to the Companys subsidiaries with minority interests. (e) Deferred income tax effect on adjustments This adjustment reflects the deferred tax effects attributable to the aforementioned adjustments. (f) Other presentation differences The major reclassifications, adjusting the IFRS presentation to conform to U.S. GAAP, are as follows: Deferred income taxes Under IFRS, current deferred tax assets and current deferred tax liabilities are presented as non-current items in the balance sheet. Under U.S. GAAP, current deferred tax assets and current deferred tax liabilities are presented within current assets and current liabilities, respectfully, in the balance sheet. Classification of accreted interest Under IFRS, the interest component of discounted obligations is presented as part of interest. Under U.S. GAAP the interest component of discounted obligations is presented as part of cost of sales. Deferred financing costs Under IFRS, borrowings are recognized in the balance sheet net of issuance related costs. Under U.S. GAAP, issuance related costs are recognized in the balance sheet as an asset. Pension costs Under IFRS, the Company has classified the interest component and the expected return on plan assets component of net periodic pension cost as a financial expense in the consolidated statement of income. Under U.S. GAAP, the interest component and the expected return on plan assets component of net periodic pension costs is included within the operating expense section of the consolidated statement of income. Assets and liabilities held for sale Under IFRS, as of December 31, 2006, the Company has classified its laser-welded tailor blank business as held for sale, following the signing of a binding letter of intent during the year. Under U.S. GAAP, as the Company will continue to have significant involvement in the laser-welded tailor blank business being sold, the respective assets and liabilities have been reclassified from the held for sale designation. (g) Other disclosures required by U.S. GAAP Variable interest entities The Company holds a 49% equity interest in Cia Hispano-Brasileira de Pelotizacao SA, a VIE that is accounted for using the equity method of accounting. Cia Hispano-Brasileira de Pelotizacao SA was established in 1974 with Companhia Vale do Rio Doce for the production and sale of iron ore pellets, destined mainly for the shareholders and related parties. As of and for the years ended December 31, 2006 and 2005, the VIE has total assets of approximately 172 and 141, respectively and reported sales and earnings before interest and taxes of 309 and 305 and 51 and 91, respectively. The exposure to loss as a result of involvement with the VIE is limited to the Companys equity and financing interests. I-94

The Company holds a 10% equity interest in Traxys SA, Bertrange (Traxys), a VIE that is accounted for using the equity method of accounting. Traxys was established as a joint venture in 2002 between Arcelor International S.A. and Umicore Marketing Services S.A. for the sourcing, trading, marketing and distribution of non-ferrous metals, ferro-alloys, minerals and industrial raw materials. In January 2006, following a management buy-out, the Companys interest in Traxys was reduced from 50% to 10%. As of and for the years ended November 30, 2006 and 2005, the VIE has total assets of approximately 760 and 575, respectively and reported sales and earnings before interest and taxes of 2,862 in 2006 and 2,219 in 2005 and 62 in 2006, 52 in 2005, respectively. The exposure to loss as a result of involvement with the VIE is to the Companys equity and financing interests. (h) U.S. GAAP earnings per share Under U.S. GAAP, basic earnings-per-share is calculated by dividing the net income available to common shareholders by the weighted average number of shares outstanding during the period, and diluted earnings-per-share is calculated by adjusting both the numerator and denominator used for the calculation of basic earnings-per-share for instruments that provide holders with potential access to the capital of the Company, whether they are issued by the Company itself or by one of its subsidiaries. The dilution is calculated, instrument-by-instrument, taking into account the conditions existing at the balance sheet date, and excluding anti-dilutive instruments. The following table sets out the calculation of basic and diluted earnings-per-share (in millions), as determined in accordance with U.S. GAAP, for each of the years ended December 31, 2005 and 2006: For the Year Ended December 31, 2005 2006 Net income available to common shareholders Basic earnings-per-share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Elimination of interest on PBGC note, net of income taxes . . . . . . . . . . . . . . . . . . . . Net income available to shareholders and assumed conversion . . . . . . . . . . . . . Weighted average number of shares outstanding: Basic earnings-per-share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Incremental shares from assumed exercise of stock options . . . . . . . . . . . . . . . . . . . Incremental shares from assumed conversion of PBGC note . . . . . . . . . . . . . . . . . . Diluted earnings-per-share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Earnings per share (Class A and Class B): Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,365 1 3,366 687 1 1 689 4.90 4.89 5,405 5,405 988 1 989 5.47 5.46

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(i) Condensed consolidated U.S. GAAP Balance Sheets and Statements of Income The following represents the condensed U.S. GAAP balance sheets of the Company as of December 31, 2005 and 2006: As of December 31, 2005 2006 in millions of USD Assets Current assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets
.........................................................

2,035 2,287 6,036 1,354 11,712 1,439 15,539 2,352 19,330 31,042

6,020 8,769 19,021 5,560 39,370 8,433 49,809 8,074 66,316 105,686

Non-current assets Goodwill and intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets
..................................................................

Shareholders equity and liabilities Current liabilities Payables to banks and current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities
......................................................

334 2,504 2,777 5,615 7,974 1,602 2,506 1,361 13,443 10,150 1,834 31,042

4,919 10,717 9,164 24,800 21,576 5,933 6,511 3,021 37,041 36,879 6,966 105,686

Non-current liabilities Long-term debt (including affiliates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non-current liabilities
.................................................

Shareholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total shareholders equity and liabilities

...................................

The following represents the condensed U.S. GAAP statements of income of the Company for the years ended December 31, 2005 and 2006: For the year ended December 31, 2005 2006 in millions of USD 28,132 58,870 21,495 829 1,062 4,746 77 69 (189) 4,703 (818) (520) 3,365 46,072 1,993 2,984 7,821 52 301 (564) 7,610 (1,224) (981) 5,405

Sales

......................................................................

Cost of sales (exclusive of depreciation and amortization) . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selling, general, and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating income
........................................................

Other income net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financing costs net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before taxes and minority interest
...............................

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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(j) Recent U.S. GAAP accounting pronouncements The following U.S. GAAP accounting standards have recently been issued: SFAS 155, Accounting for Certain Hybrid Financial Instruments an amendment of FASB statements 133 and 140 issued in February 2006 provides companies with the option to elect to measure at fair value the entire financial instruments containing embedded derivatives that would otherwise have to be accounted for separately. This pronouncement, if elected, would be effective for the Company for the fiscal year beginning January 1, 2007. The Company believes the adoption of this Statement would have no impact on its consolidated financial statements. SFAS 156, Accounting for Servicing of Financial Assets an amendment of SFAS 140 was issued in March 2006. SFAS 156 requires all separately recognized servicing assets and liabilities to be initially measured at fair value if practical and permits an entity to choose between the amortization method or the fair value measurement method for the subsequent measurement of each class of separately recognized servicing assets and liabilities. The pronouncement is effective for the Company for the fiscal year beginning January 1, 2007 and the Company believes it will have no impact on the consolidated financial statements. SFAS 157, Fair Value Measurements issued in September 2006 defines fair value and establishes a framework for measuring fair value providing a fair value hierarchy and guidance on valuation techniques. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements, except those related to share based payments or when the accounting pronouncement includes practicability exceptions to fair value measurement. This pronouncement is effective for the Company for the fiscal year beginning January 1, 2008. The Company believes the adoption of this Statement would have no impact on its consolidated financial statements. SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities - including an amendment of FAS 115 issued in February 2007, provides companies with an election to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis under a fair value option (FVO). This pronouncement is effective for the Company for the fiscal year beginning January 1, 2008. The Company expects that the adoption of this Statement would have no material impact on its consolidated financial statements. Financial Accounting Standards Board Interpretation (FIN) 48, Accounting for Uncertain Tax Positions issued in June 2006 clarifies the accounting for uncertainty in income taxes recognized in accordance with SFAS 109, Accounting for Income Taxes. This interpretation provides a two-step approach for the (i) recognition and (ii) measurement of tax positions until the uncertainty, about tax positions taken or to be taken will be treated under tax law, is ultimately resolved: (i) benefits of tax positions are taken if they are more likely than not to be sustained by the taxing authority and (ii) the tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized. The Company will adopt FIN 48 on January 1, 2007, and the cumulative effect of adoption will be recorded in retained earnings. The Company is currently evaluating the impact this Statement will have on its consolidated financial statements.

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Company Balance Sheets (After appropriation of results) December 31, 2005* 2006 ASSETS Current Assets: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Current Assets
.......................................................

50 830 6 886 14,778 2,932 11 17,721 18,607

80 4,448 2 4,530 55,060 3,133 96 58,289 62,819

Non-Current Assets: Financial fixed assets (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loan to affiliates (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Non-Current Assets Total Assets
.................................................. ...............................................................

EQUITY AND LIABILITIES Current Liabilities: Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-Current Liabilities Long-term debt (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity: Common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Equity (note 4)
....................................................... ..............................................

691 29 720 4,601 60 2,239 10,270 (111) 828 13,286 18,607

3,981 135 4,116 16,576 17 25,566 14,974 (84) 1,654 42,127 62,819

Total Equity and Liabilities *

The 2005 comparative information has been adjusted retrospectively for the adoption of IFRIC 4 which occurred as of January 1, 2006 as well as the finalization of purchase price allocations on ISG and Kryviy Rih (see note 1 and 3 of the consolidated financial statements).

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Company Statements of Income Year Ended December 31, 2005* 2006 Share in results of participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share in results of associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income and expenses after taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * 3,328 (27) 3,301 5,536 44 (354) 5,226

The 2005 comparative information has been adjusted retrospectively for the adoption of IFRIC 4 which occurred as of January 1, 2006 as well as the finalization of purchase price allocations on ISG and Kryviy Rih (see note 1 and 3 of the consolidated financial statements).

I-99

NOTES TO THE COMPANY FINANCIAL STATEMENTS (Millions of U.S. Dollars, except share data and per share data) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The description of the companys activities and the organization, as included in the notes to the consolidated financial statements also apply to the company financial statements. In accordance with article 2:362 part 8 of the Netherlands Civil Code, Mittal Steel has prepared its company financial statements in accordance with accounting principles generally accepted in the Netherlands applying the accounting principles as adopted in the consolidated financial statements. Investments in subsidiaries are stated at net asset value as the company effectively exercises influence over the operational and financial activities of these investments. The net asset value is determined on the bases of the IFRS accounting principles as applied by the Company in its consolidated financial statements. In accordance with article 2:402 of the Netherlands Civil Code, the company profit and loss account is presented in abbreviated form. For the remuneration of the managing and supervisory directors, please refer to note 26 of the consolidated financial statements. NOTE 2: FINANCIAL FIXED ASSETS Financial fixed assets can be specified as follows: Subsidiaries Balance at January 1, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange, derivative reserves and gains on available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance at December 31, 2006
............................

Associates 344 44 (7) 381

Total 14,778 5,580 33,662 (79) 1,119 55,060

14,434 5,536 33,662 (79) 1,126 54,679

A list of subsidiaries and associated companies, prepared in accordance with the relevant legal requirements (The Netherlands Civil Code, Articles 2:379 and 2:414), is deposited at the office of the Commercial Register in Rotterdam, the Netherlands. NOTE 3: LOAN TO AFFILIATES The loan to an affiliate is to Mittal Steel Europe SA and the balance as of December 31, 2006 is 3,133. This consists of a loan relating to the acquisition of Kryvorizhstal of 2,932. The interest on the loan is 10% per annum. The final repayment will be on November 23, 2013, which is eight years from the drawdown date. The remainder relates to a loan to Mittal Steel Kryviy Rih.

I-100

NOTE 4: SHAREHOLDERS EQUITY

Reserves Unrealized Gains Unrealized Net Foreign (Losses) on Gains on Additional income Currency Derivative Available Share Treasury Paid-In Retained for the Translation Financial for Sale Shareholders Shares capital Stock Capital Earnings year Adjustments Instruments Securities Equity

(millions of U.S. Dollars, except share and per share data)

*Balance at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . Movement with minority shareholders . . . . . . . . . . . . . . Items recognized directly in equity . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . Recognized income and expenses . . . . . . . . . . . . . . . . . Transfer to retained earnings . . . . Recognition of share based payments . . . . . . . . . . . . . . . . . Voting right reduction . . . . . . . . . Issuance of shares in connection with Arcelor acquisition . . . . . Treasury Stock (note 15) . . . . . . . Dividends (0.50 per share) . . . . .

704

60 (52)

(111) 27 (84)

2,239 29 52 23,231 15 25,566

10,270

5,226

610 826 826 1,436

(4) (16) (16) (20)

222 16 16 238

13,286

826 5,226 6,052 29 23,240 42 (522) 42,127

5,226 5,226 (5,226) (522) 14,974

680 1

9 17

Balance at December 31, 2006 . . . . . . . . . . . . . . . . . . . . . 1,385

* The 2005 comparative information has been adjusted retrospectively for the adoption of IFRIC 4 which occurred as of January 1, 2006 as well as the finalization of purchase price allocations on ISG and Kryviy Rih (see note 1 and 3 of the consolidated financial statements). ** Excludes treasury shares. As at December 31, 2006, the authorized common shares of Mittal Steel consisted of 5,000,000,000 Class A common shares, par value of 0.01 per share, and 721,500,000 Class B common shares, par value of 0.01 per share. At December 31, 2006, 934,818,280 (December 31, 2005: 255,401,673) Class A common shares and 457,490,210 (December 31, 2005: 457,490,210) Class B common shares were issued and 927,778,733 (December 31, 2005: 246,572,889) Class A common shares and 457,490,210 (December 31, 2005: 457,490,210) Class B common shares were outstanding. The Companys share capital at December 31, 2006 is comprised as follows: Class A December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of ISG . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . Voting right reduction . . . . . . . . . . . . . . . . . . . . . . Acquisition of Arcelor . . . . . . . . . . . . . . . . . . . . . . December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 2 9 11 Class B 58 58 (52) 6 Total 59 1 60 (52) 9 17

As of December 31, 2006, the preference and relative rights of the Mittal Steel Class A common shares and Mittal Steel Class B common shares are substantially identical except for conversion rights. Each Mittal Steel Class B common share is convertible, at the option of the holder, into one Mittal Steel Class A common share. Under Mittal Steels Articles of Association, each Mittal Steel Class B common share is convertible at any time and from time to time at the option of the holder thereof into one Mittal Steel Class A common share. The Mittal Steel Class A common shares have no conversion rights. On August 1, 2006, Mittal Steel acquired 91.9% of the share capital of Arcelor (on a fully diluted basis). Through subsequent transactions, Mittal Steel increased its ownership to 94.2% of the issued and outstanding shares of Arcelor and 19.9 million of Arcelors Convertible bonds. The acquisition was funded through a combination of cash and 680 million newly issued Class A common shares. In September 2006, the nominal value of class B shares changed from 0.10 per share to 0.01 per share. This was approved by the shareholders during the shareholders meeting of June 30, 2006. At the same time the voting rights for Class B shares reduced from 10 votes per share to 1 vote per share. I-101

At December 31, 2006, the Company held 7,039,547 of its own Class A shares which it purchased on the open market for aggregate consideration of 84 (at December 31, 20058,828,784 for aggregate consideration of 111). Treasury shares held by the company are deducted from equity. In 2006, the Company received 9 upon the exercise of options by employees. Dividends The dividend for 2006 amounted to 522 (0.50 cents per share) and was paid during the year. On February 2, 2007 an interim dividend was declared of 0.325 cents per share or 452 in total. Stock Option Plan For the stock option plan reference is made to note 16 to the consolidated financial statements. NOTE 5: LONG-TERM DEBT: 3.2 billion Credit Facility On April 7, 2005, Mittal Steel and certain subsidiaries signed a five-year 3,200 credit facility with a consortium of banks. At December 31, 2006, 2,100 was outstanding. 3.5 billion Bridge Facility On October 19, 2005, the Company signed a 3,000 loan agreement with Citigroup. The facility was subsequently increased by 500 to 3,500. The 2005 Bridge Facility was repaid in full on June 26, 2006 and cancelled subsequently. Funding was provided from a 3,000 million (3,932) Refinancing Facility entered into on January 30, 2006. 17 billion Credit Facility On January 30, 2006, the Company entered into a 5,000 million credit agreement with a group of lenders to finance the cash portion of the offer for Arcelor along with related transaction costs (Acquisition Facility) and a 3,000 million credit agreement to refinance the 2005 Bridge Facility. On May 23, 2006, the Company entered into a 2,800 million agreement with a group of lenders to finance the cash portion of the increased offer for Arcelor along with related transaction costs (Acquisition Facility). On November 30, 2006, the Company entered into a 17,000 million credit agreement with a group of lenders to refinance Mittal Steels Refinancing Facility and Acquisition Facilities, along with Arcelor 4,000 million term loan facility and 3,000 million revolving credit facility agreement. All of these refinanced facilities were repaid and cancelled in December 2006. The outstanding under 17 billion credit facility at December 31, 2006 was 15,828. EBRD Loans The secured loan is for capital expenditures and working capital requirements at Mittal Steel Galati. The loan is guaranteed by the Company and certain of its subsidiaries, and is secured by a pledge of certain assets of Mittal Steel Galati. The outstanding amount of the loan is 50 as of December 31, 2006. On April 4, 2006, Mittal Steel signed a 200 loan agreement with the European Bank for Reconstruction and Development for on-lending to Mittal Steel Kryviy Rih. The outstanding amount of the loan was 200 as of December 31, 2006. NOTE 6: COMMITMENT AND CONTINGENCIES See note 22 and 23 to the consolidated financial statements. NOTE 7: RELATED PARTIES There are no significant transactions between the company and its associates. Transactions between the company and its subsidiaries are included in the Companys Financial statements. These a transactions include the charge-out of management fees and interest on intercompany financing. NOTE 8: REMUNERATION OF TE BOARD OF DIRECTORS See note 26 to the consolidated financial statements. NOTE 9: SUBSEQUENT EVENTS See note 27 to the consolidated financial statements. I-102

Rotterdam, 16 April, 2007 BOARD OF DIRECTORS L.N. Mittal V. Mittal Bhatia N. Vaghul W.L. Ross L.B. Kaden F.H. Pinault J.J. Kinsch J.R. Alvarez Rendueles S. Silva de Freitas G. Schmit E. Pachura M. Angel Marti M. Fernandez Lopez J.P. Hansen J. Castegnaro A. Spillmann HRH Prince Guillaume de Luxembourg R. Zaleski

I-103

ADDITIONAL INFORMATION PROPOSED APPROPRIATION OF NET INCOME FOR 2006 Article 37.1 of the articles of association reads: From the profits, as apparent from the annual accounts adopted by the general meeting of shareholders, such amounts shall be reserved as the managing board shall determine. The Board of Directors has decided that the Companys income for 2006 will be added to retained earnings, taking into account the interim dividends already paid in 2006. This proposal has already been reflected in the 2006 financial statements. SPECIAL STATUTORY VOTING RIGHTS See note 16 of the notes to the consolidated financial statements. AUDITORS REPORT See page I-2 REGISTERED OFFICE Hofplein 20 3032 AC Rotterdam The Netherlands COMPANY REGISTRATION NO: 24275428 (Corporate seat Rotterdam, Netherlands)

I-104

Auditors report Introduction We have audited the consolidated financial statements which are part of the financial statements of Mittal Steel Company N.V., Rotterdam, for the year ended December 31, 2005. These consolidated financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Scope We conducted our audit in accordance with auditing standards generally accepted in the Netherlands. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Opinion In our opinion, the consolidated financial statements give a true and fair view of the financial position of the company as at December 31, 2005 and of the result and the cash flows for the year then ended in accordance with the International Financial Reporting Standards as adopted by the EU. Deloitte Accountants B.V. Rotterdam, March 29, 2006 E.R. Termaten

I-105

Audited Consolidated Financial Statements of Mittal Steel Company N.V. and its consolidated subsidiaries, including the consolidated balance sheets at December 31, 2004 and 2005 and the consolidated statements of income, changes in shareholders equity and cash flows for the years ended December 31, 2004 and 2005, prepared in accordance with IFRS, including a reconciliation of the 2004 balance sheet and income statement from Dutch GAAP to IFRS and a reconciliation of the 2004 and 2005 equity and net income from IFRS to U.S. GAAP

I-106

MITTAL STEEL COMPANY N.V. AND SUBSIDIARIES (Millions of U.S. Dollars, except share data) CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2004 and 2005 INDEX Page Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Income
.....................................................................

I-108 I-110 I-111 I-112 I-113

Consolidated Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to the Consolidated Financial Statements
........................................................

I-107

Consolidated Balance Sheets December 31, 2004 2005 (Millions of U.S. Dollars, except share data) ASSETS Current Assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivable (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Current Assets
.....................................................

2,495 138 1 2,006 3,964 666 9,270 49 169 11,058 483 190 185 288 12,422

2,035 100 14 2,287 5,994 1,040 11,470 1,513 193 18,651 927 277 314 414 22,289

Non-Current Assets: Goodwill (note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipmentnet (note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in affiliates and joint ventures (note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available for sale financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets (note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Non-Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Assets
.............................................................

21,692

33,759

See notes to the consolidated financial statements

I-108

Consolidated Balance Sheets (continued) December 31, 2004 2005 (Millions of U.S. Dollars, except share data) LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities: Payable to banks and current portion of long-term debt (note 11) . . . . . . . . . . . . . . . . . . . Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividend payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and other liabilities (note 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Current Liabilities
.................................................

341 1,899 1,650 159 1,551 597 6,197 1,639 1,077 881 273 546 4,416 10,613 59

334 2,504 137 2,036 488 5,499 7,974 2,253 1,054 611 784 12,676 18,175 60

Non-Current Liabilities: Long-term debt, net of current portion (notes 11 and 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities (note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred employee benefits (note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Non-Current Liabilities Total Liabilities
............................................ .........................................................

Equity (note 14) Common Shares: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Class A Shares, (EURO 0.01 par value per share, 5,000,000,000 shares authorized, shares issued and outstanding: 194,509,790 at December 31, 2004 and 255,401,673 at December 31, 2005) Class B Shares, (EURO 0.10 par value per share, 721,500,000 shares authorized, 457,490,210 shares issued and outstanding) Treasury Stock (9,225,140 class A shares at December 31, 2004 and 8,828,784 class A shares at December 31, 2005, at cost) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional Paid-in Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity attributable to the equity holders of the parent . . . . . . . . . . . . . . . . . . . . . . . . . Minority Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Equity
.................................................................. ....................................

(123) 552 7,207 1,509 9,204 1,875 11,079 $ 21,692 $

(111) 2,239 10,407 828 13,423 2,161 15,584 3,759

Total Liabilities and Shareholders Equity

See notes to the consolidated financial statements

I-109

Consolidated Statements of Income Year Ended December 31, 2004 2005 (Millions of U.S. Dollars, except share and per share data) $ 20,612 $ 28,132 14,422 22,342 6,190 676 5,514 1,143 149 (259) 74 (29) (214) Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense: (note 16) Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income
.................................................................

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenses Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other incomenet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financing costs: Interest expense (net of interest capitalized of $3 in 2004 and $4 in 2005) . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net gain (loss) from foreign exchange transactions . . . . . . . . . . . . . . . . . . . . . . . . . .

5,790 1,062 4,728 344 86 (503) 110 40 (353) 4,805 663 218 (881) $ 3,924 3,430 494 $ $ 3,924 4.99 4.98 687 689

6,592 636 331 (967) $ 5,625 5,210 415 $ 5,625 8.10 8.10 643 643 $

Attributable to Equity holders of the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic weighted average common shares outstanding (in millions) . . . . . . . . . . . . Diluted weighted average common shares (in millions) . . . . . . . . . . . . . . . . . . . . . . See notes to the consolidated financial statements

I-110

Consolidated Statements of Changes in Equity

Share Treasury capital Stock 59 59 1 60 $ (111) $ 2,239 $ 10,407 $ 12 3 1,693 (9) 3,430 (213) 3,430 (3,430) (758) $ 610 $ (123) 552 7,207 (17) 3,430 1,368 (758) 6 (10) (10) (4) $ (13) (32) 5,210 (2,385) 5,210 (5,210) 1,368 4 2 5,210 1,368 4 66 66 135 87 87 222 $ (110) $ 584 $ 4,380 $ $ $ 2 $ 69 $

Additional Paid-in Capital Retained Earnings 4,984 2 1,438 5,210 6,648 (45) (2,385) 9,204 (17) (681) 3,430 2,749 3 1,694 3 (213) 13,423

Unrealized Gains Unrealized (Losses) on Gains on Net Foreign Derivative Available income Currency Financial for Sale for the Translation year Adjustments Instruments Securities Shareholders equity $

Minority interest 266 $ 1,194 415 415 1,875 (208) 494 494 $ 2,161 $

Total equity 5,250 1,196 1.438 5,625 7,063 (45) (2,385) 11,079 (225) (681) 3,924 3,243 3 1,694 3 (213) 15,584

Balance at December 31, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (note 1: First time adoption of IFRS) Movements with minority shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income recognized directly in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recognized income and expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer to retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Movements with minority shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income recognized directly in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I-111

Recognized income and expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer to retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recognition of share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Issuance of shares in connection with ISG acquisition (net of capital duty of $11) . . . Treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

See notes to the consolidated financial statements

Consolidated Statements of Cash Flows Year Ended December 31, 2004 2005 (Millions of U.S. Dollars) Operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustment to reconcile net income to net cash provided by operations: Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net accretion of purchased intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net foreign exchange loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gain from early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gain on sale of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Negative goodwill released to income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non-cash operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in operating assets and liabilities, net of effects of acquisitions: Trade accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and other liabilities (including provisions) . . . . . . . . . . . . . . . . . . . . . . . Deferred employee benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash provided by operating activities
........................................

5,625 734 37 331 22 (213) (19) (1,017) 5 (212) (1,374) (155) 165 375 (4) 4,300 (837) 81 34 67 2 (3) (656) 2,258 1,185 76 (2,578) (2,126) (175) (54) 9 (713) (2,118) 236 1,762 733

3,924 1,101 (139) (30) 218 (82) (28) (267) (104) 406 33 (192) 15 (622) (359) 3,874 (1,181) 59 (300) (6,120) 38 (8) (7,512) 1,678 8,318 (1,807) (2,740) 3 (2,092) (11) 3,349 (171) (460) 2,495

Investing activities: Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from sale of assets and investments, including affiliates and joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in affiliates and joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of net assets of subsidiaries, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash used in investing activities
..............................................

Financing activities: Proceeds from payable to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from long-term debt, net of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from long-term debt from an affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments of payable to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments of long-term debt payable to unrelated parties . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments of long-term debt payable to an affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sale of treasury stock for stock option exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash (used in) provided by financing activities Effect of exchange rate changes on cash
.............................. ...........................................

Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents: At the beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At the end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Supplemental disclosures of cash flow information Cash paid during the year for: Interest net of amounts capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . See notes to the consolidated financial statements I-112 $

2,495

2,035

253 454

242 892

Notes to the consolidated financial statements NOTE 1: NATURE OF BUSINESS AND BASIS OF CONSOLIDATION Nature of business Mittal Steel Company N.V. (Mittal Steel), (Group) or (Company), formerly Ispat International N.V., together with its subsidiaries, is a manufacturer of steel and steel related products. Mittal Steel owns and operates manufacturing facilities in the United States of America (U.S.), Mexico, Canada, Trinidad and Tobago (Trinidad), Germany, France, Kazakhstan, Algeria, Romania, Czech Republic, Poland, South Africa, Ukraine, Macedonia and Bosnia and Herzegovina. These manufacturing facilities, each of which includes its respective subsidiaries, are referred to herein as the Operating Subsidiaries. On December 17, 2004, Ispat International N.V. completed its acquisition of Mittal Steel Holdings N.V., formerly LNM Holdings N.V. and changed its name to Mittal Steel Company N.V. On December 28, 2005 Mittal Steel Holdings N.V. was redomiciled to Switzerland and changed its name to Mittal Steel Holdings A.G. As Ispat International N.V. and LNM Holdings N.V. were affiliates under common control, the acquisition of LNM Holdings N.V. was accounted for on the basis of common control accounting, which is similar to a previously permitted method of accounting known as a pooling-of-interests. Therefore these consolidated financial statements reflect the financial position for those assets and liabilities and results of operations of Mittal Steel from the accounts of Ispat International N.V. and LNM Holdings N.V., as though Mittal Steel had been a stand alone legal entity during 2004. These consolidated financial statements as of and for the year ended December 31, 2004 has been prepared using the historical basis in the assets and liabilities and the historical results of operations relating to Ispat International N.V. and LNM Holdings N.V. based on the separate records maintained for each of these businesses. Organization Mittal Steel is formed and organized under the laws of the Netherlands to hold directly or indirectly certain subsidiaries involved in the steel manufacturing activities described above. Mittal Steel has no manufacturing operations of its own and its major assets are interests in the common and preferred stock of the Operating Subsidiaries. The following table sets forth each significant operating subsidiary of Mittal Steel: Subsidiary Americas Mittal Steel USA Inc.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel Lzaro Crdenas S.A. de C.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Canada Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel Point Lisas Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Europe Mittal Steel Gandrange S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trfileurope S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel Hamburg GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel Ruhrort GmbH(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel Hochfeld GmbH(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel Poland S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel Galati S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel Ostrava a.s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OJSC Mittal Steel Kryviy Rih . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asia & Africa JSC Mittal Steel Temirtau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel Annaba Spa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel South Africa Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) (2) (3)

Percentage ownership 100% 100% 100% 100% 100% 100% 100% 100% 100% 99%(3) 100% 85%(3) 93% 100% 70% 52%

Ispat Inland Inc. and Mittal Steel USA ISG Inc. merged on December 31, 2005. The surviving entity, Mittal Steel USA ISG Inc., was renamed Mittal Steel USA Inc. Mittal Steel Ruhrort and Mittal Steel Hochfeld are collectively described as Mittal Steel Duisburg. Represents the percentage of shares to which ArcelorMittal has title or that are subject to an executed agreement providing for their transfer to Mittal Steel at a fixed price and future date.

Acquisitions are more fully disclosed in note 3. I-113

Basis of presentation The statutory consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The financial statements have been prepared on the historical cost basis. Principle accounting policies are set out in note 2. First time adoption of IFRS Mittal prepared its consolidated financial statements under Dutch Generally Accepted Accounting Principles (Dutch GAAP) until December 31, 2004. On January 1, 2005 the accounting policies were changed to comply with IFRS. In order to present one year of comparative IFRS financial statements the date of transition to IFRS is January 1, 2004. The transition to IFRS resulted in the following changes in accounting policies: 1. Employee benefits The Group has chosen not to apply the exemption in IFRS 1, first time adoption, for setting the actuarial gains and losses to zero and to remain consistent with FAS 87, which was the standard used under Dutch GAAP. Considering that plans only have a short history with the Group, the FAS 87 position represents the historical gains and losses. Past service cost (prior service cost in FAS 87), is amortized under IFRS over the remaining working lives of employees only if unvested. Whereas, FAS 87 requires amortization for vested rights. Consequently non-amortized past service cost relating to vested rights was adjusted. In addition, IFRS does not recognize a minimum pension liability, therefore on the date of transition the minimum pension liability was eliminated. 2. Business combinations The Group has elected to apply IFRS 3, business combinations as from January 1, 2004, therefore electing to keep the accounting for business combinations at historically determined amounts. However, applying IFRS 3 as per the date of transition means that negative goodwill recognized as a separate component of equity under Dutch GAAP is transferred to retained earnings. Under US GAAP negative goodwill is recognized as a deduction of tangible fixed assets acquired. For US GAAP to IFRS reconciliation (see note 25) negative goodwill thus deducted is adjusted to retained earnings. 3. Other changes Different amortization of borrowing cost. IFRS amortizes this cost using the effective interest rate method, while under Dutch GAAP amortization is straight-line. Adjustment for coming out of hyperinflation for the Romanian subsidiaries. 4. Deferred income tax The movement in deferred tax represent the tax effect on the above mentioned adjustments. Equity as of January 1, 2004 Total under Dutch GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments recorded to comply with IFRS Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax effect on the above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total under IFRS
.............................................

Net income year ended Equity as of December 31, December 31, 2004 2004 $ 10,567 954 (72) 89 (459) 512 $ 11,079 $ $ 4,766 (52) 776 76 59 859 5,625

4,280 983 463 9 (485) 970

5,250

I-114

Effect of adoption of IFRS on the balance sheet as of January 1, 2004 Dutch GAAP ASSETS Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets
......................................................

IFRS adjustments $ $ $ (77) $ 117 40 $

IFRS 3,607 8,048 11,655 2,573 3,832 6,405 5,250 $ 11,655

$ $ $

3,684 7,931 11,615 2,619 4,716 7,335 4,280

LIABILITIES AND SHAREHOLDERS EQUITY Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total group equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities and shareholders equity
.......................

(46) $ (884) (930) 970

11,615

40

Effect of adoption of IFRS on the balance sheet as of December 31, 2004 Dutch GAAP ASSETS Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIABILITIES AND SHAREHOLDERS EQUITY Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total group equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities and shareholders equity
.....................

IFRS adjustments $ $ $ (234) $ (300) (534) $ 75 $ (1,121) (1,046) 512 $ (534) $

IFRS 9,270 12,422 21,692 6,197 4,416 10,613 11,079 21,692

9,504 12,722 22,226 6,122 5,537 11,659 10,567

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $

22,226

Effect of adoption of IFRS on the income statement for the year ended December 31, 2004 Dutch GAAP Gross margin
.................................................... ................................................

IFRS adjustments $ (239) $ (199) 795 (64) $ 859 $

IFRS 6,190 5,514 6,592 967 5,625

6,429 5,713 5,797 1,031

Operating income

Income before taxes and minority interest . . . . . . . . . . . . . . . . . . . . . . . . . Tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income
......................................................

4,766

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of consolidation The consolidated financial statements include the accounts of Mittal Steel and all its operating subsidiaries in which a direct or indirect controlling interest exists. Net income is reduced by the portion of the earnings of subsidiaries applicable to minority interests. The minority interests are disclosed separately in the consolidated statements of income and in the consolidated balance sheets. Intercompany balances and transactions have been eliminated in consolidation. Foreign currency translation and translation of financial statements The functional currency of each of the operating subsidiaries is the U.S. Dollar, except for Mittal Canada, Mittal Steel Ostrava, Mittal Steel South Africa, Mittal Steel Poland, Mittal Steel Iasi, Mittal Steel Hunedoara, Mittal Steel Roman, Mittal Steel Europe SA, the Operating Subsidiaries in France, Germany, Macedonia and Bosnia and Herzegovina whose functional currency is the local currency. I-115

Prior to October 1, 2004 the Romanian economy was considered highly inflationary. The records of Mittal Steel Iasi, Mittal Steel Hunedoara and Mittal Steel Roman were remeasured as if their functional currency was the reporting currency for periods prior to October 1, 2004. Transactions in currencies other than the functional currency of a subsidiary are recorded at the rates of exchange prevailing at the date of the transaction. Monetary assets and liabilities in currencies other than the functional currency are remeasured at the rates of exchange prevailing at the balance sheet date and the related transaction gains and losses are reported in the statements of income. Upon consolidation, the results of operations of Mittal Steels subsidiaries and affiliates whose functional currency is other than the U.S. Dollar are translated into U.S. Dollars at average exchange rates for the year and assets and liabilities are translated at year-end exchange rates. Translation adjustments are presented as a separate component of equity in the consolidated financial statements and are included in net earnings only upon sale or liquidation of the underlying foreign subsidiary or affiliated company. Use of Judgments and Estimates The information regarding and analysis of Mittal Steels operational results and financial condition are based on figures contained in the Mittal Steel Consolidated Financial Statements, which have been prepared in accordance with IFRS. The preparation of these financial statements requires Mittal Steels management to make judgments in relation to certain estimates and assumptions used in the application of accounting policies. These judgments and estimates are made on the basis of available facts and are a normal part of the process of preparing financial statements. While the use of different assumptions and estimates could have caused the results to be different from those reported, Mittal Steel believes that the possibility of material differences between two periods is lessened because of the consistency in the application of such judgments. The accounting policies that Mittal Steel considers critical, in terms of the likelihood of a material impact arising from a change in the assumptions or estimates used in the application of the accounting policy in question, are outlined below. Purchase Accounting Accounting for acquisitions requires Mittal Steel to allocate the cost of the enterprise to the specific assets acquired and liabilities assumed based on their estimated fair values at the date of the acquisition. This often results in positive or negative goodwill. Accounting principles allow Mittal Steel up to one year to acquire all necessary valuation information for the allocation. Management often obtains appraisals and actuarial or other valuations in order to aid in determining the estimated fair value of assets acquired and liabilities assumed. This application of managements judgment and estimates to account for acquisitions could significantly affect Mittal Steels financial statements. Deferred Tax Assets Mittal Steel charges tax expenses or accounts for tax credits based on the differences between the financial statement amounts and the tax base amounts of assets and liabilities. Deferred tax assets are also recognized for the estimated future effects of tax losses carried forward. Mittal Steel annually reviews the deferred tax assets in the different jurisdictions in which it operates to assess the possibility of realizing such assets based on projected earnings. Provisions for Pensions and Other Post Employment Benefits Mittal Steels Operating Subsidiaries have different types of pension plans for their employees. Also, most of the subsidiaries in the Americas region offer post employment benefits, primarily post employment health care. The expense associated with these pension plans and employee benefits, as well as the carrying amount of the related liability/asset on the balance sheet is based on a number of assumptions and factors such as the discount rate, expected wage increases, expected return on plan assets, future health care cost trends and market value of the underlying assets. Actual results that differ from these assumptions are accumulated and amortized over future periods and, therefore, will affect recognized expense and the recorded obligation in future periods, particularly in the case of Mittal Steels U.S. and Canadian subsidiaries. Environmental provisions Mittal Steel is currently engaged in the investigation and remediation of environmental contamination at a number of the facilities through which it operates. All of these are legacy obligations arising from acquisitions. Mittal Steel is subject to changing and increasingly stringent environmental laws and regulations concerning air emissions, water discharges and waste disposal, as well as certain remediation activities that involve the clean up of soil and groundwater. Mittal Steel recognizes a liability for environmental remediation when it is probable that I-116

such remediation will be required and the amount can be estimated. Environmental liabilities assumed in connection with the acquisition of steel facilities and other assets are recorded at the present value of the estimated future payments. There are numerous uncertainties over both the timing and the ultimate costs that Mittal Steel expects to incur with respect to this work. Significant judgment is required in making these estimates and it is reasonable that others may come to different conclusions. If, in the future, Mittal Steel is required to investigate and remediate any currently unknown contamination and waste on properties that it owns, Mittal Steel may record significant additional liabilities. Also, if Mittal Steel estimates the cost to remediate currently known contamination and waste change, it will reduce or increase the recorded liabilities through credits or charges in the income statement. Mittal Steel does not expect these environmental issues to affect the utilization of its plants, now or in the future. The estimates of provisions for environmental matters are based on various judgments and assumptions. These estimates typically reflect judgments and assumptions relating to the likelihood, nature, magnitude and timing of assessment, remediation and/or monitoring activities and the probable cost of these activities. In some cases, judgments and assumptions are made relating to the obligation or willingness and ability of third parties to bear a proportionate or allocated share of cost of these activities, including third parties who sold assets to Mittal Steel or purchased assets from it subject to environmental liabilities. Mittal Steel also considers, among other things, the activity to date at particular sites, information obtained through consultation with applicable regulatory authorities and third-party consultants and contractors and its historical experience with other circumstances judged to be comparable. Due to the numerous variables associated with these judgments and assumptions, and the effects of changes in governmental regulation and environmental technologies, both the precision and reliability of the resulting estimates of the related provisions are subject to substantial uncertainties. Impairment of non-current assets According to IAS 36, an impairment loss must be recognized when the carrying amount of a non-current asset is not recoverable and exceeds its fair value. The carrying amount of a non-current asset is not recoverable if it exceeds the expected sum of the discounted cash flows over its remaining useful life. Mittal Steel continues to monitor both internal and external factors which could result in an impairment of non-current assets or a loss in value of an equity method investment. Intangible assets Intangible assets arising from acquisitions are amortized using the straight-line method over their estimated economic lives. Economic lives are evaluated every year. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation. All property, plant and equipment except land are depreciated using the straight-line method over the useful lives of the related assets, ranging from 10 to 50 years for buildings and improvements and 2 to 45 years for machinery and equipment. Major improvements, which add to productive capacity or extend the life of an asset, are capitalized, while repairs and maintenance are charged to expense as incurred. The cost of mining production assets is depreciated on a unit-of-production basis. The rate of depreciation is determined based on the rate of depletion of the proven developed reserves in the coal deposits mined. Proven developed reserves are defined as the estimated quantity of product which can be expected to be profitably extracted, processed and used in the production of steel under current and foreseeable economic conditions. Depletion of mineral properties is based on rates which are expected to amortize cost of the estimated tonnage of minerals to be removed. Property, plant and equipment under construction are recorded as construction in progress until they are ready for their intended use; thereafter they are transferred to the related category of property, plant and equipment and depreciated over their estimated useful lives. Interest during construction is capitalized to property, plant and equipment under construction until the assets are ready for their intended use. Gains and losses on retirement or disposal of assets are determined as the difference between net disposal proceeds and carrying amount and are reflected in the income statement. Business combinations The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs I-117

directly attributable to the business combination. The acquirees identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognized at their fair values at the acquisition date. The interest of minority shareholders in the acquiree is initially measured at the minoritys proportion of the net fair value of the assets, liabilities and contingent liabilities recognized. Goodwill and negative goodwill Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over the Groups interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. Goodwill is reviewed for impairment annually at the cash generating unit level or whenever changes in circumstances indicate that the carrying amount may not be recoverable. First, the fair value of the reporting unit including goodwill is compared to its carrying amount. If the fair value of the cash generating unit is less than the carrying amount, goodwill would be considered to be impaired. Subsequently, the goodwill impairment is measured as the excess of the carrying amount of goodwill over its implied fair value. Negative goodwill The Company has historically purchased under-performing steel assets, principally those involved in various privatization programs in former government controlled economies. Businesses with these characteristics typically have been purchased for an amount that does not exceed net asset fair value, thus producing negative goodwill for accounting purposes. In a business combination in which the fair value of the identifiable net assets acquired exceeds the cost of the acquired business, the Company reassesses the fair value of the assets acquired. If, after reassessment, the Groups interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognized immediately in the income statement. Impairment of non-current assets (excluding goodwill) Non-current assets held and used by Mittal Steel are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using discounted future net cash flows of assets grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. If the discounted future net cash flows are less than the carrying amount of the asset, the asset is deemed impaired. The amount of the impairment is measured as the difference between the carrying value and the fair value of the asset. Investment in affiliates and joint ventures Investments in majority owned affiliates and joint ventures, where control does not exist and 20% to 50% owned affiliates and joint ventures in which Mittal Steel has the ability to exercise significant influence, are accounted for under the equity method of accounting whereby the investment is carried at cost of acquisition, plus Mittal Steels equity in undistributed earnings or losses since acquisition, less dividends received. The acquisitions from minority shareholders are considered transactions with shareholders and decreases or increases between the cost and the net value are recorded in shareholders equity. Investment in affiliates and others, over which the Company and/or its subsidiaries do not have the ability to exercise significant influence and have a readily determinable fair value, are accounted for at fair value with any realized gain or loss included in equity. To the extent that these investments do not have a readily determinable fair value, they are accounted for under the cost method. Mittal Steel periodically reviews all of its investments in affiliates and joint ventures for which fair value is less than cost to determine if the decline in value is other than temporary. If the decline in value is judged to be other than temporary, the cost basis of the investment is written down to fair value. The amount of any write-down is included in other operating expenses. Inventories Inventories are carried at the lower of cost or net realizable value. Cost is determined using the first in, first out (FIFO) method and average cost method, which approximates FIFO. Costs of production in process and finished goods include the purchase costs of raw materials and conversion costs such as direct labor and an allocation of fixed and variable production overheads. Raw materials and spare parts are valued at cost inclusive of freight, shipping and handling costs.

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Financial instruments Financial assets and financial liabilities are recognized on the Groups balance sheet when the Group becomes a party to the contractual provisions of the instrument. Cash and cash equivalents Cash equivalents represent short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less. Restricted cash Restricted cash represents the required collateral with various banks as margin for revolving letters of credit and guarantees. Trade receivables Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortized cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognized in the income statement when there is objective evidence that the asset is impaired. The allowance recognized is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Allowance for doubtful accounts The Company maintains an allowance for doubtful accounts at an amount it considers to be a sufficient estimate of losses resulting from the inability of its customers to make required payments. An allowance is recorded and charged to expense when an account is deemed to be uncollectible. In judging the adequacy of the allowance for doubtful accounts, the Company considers multiple factors including historical bad debt experience, the current economic environment and the aging of the receivables. Recoveries of trade receivable previously reserved in the allowance are credited to income. Bank borrowings Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured at amortized cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognized over the term of the borrowings in accordance with the Groups accounting policy for borrowing costs. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in the income statement in the period in which they are incurred. Derivative financial instruments Derivative instruments are utilized by Mittal Steel to manage its exposure to commodity prices, fluctuations in foreign exchange rates, and interest rates. Mittal Steel has established a control environment, which includes policies and procedures for risk assessment and the approval and monitoring of derivative instrument activities. Mittal Steel does not enter into foreign currency hedging contracts related to its investment in affiliated companies. The Company and its subsidiaries selectively use various financial instruments, primarily forward exchange contracts, interest rate swaps and commodity future contracts, to manage exposure to price fluctuations. All derivatives, whether designated in hedging relationships or not, are recorded on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged item are recognized in earnings. If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded in equity and are recognized in the statements of income when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings. The fair value gains or losses as a result of the change in fair value of derivatives that do not qualify for hedge accounting are recognized in cost of sales or other operating expenses. Gains and losses related to financial instruments that are utilized to manage exposures to fluctuations in the cost of energy and raw materials used in the production process are recognized as a part of the cost of the underlying product when the contracts are closed. I-119

Dividend payable Dividends payable are recorded as a liability and reduction of retained earnings when declared. Retirement benefits Payments to defined contribution retirement benefit plans are charged as an expense when due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution plans where the Groups obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan. For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses that exceed 10 per cent of the greater of the present value of the Groups defined benefit obligation and the fair value of plan assets are amortized over the expected average remaining working lives of the participating employees. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost, and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to unrecognized actuarial losses and past service cost, plus the present value of available refunds and reductions in future contributions to the plan. Provisions and accruals The Company recognizes provisions for liabilities and probable losses that have been incurred as of the balance sheet date and for which the amount is uncertain but can be reasonably estimated. Provisions of a long-term nature are stated at net present value when the amount and timing of related cash payments are material. Shortterm provisions are stated at face value. Environmental costs Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation or cost reduction, are expensed. Liabilities are recorded when environmental assessments and or remedial efforts are probable, and the cost can be reasonably estimated based on ongoing engineering studies, discussions with the environmental authorities and assumptions as to the areas that may have to be remediated along with the nature and extent of the remediation that may be required. The ultimate cost to Mittal Steel is dependent upon factors beyond its control such as the scope and methodology of the remedial action requirements to be established by environmental and public health authorities, new laws or government regulations, rapidly changing technology and the outcome of any potential related litigation. Environmental liabilities are discounted if the aggregate amount of the obligation and the amount and timing of the cash payments are fixed or reliably determinable. Asset retirement obligations The Company records asset retirement obligations (ARO) initially at the fair value of the legal liability in the period in which it is incurred and capitalizes the ARO by increasing the carrying amount of the related long lived asset. The fair value of the obligation is determined as the discounted value of the expected future cash flows. The liability is accreted to its present value each period and the capitalized cost is depreciated in accordance with the Companys depreciation policies for property, plant and equipment. Revenue recognition Revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred to customers, the sales price is fixed and determinable, collectibility is reasonably assured, and title and risks of ownership have passed to the buyer. The Company deems delivery to have occurred upon shipment or upon delivery, depending upon shipping terms of the transaction. Shipping and handling costs Mittal Steel classifies all amounts billed to a customer in a sale transaction related to shipping and handling costs as sales and all other shipping and handling costs as cost of sales.

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Research and development costs and advertising costs Research and development costs and advertising costs are expensed as incurred and are not material in any period presented. Income taxes The provision for income taxes includes income taxes currently payable or receivable and those deferred. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are also recognized for the estimated future effects of tax loss carryforwards. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable income nor the accounting income. Deferred tax assets and liabilities are measured using substantially enacted statutory tax rates in effect for the year in which the differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the income statement in the period in which the changes are enacted. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Earnings per common share The Company follows the provisions of IAS 33, which requires companies to report both basic and diluted per share data for all periods for which a statement of income is presented. Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing income available to shareholders and assumed conversion by the weighted average number of common shares and potential common shares from convertible debt and outstanding stock options. Potential common shares are calculated using the treasury stock method and represent incremental shares issuable upon exercise of the Companys outstanding stock options. The following table provides a reconciliation of the denominators used in calculating basic and diluted net income per share for the years ended December 31, 2004 and 2005: Year Ended December 31, Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plus: Interest on PBGC note, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income available to shareholders and assumed conversion . . . . . . . . . . . . . . . . . . . . . . . Weighted average common shares outstanding (in millions) . . . . . . . . . . . . . . . . . . . . . Stock options (in millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6% PBGC note (in millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average common shares assuming conversions (in millions) . . . . . . . . . . . $ 5,210 5,210 643 643 $ 3,430 1 3,431 687 1 1 689

Diluted weighted average shares outstanding excludes 3,704,940 potential common shares from stock options outstanding for the years ended December 31, 2005 because the exercise prices of such stock options were higher than the average closing price of the Companys common shares as quoted on the NYSE during the periods stated and, accordingly, their effect would be anti-dilutive. Stock Option Plan/Share based payments The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Groups estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. Fair value is measured using the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on managements best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. All options granted under the plans existing in 2004 were granted before November 7, 2002 and therefore out of scope of IFRS 2. I-121

Segment reporting Mittal Steels primary business segment is the manufacturing of steel and the Company operates in a single business segment, which is composed of the manufacturing of semi-finished and finished steel products. NOTE 3: ACQUISITIONS Mittal Steel Ostrava On January 31, 2003, the Company acquired 7,710,973 existing shares and 924,384 newly issued shares of Mittal Steel Ostrava (formerly Ispat Nova Hut), representing 70% of the total issued share capital of Mittal Steel Ostrava, as well as certain of its debt for $52 under an agreement with Fond narodniho majetku Ceske republiky (FNM). Mittal Steel Ostrava, operating in the Czech Republic, is in the business of production and sale of steel products and also owns various ancillary businesses to support the steel business. The Company acquired a further 573,294 shares of Mittal Steel Ostrava, representing 5% of the total issued share capital of Mittal Steel Ostrava, under a public offer, on November 21, 2003 for $6. The minority interest and negative goodwill has been adjusted accordingly. On the conversion to IFRS negative goodwill, included in equity, was adjusted to retained earnings. Subsequent share purchases were accounted for as step acquisitions under the purchase method. The results of Mittal Steel Ostrava have been included in the consolidated financial statements since January 31, 2003. During 2004, the Company acquired an additional 1% of the outstanding shares of Mittal Steel Ostrava. The purchase price of these shares was $11. The excess of the acquisition cost over the fair value of the net assets purchased was $4. As of December 31, 2004, the Company had an option, subject to certain restrictions for the purchase of 8% of the outstanding share capital of Mittal Steel Ostrava. On May 3, 2005 the Company exercised the option for a purchase price of $152 and also acquired an additional 1%. The valuation of acquired assets and liabilities has been completed and such amounts are reflected in the consolidated financial statements. Mittal Steel Poland On March 5, 2004, the Company acquired a 69% interest in the total issued capital of Mittal Steel Poland (formerly Polskie Huty Stali Spoka Akcyjna (PHS)), a steel manufacturing company in the Republic of Poland, from the State Treasury of the Republic of Poland. In conjunction with the acquisition of the controlling interest in Mittal Steel Poland, the Company irrevocably committed to purchase an additional 25% interest by December 2007. Simultaneously, the Polish state authorities, who currently hold these shares, have irrevocably committed to sell this additional 25% interest in Mittal Steel Poland to the Company. Because the irrevocable commitments transfer operational and economic control of these remaining shares, it has been accounted for as an acquisition of the remaining shares, with a liability recorded equal to the fair value of the guaranteed payments. As of the acquisition date, the Companys total effective ownership percentage in Mittal Steel Poland was 94.0%. The total purchase price for Mittal Steel Poland, including acquisition costs, was $519, which was funded though a combination of cash, debt and liabilities recorded under the acquisition agreement. The results of Mittal Steel Poland have been included in the consolidated financial statements since March 2004. The Company has also committed to make capital expenditures of 497 million ($587) over a period ending by December 2009. The Company increased its ownership percentage to approximately 99% at December 31, 2004 through the purchase of additional shares held by current and former employees for cash consideration of $37. Mittal Steel Poland, one of the largest steel producers in Central and Eastern Europe, produces a wide range of steel products and owns various ancillary businesses to support the steel business. The Company has completed its valuation of the acquired assets and liabilities during 2004. Mittal Steel South Africa On June 9, 2004 after obtaining the necessary shareholder and the Republic of South Africa Competition Tribunal approvals, the Company purchased an additional 2,000 shares in Mittal Steel South Africa (formerly Iscor Limited) on the open market. This purchase increased the Companys 49.99% ownership in the outstanding share capital of Mittal Steel South Africa at December 31, 2003 to greater than 50%, and provided the Company with effective control over Mittal Steel South Africas operations. The Company had historically accounted for Mittal Steel South Africa under the equity method of accounting. A publicly traded company whose shares trade on the JSE Securities Exchange, South Africa, Mittal Steel South Africa is an integrated steel producer in the Republic of South Africa and is comprised of four steel plants and a metallurgical by-products processing division. The Company has included the results of operations of Mittal Steel South Africa in its Consolidated Statements of Income for the year-ended December 31, 2004 as from June 9, 2004. The Companys investment in Mittal Steel South Africa was accounted for under the equity method of accounting from 2001 through 2003, and each of the Companys investments in the outstanding shares of Mittal Steel South Africa were accounted for as a step acquisition under the purchase method of accounting. During I-122

2001, the Company made an initial 8% investment in the outstanding shares of Mittal Steel South Africa, increasing its ownership percentage in both 2002 and 2003 through additional share purchases on the open market and as part of a rights issue by Mittal Steel South Africa. The allocation of the total purchase price of Mittal Steel South Africa resulted in the consolidation of total assets of $2,296 and total liabilities of $866. Total assets are comprised of $835 in current assets, $1,834 in property, plant and equipment and other non-current assets, including goodwill, of $241. Total liabilities include $498 in current liabilities and $377 in non-current liabilities. On November 30, 2005, the Company increased its shareholding in Mittal Steel South Africa to 52% by acquiring an additional 2% interest for a total consideration of $78. Mittal Steel Zenica On December 10, 2004, the Company acquired a 51% interest in Mittal Steel Zenica (formerly BH Steel Zeljezara Zenica LLC), a steel manufacturing company located in Bosnia and Herzegovina, for $80 from the Government of the Federation of Bosnia-Herzegovina and subsequently in December 2005 the Company acquired a further 41% from the Kuwait Consulting & Investment Co. (KCIC) for $98. In conjunction with the acquisition of the controlling interest in Mittal Steel Zenica, the Company irrevocably committed to purchase the additional 8% interest in the total outstanding capital no later than December 2009. Because the irrevocable commitments transferred operational and economic control of these remaining shares in December 2004, it was accounted for as an acquisition of the remaining shares, with a liability recorded equal to the fair value of the guaranteed payments. As of the acquisition date, the Companys total effective ownership percentage in Mittal Steel Zenica was 100%. The results of Mittal Steel Zenica have been included in the consolidated financial statements since December 2004. In connection with the acquisition, the Company has committed to make capital expenditures of $135 over a 10 year period. The Company has completed its valuation of the assets acquired and liabilities assumed during 2005. International Steel Group (ISG) On April 15, 2005, Mittal Steel acquired 100% of the outstanding common shares of International Steel Group Inc. (ISG) (renamed Mittal Steel USA ISG Inc.). Mittal Steel USA ISG is one of the largest steelproducers in North America, shipping a variety of steel products from 13 major steel producing and finishing facilities in 8 states. As a result of the acquisition Mittal Steel is the leading steel provider in North America. The aggregate purchase price of approximately $3,829 including cash of $2,072 ($1,472 net of cash acquired and $52 of acquisition cost) and Class A common Shares valued at $1,705. The fair value of the 60,891,883 Class A common shares was determined based on the market-price of Mittal Steels Class A common shares at the date of the acquisition. As of December 31, 2005 the allocation of the purchase price to assets acquired and liabilities assumed are preliminary and subject to revision. The Company has not received all information to determine the final values to be assigned. Appraisals of property, plant and equipment and intangible assets are currently underway. An evaluation of information relating to certain recorded liabilities is also underway. Intangible assets identified as a result of purchase accounting relate to $4 assigned to patents and $499 assigned to favorable supply and sales contracts that are being amortized over the term of the associated contracts ranging from one to six years or 2 years on a weighted average basis. Intangible liabilities consist of $1,060 assigned to unfavorable supply and sales contracts that are being amortized over the term of the associated contracts ranging from one to 15 years or 3.2 years on a weighted average basis. The results of Mittal Steel USA ISGs operations have been included in the consolidated financial statements since April 15, 2005. Romportmet During 2005, Mittal Steel increased its share in the outstanding share capital in the Romportmet, port facility in Romania, to 94% for a consideration of $47 in cash. In accordance with the current legal framework, Mittal Steel will acquire the remaining minority shares through a mandatory public offer. Kryvorizstal On November 25, 2005, the Company acquired 93% of the outstanding common stock of OJSC Krivorizky Ore Mining Company and Steel Works Kryvorizstal (renamed Mittal Steel Kryviy Rih) from the governmentally run State Property Fund of Ukraine. Mittal Steel Kryviy Rih is the largest producer of carbon steel long products in the Ukraine and the nearby region. As a result of the acquisition, the Company is the leading provider of steel products in the region. The Company also expects to achieve synergies and increase productivity through integration with its operations. Mittal Steel Kryviy Rih was acquired for $4,908 in cash ($4,632 net of cash acquired). In connection with the acquisition, the Company has committed to make capital expenditures of $500 until 2010. I-123

Based on our preliminary purchase price allocation for Kryviy Rih, we have identified approximately $1,445 of excess purchase price over the fair value of the assets acquired. The allocation is subject to further refinement as additional information becomes available. As of December 31, 2005 the allocation of the purchase price to assets acquired and liabilities assumed are preliminary and subject to revision. The results of Mittal Steel Kryviy Rih have been included in the consolidated financial statements since November 26, 2005. With respect to the above acquisitions for 2004 and 2005, the table presented below, summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition. 2004 Acquisitions Mittal Steel Mittal Steel Mittal Steel South Africa Poland Zenica* Current assets
..................

2005 Acquisitions Mittal Steel Mittal Steel USA ISG Kryviy Rih $ 3,024 4,066 598 7,688 1,613 844 1,560 165 4,182 3,506 3,506 1,705 1,524 3,229 (277) $ $ 332 4,177 4,509 125 151 807 1,083 3,426 239 3,187 4,632 4,632 1,445

835 1,834 241 2,910 498 149 228 875 2,035 1,017 1,018 1,018 1,018

864 1,966 52 2,882 669 48 337 298 34 1,386 1,496 91 1,405 519 519

127 169 1 297 31 38 12 81 216 216 178 178

Property, plant & equipment . . . . Other assets . . . . . . . . . . . . . . . . . . . . Total Assets Acquired

..........

Current liabilities . . . . . . . . . . . . . . . Long-term loan . . . . . . . . . . . . . . . . . Other long-term liabilities

......

Deferred tax liabilities . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . Total Liabilities Assumed Total Net Assets
...... ...............

Minority interest . . . . . . . . . . . . . . . Net assets acquired . . . . . . . . . . . . . Shares issued . . . . . . . . . . . . . . . . . . . Cash paid, net . . . . . . . . . . . . . . . . . . Equity investment . . . . . . . . . . . . . . Purchase price
................. ............

(Negative) goodwill *

(886) $

(38) $

During 2005, the Company adjusted the purchase price allocation for Mittal Steel Zenica, with respect to the fair value of the plant, property and equipment acquired.

Negative goodwill is included in other income in the income statement. Unaudited Pro Forma Results The following unaudited pro forma financial information presents the combined results of operations of Mittal Steel for 2005, with Mittal Steel USA ISG and Mittal Steel Kryviy Rih as if the acquisitions had occurred as of the beginning of the periods presented. The 2004 pro forma information also includes the results of operations of Mittal Steel Poland, Mittal Steel South Africa and Mittal Steel Zenica on the same basis. The unaudited pro forma financial information is not indicative of what our consolidated results of operations actually would have been had we completed the acquisition at the dates indicated. In addition, the unaudited pro forma financial information does not purport to project the future results of operations of the combined company. For the year ended December 31, 2004 2005 Pro Forma Pro Forma Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Per share amounts Basic earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-124 $ 34,195 7,117 11.07 11.07 $ 33,028 3,715 5.41 5.41

NOTE 4: TRADE AND OTHER RECEIVABLES December 31, 2004 2005 Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $ 2,273 $ (267) 2,006 $ 2,528 (241) 2,287

The provision charged to the income statement is $13 and $23 for 2004 and 2005, respectively. NOTE 5: INVENTORIES Inventory, net of allowance for slow moving or obsolete inventory of $244 and $269 at December 31, 2004, and December 31, 2005, respectively, is comprised of the following: December 31, 2004 2005 Finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Production in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manufacturing supplies, spare parts and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,091 997 1,422 454 3,964 $ 1,956 1,138 2,321 579 5,994

$ NOTE 6: PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are summarized as follows: Land, buildings and improvements Cost At January 1, 2004 . . . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of subsidiary . . . . . . . . . . . . . . . . . . Exchange differences . . . . . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At January 1, 2005 . . . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of subsidiary . . . . . . . . . . . . . . . . . . Exchange differences . . . . . . . . . . . . . . . . . . . . . Disposals and others . . . . . . . . . . . . . . . . . . . . . . At December 31, 2005
....................

Machinery and equipment $ 7,757 636 2,377 625 (82) 11,313 869 7,644 (223) (292) 19,311

Construction in progress $ 310 $ 159 217 28 (88) 626 128 183 (32) 905

Total 9,803 837 3,969 1,108 (170) 15,547 1,181 8,243 (444) (292) 24,235

1,736 42 1,375 455 3,608 184 416 (189) 4,019

Accumulated depreciation and impairment At January 1, 2004 . . . . . . . . . . . . . . . . . . . . . . . . Depreciation charge for the year . . . . . . . . . . . Exchange differences . . . . . . . . . . . . . . . . . . . . . At January 1, 2005 . . . . . . . . . . . . . . . . . . . . . . . . Depreciation charge for the year . . . . . . . . . . . Eliminated on disposal . . . . . . . . . . . . . . . . . . . . At December 31, 2005 Carrying amount At December 31, 2005 At December 31, 2004
....................

542 119 50 711 321 1,032 $ $ 2,987 2,897 $ $

3,080 612 78 3,770 780 4,550 14,761 7,543 $ $

5 3 8 (6) 2 903 618 $ $

3,627 734 128 4,489 1,101 (6) 5,584 18,651 11,058

.................... ....................

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During the period, the Group carried out a review of the recoverable amount of its manufacturing plant and equipment. The recoverable amount of the relevant assets has been determined on the basis of their value in use. The Group has pledged land and buildings to secure banking facilities granted to the Group, which are further disclosed in note 11 and 12. NOTE 7: GOODWILL Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating unit(s) that is or are expected to benefit from that business combination. Usually that is the plant (or plants) acquired. Before recognition of impairment losses the carrying amount of goodwill has been allocated as follows: Year ended December 31, 2004 2005 Europe: Mittal Steel Skopje . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RZR Ljubija a.d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mittal Steel Kryviy Rih . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Romportmet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asia & Africa: MS South Africa
.................................................................

40 7 2

40 7 1,445 19 2

49

1,513

In 2005 the Company acquired Mittal Steel Kryviy Rih. Based on the preliminary purchase accounting the Company has recognized $1,445 as goodwill. The following accounting policy will be adopted when the purchase accounting is completed. Mittal tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of the cash generating units are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the cash generating units. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. Mittal prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next five years and extrapolates cash flows for the following five years based on an estimated growth rate. This rate does not exceed the average long-term growth rate for the relevant markets.

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NOTE 8: INVESTMENTS IN AFFILIATES AND JOINT VENTURES The Companys investments in affiliates and joint ventures, which include joint ventures accounted for using the equity method, are as follows:
Ownership % At December 31, 2005 Type of ownership December 31, 2004 2005

Investee Equity method investments: Located in U.S. PCI Associates . . . . . . . . . . . . . . . . . . . . . . . . I/N Tek(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . I/N Kote(2) . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating activity

Pulverized coal Cold rolling Galvanizing

50% 60% 50%

Partnership Partnership Partnership

22 65 149

23 82 159

Located in Mexico Consorcio Minero Benito Jurez Pea Colorada S.A. de C.V. (Pea Colorada) . . . . . . . . . . . . . . . . . . . . . . . . . Mining and palletizing plant Servicios Siderrgicos Integrados, S.A. de C.V. (Sersiin) . . . . . . . . . . . . . . . . . . . . . Port operations, lime, industrial gases and engineering Located in Canada Sorevco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delta Tube . . . . . . . . . . . . . . . . . . . . . . . . . . . Located in Germany Westflische Drahtindustrie GmbH (WDI) . . . . . . . . . . . . . . . . . . . . . . . . . . . Located in South Africa Macsteel International Holdings B.V.(3) . . . . . Located in Poland Zaklad Przetworstwa Hutniczego . . . . . . . . . Located in China Hunan Valin(4) . . . . . . . . . . . . . . . . . . . . . . . . Other equity method investment . . . . . . . . . . Galvanizing plant Tubes

50% 50%

Common stock Common stock

13 8

22 7

50% 40%

Limited partnership Limited partnership

7 1

7 1

Wire drawing Trading activities Steel products Steel products

33.3% 50% 33% 31.43%

Common stock Partnership Common stock Common stock $

15 93 32 78 483 $

20 130 40 344 92 927

(1) I/N Tek, a general partnership formed for a joint venture between the Company and Nippon Steel Corporation (NSC), owns and operates a cold-rolling facility. I/N Tek is 60% owned by a wholly owned subsidiary of the Company and 40% owned by an indirect wholly owned subsidiary of NSC. The Company does not exercise control over I/N Tek as all significant management decisions of the joint venture require agreement by both the partners. Due to this lack of control by the Company, the Company accounts for its investment in I/N Tek under the equity method. The Company has rights to the productive capacity of the I/N Tek facility, except in certain limited circumstances and, under a tolling arrangement, has an obligation to use the facility for the production of cold rolled steel. Under the tolling arrangement, the Company was charged $149 and $144 for the years ended December 31, 2004 and 2005, respectively, and the payable with I/N Tek was $1 at December 31, 2005. (2) Mittal Steel USA and NSC own and operate another joint venture which consists of a 500,000 ton electro galvanizing line and a 500,000 ton hot-dip galvanizing line adjacent to the I/N Tek facility. I/N Kote, the general partnership formed for this joint venture, is owned 50% by a wholly owned subsidiary of Mittal Steel USA and 50% by an indirect wholly owned subsidiary of NSC. Mittal Steel USA and NSC each have guaranteed the share of long-term financing attributable to their respective subsidiarys interest in the partnership. The I/N Kote joint venture is required to buy all of its cold rolled steel from the Company. Sales to I/N Kote were $323 and $361 for the years ended December 31, 2004 and 2005, respectively. The Companys receivable with I/N Kote was $4 at December 31, 2005. (3) Macsteel International Holdings B.V. (Macsteel) is an equity method investment owned by Mittal Steel South Africa. Mittal Steel South Africas steel products are marketed internationally through Macsteel, a joint venture in which Mittal Steel South Africa holds a non-controlling 50% interest. The Company recognized $42 in equity income from Macsteel in 2005 ($51 in 2004). (4) On September 28, 2005, following the required approvals by various institutions of the Chinese Government and minor adjustments to the share purchase agreement signed on January 14, 2005, Mittal Steel completed the acquisition of 36.67% of the outstanding shares of Hunan Valin Steel Tube and Wire Co., Ltd (Hunan Valin), for a total consideration of $338 (excluding expenses of $6). As a consequence of publicly held outstanding convertible bonds being converted into shares, the shareholdings of Mittal Steel in Hunan Valin was diluted to 31.43% as of December 31, 2005. During January 2006, the conversion of all remaining convertible bonds occurred and, as a result, the shareholdings of Mittal decreased to 29.49%. The acquisition has been accounted for as an equity investment. As of December 31, 2005 the investment had a market value of $391. Also see subsequent events in note 24.

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Summary condensed information, in the aggregate, of the Companys investments accounted for using the equity method is disclosed as follows: Year ended December 31, 2004 2005 Condensed Statement of Income Data* Gross revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,128 88 $ 3,446 137

At December 31, 2004 2005 Condensed Balance Sheet Data Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * Includes Hunan Valin as from September 28, 2005 $ 559 1,565 606 1,071 494 $ 960 2,487 1,030 1,570 917

NOTE 9: AVAILABLE FOR SALE SECURITY At December 31, 2004 2005 Available for sale security(1): Equity security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value
(1)

$ $

55 135 190

$ $

55 222 277

....................................................................

At December 31, 2004 and 2005, the Company owned approximately 8.6% of the outstanding shares of Eregli Denirve Fabrikal (Eregli), with a market value of $190 and $277 as of December 31, 2004 and 2005, respectively. Eregli is the largest iron and steel producer in the Republic of Turkey. Eregli is publicly traded on the Istanbul Stock Exchange.

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NOTE 10: BALANCES AND TRANSACTIONS WITH RELATED PARTIES Transactions with related parties were as follows: Year ended December 31, 2004 2005 Sales Transactions Macsteel International Holdings BV . . . . . . . WDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sorevco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I/N Kote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P.T. Ispat Indo/Glacier Trade Centre . . . . . . . Alpos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M.G. Odra Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . Topham Eisen-und Stahlhandelsges . . . . . . . . Polish Steel Products . . . . . . . . . . . . . . . . . . . . . . TEGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Polski Koks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zaklad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alkat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Krakodlew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stalprofil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Valcovnia Plecku . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Wire Industries (Pty) Ltd. . . . . Florin Centrum . . . . . . . . . . . . . . . . . . . . . . . . . . . . Florin Podkarpacie SA . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
......................................

At December 31, 2004 2005 Receivables $ 62 34 33 3 7 1 1 50 10 13 11 225 $ 51 20 4 3 3 4 2 1 45 13 2 6 3 4 2 5 168

1,047 195 323 1 18 7 45 9 6 325 86 21 14 90 8 26 14 2,235

1,369 153 63 361 6 12 8 30 15 8 77 70 22 11 68 24 23 9 10 2,339

Year ended December 31, 2004 2005 Purchases of raw material & others Pea Colorada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sersiin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E.I.M.P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PCI Associates (Tolling fee) . . . . . . . . . . . . . . . Orind Refractories . . . . . . . . . . . . . . . . . . . . . . . . . Cal. del. Balsas . . . . . . . . . . . . . . . . . . . . . . . . . . . . I/N Tek (Tolling charges) . . . . . . . . . . . . . . . . . . Lindsay International Pvt Ltd . . . . . . . . . . . . . . M.G. Odra Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corp. del. Balsas . . . . . . . . . . . . . . . . . . . . . . . . . . Thyssen Trade Praha . . . . . . . . . . . . . . . . . . . . . . Polski Koks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zaklad Przetworstwa Hutniczego . . . . . . . . . . Alkat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Krakodlew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stalprofil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Przedsibiorsti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prezerobu Ziomu Ziomex . . . . . . . . . . . . . . . . . . HK Zaklad Transportu Samochodowego . . . Bulk Lehar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
......................................

At December 31, 2004 2005 Payables 53 11 188 54 66 17 144 57 12 5 217 30 12 3 19 6 20 914 $ 16 22 15 14 2 (16) 4 2 3 58 3 2 2 10 137 $ 27 18 (5) 5 2 1 6 2 2 50 2 3 6 6 125

34 9 153 57 46 16 149 40 9 5 6 372 40 26 18 12 6 23 1,021 I-129

NOTE 11: PAYABLE TO BANKS AND CURRENT PORTION OF LONG-TERM DEBT Payable to banks and current portion of long-term debt consist of the following: At December 31, 2004 2005 Letter of credit, revolving and other credit facilities including bank overdrafts . . . . . . . . . . . Current portion of long-term debt and lease obligations (see note 12) . . . . . . . . . . . . . . . . . . . . $ $ 237 104 341 $ $ 144 190 334

Multi-currency Letter of credit facility On December 30, 2005 the Company entered into a multi-currency revolving letter of credit facility in an aggregate amount equal to $800 with a consortium of lenders. This facility is to be used by the Company and its subsidiaries for the issuance of letters of credit and financial guarantees. The terms of the letter of credit and financial guarantees carry certain restrictions as to duration. There were no utilizations under this facility as of and for the year ended December 31, 2005. Revolving credit facility The Canadian Operating Subsidiary has a revolving term credit facility of C$147 million ($125) bearing interest at the U.S. prime base or the Canadian prime rate maturing in July 2009 and collateralized by the Canadian Operating Subsidiarys accounts receivable and inventories to an amount of $268. As of December 31, 2005, C$ nil ($ nil) was outstanding under this facility. Under the conditions of the revolving term credit facility, the Canadian Operating Subsidiary must satisfy certain restrictive covenants as to minimum financial ratios, acquisition of fixed assets and payments of dividends or other distributions of equity. Other credit facilities Other credit facilities provide for borrowing at various interest rates and support letters of credit in addition to providing borrowings to fund local working capital requirements at certain Operating Subsidiaries. Weightedaverage interest rates on the bank lines, working capital facilities and temporary overdrafts ranged from 2.0% to 8.7% in 2004 and 2.0% to 7.65% in 2005. Certain of the credit facilities contain restrictive covenants that (i) require the Companys subsidiaries to comply with certain financial maintenance tests including the ratio of current assets to current liabilities and the ratio of total liabilities to total capital; (ii) require the maintenance of specified levels of net worth; (iii) prohibit subsidiaries from entering into agreements that restrict their ability to pay dividends and (iv) limit the payment of dividends (see note 14). Certain of the lines of credit are collateralized by current assets and property, plant and equipment with a net carrying value of $258 and $292 at December 31, 2004 and 2005, respectively.

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NOTE 12: LONG-TERM DEBT Long-term debt denominated in U.S. dollars unless otherwise noted, is comprised of the following as of December 31: Year of maturity Type of Interest 2004 2005 US Dollar Equivalent (millions) $ 83 268 351 2010 2014 2014 2007 2015 2007 - 2014 Floating Fixed Fixed Fixed Fixed Fixed 150 420 312 882 2006 2006 - 2011 2007 - 2013 Fixed Floating Fixed 95 101 97 293 2011 2013 2012 Fixed Fixed Floating 150 17 50 217 1,743 104 1,639 $ 1,639 $ $ 2,750 3,500 51 67 16 6,384 150 420 500 35 152 119 1,376 82 35 42 159 150 17 36 203 8,122 180 7,942 32 7,974

Corporate $3.2 billion Credit Facilit y . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3.5 billion Bridge Finance Facility . . . . . . . . . . . . . . . . . . . . IFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBRD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Loans (denominated in euro) . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . America Senior secured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior secured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior unsecured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PBGC convertible notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asset acquisition loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Americas
........................................

2010 2007 - 2008 2030 - 2035 2009 2009

Floating Floating Floating Floating Fixed

Europe Secured notes (denominated in euro) . . . . . . . . . . . . . . . . . . . Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Europe
..........................................

Asia & Africa Government Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Asia & Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less current portion of long-term debt . . . . . . . . . . . . . . . . . Total long-term debt (excluding lease obligations) . . . . . Lease obligations (net of $10 of current portion) . . . . . . . Total long-term debt, net of current portion Corporate
.........

$3.2 Billion Credit Facility On April 7, 2005, Mittal Steel and certain subsidiaries signed a $3,200 credit facility (2005 Credit Facility) with a consortium of banks. The five-year facility is divided into a term loan tranche and a revolver tranche. The $1,700 term loan tranche was used to finance the cash portion of the consideration payable in connection with the acquisition of International Steel Group Inc. The $1,500 revolver tranche was made available to refinance certain existing indebtedness of Mittal Steel and its subsidiaries and for general corporate purposes. At December 31, 2005, $2,750 was outstanding under the facility. Both tranches pay interest at a rate of LIBOR plus a margin based on a rating grid. The average interest rate for 2005 was 4.16%. $3.5 Billion Bridge Finance Facility On October 19, 2005, the Company signed a $3,000 loan agreement with Citigroup (2005 Bridge Facility). The facility was subsequently increased by $500 to $3,500 and has terms similar to the $3,200 credit facility. The Company used the proceeds of this facility to partially fund the acquisition of a 93.02% stake in the capital of Mittal Steel Kryviy Rih. The 2005 Bridge Facility pays interest at a rate of LIBOR plus a margin based on a I-131

rating grid. The average interest rate for 2005 was 4.47%. As defined in the 2005 Bridge Facility, the Company has an obligation to repay this facility upon entering into new significant borrowing arrangements (See also note 24). IFA On November 22, 2005, the Company entered into an agreement with the Indiana Finance Authority to issue Environmental Improvement Revenue Refunding Bonds, Series 2005 in an amount of approximately $51. The Company used the proceeds to redeem two outstanding bonds at Mittal Steel USA Inc (series 1993 and 1995) in 2005 and to redeem series 1977 in February 2006. Interest is paid on a floating rate basis. The average interest rate for 2005 was 3.13%. EBRD loan The secured loan is for capital expenditure and working capital requirement at Mittal Steel Galati. The loan is guaranteed by the Company and certain of its subsidiaries and is secured by a pledge of certain assets of Mittal Steel Galati. The average interest rate for 2005 was 6.22%. Americas Senior Secured Notes On March 25, 2004, Ispat Inland ULC issued $800 principal amount of senior secured notes: $150 of floating rate notes bearing interest at LIBOR plus 6.75% due April 1, 2010 and $650 of fixed rate notes bearing interest at 9.75% (issued at 99.212% to yield 9.875%) due April 1, 2014 (the Senior Secured Notes), of which $150 and $420 (net of $3 of discount) are outstanding as of December 31, 2005. The Senior Secured Notes are secured by First Mortgage Bonds (relating to certain assets of the former Ispat Inland Inc.) totalling $800 and by a second position lien on the inventory of Mittal Steel USA. As further credit enhancement, the Senior Secured Notes are fully and unconditionally guaranteed by Mittal Steel USA, certain of its subsidiaries as well as by Mittal Steel and certain other affiliates. The terms of the Senior Secured Notes place certain limitations on the ability of Mittal Steel USA and its subsidiaries to incur additional indebtedness, pay dividends or make other distributions and various other activities. The indenture also contains limited covenants that are applicable to Mittal Steel. These limitations are subject to a number of exceptions and qualifications. Mittal Steel USA was in compliance with all covenants on December 31, 2005. The restrictions in the indenture for the Senior Secured Notes on paying dividends or making other distributions to shareholders and the repurchase or redemption of stock limited such payments to $503. The Senior Secured Notes became investment grade rated as of January 19, 2006. As a result, many of the above limitations were suspended. Senior unsecured notes On April 14, 2004, Mittal Steel USA ISG Inc. issued $600 of senior, unsecured debt securities due 2014. The debt securities bear interest at a rate of 6.5% and were sold at an original issue discount of $5, which is amortized as interest expense over the life of the senior unsecured notes. These debt securities have a principal at maturity of $600 and an effective annual interest rate of 6.625%. Certain of the wholly owned subsidiaries of Mittal Steel USA guarantee these notes on a full, unconditional and joint and several basis. On July 22, 2005, Mittal Steel USA ISG Inc. repurchased $100 of bonds leaving an outstanding balance of $500. PBGC note The Pension Benefit Guaranty Corporation (PBGC) convertible note bears interest at 6.0% and the principal is due in full on May 6, 2007. The note is subordinated to all of Mittal Steel USAs senior indebtedness. The PBGC note is convertible, at the PBGCs option, into 35,597.45 shares of the Companys common stock for each $1 in principal and interest outstanding at any time. Asset acquisition loans In May 2005, Mittal Steel USA ISG Inc. took ownership of a coke oven battery at Burns Harbor that was previously leased under a capital lease. The related loan amounts to $147 as of December 31, 2005. Payments to the lender are minimum monthly payments totalling $6 per year with additional payments based on coke production through 2015. The coke oven battery is collateral for the loan. In connection with ISGs acquisition of Weirton, ISG issued a $5 promissory note due 2019. The note bears interest at 5.0% per annum and annual principal and interest payments began in May 2005. I-132

Other loans The other loans relate to fixed rate bonds bearing interest at 5.75%-7.25%. Redemptions 2005 Other loans On October 5, 2005, Ispat Inland redeemed the $28 principal amount of its outstanding First Mortgage 7.9% Bonds, Series R, due January 15, 2007 at par. On December 28, 2005, Ispat Inland redeemed the $23 principal amount of its outstanding City of East Chicago, Indiana Pollution Control Refunding Revenue Bonds (Inland Steel Company Project No. 10) Series 1993 at par and the $12 principal amount of its outstanding Indiana Development Finance Authority Pollution Control Refunding Revenue Bonds (Inland Steel Company Project No. 12) Series 1995 at 102%. On February 1, 2006, Mittal Steel USA redeemed the $17 principal amount of its outstanding City of East Chicago, Indiana Pollution Control Revenue Bonds (Inland Steel Company Project No. 5) Series 1977 at par. Redemptions 2004 Senior Secured Notes On December 30, 2004, Ispat Inland (through an affiliate) redeemed $228 principal amount of its 9.75% Senior Secured Notes due 2014, at a redemption price equal to 109.75% for which Ispat Inland recognized a $22 loss in other expenses. Contingent Liability In 1998, Ispat Inland entered into an agreement with the PBGC to provide certain financial assurances with respect to its Pension Plan. Under the terms of this agreement, the PBGC was granted a first priority lien on certain assets and Ispat Inland was required to make certain contributions to its Pension Plan. In 2003, the agreement was amended and under the amended terms, Ispat Inland contributed $175 in 2005 and $83 in 2004 and pledged $160 of non-interest bearing First Mortgage Bonds. The agreement terminates upon the earlier of either being fully funded under Employee Retirement Income Security Act (ERISA) or Mittal Steel USA meeting certain financial measures. The Company believes the financial measures tests have been met as of December 31, 2005 and, as such, the agreement has terminated, eliminating its contribution requirements in 2006 and beyond and also eliminating the collateral requirements. The PBGC has yet to review the 2005 financial statements and acknowledge the termination of the agreement in connection with the satisfaction of the financial measures. Europe Senior Secured Notes Denominated in Euro On February 1, 2001, Mittal Steel Europe Group SA, issued 150 million Senior Secured Notes (Bonds), with a mature of February 1, 2011. These Bonds are secured by mortgage over the property plant and equipment of the German Operating Subsidiaries and an indirect pledge on the shares of the French Operating Subsidiary. The interest rate is fixed at 11.875% per annum and payable semi-annually. Redemption In 2004, Mittal Steel Europe Group SA purchased 39 million ($48) Bonds at an average purchase price of 111.6%. As of December 31, 2004 and 2005, the par value of the outstanding Bonds was 70 million. These Bonds were called on December 19, 2005 and repaid on February 1, 2006 at 105.938% of par value. Penalties of $8 arising from the early retirement of these Bonds were accrued in 2005. Other loans The European floating rate loans bear interest at Libor/Warsaw Interbank Offering rate (Wibor) + 0% - 6%. The fixed rated loans bear interest at 5.5% - 7.5%. Loans for the Operating Subsidiaries in Macedonia, Bosnia and Herzegovina, Romania and Poland are secured by property, plant and equipment. Asia & Africa Mittal Steel Annaba has a $150 ten-year term loan agreement with the Government of Algeria. The loan matures in October 2011 and bears interest at 5% per annum (payable annually) from October 2004, which is after a moratorium period of three years. The Company has guaranteed the payment of the principal and interest payable under this loan. I-133

The floating rate loans bear interest at Libor + 3.5%. Loans at the Operating Subsidiaries in Kazakhstan and Algeria, with amounts outstanding as of December 31, 2005 of $36 are secured by property, plant and equipment to an amount of $20. Other Certain debt agreements of the Company or its subsidiaries provide for various covenants requiring certain consent from lenders in specified circumstances, to declare or pay any dividends, make certain restricted payments, incur additional indebtedness, make certain investments, create liens, guarantee indebtedness, sell or acquire assets with certain exceptions, enter into any merger or consolidation or reorganization, as well as require compliance with other financial maintenance tests, which includes financial ratios and minimum levels of net worth. The Company is in compliance with the financial covenants contained within the amended agreements related to all of its non-current borrowings. Maturities of long-term debt including lease obligations at December 31, 2005 are as follows: Year ended December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subsequent years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
.............................................................................................

190 1,876 1,808 52 2,931 1,307 8,164

NOTE 13: FINANCIAL INSTRUMENTS AND CREDIT RISK Fair Value of Financial Instruments The estimated fair values of certain financial instruments have been determined using available market information or other valuation methodologies that require considerable judgment in interpreting market data and developing estimates. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair values. The carrying amounts of the Companys cash and cash equivalents, accounts receivable and accounts payable approximate their fair values due to the short-term nature of these instruments. The Companys short and long-term debt consists of debt instruments which bear interest at fixed rates and variable rates tied to market indicators. The fair value of the Companys variable rate debt approximates its carrying amount given the floating rate nature of the debt at prevailing market rates. The fair value of fixed rate debt is based on estimated future cash flows discounted using the current market rates for debt of the same remaining maturities and credit risk. The estimated fair values of the Companys short and long-term debt are as follows: December 31, 2004 Carrying Estimated Value Fair Value Instruments payable bearing interest at variable rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Instruments payable bearing interest at fixed rates . . . . Long-term debt, including current portion . . . . . . . . . . . . Payable to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 751 992 1,743 237 $ 764 1,041 1,805 237 December 31, 2005 Carrying Estimated Value Fair Value $ 6,589 1,575 8,164 144 $ 6,594 1,649 8,243 144

Derivative financial instruments The Company uses foreign currency exchange contracts to manage the risk of foreign currency fluctuations on projected cash flows relating to purchase and sales contracts. In the Americas, subsidiaries use futures and swap contracts to manage fluctuations in the cost of natural gas and certain nonferrous metals, primarily zinc, which is used in the coating of steel. Timing of these transactions corresponds to the expected need for the underlying physical commodity and is intended as a hedge. I-134

The Company had one long running interest rate swap which ended in January 2006. The effective portion of the fair value gains or losses on these cash flow hedges are recorded in equity and recorded in the income statement as per the realization of the cash flows if they meet the criteria of IAS 39. Any ineffective portions of the gains or losses on all cash flow foreign exchange contracts, swaps or options designated as hedges were recognized currently in earnings. The amounts of gains or losses reclassified from equity into earnings, as a result of the discontinuance of cash flow hedges, were not material. The fair value gains or losses from foreign currency derivatives and commodity swaps and options that do not qualify for hedge accounting are recognized in cost of sales or other operating expenses. The amounts of derivative financial assets and liabilities recognized in the balance sheet as of December 31, 2004 and 2005 are not material. These are all short-term. Credit Risk Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted and from movements in interest rates and foreign exchange rates. The Company does not anticipate non-performance by counterparties. The Company generally does not require collateral or other security to support financial instruments with credit risk. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. Financial instruments that potentially subject the Company to credit risk primarily consist of trade accounts receivable and derivative contracts. The Company considers its credit risk associated with trade accounts receivable to be limited due to a large number of customers comprising the Companys customer base and their geographic dispersion. The Company sells a significant amount of products pursuant to orders throughout its main markets. The Company grants credit based on evaluations of its customers financial situation, in certain cases, without requiring guarantees or letters of credit, and monitors the exposure of potential losses from granting credit. To reduce risk the Company routinely assesses the financial strength of its customers and as a consequence, believes that its accounts receivable credit risk exposure is limited. In addition, the Company has entered into insurance policies in a number of subsidiaries. The counterparties to derivative contracts are generally major financial institutions and credit risk is generally limited to the unrealized gains and losses on such contracts should the counterparties fail to perform as contracted. Additionally, the Company utilizes a portfolio of highly rated financial institutions either headquartered or operating in the same countries in which the Company conducts its business. The credit exposure to each counterparty is capped in function of its credit rating and our business volume. As a result, the Company considers the risk of counterparty default to be minimal. NOTE 14: SHAREHOLDERS EQUITY As of December 31, 2005, the authorized common shares of Mittal Steel consisted of 5,000,000,000 class A common shares, par value of EUR0.01 per share, and 721,500,000 class B common shares, par value of EUR0.10 per share. At December 31, 2005, 255,401,673 (2004: 194,509,790) class A common shares and 457,490,210 (2004: 457,490,210) class B common shares were issued and 246,572,889 (2004: 185,284,650) class A common shares (excluding treasury shares) and 457,490,210 (2004: 457,490,210) class B common shares were outstanding. The preference and relative rights of the Mittal Steel class A common shares and Mittal Steel class B common shares are substantially identical except for disparity in voting power and conversion rights. Holders of Mittal Steel class A common shares are entitled to one vote per share and holders of Mittal Steel class B common shares are entitled to 10 votes per share on all matters submitted to a vote of shareholders. Each Mittal Steel class B common share is convertible, at the option of the holder, into one Mittal Steel class A common share. On April 15, 2005 Mittal Steel issued 60,891,883 class A common shares to the former ISG stockholders in exchange for their shares of ISG common stock. I-135

At December 31, 2005, the Company had 8,828,784 of its own Class A shares which it purchased on the open market for a net consideration of $111 (at December 31, 20049,225,140 at a consideration of $123). In 2005 the Company received $3 upon the exercise of options. In 2004 Company bought back 5,300,000 of its shares from the open market during the year at a consideration of $54 under a share buy-back program announced by the Company. These shares have been acquired for the purpose of the Companys employee stock option plan. All calculations to determine the amounts available for dividends are based on Mittal Steels Dutch statutory accounts, which, as a holding company, are different from its consolidated accounts. Mittal Steel has no manufacturing operations of its own. Accordingly, it can only pay dividends or distributions to the extent it is entitled to receive cash dividend distributions from its subsidiaries, recognizes gains from the sale of its assets or records share premium from the issuance of (new) common shares. Certain of the Companys Operating Subsidiaries are subject to restrictions under the terms of their debt agreements for paying dividends. As a result, subsidiaries of Mittal Steel had $6,386 in retained earnings which are free of restriction for the payment of dividend at December 31, 2005. Dividends are payable by Mittal Steel in either U.S. Dollars or in Euros. Dividends 2005 The dividend for the year amounts to $213 and was paid during the year. 2004 The dividend for the year declared by LNM Holdings N.V. to its sole shareholder before it was acquired by the Company was $2,385. Share Retention Agreements Mittal Steel Temirtau has entered into share retention agreements with the European Bank for Reconstruction and Development (EBRD) and International Finance Corporation (IFC), whereby until the date on which the EBRD and IFC loans have been repaid in full, Mittal Steel Temirtaus holding company or its nominee shall not, unless EBRD and IFC otherwise agree in writing, transfer, assign, pledge, dispose or encumber 67% of the share holding in Mittal Steel Temirtau. The Company has pledged 20% of the outstanding shares of Mittal Steel Galati towards its commitment to pay the remaining purchase price owed to APAPS relating to the Companys acquisition of Mittal Steel Galati. Further, the Company has also pledged 50% of the outstanding shares of Mittal Steel Galati towards the Companys ten-year capital expenditure commitment at Mittal Steel Galati which commenced November 2001. The Company has pledged 44.8% of the outstanding shares of Mittal Steel Iasi towards its commitment to pay the remaining purchase price owed to APAPS relating to the Companys acquisition of Mittal Steel Iasi. The Company has entered into a share pledge agreement with APAPS for 51.1% of its share holding in Mittal Steel Romans share capital towards its commitment to pay the purchase price for Mittal Steel Roman. The Company has also entered into a share pledge agreement with APAPS for 49.9% of its share holding in Mittal Steel Romans share capital towards its capital expenditure commitment for five years commencing December 2003. The Company has entered into a share pledge agreement with APAPS for 1.4% of its share holding in Mittal Steel Hunedoaras share capital towards its commitment to pay the purchase price for Mittal Steel Hunedoara. The Company has also entered into a share pledge agreement with APAPS for 51.7% of its share holding in Mittal Steel Hunedoaras share capital towards its capital expenditure commitment for five years commencing April 2004. The Company has entered into a share retention agreement with IFC to retain at least 51% of the registered share holding in Mittal Steel Annaba towards the commitment for repayment of loans to IFC by Mittal Steel Annaba. The Company is obliged to establish a registered pledge in favor of the State Treasury of Poland over such number of the Companys shares of Mittal Steel Poland which is equal to the difference between: (i) the number of shares in the Company held by Mittal Steel Holdings and (ii) 50% of the Companys shares plus one share. As I-136

a result, the number of the shares to be pledged equals to 32,440,972 shares, which constitutes about 12.17% of the entire Companys share capital and about 19.58% of all shares/capital held by the Company. Stock Option Plan In 1999, the Company established the Mittal Steel Global Stock Option Plan (MittalShares). Under the terms of MittalShares, the Company may grant options to purchase common shares to senior management of Mittal Steel and its affiliates for up to 10,000,000 shares of common shares. The exercise price of each option equals not less than the fair market value of Company stock on the date of grant, with a maximum term of 10 years. Options are granted at the discretion of the Companys Board of Directors Remuneration Committee or its delegate. The options vest either ratably upon each of the first three anniversaries of the grant date, or, in total, upon the death, disability or retirement of the participant. The fair value of each option grant to purchase Mittal Steel common shares is estimated on the date of grant using Black-Scholes option pricing model with the following weighted-average assumptions: Year of grant 2005 Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected annualized volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discount rate Bond equivalent yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected life in years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The status of the Mittal Shares is summarized below at December 31, 2005: Weighted Average Exercise Price per share 7.32 7.76 9.07 6.72 28.75 5.87 27.87 22.92 6.96 8.03 1.44% 52% 4.50% 6

Number of Shares Outstanding, January 1, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,339,334 Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,384,118) (Forfeitures) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (244,000) Outstanding, December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Forfeitures) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding, December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exercisable, December 31, 2005 Exercisable, December 31, 2004
............................... ...............................

Range of Exercise Prices 2.26 - 11.94 2.26 - 11.94 2.26 - 11.94 2.26 - 11.94 28.75 2.26 - 11.94 2.26 - 28.75 2.26 - 28.75 2.26 - 28.75 2.26 - 11.94

1,711,216 3,908,773 (351,850) (210,833) 5,057,306 1,352,366 1,321,721

Options granted during 2005 had a fair value of $13 per share. The following table summarizes information about stock options at December 31, 2005: Options Outstanding Weighted Average Number Contractual Life of Shares (in years) 409,499 379,050 563,817 3,704,940 5,057,306 3.71 4.42 6.27 9.65 8.40

Exercise Prices $11.94 8.57 2.26 28.75 $2.26 28.75

Options Exercisable Number Of Shares 409,499 379,050 563,817 1,352,366

NOTE 15: PENSIONS AND OTHER POST-RETIREMENT PLANS Mittal Steels Operating Subsidiaries have different types of pension plans for their employees. Also, most of the subsidiaries in the Americas region offer post-employment benefits, including post-employment health care. The expense associated with these pension plans and employee benefits, as well as the carrying amount of the related liability/asset on the balance sheet is based on a number of assumptions and factors such as the discount rate, I-137

expected wage increases, expected return on plan assets, future health care cost trends and market value of the underlying assets. Actual results that differ from these assumptions are accumulated and amortized over future periods and, therefore, will affect recognized expense and the recorded obligation in future periods, particularly in the case of Mittal Steels U.S. and Canadian subsidiaries. The total accumulated unrecognized losses amounted to $1,103 for pensions and $180 for other post retirement benefits as of December 31, 2005. A summary of the defined benefit plans is as follows: Americas U.S. and Canadian Plans Mittal Steel USAs Pension Plan and Pension Trust is a non-contributory defined benefit plan covering approximately 40% of its employees. Benefits for most non-represented employees are determined under a Cash Balance formula as an account balance which grows as a result of interest credits and of allocations based on a percentage of pay. Benefits for other non-represented salaried employees are determined as a monthly benefit at retirement depending on final pay and service. Benefits for wage and salaried employees represented by the United Steelworkers of America are determined as a monthly benefit at retirement based on fixed rate and service. The Company also has established defined contribution benefit trusts to fund pensions and retiree medical and death benefits as well as qualified savings plans. Compensation expense related to this savings plan amounted to $4 and $123 for the years ended December 31, 2004, and 2005 respectively. The Canadian Operating Subsidiary offers contributory and non-contributory defined benefit pension plans for substantially all of its employees. Benefits for the non-contributory plans are generally calculated based on the number of years of service of the unionized employees and based on actuarial computations. Benefits for the contributory plans are generally calculated based on the number of years of service and the maximum average eligible earnings of each employee during any period of five consecutive years. The Canadian Operating Subsidiary provides certain post-employment and post-employment medical benefits and life insurance for certain groups of retired employees. The Company is accruing the cost of these benefits for current and future retirees using the projected unit credit actuarial method. Trinidad Plan The Companys Operating Subsidiary in Trinidad maintains a contributory defined benefit pension plan for substantially all of its employees, the benefits of which are based on the employees length of service. Mexican Plan The Mexican Operating Subsidiary provides for seniority premiums to its employees, which consists of a one-time payment of 12 days wages for each year worked, calculated on the basis of employees most recent salary. The maximum salary used in this calculation is limited to double the legal minimum wage. The liabilities and net periodic cost related to these retirement benefits are calculated by independent actuaries using the projected unit credit method. The Mexican Operating Subsidiary also provides seniority premium benefits, which are mandated by Mexican law, to employees upon unjustified dismissal, after 15 years of service or to the employees beneficiary upon death. Net periodic cost related to such obligation was not material for the years ended December 31, 2004 and 2005. The related accrued liability of $3 and $6 as of December 31, 2004 and 2005, respectively, is classified in the consolidated balance sheets as other long-term liabilities. Europe Some European Operating Subsidiaries maintain mainly unfunded defined pension plans for a certain number of employees the benefits of which are based on such employees length of service and applicable pension table under the terms of individual agreements. Other plans have an obligation to pay lump sum retirement indemnities to employees calculated bases on the length of service and compensation at retirement. Asia & Africa South African Plan The South African Operating Subsidiary contributes to defined contribution savings plans. Contributions amounted to $17 in 2004 and 2005. I-138

Additionally certain employees at the South African Operating Subsidiary are covered by multi-employer pension plans. Company contributions to these plans were not material in 2004 and 2005. Plan Assets The weighted-average asset allocations for the Funded Pension Plans at December 31, 2004, and 2005, by asset category are as follows(1):
U.S. December 31, 2004 CANADA TRINIDAD U.S. December 31, 2005 CANADA TRINIDAD

Equity Securities . . . . . . . . . . . . . . . . . . . . . Fixed Income (including cash) . . . . . . . . Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

64% 18% 6% 12% 100%

61% 39% 100%

55% 38% 7% 100%

62% 17% 21% 100%

60% 40% 100%

49% 38% 13% 100%

The respective Finance and Retirement Committees of the Board of Directors in the U.S., Canada and Trinidad have general supervisory authority over the respective trust funds. These committees have established the following asset allocation targets:
U.S. December 31, 2005 CANADA TRINIDAD

Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fixed Income (including cash) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
................................................................

63% 23% 5% 9% 100%

60% 40% 100%

50% 40% 10% 100%

U.S. Plan Assets The investment objectives for the U.S. Pension Plan are defined in the Statement of Investment Policy dated December 1, 2000. The objectives stated therein are as follows: A. Investments of the Trust Fund are made solely in the interest of the participants and beneficiaries and for the exclusive purposes of providing benefits to such participants and their beneficiaries and defraying the reasonable expenses of administering the Plans and the Trust. B. The investment objectives shall be to: 1) provide long-term growth (in the form of income and/or capital appreciation) in Trust assets so as to maximize the amounts available to provide benefits to Plan participants and their beneficiaries and 2) maintain adequate liquidity in the Trusts assets to permit timely payment of all benefits to such participants and their beneficiaries. In carrying out these objectives, short-term fluctuations in the value of the Trusts assets shall be considered secondary to long-term investment results. C. The Trust Fund shall be invested with the care, skill, prudence and diligence under the circumstances prevailing from time to time that a prudent man acting in a like capacity and familiar with such matters would use in the investment of a fund of like character and with like aims. D. The investments of the Trust Fund shall be diversified so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. The Policy provides for broad ranges around these targets to reduce rebalancing trading cost and facilitate the management of the Trust Fund. Investment risk is monitored by the Company on an ongoing basis, in part through the use of quarterly investment portfolio reviews, compliance reporting by investment managers, and periodic asset/liability studies and reviews of the Plans funded status. The Company uses a long-term rate of return assumption of 9.5%. This assumption is viewed in a long-term context and is evaluated annually. The expected return assumption is supported by the asset allocation of the Trust and the historical long-term return on Trust assets.
(1)

U.S. Pension plans weighted asset allocation measured at November 30, 2004 and November 30, 2005 respectively. I-139

Trinidad Plan Assets The Plans assets are held in trust and invested on a long-term basis. Investment strategy is largely dictated by local investment restrictions (maximum of 50% in equities and 20% overseas) and asset availability since the local equity market is small and there is little secondary market activity in debt securities. The Plan is not permitted to invest in assets of the Company. Canada Plan Assets Asset allocation is established according to the objectives of the Pension Fund. This is based on the risk/return trade-off defined by the Committee in view of the long-term outlook for financial markets and by taking into account the Plan benefits, its commitments and financial situation after considering all the factors that could affect the provisioning, solvency and capacity of the Plan to meet its obligations. Summary of changes in the benefit obligation and of the change in plan assets: At December 31, 2004 U.S. & CANADIAN TRINIDAD

TOTAL Change in benefit obligation Benefit obligation at beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan participants contribution . . . . . . . . . . Actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate differences . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefit obligation at end of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in plan assets Fair value of plan assets at beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actual return on plan assets . . . . . . . . . . . . . Employer contribution . . . . . . . . . . . . . . . . . . Plan participants contribution . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate differences . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value of plan assets at end of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Unfunded) funded status of the plans . . . Unrecognized net actuarial loss (gain) . . . Unrecognized transition asset . . . . . . . . . . . Unrecognized prior service cost . . . . . . . . . Net amount recognized
................

EUROPE

3,074 51 186 2 142 (230) 43 3,268

2,963 46 180 1 138 (227) 34 3,135

53 3 3 1 3 (1) 62

58 2 3 1 (2) 9 71

2,109 301 121 2 (228) 22 2,327 (941) 939 (2) 114 $ 110 $

2,032 279 120 1 (227) 22 2,227 (908) 967 0 105 164 $

77 22 1 1 (1) 100 38 (28) (2) 9 17 $

(71) (71)

I-140

TOTAL Change in benefit obligation Benefit obligation at beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan participants contribution . . . . . . . . . . . . . . . Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate differences . . Benefit obligation at end of the period
.....

At December 31, 2005 U.S. & CANADIAN TRINIDAD

EUROPE

3,268 134 52 195 2 246 (243) 9 3,663

3,135 134 47 188 1 241 (239) 19 3,526

62 3 4 1 (2) 68

71 2 3 5 (2) (10) 69

Change in plan assets Fair value of plan assets at beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actual return on plan assets . . . . . . . . . . . . . . . . . . Employer contribution . . . . . . . . . . . . . . . . . . . . . . . Plan participants contribution . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate differences . . Fair value of plan assets at end of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Unfunded) funded status of the plans . . . . . . . . Unrecognized net actuarial loss (gain) . . . . . . . . Unrecognized transition asset . . . . . . . . . . . . . . . . Unrecognized prior service cost . . . . . . . . . . . . . . Net amount recognized
.....................

2,327 69 244 200 2 (241) 11 2,612 (1,051) 1,103 (1) 92 $ 143 $

2,227 69 241 199 1 (239) 11 2,509 (1,017) 1,125 84 192 $

100 3 1 1 (2) 103 35 (22) (1) 8 20 $

(69) (69)

The following table details the components of net periodic pension cost December 31, 2004 U.S. & CANADIAN TRINIDAD

TOTAL Components of net periodic cost (benefit) Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . Amortization of prior service cost . . . . . . . Amortization of net (gain) loss . . . . . . . . . . Net periodic cost (benefit)
.............

EUROPE

51 186 (210) 13 41 81

46 180 (204) 13 41 76

3 3 (6)

2 3 5

TOTAL Components of net periodic cost (benefit) Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . Amortization of prior service cost . . . . . . . Amortization of net (gain) loss . . . . . . . . . . Net periodic cost (benefit)
.............

December 31, 2005 U.S. & TRINIDAD CANADIAN

EUROPE

51 195 (212) 38 52 124

47 188 (204) 38 56 125

3 4 (8) (1) (2)

1 3 (3) 1

I-141

Post-employment benefits Mittal Steels Operating Subsidiaries in the U.S., Canada and France provide post-employment benefits, including medical benefits and life insurance benefits to retirees. Substantially all of the U.S. Operating Subsidiarys employees are covered under post-employment life insurance and medical benefit plans that require deductible and co-insurance payments from retirees. The post-employment life insurance benefit formula used in the determination of post- employment benefit cost is primarily based on applicable annual earnings at retirement for salaried employees and specific amounts for hourly employees. The U.S. Operating Subsidiary does not pre-fund most of these post- employment benefits. Effective January 1, 1994, a Voluntary Employee Benefit Association Trust was established for payment of health care benefits to United Steel Workers of America. Funding of the Trust is made as claims are submitted for payment. Summary of changes in the post employment benefit obligation and the change in plan assets: At December 31, 2004 U.S. & TOTAL CANADIAN EUROPE OTHER Change in post-employment benefit obligation Benefit obligation at beginning of period . . . . . . . . . . . . . . . . . . . . . Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate changes . . . . . . . . . . . . . . . . . . . . . Benefits obligation at end of period . . . . . . . . . . . . . . . . . . . . . . . . Fair value of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Funded (unfunded) status of the plans . . . . . . . . . . . . . . . . . . . . . Unrecognized net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognized prior service cost (benefit) . . . . . . . . . . . . . . . . . . . . . Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 954 4 9 54 (14) (75) 5 937 (937) 102 (144) $(979) $ 929 9 52 (12) (73) 2 907 (907) 102 (144) $(949) $ 25 1 (1) (1) 2 26 (26) $(26) $ 4 1 (1) (1) 1 4 (4) $ (4)

At December 31, 2005 U.S. & TOTAL CANADIAN OTHER EUROPE Change in post-employment benefit obligation Benefit obligation at beginning of period . . . . . . . . . . . . . . . . . . . . . Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate changes . . . . . . . . . . . . . . . . . . . . . Benefits obligation at end of period . . . . . . . . . . . . . . . . . . . . . . . . Fair value of assets (from acquisition) . . . . . . . . . . . . . . . . . . . . . . . . Funded (unfunded) status of the plans . . . . . . . . . . . . . . . . . . . . . Unrecognized net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognized prior service cost (benefit) . . . . . . . . . . . . . . . . . . . . . Net amount recognized
.....................................

937 315 12 66 (279) 57 (78) (2) 1,028 23 (1,005) 180 (154)

$ 907 315 12 65 (279) 60 (77) 1 1,004 23 (981) 180 (154) $ (955)

$ 26 1 (1) (1) (3) 22 (22) $(22)

$ 4 (2) 2 (2) $ (2)

$ (979)

I-142

The net periodic post-employment cost: At December 31, 2004 U.S. & TOTAL CANADIAN EUROPE OTHER Components of net periodic cost (benefit) Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of net (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net periodic benefit cost
....................................

$ 9 54 (29) (1) $ 33

$ 9 52 (29) $ 32

$ 1 $ 1

$ 1 (1) $

At December 31, 2005 U.S. & TOTAL CANADIAN EUROPE OTHER Components of net periodic cost (benefit) Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of net (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net periodic benefit cost
....................................

$ 12 66 (1) (288) (1) $(212)

$ 12 65 (1) (288) 1 $(211)

$ 1 (1) $

$ (1) $ (1)

Weighted-average assumptions used to determine benefit obligations at December 31, Pension Benefits 2004 2005 Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of compensation increase . . . . . . . . . . . . 4.75%-10% 3%-18% 4.25%-7.75% 2%-8% Other Benefits 2004 2005 4.75%-10% 3%-5.28% 4.25%-7.25% 2%-8%

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31, Pension Benefits 2004 2005 Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of compensation increase . . . . . . . . . . Expected long-term rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . Health Care Cost trend December 31, 2004 Health care cost trend rate assumed for next year . . . . . . . . . . . . . . . 4.50%-8.6% 2005 4.5%-11.2% 4.75%-10% 3%-18% 5.28%-9.5% 4.25%-7.75% 2%-8% 6.5%-9.5% Other Benefits 2004 2005 5%-10% 4%-8% 4.75%-9.5% 4.25%-7.75% 2%-8% 6.5%-9.5%

An increase of 1% in the health care cost trend rate of Mittal Steel USA would increase the post employment benefit obligation by $102 and the annual net periodic cost by $11. A 1% decrease would reduce the postemployment benefit obligation by $90 and the annual net periodic cost by $9. At the Canadian Operating Subsidiary, for evaluation purposes, the annual growth rate assumption for the cost of health care for each participant was decreased to 8% in 2005 (from 8.6% in 2004). The rate is expected to gradually decline to 3.6% in 2010 and remain at this level thereafter. A 1% change would have an effect of $3 on the post-employment benefit obligation.

I-143

Cash Flows Contributions The Company expects to contribute $300 to the US Trust in 2006. There are no PBGC or ERISA minimum funding requirements due in 2006. The Company expects to contribute $4 to the Trinidad Trust in 2006, which is equal to its minimum statutory regular contributions. The Company expects to contribute $30 to the Canadian Trust in 2006. Estimated Future Pension and Post-Employment Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid: Year ended December 31 U.S. & CANADIAN TRINIDAD $ 318 330 343 356 367 1,840 $ 1 1 1 2 2 11

Expected benefit payments 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TOTAL $ 324 337 350 364 375 1,882

EUROPE $ 5 6 6 6 6 31

Total long-term employee benefits Together with plans and obligations that do not constitute pension or other post employment benefits the total long-term employee benefits are as follows: At December 31 2004 2005 Pension obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Included in accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other post-employment benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term employee benefits (jubilee, leave, compensation) . . . . . . . . . . . . . . . . . . . . . $ (110) $ (175) 979 187 881 $ (143) 979 218 1,054

$ NOTE 16: INCOME TAX EXPENSE The breakdown of the income tax expense (benefit) is as follows:

Year Ended December 31, 2004 2005 Current: Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asia & Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current income tax expense
...............................................

41 330 265 636 253 (32) 110 331

7 279 377 663 69 149 218

Deferred: Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asia & Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total deferred tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total income tax expense
........................................................

967

881

I-144

The following table reconciles the income tax expense (benefit) calculated at the statutory rate of each tax jurisdiction to the corresponding amounts as reported: Year ended December 31, 2004 Asia & Americas Europe Africa Statutory tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (decrease) resulting from: Permanent items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefit arising from interest in partnership . . . . . . . . . . Rate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change measurement of deferred tax assets . . . . . . . . . Benefit of tax holiday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effects on foreign currency translation . . . . . . . . . . . . . . Other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense
.................................

Total $ 1,177 (26) (19) 51 (129) (235) 23 52 73 $ 967

315 (19) (22) (14) 4 9 21

517 1 73 (115) (190) (20) 32

345 (27) (45) 39 43 20

294

298

375

Year ended December 31, 2005 Asia & Americas Europe Africa Statutory tax expense
.................................

Total 1,007 136 (39) (22) (28) (226) (21) 10 54 10

$ 336 (21) (39) (16) 11 (226) 7 17 7 $ 76

243 55 (1) (39) 3 4 14

428 102 (5) (21) 33 (11)

Increase (decrease) resulting from: Permanent items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefit arising from interest in partnership . . . . . . . . . . . . Rate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change measurement of deferred tax assets . . . . . . . . . . . Re-characterization of capital loss to ordinary loss . . . . Benefit of tax holiday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effects on foreign currency translation . . . . . . . . . . . . . . . . Other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense
...................................

279

526

881

Re-Characterization of Capital Loss to Ordinary Loss During 2004, the Mexican Operating Subsidiary, in two separate transactions, transferred shares of two of its subsidiaries and realized capital losses for tax purposes of approximately $755 and $668, respectively. At December 31, 2004, no deferred tax asset was recognized related to these losses as there were no existing temporary differences that would result in future capital gains nor were there any capital gains expected to occur. In 2005, the Mexican federal court approved the Mexican Operating Subsidiarys petition to utilize the $755 capital loss against operating income. Accordingly, a tax benefit of $226 million was recognized. The petition related to the loss of $668 has not been approved by the Mexican authorities, and accordingly, a deferred tax asset of $187 has not been recognized.

I-145

Deferred Income Tax Deferred tax assets and (liabilities) at December 31, 2004 and 2005 are summarized as follows: Year Ended December 31, 2004 2005 Net deferred tax assets consist of the following: Employee benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net operating losses and alternative minimum tax . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Facilities relocation restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net operating loss carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Employee benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net operating loss carry forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net deferred tax liabilities consists of the following: Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net operating loss carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Employee benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unfavourable contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Employee benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net operating loss carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Employee benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total net deferred tax liabilities
............................

Americas Americas Americas Americas Americas Europe Europe Europe Europe Europe Asia & Africa Asia & Africa Asia & Africa Asia & Africa

335 260 (522) 22 (61) 19 20 9 66 (122) 28 104 27 185

43 104 (62) 20 3 72 21 34 79 314

Americas Americas Americas Americas Americas Americas Americas Europe Europe Europe Europe Asia & Africa Asia & Africa Asia & Africa Asia & Africa

(179) 30 (34) (9) (243) 19 (11) (40) (727) 97 18 2

$ (1,368) 150 264 260 163 30 (1,094) 27 (52) (706) 51 22 $ (2,253)

$ (1,077)

Mittal Steel did not recognize deferred tax relating to tax loss carryforwards and capital loss carryforwards in France and U.S. as well as other temporary differences for an amount of $ 163 ($203 as of December 31, 2004). In France, tax loss carryforwards and capital loss carryforwards have no expiration date. In addition, capital loss carryforwards can only be offset against capital gains. In U.S., tax loss carryforwards expire in varying amounts from 2006 through 2023. The utilization of tax loss carryforwards is, however, restricted to the taxable income of the subsidiary generating the losses. At December 31, 2005, based upon the level of historical taxable income and projections for future taxable income over the periods in which the temporary timing differences are anticipated to reverse, management believes it is more likely than not that Mittal Steel will realize the benefits of the deferred tax assets recognized. However, the amount of the deferred tax asset considered realizable could be adjusted in the future if estimates of taxable income are revised. Mittal Steel has not provided any deferred income taxes on the undistributed earnings of its foreign subsidiaries based upon its determination that such earnings will be indefinitely reinvested. If such earnings were not considered indefinitely reinvested, deferred foreign income taxes would have been provided, after consideration of estimated foreign tax credits. However, determination of the amount of deferred foreign income taxes on reinvested earnings is not practicable. I-146

Secondary Taxation on Companies (STC) is a tax levied on South African companies at a rate of 12.5% of dividends distributed. STC is not included in the computation of current or deferred tax as these amounts are calculated at the statutory company tax rate on undistributed earnings. On declaration of a dividend, the South African Operating Subsidiary includes the tax of 12.5% in its computation of the income tax expense. If the South African Operating Subsidiary distributed all of its undistributed retained earnings, of which $1,337 and $1,954 in 2004 and 2005, respectively, would be subject to STC, additional taxes of $149 and $217 in 2004 and 2005, respectively, would be owed. STC on dividends declared in 2004 and 2005 were $29.7 and $29.8, respectively and are included in Other Taxes in the effective rate reconciliation. As provided in certain agreements related to acquisitions and capital investments undertaken by the Company, income from operating activities in certain countries is subject to reduced tax rates, or, in some cases is wholly exempt from taxes. Such arrangements expire over various fiscal years through 2011. The Kazakhstan Operating Subsidiary and the Government of Kazakhstan signed an agreement that fixed its corporate income tax payments for the years 2005 through 2009. The fixed corporate income tax payments are dependent upon the Kazakhstan Operating Subsidiarys completion of required capital investments by December 31, 2004, which was subsequently extended to December 31, 2006. As of December 31, 2005, the Company has incurred approximately $526 of the total $580 required capital investments. The Algerian Operating Subsidiaries are exempt from corporate tax for a period of 10 years commencing from October 2001 provided certain commitments are met as specified in note 19. Tax Loss Carryforwards At December 31, 2005, the Company had total estimated net tax loss carryforwards of $2,382 which includes tax loss carryforwards of our US Operating Subsidiary net of limitation imposed by IRC Section 382. Such amount includes net operating losses of $1,674 primarily related to the U.S. and the Mexican Operating Subsidiaries which expire as follows: Year Expiring 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50 63 80 51 82 42 38 44 400 38 38 38 38 38 73 298 38 225

The remaining tax loss carryforwards of $708 are indefinite lived and are attributable to the Companys operations in France, Trinidad and Tobago and South Africa. Tax loss carryforwards are denominated in the currency of the countries in which the respective subsidiaries are located and operate. Fluctuations in currency exchange rates could reduce the U.S. Dollar equivalent value of these tax loss carryforwards in future years.

I-147

NOTE 17: PROVISIONS Provisions for environmental liabilities, asset retirement obligations and restructuring Foreign Additions Balance at currency Balance at December 31, charged to Deductions/ exchange December 31, Income 2005 2004 Release Acquisitions difference Environmental (see note 20) . . . . . . . . . . . . . . . . . . Asset retirement obligation . . . . . . . . . . . . . . . . Restructuring . . . . . . . . . . . . . . . Total
.......................

199 $ 114 119

75 5 30 110

$(23) (13) (56) $(92)

232 100

$(18) (8) (8) $(34)

465 198 85

432 $ 273 159

332

748 611 137

Long-term liabilities . . . . . . . . Current liabilities . . . . . . . . . . . $

432

748

Foreign Balance at Additions currency Balance at January 1, charged to Deductions/ exchange December 31, 2004 Income Release Acquisitions difference 2004 Environmental (see note 20) . . . . $ Asset retirement obligation . . . . . Restructuring . . . . . . . . . . . . . . . . . . . Total
...........................

37 $ 47 1 85 $

9 8 12 29

(2) $ (16) (18) $

150 $ 59 96 305 $

5 26 31

199 114 119 432

Other provisions include mainly include short term employee benefit liabilities. The provisions will be used in a period of 2 to 4 years; for the environmental provisions up till 20 years. NOTE 18: ACCRUED EXPENSES Accrued expenses were comprised of the following at December 31: December 31, 2004 2005 Accrued payroll and employee related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advances from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
.........................................................................

$ 447 54 121 98 117 714 $1,551

$ 471 89 121 140 518 697 $2,036

NOTE 19: COMMITMENTS Commitments Mittal Steel leases various facilities, land and equipment under non-cancellable lease arrangements. In most cases, management expects that in the normal course of business, leases that expire will be renewed or replaced by other leases.

I-148

Future minimum lease payments required under operating leases that have initial or remaining non-cancellable terms in excess of one year are as follows: Year ending 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total minimum lease payments
.....................................................................

51 39 34 32 25 100 281

Rent expense amounted to $30 and $82 for the years ended December 31, 2004 and 2005, respectively. In the ordinary course of its business, the Company has guaranteed certain debts of its subsidiaries totaling $910. The Company has external guarantees to an amount of $260, which includes guarantees with respect to debts of joint ventures, I/N Kote and I/N Tek. At December 31, 2004 and 2005, Ispat Inland (now Mittal Steel USA) guaranteed $41 and $26, respectively, of long-term debt attributable to I/N Kote, one of its equity investments. Since Mittal Steel USA accounts for its investment in I/N Kote under the equity method, the debt, which matures on January 12, 2007, is not recorded in Mittal Steel USAs consolidated balance sheet. Mittal Steel USAs guarantee could be invoked in an event of defaults as defined in the provisions of the I/N Kote loan agreement. In addition to its 50% share of the remaining principal balance, Mittal Steel USA also guarantees any outstanding interest due, both of which bear interest at a rate equal to the higher of (1) the prescribed borrowing rate on the loan, or (2) the Banks (Mizuho Corporate Bank Limited) prime rate, plus 2%. If Mittal Steel USA performed on its guarantee, it would continue to own its share of I/N Kote, subject to the security interest of the Bank in the assets of I/N Kote. The terms of the guarantee require Mittal Steel USA to maintain a minimum tangible net worth (as defined). Mittal Steel USA was in compliance with this test as of December 31, 2005. Mittal Steel Company NV has guaranteed 60% of the debt of I/N Tek (guaranteed amount of $72 at December 31, 2004 and $50 million at December 31, 2005). In the normal course of business, Mittal Steel enters into various long-term raw material supply contracts, which generally provide for the purchase prices to be negotiated annually based on market prices. On September 12, 2005, the Company announced that the Liberian Senate ratified the Mining Development Agreement the Company entered into with the Government of Liberia. Under this agreement, the Company expects to have access to iron ore reserves in Western Liberia and anticipates the project to cost approximately $900 for the development of the mines, related railway and port infrastructure, as well as community development. The Company expects shipments of iron ore to commence in 2007. Mittal Steel USA In 1998, Mittal Steel USA entered into an agreement (the Agreement) with the PBGC to provide certain financial assurances with respect to the Companys Pension Plan. The Company granted the PBGC a first priority lien on selected assets in the year 2003. Mittal Steel USA agreed to make contributions to its Pension Plan of $160 over the next two years and 50% of excess cash flows ($147 for 2004 was paid in 2005) as defined in the Agreement. Under the Agreement, Ispat Inland contributed $83 in 2004 and $28 in 2005, and has no required contributions for 2006. Additionally, the Company pledged $160 of non-interest bearing First Mortgage Bonds to the PBGC as security until the remaining $110 has been contributed to the Pension Plan and certain tests have been met. This commitment is since fulfilled. In 1993, Mittal Steel USA established a partnership, PCI Associates, with a subsidiary of NiSource Inc. to lease from General Electric Capital Corporation equipment located at Indiana Harbor East for the injection of pulverized coal into the blast furnaces. The lease runs until 2011. In 2003, NiSource sold its portion of PCI Associates to Primary Energy Steel LLC. Mittal Steel USA has certain responsibilities upon the failure of PCI Associates to pay certain amounts due, to perform certain duties under the PCI lease, or the insolvency of Primary Energy Steel LLC. So long as Mittal Steel USA is the operator of the facility, it is required to reimburse the lessor for certain amounts due or to perform such actions under the lease relating to its operations. The guaranteed amounts and duties do not pertain to the base rents due under the lease, which are the responsibility of Primary Energy Steel LLC. Mittal Steel USA could be responsible for the percentage of the liabilities, costs or expenses associated with specified misrepresentations or covenant breaches, discounted at 10%, but it cannot I-149

reasonably estimate the amounts which could be due under this guarantee. However, it is not likely that resulting payment obligations in connection with any such arrangements could materially affect our financial position or results of operations. Mittal Steel USA has not recognized any liability associated with this guarantee. ClevelandCliffs Inc. has a contract to supply Mittal Steel USAs requirements for iron ore pellets through 2016 for its Cleveland and Indiana Harbor West facilities. This agreement will renew on an annual basis after 2016, unless either party gives at least two years advance notice of termination. The agreement specifies product quality requirements and provides Mittal Steel USA with the right to negotiate price adjustments or to refuse to accept shipments of products in some circumstances. The prices paid for iron ore pellets under the agreement is subject to annual adjustments for changes in certain price indices and selling prices for certain steel products. With ISGs acquisition of Weirton, Mittal Steel USA assumed Weirtons agreement with Cleveland-Cliffs Inc. and agreed to certain amendments as part of the assignment. Cleveland-Cliffs Inc. supplied a portion of Weirtons pellet requirements in 2004 and 2005 and for the period 2006 to 2018 the contract provides that Cleveland-Cliffs Inc. will supply a tonnage amount equal to total annual iron ore pellet tonnage requirements, with a minimum annual purchase obligation of 2 million tons per year required for consumption in Weirtons iron and steel making facilities in any year. The other terms of the agreement are generally similar to other iron ore pellet contracts with Cleveland-Cliffs Inc. but only require a one year advance notice of termination. United States Steel Corporation also supplied a portion of the requirements for iron ore pellets at the Weirton facility in 2004 and 2005. Late in 2005, Mittal Steel announced the indefinite idling of the blast furnaces at the Weirton facility and also entered into discussions with Cleveland-Cliffs about the Weirton arrangement and significant volume and pricing issues under all of its contracts with Cleveland-Cliffs. Mittal Steel cannot determine at this time whether these discussions will result in a negotiated resolution of the issues. Mittal Steel USA has purchase commitments for gas and other minerals to an amount of $7,168, with firm commitments of between $600 and $1,100 per year through 2034. Mittal Steel Point Lisas Mittal Steel Point Lisas has purchase commitments for gas and other minerals of $539. Pursuant to its agreement with ISCOTT and the Government of Trinidad and Tobago made on December 30, 1994, the Company was required to offer new shares representing 40% of Mittal Steel Point Lisas total issued share capital in a public offering to Trinidad and Tobago nationals and locally controlled corporations by June 30, 1998. The agreement also provides that such offering must be made at a fair price and on such other terms to be negotiated, and in default of agreement, by the Trinidad and Tobago Stock Exchange (TTSE). The Government extended the deadline to make the offering in the second half of 2000 and has also agreed in principle, as an alternative arrangement, to allow the shares of Mittal Steel to be listed and offered on the TTSE. The Company is currently working with the Government to resolve the requirement. Mittal Canada Mittal Canada has purchase commitments for gas and other minerals of $232. Mittal Steel Poland Mittal Steel Poland has commitments towards the purchase of coal of $596. Mittal Steel Duisburg In February 2005 Mittal Steel Duisburg signed an agreement with ThyssenKrupp Stahl AG for the purchase of between 1.3 - 1.5 million tonnes of pig iron each year for a 20 year term commencing October 2007. Mittal Steel Annaba and Mittal Steel Tebessa The Company has committed to invest $140 at Mittal Steel Annaba over a ten year period commencing October 2001 of which $80 shall be invested in the first five years of operations to attain shipping levels of 1.2 million metric tons per year. Mittal Steel Annaba has spent $72 through December 31, 2005. Mittal Steel Annaba has committed to complete and realize the industrial pollution control program estimated to cost up to $25 over a ten-year period commencing October 2001 for which Mittal Steel Annaba has spent $4 through December 31, 2005. The Company also committed to invest $30 at Mittal Steel Tebessa over a ten-year period commencing October 2001, $20 of which is to be invested in the first five years of operations. The Company has spent $16 through December 31, 2005 towards this commitment. Mittal Steel Galati The Company has committed to invest $175 (including $25 for environmental protection) to finance part of the total capital expenditure commitment of $351 (including $76 for environmental protection) at Mittal Steel Galati I-150

over a ten year period ending in 2011. The amount committed to be spent is $55 and $44 for the years ending December 31, 2005 and 2006, respectively and thereafter $20 every year from sixth to tenth year. Mittal Steel Galati has spent $366 and the Company has invested $60 in Mittal Steel Galati through December 31, 2005. The Company is committed to spend $34 towards the environmental obligations as December 31, 2005. Mittal Steel Galati is committed to contribute $5 per year to provide certain employees facilities. Mittal Steel Hunedoara, Mittal Steel Iasi and Mittal Steel Roman The Company has committed to spend $57 in aggregate on capital expenditures, of which $53 remains outstanding as of December 31, 2005. Mittal Steel Ostrava Mittal Steel Ostrava has committed to invest $243, including $20 for environmental investment, from 2003 to 2012. The majority of the investments are required to be made by 2007. Mittal Steel Ostrava has spent $103 up to December 31, 2005 towards this commitment. Mittal Steel Poland The sale of Mittal Steel Poland by the government of Poland was part of an initiative to restructure the Polish steel industry. Pursuant to the acquisition agreement, the Company committed to make capital expenditures of $587 through December 2009, as well as to comply with the restructuring plan that the government of Poland agreed with the European Commission as part of the European Union accession process, including the shutdown of some rolling and finishing facilities and minimum employment levels. Through December 31, 2005, Mittal Steel Poland has spent $91 towards this commitment. Mittal Steel Polands Krakow unit (previously an independent legal entity owned by the State Treasury of Poland) entered into a composition agreement with its trade creditors (approved by the court in 2002). Outstanding balances are to be paid in installments without interest and 40% of the liability to be waived upon completion of all payments. The last installment is due in 2007. If Mittal Steel Poland fails to pay installments according to the agreed schedule, the portion waived ($82) would become due with interest for the period from the date the composition agreement was approved through the date of payment. Mittal Steel Poland was in compliance with these repayment obligations as of December 31, 2005. Mittal Steel Poland applied to the Polish government for restructuring of public debts due to various government institutions. The agreement was made according to specified government aid programs for the steel industry and other entities important for the labor market in Poland. According to the agreement, outstanding balances due were to be paid in installments without interest. The last installment is due in 2010. If Mittal Steel Poland fails to pay installments according to agreed schedules, interest for the entire period following approval of the agreement would become due. Mittal Steel Poland was in compliance with these repayment obligations as of December 31, 2005. Mittal Steel Zenica The Company has committed to invest $135 (including environmental protection) at Mittal Steel Zenica over a ten-year period ending in 2014. The amount committed to be spent is $65 over the first three years, $35 over the next three years and $35 over the final four years. Mittal Steel Zenica has spent $nil through December 31, 2005. Mittal Steel Temirtau On December 26, 2001, Mittal Steel Temirtau had signed a contract with the Committee on Investments of the Ministry of Foreign Affairs of the Republic of Kazakhstan. Under this contract the Company, subject to market conditions, is required to invest in projects totaling $580 through 2006. The Company has invested $526 through December 31, 2005. Other capital commitments outstanding against major contracts as of December 31, 2005 totaled $28. Mittal Steel South Africa Mittal Steel South Africa has capital equipment purchase commitments for amounts authorized and orders placed of $116 as of December 31, 2005. Mittal Steel Kryviy Rih The Company has committed to fulfill the privatization plan and the Post-Privatization Development Concept of Mittal Steel Kryviy Rih. Mittal Steel Kryviy Rih has committed to invest $500 from 2006 to 2010.

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NOTE 20: CONTINGENCIES The Company is party to a number of legal proceedings arising in the ordinary course of business. The Company does not believe that the adverse determination of any such pending litigation, either individually or in the aggregate, will have a material adverse effect on its business, financial condition, results of operations, or cash flows. Where these actions are being contested their outcome is not predictable with assurance. Environmental Liabilities The Companys operations are subject to a broad range of laws and regulations relating to the protection of human health and the environment at its multiple locations and Operating Subsidiaries. Previous owners of the Companys facilities expended in the past, and the Company expects to expend in the future, substantial amounts to achieve or maintain ongoing compliance with applicable environmental laws and regulations. The Company believes that these environmental expenditures are not projected to have a material adverse effect on the Companys consolidated financial position or on the Companys competitive position with respect to other steelmakers subject to the same environmental requirements. Mittal Steel USA Under the Resource Conservation and Recovery Act (RCRA) and similar U.S. state programs, the owners of certain facilities that manage hazardous wastes are required to investigate and, if appropriate, remediate historic environmental contamination found at such facilities. All of Mittal Steel USAs major operating and inactive facilities are or may be subject to a corrective action program or other laws and regulations relating to environmental remediation, including projects relating to the reclamation of industrial properties, also known as brownfield projects. The U.S. Comprehensive Environmental Response, Compensation, and Liability Act, also known as Superfund, and analogous state laws can impose liability for the entire cost of cleanup at a site upon current or former site owners or operators or parties who sent hazardous materials to the site, regardless of fault or the lawfulness of the activity that caused the contamination. Mittal Steel USA is a potentially responsible party at several state and federal Superfund sites. Mittal Steel USA could incur additional costs or liabilities at these sites based on new information, if additional cleanup is required, private parties sue for personal injury or property damage, or other responsible parties sue for reimbursement of costs incurred to clean up sites. Mittal Steel USA could also be named a potentially responsible party at other sites if its hazardous materials or those of its predecessor were disposed of at a site that later becomes a Superfund site. In 1990, Mittal Steel USAs Indiana Harbor (East) facility was party to a lawsuit filed by the EPA under the RCRA. In 1993, Mittal Steel USA entered into the EPA Consent Decree, which, among other things, requires facility wide RCRA corrective action and Indiana Harbor Ship Canal sediment assessment and remediation. At December 31, 2005, Mittal Steel USAs reserves for environmental liabilities included $16 for RCRA Corrective Action, and $23 for sediment remediation. As of December 31, 2005, it is not possible to accurately predict, beyond the currently established reserve, the amount of potential environmental liabilities for Mittal Steel USAs Indiana Harbor (East) facility. Mittal Steel USAs properties in Lackawanna, New York are subject to an Administrative Order on Consent with the EPA requiring facility wide RCRA Corrective Action. The Order, entered into by former owner Bethlehem Steel in 1990, requires Mittal Steel USA to perform a Remedial Facilities Investigation (RFI), Corrective Measures Study, complete Corrective Measures and perform any required Post Remedial Activities. As required by the order, the RFI was completed and submitted to EPA, and the New York State Department of Environmental Conservation (NYDEC), for approval on December 17, 2004. In addition, NYDEC and Mittal Steel USA executed an Order on Consent on November 26, 2004 to perform Interim Corrective Measures at a former benzol storage tank area. Mittal Steel USA has reserved approximately $66 for the undiscounted future cost of performing anticipated remediation and post remediation activities over a period of 15 years or more. The estimate is based on the extent of soil and groundwater contamination identified by the RFI and likely remedial alternative, including excavation and consolidation of containments in an on-site landfill and continuation of a benzol groundwater pump and treat system. Mittal Steel USAs Sparrow Point, Maryland facility, former owner Bethlehem Steel, the EPA and the Maryland Department of the Environment agreed to a phased RFI as part of a comprehensive multimedia pollution Consent Decree. The Consent Decree was entered by the U.S. District Court for Maryland on October 8, 1997. Mittal Steel USA has assumed Bethlehems ongoing obligations under the Consent Decree. The Consent Decree requires Mittal Steel USA to address compliance, closure and postclosure care matters and implement corrective measures associated with two onsite landfills, performa site-wide investigation required by Section 3008(h) of I-152

RCRA, continue the operation and maintenance of a remediation system at an idle rod and wire mill, and address several pollution prevention items. The potential costs, as well as the time frame for the complete implementation of possible remediation activities at Sparrows Point, cannot be reasonably estimated until more of the investigations required by the decree have been completed and the data analyzed. Notwithstanding the above, it is probable, based on currently available data, that remediation will be required at the former coke plant. In addition, pursuant to the order of the U.S. District Court for Maryland, Mittal Steel USA must also implement corrective measures at the Grays Landfill and Coke Point Landfill and post-closure care at the former Rod and Wire Mill Area. The total undiscounted environmental reserve for these related matters is approximately $42 and has been recorded in the consolidated balance sheet at December 31, 2005. Mittal Steel USA is required to prevent acid mine drainage from discharging to surface waters at closed mining operations in southwestern Pennsylvania. Mittal Steel USA entered into a Consent Order and Agreement with the Pennsylvania Department of Environmental Protection (PaDEP) in May 2003 addressing the transfer of required permits from Bethlehem to Mittal Steel USA and providing financial assurance for long-term operation and maintenance of the wastewater treatment facilities associated with these mines. As required by this Consent Order and Agreement, Mittal Steel USA submitted an Operational Improvement Plan to improve treatment facility operations and lower long-term wastewater treatment costs. The Consent Order and Agreement also required Mittal Steel USA to propose a long-term financial assurance mechanism. PaDEP approved cost reduction plan. On May 9, 2004, Mittal Steel USA entered into a revised Consent Order and Agreement outlining a schedule for implementation of capital improvements and requiring the establishment of a treatment trust that the PaDEP has estimated to be the net present value of all future treatment cost. Mittal Steel USA expects to fund the treatment trust over a period of up to ten years at a current target value of about $20. Until the improvements are made and the treatment trust is fully funded. Mittal Steel USA accrued $20 and we expect to spend about $1 to $2 per year for the operation of treatment plants for acid mine drainage from these closed mines. After the treatment trust is fully funded, the treatment trust will then be utilized to fund the cost of treatment of acid mine drainage. Although remote, Mittal Steel USA could be required to make up any deficiency in the treatment trust in the future. Mittal Steel USA is subject to a variety of permitting requirements under the Clean Air Act that restricts the type and amount of air pollutants that may be emitted from regulated emission sources. On February 28, 2003, the U.S. EPA issued a final rule to reduce hazardous air pollutant (HAP) emissions from integrated iron and steel manufacturing facilities. The final rule will require affected facilities to meet standards reflecting the application of maximum achievable control technology (MACT) standards. Many of Mittal Steel USAs facilities are subject to the new MACT standards, and compliance with such standards will be required starting in May 20, 2006. Mittal Steel USA anticipates installing controls at facilities to comply with the new MACT standards with capital expenditures of about $145 through 2007. Mittal Steel USAs facilities are also subject to a variety of permitting requirements under the Clean Water Act, which restricts the type and amount of pollutants that may be discharged from regulatory sources into receiving bodies of waters, such as rivers, lakes and oceans. On October 17, 2002, the U.S. EPA issued regulations that require existing wastewater dischargers to comply with new effluent limitations. Several of Mittal Steel USAs facilities are subject to the new regulations, and compliance with such regulations will be required as new discharge permits are issued for continued operation. Mittal Steel USA anticipates spending approximately $110 over the next 40 years, including $11 during 2006, to address the removal and disposal of PCB equipment and asbestos material encountered during the operation of our facilities. Mittal Steel USA expects to spend about $60 in 2006 and an average of about $40 per year for capital expenditures from 2007 through 2010 to meet environmental standards. Other Subsidiaries Environmental remediation for periods prior to the privatizations of the Companys Operating Subsidiaries in the Czech Republic, Romania and Algeria are borne by the local governments in those countries. Environmental remediation relating to periods subsequent to the privatizations has been complied with, and accordingly there are no remediation liabilities for which the Company is responsible at December 31, 2005. The liability primarily relates to environmental remediation costs recognized (a) fully in terms of decommissioned facilities, and (b) pro-rated costs for facilities to be decommissioned in the future in terms of site-specific holistic environmental master plans developed in consultation with external consultants taking into consideration the appropriate statutory regulations. I-153

Legal Claims Mittal Steel USA In January 2005, Indiana Harbor (East) received a third party complaint by Alcoa Incorporated alleging that Indiana Harbor (East) is liable as successor to the interests of Hillside Mining Co., or Hillside, a company that Indiana Harbor (East) acquired in 1943, operated until the late 1940s and then sold the assets of in the early 1950s. It is alleged in the complaint that since Hillside was operating in the area at the same time as Alcoa, if Alcoa is found to be liable in the original suit that was filed against it by approximately 340 individuals who live in the Rosiclare area of southern Illinois, then Indiana Harbor (East) should also be found liable, and there should be an allocation to Indiana Harbor (East) of the amount that would be owed to the original plaintiffs. Those original plaintiffs are alleging that the mining and processing operations allowed the release of fluorspar, manganese, lead and other heavy metal contaminants, causing unspecified personal injury and property damage. Indiana Harbor (East) has also been identified as a potentially responsible party by the Illinois Environmental Protection Agency in connection with this matter, which is currently requesting that Indiana Harbor (East) and other potentially responsible parties conduct Site Investigations of certain Areas of Concern. Until such time as this matter is further developed, management is not able to estimate reasonably possible losses, or a range of such losses, the amounts of which may be material in relation to Mittal Steels financial position, results of operations and cash flows. Indiana Harbor (East) intends to defend itself fully in these matters. Mittal Steel USA and an independent, unaffiliated producer of raw materials are parties to a long-term supply agreement under which Ispat Inland was obligated to fund an escrow account to indemnify said producer of raw materials for the continuing availability of certain tax credits, which credits extend until January 1, 2008. No contributions to the escrow account are required at this time as Mittal Steel USA believes the likelihood of the specific contingency occurring is remote. If there is any loss, disallowance or reduction in the allowable tax credits applicable to the raw materials previously sold to Ispat Inland, Mittal Steel USA will be required to repay the producer the amount by which the cost of the raw materials was decreased as a result of such tax credits, subject to certain adjustments, plus interest. As of December 31, 2005, the cumulative cost reduction due to such tax credits totalled $213. Mittal Canada In March 2004, a group of residents in Nova Scotia brought a potential class action in the Supreme Court of Nova Scotia against various parties, including Mittal Canada, alleging various torts for damage allegedly caused by the steel plant and coke ovens formerly owned and occupied by Dominion Steel and Coal Corporation from 1927 to 1967. Mittal Steel acquired Mittal Canada in 1994 and the plaintiffs are attempting to establish that Mittal Canada thereby assumed the liabilities of the former occupiers. The plaintiffs are now seeking to have the claim approved as a class action, though the court has not yet issued a decision on this matter. Mittal Canada intends to file preliminary motions to set aside this claim at an early stage. Mittal Steel is currently unable to assess the outcome of these proceedings or the amount of Mittal Canadas potential liability, if any. Trfileurope In late 2002, three subsidiaries of Mittal Steel (Trfileurope, Trfileurope Italia S.r.l. and Fontainunion S.A.), along with other European manufacturers of pre-stressed wire and strands steel products, received notice from the European Commission that it was conducting an investigation into possible anti-competitive practices by these companies. Mittal Steel and its subsidiaries are cooperating fully with the European Commission in this investigation. The European Commission can impose fines (up to a maximum of 10% of annual revenues) for breaches of EU competition law. Mittal Steel is currently unable to assess the ultimate outcome of the proceedings before the European Commission or the amount of any fines that may result. As the alleged anticompetitive activities would have taken place in large part prior to the acquisition of the subsidiaries, Mittal Steel has notified the previous owners that it will seek indemnification for costs resulting from the investigation. Mittal Steel Galati Sidex International Plc. (SIP), a joint venture that Mittal Steel Galati formed in 1997 with Balli Steel Plc, in 2002 raised a claim of approximately $48 for alleged non-delivery of steel by Mittal Steel Galati from 1998 onwards as well as interest, damages and costs. Mittal Steel Galati disputed this claim and brought a counterclaim for non-payment by SIP plus damages, interest and costs, in total exceeding the amount of the claim raised by SIP. An arbitration tribunal made an award in favor of SIP for $25 plus interest in September 2005. In February 2006 the sum of $37, including accrued interest, was paid in full. Mittal Steel has an indemnity from a third party in this matter. The Competition Council of Romania has commenced investigations against Mittal Steel Galati on certain commercial practices. The Company is cooperating fully with the authorities but cannot at present determine the I-154

outcome or estimate the amount or range of a potential fine that may be imposed on Mittal Steel Galati. No amount has been provided as of December 31, 2005. Mittal Steel Roman & Mittal Steel Iasi In June 2005 the Competition Council of Romania had begun an investigation concerning state aid received by Mittal Steel Roman and Mittal Steel Iasi in connection with their respective privatizations. Since the Company cannot determine the outcome of this investigation or estimate the amount or range of a potential recovery order that may be imposed, no amount has been provided as of December 31, 2005. Mittal Steel Ostrava Since 2001, Mittal Steel Ostrava (MSO) has been involved in a dispute with Kaiser Netherlands B.V. (Kaiser), the contractor for phase 1 of a mini-mill works project (rolling mill P1500), and its parent company, Kaiser Group International. Under the terms of the turn-key engineering and construction contract, a maximum of three performance tests were required to ensure that the mini-mill met contract mandated quality and quantity standards. Although the mini-mill failed the first performance tests, Kaiser contends MSO owes various costs incurred by Kaiser in relation to the construction of the mini-mill. The dispute has not been resolved and Kaiser has commenced legal action against MSO. Until recently, the primary legal venue for this matter has been the United States Bankruptcy Court for the District of Delaware, where Kaiser Group International is currently going through bankruptcy reorganization. The Delaware bankruptcy court has previously ruled that Kaiser Group International, as opposed to Kaiser, could proceed with prosecution of its specific claims against MSO in the Delaware bankruptcy court venue. MSO appealed this ruling, and during the first quarter of 2004, the Delaware bankruptcy courts decision was overturned by the United States District Court for the District of Delaware, which ruled that the proceedings should be stayed pending the completion of international arbitration proceedings. On January 6, 2004, Kaiser filed arbitration claims against MSO in the amount of $51 with the International Court of Arbitration in Paris. The sum claimed was revised to $67 in November 2004 to include interest and additional costs. The Company vigorously disputes this claim and has submitted a $50 counterclaim against Kaiser in these same arbitration proceedings. At December 31, 2005, the Company has provided for a reserve of $31 with respect to this matter, a sum equal to the amount MSO withdrew from the performance letter of credit posted by Kaiser as well as retention fee payments claimed by Kaiser. As the Company cannot estimate the amount or range of any additional potential loss that may be incurred by MSO, no additional amount has been provided as of December 31, 2005. Mittal Steel South Africa Mittal Steel South Africa is involved in a dispute with Harmony Gold, Cadac (Pty) Ltd., Barnes Group of Companies and others alleging that Mittal Steel South Africa is in violation of the Competition Act. Any adverse decision by the Competition Commission or Competition Tribunal in the Republic of South Africa would impact the pricing formulas used by Mittal Steel South Africa and may result in a fine not exceeding 10% of sales of Mittal Steel South Africa. A trial date has been fixed for March 2006. As the Company cannot determine the outcome of this matter or estimate the amount of potential loss that may be incurred by Mittal Steel South Africa, no amount has been provided as of December 31, 2005. Mittal Steel South Africa is involved in a dispute with the South African Revenue Services in respect of the tax treatment of the first Business Assistance Agreement (BAA) payments of $97 in 2003 and $116 in 2004. An independent legal opinion has been obtained supporting the Companies taxation treatment of the payments. As the Companies cannot determine the outcome of this matter or estimate the amount or range of potential loss that may be incurred by Mittal Steel South Africa, no amount has been provided as of December 31, 2005. Other contingencies Other contingent liabilities arise periodically in the normal course of business. In the opinion of management, any such unrecognized matters that are reasonably possible at December 31, 2005, would not have a material effect on our financial position, results of operations or cash flows.

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NOTE 21: EMPLOYEES AND KEY MANAGEMENT PERSONNEL Employees Mittal Steel had approximately 224,000 employees as of December 31, 2005. The table below sets forth the breakdown of the total year-end number of employees by geographical region for the past two years. Year Ended 2004 2005 Region Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asia & Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
.........................................................................

9,713 79,278 75,402 164,393

24,320 128,198 71,768 224,286

Year Ended 2004 2005 Employee information Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
(1)

$ $

2,344 105 2,449

$ $

3,247 60(1) 3,307

.........................................................................

In 2005 a change in a post employment benefit plan in the US resulted in a decrease of the pension obligation to an amount of $212.

Board of directors The total annual remuneration of the members of Mittal Steels board of directors for 2004 and 2005 was as follows: Year Ended December 31, 2004 2004 (All amounts in $ thousands except option information) $ 4,471 $ 4,369 11,747 235,000

Base salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term performance-related bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term incentives (number of options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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The annual remuneration of the members of Mittal Steels board of directors was as follows:
2004 2005 2004 2005 Short-term Short-term Long-term Long-term Performance Performance Number Number 2005 Related Related of Options of Options (All amounts in $ thousands except option information)

2004

Lakshmi N. Mittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aditya Mittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vanisha Mittal Bhatia . . . . . . . . . . . . . . . . . . . . . . . . . . . . Malay Mukherjee(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Narayanan Vaghul . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ambassador Andrs Rozental . . . . . . . . . . . . . . . . . . . . . Fernando Ruiz Sahagun(2) . . . . . . . . . . . . . . . . . . . . . . . . Muni Krishna T. Reddy . . . . . . . . . . . . . . . . . . . . . . . . . . Ren Lopez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wilbur L. Ross, Jr.(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lewis B. Kaden(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)

1,679 1,193 807 136 213 89 206 148 4,471

2,194 1,245 18 311 109 134 22 110 74 73 79 4,369

4,596 4,050 3,101 11,747

100,000 75,000 60,000 235,000

(2) (3) (4)

Mr. Mukherjee resigned from Mittal Steels Board of Directors on April 12, 2005, but continued in his role as Chief Operating Officer of Mittal Steel. His remuneration reflected in above table is only for the period January 2005 to March 2005. Mr. Ruiz resigned from Mittal Steels Board of Directors on April 12, 2005. Mr. Ross was elected to Mittal Steels Board of Directors on April 12, 2005. Mr. Kaden was elected to Mittal Steels Board of Directors on April 12, 2005.

The amount outstanding at December 31, 2005 in respect of loans and advances to members of Mittal Steels board of directors was $0 million (December 31, 2004: $0 million). In 2005, $0 million was accrued by Mittal Steel to provide pension benefits to the directors. In addition, Mittal Steel has not given any guarantees for the benefit of the members of Mittal Steels board of directors. The following table provides summarized information on the options outstanding and the movements on the options granted to Mittal Steels board of directors (in 2001, 2003 and 2004 no options were granted to members of Mittal Steels board of directors):
Weighted Average Exercise Price

Granted in 1999

Granted in 2000

Granted in 2002

Granted in 2005

Total

Lakshmi N. Mittal . . . . . . . . . . . 80,000 80,000 80,000 100,000 Aditya Mittal . . . . . . . . . . . . . . . . 7,500 7,500 25,000 75,000 Vanisha Mittal Bhatia . . . . . . . . Malay Mukherjee(1) . . . . . . . . . . 40,000 40,000 50,000 60,000 Narayanan Vaghul(2) . . . . . . . . . Ambassador Andrs Rozental(6) . . . . . . . . . . . . . . . . 3,333 Fernando Ruiz Sahagun(3)(6) . . . 3,333 Muni Krishna T. Reddy . . . . . . . Ren Lopez . . . . . . . . . . . . . . . . . Wilbur L. Ross, Jr.(4) . . . . . . . . . Lewis B. Kaden(5) . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . 127,500 127,500 161,666 235,000 Exercise price . . . . . . . . . . . . . . . $ 11.94 $ 8.57 $ 2.26 $ 28.75 Term (in years) . . . . . . . . . . . . . . 10 10 10 10 Expiration date . . . . . . . . . . . . . . September 14, 2009 June 1, 2010 April 5, 2012 August 23, 2015
(1)

340,000 $ 115,000 $ 190,000 $ 3,333 $ 3,333 $ 651,666 $

13.81 20.58 13.99 2.26 2.26 14.94

(2) (3) (4) (5) (6)

Mr. Mukherjee resigned from Mittal Steels board of directors on April 12, 2005, but continued in his role as Chief Operating Officer of Mittal Steel. Mr. Vaghul exercised all his vested options in 2005. Mr. Ruiz resigned from Mittal Steels board of directors on April 12, 2005. Mr. Ross was elected to Mittal Steels board of directors on April 12, 2005. Mr. Kaden was elected to Mittal Steels board of directors on April 12, 2005. Both Mr. Ruiz and Mr. Rozental exercised the majority of their vested options in 2005, except for 3,333 options granted in 2002.

Senior management personnel The total annual remuneration of the senior management of Mittal Steel for 2005 was: $14 million in base salary and $11 million in short-term performance related bonus. For 2005, $1 million was accrued by Mittal Steel to I-157

provide pension benefits to its senior management. As of December 31, 2005, $0.2 million (December 31, 2004: $0 million) was outstanding in respect of loans and advances to senior management of Mittal Steel. The maximum amount outstanding during 2005 to senior management in respect of loans and advances was approximately $0.2 million (2004: $0.2 million). No interest was payable on the loans. NOTE 22: SEGMENT AND GEOGRAPHICAL INFORMATION The management considers the Companys steel operation to be a single business segment. As the Company has no operations in its home country of the Netherlands, all of its sales are considered to be foreign sales. Annual sales to any individual customer did not exceed 10% of total sales in any of the periods presented. Information with respect to the Companys operations in different geographic areas is as follows:
Year ended December 31, 2005 Americas Europe Asia & Africa Eliminations Consolidated

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income (expense) net . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from equity method investments . . . . . . . . . . . . . . . . Financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before taxes and minority interest . . . . . . . . . . . . . . . Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . Income before minority interest . . . . . . . . . . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in affiliates and joint ventures . . . . . . . . . . . . . . Unallocated assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unallocated liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ $

12,467 1,676

$ $

9,762 775

$ $

7,683 2,195

$ $

(1,780) 82

$28,132 $ 4,728 344 86 (353) 4,805 881 3,924 494 $ 3,430

341 335 11,992

471 390 16,783

289 456 7,605

(4,139)

1,101 1,181 32,241 1,204 314 $33,759 7,270 10,905 $18,175

3,822

2,747

2,403

(1,702)

Year ended December 31, 2005

Americas

Europe

Asia & Africa

Eliminations

Consolidated

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income (expense) net . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from equity method investments . . . . . . . . . . . . . . . . Financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before taxes and minority interest . . . . . . . . . . . . . . . Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . Income before minority interest . . . . . . . . . . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in affiliates and joint ventures . . . . . . . . . . . . . . Unallocated assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unallocated liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ $

6,560 1,537

$ $

9,905 1,773

$ $

6,063 2,005

$ $

(1,916) 199

$20,612 $ 5,514 1,143 149 (214) 6,592 967 5,625 415 $ 5,210 734 837 20,834 673 185 $21,692

185 130 5,720

466 289 12,258

224 503 7,666

(141) (85) (4,810)

1,900

2,431

3,783

(2,568)

5,546 5,067 $10,613

NOTE 23: FACTORING OF RECEIVABLES Additionally, some of our subsidiaries have entered into Factoring Agreements with certain banks/financial institutions under which they are entitled to sell eligible accounts receivables from the customers up to an agreed I-158

limit. The bank/financial institution buys these receivables without recourse to the seller. Payments for sale of these receivables are received in two installments. The first installment ranging between 90% to 95% of the receivables sold (up to a maximum of $284) is made available immediately on sale of the receivables. The deferred proceeds outstanding and availability amounted to $167 and $220 at December 31, 2004 and 2005 respectively. The balance portion of the purchase price is held back towards factoring commission, interest charges and any possible bonus or discounts till the receivables are collected from the customer by the Factoring agent. The proceeds from the sale of trade accounts receivables are included in the cash flows from operating activities in the Consolidated Statements of Cash Flows. The receivables are sold at a discount that is included in selling, general and administrative expenses in the consolidated statements of income and amounted $7 and $6 for 2004 and 2005 respectively. Factoring 2004 $ 1,236 1,376 7 167 2005 $ 1,554 1,605 6 220

Proceeds from trade receivables sold under factoring agreement . . . . . . . . . . . . . . . . . . . . . Nominal of trade receivables sold under factoring agreement . . . . . . . . . . . . . . . . . . . . . . . . Discounts incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred payments on balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 24: SUBSEQUENT EVENTS

On February 24, 2006, The Company issued a notice of redemption for all $150 outstanding principal amount of its Senior Secured Floating Rate Notes due 2010 at redemption price equal to 103% of the outstanding principal amount of its Senior Secured Floating Rate Notes due 2010 at a redemption price equal to 103% of the outstanding principal amount, plus accrued interest to, but excluding, April 1, 2006. The bonds will be redeemed on April 1, 2006. On February 14, 2006, the Companys board of directors declared an interim dividend of $0.125 per share payable on March 15, 2006 and decided to propose to the general meeting of shareholders to amend the dividend policy going forward to a quarterly dividend of $0.125 per share. This dividend has since been paid. On February 1, Mittal Canada, a Canadian subsidiary of the Company, completed the acquisition of three subsidiary companies of Stelco Inc (Stelco). The Norambar Inc and Stelfil Lte plants located in Quebec and the Stelwire Ltd. Plant in Ontario were acquired at a cost of C$30 million (approximately $25). Mittal Canada has also assumed C$28 million (approximately $23) in debt. On January 30, 2006, the Company entered into a 5,000 million (approximately $6,041) credit agreement with a group of lenders (the Acquisition Facility) to finance the cash portion of the offer for Arcelor along with related transaction costs. Should the Company borrow amounts under the Acquisition Facility it would be required to repay the borrowings under the 2005 Bridge Facility. Accordingly, concurrent with entering into the Acquisition Facility, the Company entered into a 3,000 million (approximately $3,625) credit agreement (the Refinancing Facility) for the refinancing of the 2005 Bridge Facility. The Acquisition Facility and the Refinancing Facility bear interest at EURIBOR plus a margin based on a rating grid and are repayable from 2008 to 2011. On January 27, 2006 the Company announced that it had launched an offer to the shareholders of Arcelor SA (Arcelor). Under the terms of the primary offer, Arcelor shareholders will receive 4 Mittal Steel shares and 35.25 (approximately $43.05) cash for every 5 Arcelor shares (equivalent to 0.8 Mittal Steel shares plus 7.05 (approximately $8.61) cash for each Arcelor share). In addition to or instead of the primary offer, Arcelor shareholders will have the right to receive in secondary offers a specified mix of cash or stock, provided that 25% of the aggregate consideration paid to Arcelor shareholders is paid in cash and 75% in stock. On January 23, 2006 the Company announced that its shareholding in Hunan Valin Steel Tube & Wire Company Limited (Hunan Valin) was diluted to 29.49% as a result of publicly outstanding convertible bonds being converted into shares. NOTE 25: RECONCILIATION FROM IFRS TO US GAAP The annual report of Mittal Steel (available at http://www.mittalsteel.com/) has been prepared in accordance with US Generally Accepted Accounting Principles (US GAAP). These statutory consolidated financial statements I-159

have been prepared in accordance with IFRS. US GAAP varies in certain respect from IFRS. To provide an understanding on the differences between US GAAP and IFRS the effect on consolidated shareholders equity is described in the following table: Equity as at Equity as at December 31, December 31, 2004 2005 $ 7,589 $ 11,984 954 3,609 (9) (1,064) 3,490 11,079 1,322 3,481 3 (1,206) 3,600 15,584

(Unaudited, subject to changes) Total under US GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments recorded to comply with IFRS Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax effect on the above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total under IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The differences between US GAAP and IFRS on consolidated net income are described below: Net income at year Net income at year ended December 31, ended December 31, 2004 2005 $ 5,316 (52) 776 (144) (271) 309 $ 5,625 $ $ 3,885 232 (110) (20) (63) 39 3,924

(Unaudited, subject to changes) Total under US GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments recorded to comply with IFRS Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax effect on the above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total adjustments Total under IFRS
.............................................. ..............................................

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Signing of the financial statements Rotterdam, March 29, 2006 BOARD OF DIRECTORS Lakshmi N. Mittal Aditya Mittal Vanisha Mittal Bhatia Narayanan Vaghul Ambassador Andrs Rozental Lewis B. Kaden Muni Krishna T. Reddy Ren Lopez Wilbur L. Ross

I-161

To the Board of Directors of Arcelor 19, avenue de la Libert, L-2930 Luxembourg INDEPENDENT ASSURANCE REPORT ON UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION Introduction In accordance with your instructions, we report on the unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined income statement (Unaudited Pro Forma Condensed Combined Financial Information) as of and for the year ended December 31, 2006 of Arcelor and subsidiaries (the Company or Arcelor). The Unaudited Pro Forma Condensed Combined Financial Information has been prepared, for illustrative purposes only, to provide the estimated effects of the following transactions as if they occurred on January 1, 2006 for the pro forma condensed combined income statement and as if they occurred on December 31, 2006 for the pro forma condensed combined balance sheet: the acquisition by Mittal Steel Company N.V. (Mittal Steel) of 94.2% of the share capital (on a diluted basis) of Arcelor and all of the outstanding OCEANEs (convertible bonds) of Arcelor (collectively, the Arcelor Acquisition) (the acquisition is reflected in the historical balance sheet as of December 31, 2006 of Mittal Steel); the tender offer by Mittal Steel for the acquisition of all outstanding minority interests in Arcelor Brasil S.A. (Arcelor Brasil), a subsidiary of Arcelor; the $590 million share buy-back program announced on April 2, 2007 and the 27 million share buyback program announced on June 12, 2007; the merger of Mittal Steel into ArcelorMittal; and the proposed merger of ArcelorMittal (the surviving entity in the Mittal Steel and ArcelorMittal merger) into Arcelor, which will subsequently be renamed ArcelorMittal.

Because of its nature, the Unaudited Pro Forma Condensed Combined Financial Information for the year ended December 31, 2006 addresses a hypothetical situation and, therefore, does not represent the Companys actual results. It is the responsibility of the Companys Board of Directors to prepare the Unaudited Pro Forma Condensed Combined Financial Information in accordance with the requirements of European Union (EU) Regulation 2004-809. It is our responsibility to provide the conclusion required by Annex II item 7 of EU Regulation 2004809. We are not responsible for expressing any other conclusion on the Unaudited Pro Forma Condensed Combined Financial Information or on any of its constituent elements. Scope We performed our procedures in accordance with International Standard on Assurance Engagements (ISAE) 3000 Assurance Engagements other than Audits or Reviews of Historical Financial Information. Our procedures, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with source documents, consideration of the evidence supporting the adjustments and inquiries of the Company management. We planned and performed our procedures to obtain the information and explanations we considered necessary in order to provide reasonable assurance that the Unaudited Pro Forma Condensed Combined Financial Information had been properly compiled on the basis stated. We believe that our procedures provide a reasonable basis for our conclusion.

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Conclusion In our opinion: a) the Unaudited Pro Forma Condensed Combined Financial Information has been properly compiled on the basis stated; and b) the basis is consistent with the accounting policies of the Company, which are in accordance with International Financial Reporting Standards as endorsed by the EU.

DELOITTE SA Rviseur dentreprises Eric van de Kerkhove Partner (September 26, 2007)

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