company profile primary operations: smederevo –production...

Primary Operations: Smederevo – Production History

COMPANY PROFILE

“Železara Smederevo”, SmederevoFebruary, 2012

COMPANY PROFILE

1

This presentation (“Presentation”) contains selected information pertaining to the operations of Železara Smederevo, d.o.o. (the “Company”). The sole purpose of this Presentation is to assist recipients in deciding whether they wish to proceed with a further investigation for a possible acquisition of the Company (“Transaction”). It is not intended to form the basis of any investment decision or any decision to purchase the Company. This Presentation does not constitute an offer or invitation for the sale or purchase of any securities or ownernship stakes.

The information in this Presentation has been provided by the Company. No representation or warranty, express or implied, is or will be made, and no responsibility or liability is or will be aaccepted, in relation to the accuracy or completeness of this Presentation or any other written or oral information made available to any interested party or its advisors and any liability therefore is hereby expressly disclaimed. In particular, no representation or warranty is given as to the achievement or reasonableness of any future projections, management estimates, prospects or returns. Only those particular representations and warranties that may be made in a sale and purchase agreement when and if it is finally executed, and subject to such limitations and restrictions as may be agreed, shall have any effect.

This Presentation contains information that the Company considers to be confidential or proprietary in nature.

In furnishing this Presentation, the Company undertake no obligation to provide the recipient with access to additional information or to update this Presentation or additional information or correct any inaccuracies therein.


COMPANY PROFILEŽELEZARA

SMEDEREVO Disclaimer


SMEDEREVO

2

Presentation or additional information or correct any inaccuracies therein.

This Presentation is for distribution only to persons reasonably believed to be necessary to evaluate whether there is an interest in pursuing aTransaction.

22

• Key Investment Highlights

• Železara Smederevo Asset Overview− Facilities and Capabilities

− Raw Materials Supply

− Customers and Export Routes

− Environmental Record



SMEDEREVO Agenda


SMEDEREVO

3

− Environmental Record

− Workforce

• Financial Data

33

1

2

3

1. Unique and High Quality Asset

2. Significant Synergy Opportunities

3. Large Customer Footprint



SMEDEREVO Investment Highlights


SMEDEREVO

4

4

5

6

7

4. Attractive and Growing End Market Segments

5. Established Logistics and Infrastructure Network

6. First Class Safety, Environmental, Quality and Reliability Standards

7. Serbia - Attractive Operating Location

8. Ownership Structure

54

1. Unique and High Quality Asset

• Only flat rolled producer in Serbia and 2nd largest flat rolled producer in Balkan region

• Versatile hot strip mill with width up to 2,050 mm and thickness from 1.5 to 15 mm

• Excess hot strip mill capacity

• The only tin producer in the Balkan region

Indexed (2003 = 100)Shipments vs. EU27 Steel Consumption(Tonnes)



SMEDEREVO Investment Highlights (cont.)


SMEDEREVO

5

200

120

80

40

(Tonnes)2,000

1,6001,203

1,579 1,645 1,5301,394

1,100 1,1301,200 984

800 489

400

0

2003 2004 2005 2006 2007 2008

Total CapitalInvestment $36 $49 $23 $73 $72($MM)

Note1. All 2011F data reflects actual data through September 30, 2011 and forecasts for last quarter

0(1)

2009 2010 2011F

$16 $27 $70

Indexed EU27 Steel Consumption

160

5

2. Significant Synergy Opportunities

• Potential to lower raw material costs through alternative supply arrangements for:− Coke

− Pellets

− Sinter Ore

− Concentrate

• Ability to supply own or source slabs through alternative supply arrangements

• Opportunities to leverage the new owner’s existing customer relationships and saleschannels to sell Železara Smederevo’s steel





SMEDEREVO

6

channels to sell Železara Smederevo’s steel

• Platform for potential high-return growth investments

• Substantial tax attributes available to offset approximately $200MM of future incometaxes

Estimated Input Usage

Tonnes Per One Tonne of Crude Steel Produced

Pre-PCI Post-PCIName Per Tonne Amount Per Tonne Amount

Coke 0.5445 0.4866

Pulverized Coal Injection (PCI) 0.0000 0.1206

Pellets 1.0794 1.0794

Sinter Ore (for Sinter) 0.4091 0.4091

Concentrate (for Sinter) 0.1195 0.1195

6

3. Large Customer Footprint

• Established customer base in Balkan region and into Western and Central Europe

• 400+ customers with the top 10 comprising 35% of 2010 tonnes shipped

− No single customer accounts for more than 7% of volume

• Železara Smederevo is focused on developing longer term customer relationships

Product Mix Contract vs. Spot End Market Mix





SMEDEREVO

7

Product Mix(%)100 8 2

Contract vs. Spot(%)100

End Market Mix(%)

100 11 129 12

80 13 14

60 6 14

4064 58

20

02006 2011F

Hot Rolled Pickled Cold Rolled

Tin Other

Notes1. All 2011 YTD data as of September 30, 2011

2. Includes Service Centers, Stockist / Distributors, Traders

10

80 47 80

60 60

40 90 40

5320 20

0 0(1)2006 2011 YTD

Spot Contract

2 8

62 51

25 29

2006 2011 YTD (1)

Construction SSC (2)

Auto and Appliance Packaging

7

4. Attractive and Growing End Market Segments

• Proven capability to produce high strength grades for pipe industry including X70

• Established cold rolled performance to appliance and automotive customers in theregion

• Automotive and appliance growth in Serbia

• Ability to produce chequered plate (floor plate) material for construction applications

• Surrounding geographies still in beginning phase of steel intensity curve





SMEDEREVO

8

Key End Market Segments2011 YTD Shipment Tonnes

Other 4% (1)

White Goods 4% Construction 3%

Automotive 4% Service CentersMetallurgy 5% 27%

13%

World Steel Intensity CurveSteel Consumption (Kg Per Capita)

1,200

1,000 South Korea

800

600 Japan

Packaging 19% 21%400

ChinaSlovenia

CISB&H

Serbia

GermanyEU

U.K.USA

Pipe and Tube Stockist / Distributors

Note1. Includes Machinery, Metal Goods, Trader and Transport categories

200 BulgariaCroatia

Romania0 Macedonia

0 10,000 20,000

Source: WSA, IMF

30,000 40,000 50,000

GDP Per Capita ($)

8

5. Established Logistics and Infrastructure Network• Danube ports provide access for barge receipts of raw materials and steel shipments

− Port 1

• One Gantz crane for receiving raw materials

• One crane used for shipping

− Port 2

• Two Gantz cranes

• Access to rail and transloading facilities





SMEDEREVO

9

• Access to rail and transloading facilities− Rail access from Port 1 to Smederevo facility

− In 2011, Železara Smederevo donated land necessary for the government to complete rail access from Port 2 toSmederevo facility

• If not completed in 5 years, land will be returned to Železara Smederevo

• Established network of logistics partners (truck, rail)

9

6. First Class Safety, Environmental, Quality and Reliability Standards

• Well trained and established local work force

• ISO and TS certified

• Excellent safety record and training program with zero days away from work injuries in 2010

• ~$90MM spent on environmental projects from 2007 - 2011 YTD (including construction of a new modernlandfill)

• Established preventative maintenance procedures focused on facility reliability

• Excellent working relationship with relevant authorities





SMEDEREVO

10

• Excellent working relationship with relevant authorities

Historical Safety Track Record

Number of Incidents With Injury600 572

500

400 356

300

200

100

0

2002 2003

323

11762 59

2004 2005 2006 2007

Zero daysaway from

work injuriesin 2010

39 26 30 17

2008 2009 2010 2011 YTD

10

7. Serbia Attractive Operating Location

• Central location in Balkan region with established trading routes facilitating accessto Europe, Russia and the Middle East

• Second lowest corporate tax rate in Europe (10%)

• Free trade agreements with Turkey and Russia for access to developing markets, aswell as agreements with EU and USA

• In October 2011, the European Commission recommended Serbia be given EUcandidate status

• Educated workforce: average 14 years education and literacy rate exceeding 96%





SMEDEREVO

11

• Educated workforce: average 14 years education and literacy rate exceeding 96%

SlovakiaGermanyFrance

AustriaSwitzerland Hungary

RomaniaSlovenia

Croatia

Bosnia and SerbiaHerzegovina

ItalyBulgaria

Montenegro

Macedonia

Albania

Greece Turkey

10th Pan-European Corridor 7th Pan-European Corridor (Danube River)11

8. Ownership Structure

• Železara Smederevo is organized as a Limited Liability Company

• 100% of ownership stake is in possesion by the Republic of Serbia, as of 31st of January 2012.

• Prior to acquisition of the company by the Republic of Serbia, Železara Smederevo was a subsidiary of U.S. Steel Corporation.





SMEDEREVO

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was a subsidiary of U.S. Steel Corporation.

12

Železara Smederevo at a Glance

• Železara Smederevo products include hot and cold rolled products and tin plate

− Annual crude steel production capability of 2.2MM tonnes

− Annual hot strip mill rolling capacity of 2.4MM tonnes

− 2010 shipments of 1.4MM tonnes

− Peak crude steel production of 1.7MM tonnes (2006)

− 83% of products exported to 35 countries worldwide

• Železara Smederevo employs ~5,400 people

• Total 2010 revenues of approximately $1Bn



SMEDEREVO Assets: Overview


SMEDEREVO

13

• Total 2010 revenues of approximately $1Bn

Sales by Product2011F Shipment Tonnes

TinCold Rolled Other

2%

14%12%

Pickled 14%

58%

Hot Rolled

13

Location of Železara Smederevo Facilities

Main Facility

Hungary

Croatia

Tin Mill• Tin coating line• Two shearing lines

Scale (miles)0 25 50

Subotica

Vojvodina

Zrenjanin

Novi Sad

Pančevo

Belgrade

• Sintering lines75 100 • Two blast furnaces with new

pulverized coal injection

facility• Steel shop• Two slab casters

Romania • Hot strip mill• Sheet cold reduction mill• Shearing and slitting lines• Annealing and tempering

units



SMEDEREVO Assets - Location


SMEDEREVO

14

Bosnia andHerzegovina

Two Danube River Ports

• Used for raw material

receipts and steel shipments

SmederevoŠabac

Kučevo

Kragujevac Bor

Užice

NIš

units

Limestone Mine• Metallurgical lime production• Quartz and limestone quarryNovi Pazar

Montenegro

Kosovo Bulgaria

Albania Macedonia

Tin Mill Main Facility and River Ports Limestone Mine

14



SMEDEREVO Facilities


SMEDEREVO

1515

Key Equipment

Smederevo Primary Operations Key Equipment

CapacityMachine (MM t)

Sintering Lines (3) 1.3

Blast Furnace 1 0.9

TechnicalMake Specifications

• Dwight-Lloyd

• UZKM, USSR

• USSR MetallurgicalInstitute

Comments

• Sinter plant main stack scrubber upgraded in 2008 - 2009($22MM)

• Relined in 2005 ($27MM)• Pulverized coal injection completed in 2011 ($50MM)



SMEDEREVO Primary Operations: Smederevo – Key Equipment


SMEDEREVO

16

Blast Furnace 2 1.2

Steelmaking Vessels 2.2K1

K2

K3

Slab Casters (2) 2.2

Institute

• Woodings pneumaticdrill machine

• USSR MetallurgicalInstitute

• Woodings hydraulicmud gun

• Juzno Uralski Masinski • Volume of eachZavod (JUMZ), USSR vessel after reline

is 73.8m3

• JUMZ • 2,080 mm casters

• Pulverized coal injection completed in 2011 ($50MM)

• No relining required until 2020

• Relined in 2007 ($41MM)

• Pulverized coal injection completed in 2011 ($50MM)

• No relining required until 2020

• K1: Upgraded in 2006, last reline in 10/2011

• K2: Last reline in 9/2008

• K3: Upgraded in 2004, last reline in 9/2010

• Adjustable width mold upgraded in 2005(1,050 - 2,080 mm) by VAI, Austria

16

Production History

Raw Steel Production(000s of Tonnes)

1,800

1,600

1,400

1,684

1,493

1,212

1,656

1,254 1,308



SMEDEREVO Primary Operations: Smederevo – Production History


SMEDEREVO

17

1,200

1,000

800

600

400

200

0

1,212

2005 2006 2007

1,054

2008 2009 2010 2011F

17

Key Equipment

Smederevo Hot Rolled Products Key Equipment

Machine Capacity (MM t) Make

6 Stand Hot Strip Mill 2.40 • SMS-Wean United

Technical Specifications

• 2 reheat furnaces (NG/BFG)=250 TPHcapacity

• Coil Dimensions: thickness1.5 - 15.0 mm, width760 - 2,050 mm, 35t max coil weight

Comments



SMEDEREVO Hot Rolled Products: Smederevo – Key Equipment


SMEDEREVO

18

Pickle Line 1 0.30 • Schloemann-Siemag

Pickle Line 2 0.75 • Davy McKee

Hot Roll 0.45 • Nippon SteelShearing Line

Hot Roll Slitting Line 0.17 • Nippon Steel

760 - 2,050 mm, 35t max coil weight

• Coil Dimensions: thickness1.5 - 6.0 mm, width 650 - 1,500 mm, 18tmax coil weight

• Maximum speed: 125m/min

• Coil Dimensions: thickness1.5 - 6.0 mm, width 650 - 1,500 mm, 35tmax coil weight

• Maximum speed: 170m/min

• Upgraded and restartedin 2008 ($16MM)

• Upgraded 2005 - 2006

• Tension leveller installed in2006

18

Production History

Hot Strip Mill Production(000s of Tonnes)

1,800

1,600

1,400

1,703 1,685

1,289

1,642

1,462

1,243



SMEDEREVO Hot Rolled Products: Smederevo – Production History


SMEDEREVO

19

1,200

1,000

800

600

400

200

0

2005 2006 2007

1,127

2008 2009 2010 2011F

19

Products

• Železara Smederevo makes structural steels and low-carbon and fine grained micro-alloyed steels

Hot Rolled Products

Type

Hot Rolled Coils

Hot Rolled Sheet

Hot Rolled Pickled Coils

Thickness (mm) Width (mm)

1.5- 15.0 720 - 2,050

3.0- 15.0 720 - 2,050

1.5- 6.0 700 - 1,500

2011F SalesWeight (t) (000s Tonnes)

max 15 137 (1)

20 142

6 - 35 511 (1)



SMEDEREVO Hot Rolled Products: Smederevo – Products


SMEDEREVO

20

Hot Rolled Pickled Coils

Hot Rolled Pickled Sheets

Hot Rolled Slit Coils

Hot Rolled Pickled Slit Strips

1.5- 6.0 700 - 1,500

1.5- 6.0 700 - 1,500

1.5- 8.0 52 - 699

1.5- 6.0 52 - 699

20 142

2 – 6 9

max 15 6

max 6 3

Note1. Includes chequered material 20



SMEDEREVO Cold Rolled Products: Smederevo – Key Equipment


SMEDEREVO

Key Equipment

Smederevo Cold Rolled Products Key Equipment

CapacityMachine

5 Stand Cold Reduction Mill

Box AnnealingShop 1

(MM t) Make

0.75 • Davy McKee

0.60 • Salem (Shop 1)

Technical Specifications

• Coil Dimensions: thickness 0.17 - 3.00 mm,width 650 - 1,500 mm, 35t max coil weight

• Maximum speed: 2,000 m/min

• 40 bases in shop, 60t per base

Comments

• Upgraded in2004 ($6MM)

21

Shop 1

Shop 2

Continuous Annealing Line

1 Stand Temper Mill

2 Stand Double Cold Reduction Mill

Cold Rolled Shearing LinesLine 1

Line 2

Slitting Line

Cleaning Line

0.60 • Salem (Shop 1)

• Davy McKee (Shop 2)

0.24 • Davy McKee

0.20 • Ernst Talman Werke

0.40 • Davy McKee

0.20 • Schloemann-Siemag (Line 1)

• Davy (Line 2)

0.20 • Davy McKee

0.24 • Davy McKee





• Maximum speed: 600 m/min


• Maximum speed: 2,000 m/min

• Upgraded in2005 ($4MM)

21

Production History

5 Stand Tandem Mill Production(000s of Tonnes)

600

500 474 489

408

475



SMEDEREVO Cold Rolled Products: Smederevo – Production History


SMEDEREVO

22

400

300

200

100

0

408

2005 2006 2007

383

356

260

2008 2009 2010 2011F

22

Products

Cold Rolled Products

2011F SalesType Thickness (MM) Width (MM) (000s Tonnes)

Cold Rolled Strip 0.35 - 3.00 700 - 1,500 115

Cold Rolled Sheet Products 0.35 - 3.00 700 - 1,500 27

Cold Rolled Slitted Products 0.35 - 3.00 200 - 700 10



SMEDEREVO Cold Rolled Products: Smederevo – Products


SMEDEREVO

23

Full Hard Products 0.16 - 3.00 700 - 1,500 5

2823

Key Equipment

Šabac Tin Mill Key Equipment

Machine Capacity (MM t) Make Technical Specifications Comments

Electrolytic Tinning 0.20 • Davy McKee • Coil Dimensions: thickness • Tension leveler installed in 2004 ($2MM), sideLine 0.14 - 0.49 mm, width 650 - trimmer installed in 2007

1,000 mm, 18t max coilweight

Shearing Line 1 0.05 • Davy McKee • Product range: thickness • Line not used frequently



SMEDEREVO Tin Mill: Šabac – Key Equipment


SMEDEREVO

24

Shearing Line 1 0.05 • Davy McKee • Product range: thickness • Line not used frequently

• Hallden 0.2 - 0.5 mm, width

(Shears) 650 - 1,000 mm, 18t max coilweight

Shearing Line 2 0.05 • Davy McKee • Product range: thickness 0.2 • Line upgraded

• Hallden - 0.5 mm, width 650 - 1,000 − Processor changed from original to PLC in(Shears) mm, 18t max coil weight 2006

− Shears system changed to direct drive andshears changed to ZDAS in 2008

24

Production History



SMEDEREVO Tin Mill: Šabac – Production History


SMEDEREVO

Electrolytic Tinning Line Production(000s of Tonnes)

250

200

168

202 201

174 178

25

150

100

50

0

2005 2006 2007 2008

146 145

2009 2010 2011F

25

Products

• Železara Smederevo makes continuously or batch annealed and skin passed (single reduced) ordouble reduced tin plate, in form of either coils or sheets

Tin Mill Products

2011F SalesType Thickness (mm)

Double Reduced Coils 0.14- 0.17

Width (mm) Weight (t) (000s Tonnes)

720 - 960 3.0- 11.8 17



SMEDEREVO Tin Mill: Šabac – Products


SMEDEREVO

26

Double Reduced Sheets 0.14- 0.17

Single Reduced Coils 0.18- 0.40

Single Reduced Sheets 0.18- 0.40

720 - 960 0.5- 2.7 9

720 - 960 3.0- 11.8 76

720 - 960 0.5- 2.7 31

26

• Danube ports provide access for barge receipts of raw materials andsteel shipments

•

− Port 1

• One Gantz crane for receiving raw materials

− Capacity of 1,700 tonnes of coke / day

− Throughput of 450,000 tonnes / year

• One 40 tonne crane used for shipping finished products

− Throughput of 480,000 tonnes / year99 year lease



SMEDEREVO Danube River Ports


SMEDEREVO

27

− Port 2

• Two Gantz cranes with− Capacity of 260,000 tonnes / month of raw material

− Throughput of 2.2MM tonnes / year

• Owned by Železara Smederevo

• All types of barges able to dock at Ports

• Access to rail and transloading facilities

− Rail access from Port 1 to Smederevo facility− In 2011, Železara Smederevo donated land necessary for government to complete rail

access from Port 2 to Smederevo facility

• If not completed in 5 years, land will be returned to Železara Smederevo

27

Raw Materials Supply

Raw Material Entry Routes Summary

Russia

Coke

• Delivered primarily by trainwith some by barge

• Lump coke delivered fromBosnia, Hungary, Poland UK

and Ukraine

Denmark

The Netherlands

Belgium Germany

Belarus

PolandUkraine

Iron Ore

• Delivered by barges onthe Danube toSmederevo Port

• Sinter ores, iron orepellets and concentratesourced from Ukraine



SMEDEREVO Raw Materials Supply


SMEDEREVO

28

Limestone• Delivered by train from

Železara Smederevo’s facility in Kucevo

Belgium Germany

Czech Republic

France

Switzerland Austria

Slovenia

Croatia

Ukraine

Slovakia

Hungary

Romania

Port of Constanta

Scrap

• Delivered by truck andtrain from sources within


Montenegro

Italy

SerbiaBulgaria

Macedonia

Turkey

• Primary Port forseaborne receipts of rawmaterials

• From Port, raw materials

Serbia

Illustrative Coke Entry Routes

AlbaniaGreece

Illustrative Iron Ore Entry Routes Danube River

are transloaded intobarges along Danubefor delivery to plant

28

End Market Segments for Panther Products

Key Market Segments and Top Customers

Key End Market Segments2011YTD Shipment Tonnes

5% 4% 4% 4%13% 3%

27%

19%

21%

Top 10 Customers2010 Shipments

% of

Customer Shipments

A 6.3

B 5.6

Type Region

Converter South-Eastern Europe

Service Center Central Europe



SMEDEREVO End Market Segments for Železara Smederevо’s Products


SMEDEREVO

29

21%

Service Centers Packaging White GoodsStockist / Distributors Metallurgy Other (1)

Pipe and Tube Automotive Construction

Sales by Type(%)100

C 4.1

D 3.7

E 2.9

F 2.7

South-WesternService Center

Europe

Pipe and Tube Western Europe

Service Center Eastern Europe

Pipe and Tube Western Europe

8060

40200

ContractTonnes(000s)

Note

86 86 77

14 14 23

2008 2009 2010

215 149 314

Contract Spot

53 G

H47

I2011YTD

J429Total

Central and South-2.7 Packaging

Western Europe

2.7 Service Center Eastern Europe

2.5 Service Center South-Eastern Europe

2.1 Pipe and Tube Western Europe

35.3

1. Includes Machinery, Metal goods, Trader and Transport categories29

Panther Key Competitor Facilities

Hungary

Slovenian Steel GroupAcroni (Jesenice)

(Cap 0.4MM t)

Slovenia

Dunaferr IUD Group(Dunaujvaros)(Cap 1.6MM t)

Romania

ArcelorMittal(Galati)

(Cap 5.5MM t)



SMEDEREVO End Market Segments for Železara Smederevо’s Products (cont.)


SMEDEREVO

30

SloveniaCroatia

Železara Smederevo (Sabac)(Cap 0.2MM t)Bosnia

Herzegovina

Železara Smederevo(Smederevo)(Cap 2.2MM t)

Erdemir(Targoviste)

(Cap 0.1MM t)

Serbia

Interlemind

Montenegro

(Leskovac)(Cap .03MM t)

ArcelorMittal

Bulgaria

Stomana(Pernik)

(Cap 0.4MM t)

(Skopje)(Cap 1.0MM t)

Makstil(Skopje)(Cap 0.6MM t)

Macedonia

30

Primary Steel Export Routes Summary

Russia

Germany, AustriaBenelux and Hungary

• Danube by upstreambarge

UK

Balkan Region

Denmark

The Netherlands

Germany

Belarus

Poland

Poland, Czech Republic,Slovakia and Hungary

• Railways and truck



SMEDEREVO End Market Segments for Železara Smederevо’s Products (cont.)


SMEDEREVO

31

Balkan Region

• Primarily sold ex works(via trucks) and partially

delivered by rail

Italy, Turkey, Greece and

North Africa

• Railways and truck to

Germany

Belgium

France

Switzerland

Czech Republic

Slovakia

Austria

HungaryRomania

SloveniaCroatia


Ukraine

Romania and Bulgaria

• Danube by downstreambarge

ports of Rijeka, Croatiaand Koper, Slovenia Italy

Italy, UK, Portugal and

Spain

• Railway to port of Bar,Montenegro

SerbiaBulgaria

Montenegro Macedonia

Albania

Greece

Danube River

Turkey, Asia, andOverseas

• Barge to port ofTurkey Constanta, Romania

31

Overview

• Clear and enforced environmental policy

• Since 2007, Železara Smederevo has spent ~$90MM on environmental projects

• Certified for ISO (ISO 14011 in 12/2000 and ISO 9001 in 9/2003), TS (TS 169494 in12/2008) and HACCP (Hazard Analysis and Critical Control Point for Sabac in4/2005)

• Compliant with air discharge emission standards



SMEDEREVO Environmental


SMEDEREVO

32

Environmental Expenditure 2007 - 2011YTD ($MM)

Sinter Plant Main Stack Scrubber $27.0

Steel Shop Secondary Dedusting 23.4

Landfill 23.0

Blast Furnace Sludge Filter Press 3.9

Steel Shop Filter Press 3.3

Air Compressor & Oxygen Lance Cooling System 2.3

Road Improvements 1.7

Other 2.6

Total $87.2

32

Waste Water Management

− February 2008: obtained water permit for intake of industrial water, canal Danube

• Železara Smederevo has since obtained the following permits

• Valid until September 2014

− July 2009: obtained permit for sanitary waste water treatment plant


− November 2009: obtained water permit for facility for potable water



SMEDEREVO Environmental (cont.)


SMEDEREVO

33


• Železara Snederevo committed to improve waste water quality and reduce amount of discharged water

− Steel Shop - Cooling water for lances - 450 m3/h

• In working towards obtaining remaining water discharge permit, the following steps havebeen taken to reduce total average discharge to 2,000m3/h from 3,500m3/h

− Construction of cooling water recirculation for Air Compressor Station - 1,050 m3/h

− Reheat Furnace door cooling water - 65 m3/h

− Pump Station 225 - redirection Sinter Plant Scrubber water - 110 m3/h

− CRM - Coils cooling water - 15 m3/h

• Železara Smederevo has an agreement to operate the Smederevo facility without adischarge permit until 12/6/2011

− Steps are being taken to extend the agreement

33

Workforce Overview

Headcount by Function

Administration (1) 685

Commercial (2) 147

Labor Unions in Železara Smederevo

• Approximately 85% of hourly employees aremembers in one of six registered unions in the company

− Three Unions are “Representative” (i.e., more than 15% ofemployees are their members)

• “Autonomous” Union - 2,240 members



SMEDEREVO Human Resources


SMEDEREVO

34

Commercial (2) 147

Maintenance 606

Operations 3,869

Quality 109

Total 5,416

• “Autonomous” Union - 2,240 members

• “Independent” Union - 1,044 members

• “ASNS USS” - 954 members

• All “representative” Unions participate in collectivenegotiations

• Other three unions are small

• Approximately 950 employees are not unionmembers

Notes1. Includes Accounting and Finance, Legal, Human Resources, IT, Public Relations, Catering, Procurement, General Director’s Office

2. Includes Sales and Customer Service Representatives (including Technical Service Representatives), Business Planning andTransportation 34

Historical Financial Performance

Shipments(000s Tonnes)

1,750 1,645

1,579

1,500

1,250

1,530

1,394

Sales($MM)1,750

1,500

1,250

1,573

1,253



SMEDEREVO Financial Summary


SMEDEREVO

35

1,250

1,000

750

500

250

0

2006 2007

Note

1,100 1,130

2008 2009 2010 2011F

1,250

1,000

750

500

250

0(1)

1,005 1,020 1,039

709

(1)2006 2007 2008 2009 2010 2011F

1. All 2011F data reflects actual data through 9/30/11 and forecasts for last quarter

35


COMPANY PROFILE

ŽELEZARA SMEDEREVO Financial Summary (cont.)

COMPANY PROFILE

ŽELEZARA SMEDEREVO


Total Cash Cost/Tonne (1)($/Tonne)

1,200

975

1,061

EBITDA($MM)

150

821,00075

808825 29

38


36

808 29800 738

0618

600

(75)

400

(150) (130)200

(160)

(180)

0 (225)

2006 2007 2008 2009 2010 2011F 2006 2007 2008 2009 2010 2011F

Note1. Total costs (cost of sales, SG&A, income from investees, net gain/loss on disposal of assets and other income/loss) less depreciation divided by total shipments

5736



COMPANY PROFILE

ŽELEZARA SMEDEREVO Financial Summary – Income Statement

COMPANY PROFILE

ŽELEZARA SMEDEREVO

Operating revenues 1,035,666 995,089 Ravenues from sale of goods and services 1,018,959 1,000,836 Revenues from activated effects 0.5 - Increase in value of work in progress and finished goods 100,543 183,901 Decrease in value of work in progress and finished goods (84,414) (191,358) Other operating revenues 577 1,710

Operating expenses (1,159,062) (1,145,034) Cost of goods sold (8,364) (11) Cost of material (936,021) (914,619)

Income Statement (000 USD) 2010 2011

37 37

Cost of material (936,021) (914,619) Salaries and other staff costs (88,130) (100,133) Other operating expenses (126,547) (130,271)

EBITDA (123,397) (149,945) EBITDA margin n.m n.m

Depreciation (18,393) (21,013)

EBIT (141,790) (170,957) EBIT margin n.m n.m

Financial revenues 100,156 162,054 Financial expenses (142,766) (181,167)

Other revenues 40,088 41,813 Other expenses (48,371) (64,988)

Profit (Loss) before tax (192,682) (213,245)

Income tax - -

Net profit (Loss) (192,682) (213,245) Net margin n.m n.m

Summary Balance Sheet

Comments

• 86% of receivables current and 6% up to 30 days overdue

• Average receivables term of approximately 52 days


COMPANY PROFILE

ŽELEZARA SMEDEREVO Financial Summary – Balance Sheet

COMPANY PROFILE

ŽELEZARA SMEDEREVO

ASSETSIntangible assets 9,326 9,113Tangible assets 177,517 208,580Financial assets 292 621Total fixed assets 187,135 218,314Inventories 188,880 120,334Receivables 173,643 111,928Financial assets 0 0Cash 42,580 12,977Total current assets 405,103 245,239

2010 2011Balance Sheet (000 USD)

38

• Average receivables term of approximately 52 days

• Bad debt reserve of 6% of receivables

• Average external payables term of approximately 33 days

• All but $1MM of intercompany payables owed to U.S. SteelKosice for raw materials (tin anodes, slabs, coke)

38

Total current assets 405,103 245,239Accrued income 14,833 8,344Loss above the equity value 241,892 430,541TOTAL ASSETS 848,962 902,438

EQUITY & LIABILITIES Share capital 144,637 141,801Subscribed unpaid capital 0 0Rev. reserves 0 0Reserves 5,850 5,736Retained profit/loss 0 0Current year profit (150,488) (147,536) Own repurched shares 0 0Total shareholders equity 0 0Long term reservations 10,982 13,083Long term liabilities 561,238 769,167Current liabilities 272,928 116,880Deferred income 3,813 3,308TOTAL EQUITY & LIABILITIES 848,962 902,438

company profile primary operations: smederevo –production...

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