ArcelorMittal Galati – from energy

intensive to energy competitive

ArcelorMittal in Romania

• 4 production units: Galati (flat products), Hunedoara (long products), Iasi, Roman and Galati (tubes and pipes) + functional services units;

– 15,000 employees, including contractors. Indirect related jobs – 60,000.

• ArcelorMittal Galati – the 10th Romanian exporter

• ArcelorMittal Roman - the 59th Romanian exporter

• ArcelorMittal is exporting more than 70% of its production made in Romania

• We are the Romanian 10th company (2012) by turn-over, an active member of COMPIROM and ABIEC associations.

• In Romania, intensive energy industries contribute 32.5% of the GDP

The steel made in Romania by ArcelorMittal

is exported for:

Our markets are very competitive and truly opened • Steel industry is an energy intensive industry. • Energy is 35% of our added value • We cannot pass on additional costs to it’s mainly global customers

Ship building Pressure vessels Constructions

Automotive industry Wind mills Bridges, infrastructure

Our strategy for survival in post-crisis world

• Adaptation to a post crisis world where demand for steel has reduced and competition has increased on truly open markets:

– Footprint exercise: from 4 Mt to 2 Mt

– Increase efficiency and productivity: through our transformation programs ARC2012 and 2015+, reorganization and investments on core processes 15% cost reduction 2013 vs. 2007.

– Energy efficiency is a key driver of our competitiveness ENERGIZE Project (2012 – 2015) 100 projects to improve our energy footprint and to save approximately 15% of our energy consumption

– More then 200 Million Euros invested in a context of losses since 2009

Energy efficiency: 1st axis: efficient usage of non

renewable resources • Steel production: 2 main processes

– Blast furnace process: iron ore + fuel (coke) hot metal

• Decrease fuel consumption improve CO2 balance

• Investment of more than 90 Million Euros, in last 4 years

– Steel shop process: hot metal + recycled scrap Liquid steel

• Increase scrap rate recycling improve also CO2 balance

• Results:

– Reduction of coke equivalent rate by nearly 20%; BF5 is now among best performers in Europe

– Consumption of more than 150 kg/ton of recycled scrap at steel shop

– Impact for community: reduction of CO2 emission by more than 20% in ton CO2/ ton LS and by 40 % in absolute terms

586

548

534 537

520

502

480474

485

470

2008 2009 2010 2011 2012 2013 2014 YTD Q3-2014 2015 2018

Galati BF5 - Eqv. Coke rate kg/t

Galati BF5 - Eqv. Coke rate kg/t

Energy efficiency: 2nd axis: reducing

consumption of electricity and natural gas

11,5

0,0

12,0

11,0

12,5 12,12

2015

10,67

-8,7%

11,67

11,42

2011 2014 Q3 2014 YTD

10,50

12,50

2013 2012

-16,0%

• Energize project is focused on efficient way of use for any type of energy: electricity, natural gas, steam, compressed air, oxygen, blast furnace gas (internal resource)

• Electricity and natural gas, cover 70% of total energy consumption

• Our target: -15% global energy efficiency indicator, GJ/t

• Methodological approach by benchmarking BAT

• 10% till the end 2014 with an investment cost of 17M€

-boiler nr.8, BF5 Turbo Blowers, VFD package, ...

• 5% will be delivered till the end of 2015, for which, another 15M€ will be invested

-boiler nr.10, HP2 Hot Leveller, Sinter M6

• Further 12% reduction, till 9,1GJ/t, could be achieved but with very high investment requests, over 100M€, needed to cover structural gap between Galati plant and a modern one, with projects like:

-BOF steam generation, TRT, BF5 HS Oxyfuel, HSM new WBF

AMG energy efficiency improvement

Energy efficiency: 3rd axis: reducing

our environmental footprint • Responsible usage of our resources:

– Water consumption reduced by more than 40% in m3/ton steel

produced.

• Significant reduction of our air emission footprint:

– Dust emission reduced overall more then 70% in tons of

dust/year.

• Result in better quality of life for community:

– Air quality in Galati:

very good (level 2,10-20ug/m3, as per EPA scale)

Better than other cities in Romania (WHO report)

54514948

29272622

18

0

20

40

60

Galati Buzau Botosani Bucharest Oradea Craiova Timisoara Bacau Iasi

ug/m3

Support needed to further decrease the energy

consumption and improve environmental footprint

• Most expensive investments required are not affordable in the

current steel market

• Several levers available for the support

– Access to European Funds should be allowed and supported for

energy efficiency projects and environmental projects

– Set up a scheme with Indirect CO2 compensation as allowed by the

European directive

– State aid

But our efforts will not be sufficient and activity

will be endangered if Romania does not establish

a stable frame for our activities

Electricity dossier

• GC exemption to be enforced as

soon as possible

• Contracting platform for big users

to be adapted to their needs and

aligned with best practices in other

European countries

Natural Gas dossier

• Still a major concern for us, a

danger for our future.

• Today: no market

• Stable frame needs to be ensure

for next 10 years to allow

investments to flow

Conclusion

• Through its transformation program ARC2012-ARC2015, our

plant –supported by ArcelorMittal in a very difficult period-

has invested more than 150 Million Euros to improve its

energy and environmental footprint.

• This approach brought spectacular improvement results

closing more than 80% of the gap with best in class plants in

Europe.

• But even with huge investments, this better energy efficiency

has not been able to off-set the exponential cost increase of

the energies in the past years.

• To avoid closure of big chunk of the energy intensive

industries in Romania and ensure their future, maintaining

global energy cost competitiveness remains a priority:

sustainable, predictable and affordable energy and natural

costs to compete fairly on international market.

• Solutions exist, are legally implemented in most European

countries and must address all energy cost components.