North of the Border,CARI, Ottawa, Jun 2016

North of the Border:The Future of Canadian Steelmaking

Presentation at:

75th Annual Convention Ottawa, Canada

by: Becky E. Hites, PresidentJune 10, 2016

Canada Accounts for 11% of North American Crude Steel Production

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Canada11%

Mexico17%

United States72%

North American Crude Steel Production by Country - 2015

Source: World Steel Association

Crude Steel Production Was Down 8.6% in 2015 and Down in All Three Major North American Countries

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North American Crude Steel Production

USA Canada Mexico


Canadian Crude Steel Production Has Stagnated Over the Past 5, 10 and 20 Years…

1967-2015 1995-2015 2005-2015 2010-2015 2014-201548 Years 20 Years 10 Years 5 Years 1 Year

Canada 0.7% -0.7% -2.1% -0.9% -2.2%Mexico 3.8% 2.1% 1.2% 1.6% -3.9%United States -0.8% -0.9% -1.8% -0.4% -10.5%Total - North America -0.3% -0.5% -1.4% -0.1% -8.6%


North American Crude Steel Production Compound Annual Growth Rates

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And Was 12.5 Million Metric Tonnes in 2015

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Canada Crude Steel Production


Canadian Steelmaking Has Been in Decline Through Both the BOF and EAF Production Routes

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Canadian BOF and EAF Annualized MonthlyCrude Steel Production

BOF EAF

Source: AISI, Statistics Canada & Canadian Steel Producers Association

Compared To the 2000 Peak, in 2014 BOF Steelmaking Was Down 2.1 Million Tons and EAF Was Down 1.8 Million Tons

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Canadian Crude Steel Production by Type

BF/BOF EAF


Electric Arc Furnace Steelmaking Has Been Steady At About 40% of Canadian Production

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Canadian EAF Percent of Total Crude Steel Production


Canada Has 14.5 Million Tons of Crude Steel Capacity and 15.6 Million Tons of Finished Product Capacity Split 12.6 Million Tons of Flat Products

and 3 Million Tons of Long Products

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Year Age of Semi ProductMill Started Mill BOF/EAF Long/Flat ProductsAlta Steel, Edmonton, Alberta 1955 61 EAF Long 330 330 Rebar, Flat Bar, Engineered Bar, Ball Stock, Moly-Cop Grinding RodArcelorMittal Dofasco, Hamilton, Ontario 1978 38 BOF/EAF Flat 3,630 4,600 HRB, CRC, Galv, Galvanneal, Galvalume, Tinplate, TagTough, UltraVitArcelorMittal Montreal-Contrecoeur, Quebec 1978 38 EAF Long 400 400 Bar & Wire RodArcelorMittal Montreal-Longueuil, Quebec 1978 38 EAF Long 400 400 BarEssar Steel Algoma, Sault Ste Marie, Ontario 1972 44 BOF Flat 4,084 3,300 HRB, CRC, PlateEvraz, Regina, Saskatchewan 1961 55 EAF Flat 1,200 1,200 Slab, HRB, Pipe & TubeGerdau Cambridge, Ontario 1998 18 EAF Long 340 323 Rounds, Squares, Flats, Angles, Channels, Sections & RebarGerdau Manitoba, Selkirk 1990 26 EAF Long 360 342 Merchants, SBQ, Rebar, Angles, Channels & Light BeamsGerdau Whitby, Ontario 2000 16 EAF Long 1,000 950 Angles, Channels, Grader Blades, Rebar, Beams, Flats & BilletsHamilton Specialty Steel, Ontario 1997 19 EAF Long 200 200 SBQUS Steel Hamilton, Ontario 1971 45 BOF Flat HRB, CRC, GalvUS Steel Lake Erie, Nanticoke, Ontario 1980 36 BOF Flat 2,600 3,600 HRB, CRC, Galv, Galvanneal

Total 14,544 15,645

Source: AIST Directory Iron & Steel Plants, Company Reports, Market Sources, & Steel-Insights, LLC estimates

Capacity

(Thousand Tons)

Major Canadian Mills

Idle

Apparent Steel Consumption in Canada Has Declined At a 1.5% Compound Annual Rate Over the Past Decade Through 2015

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Canada Steel Production, Imports and Exports

Production Imports Apparent Steel Use


Canadian Shipments in 2014 Were 76% Sheet, 11% Bar, 3% Plate, 3% Wire Rod, 2% Primary Forms, 2% Tin Plate

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Sheet76%

Bar Products11%

Plate3%

Wire Rod3%

Structurals2%

Tin Plate2%

Primary Forms2%

Rail & Structurals1%

Canadian Steel Shipments by Product 201413.4 Million Tons Including Primary Form Products

S

Source: AISI & Statistics Canada

Canada Exports Over Half of Its Steel Production

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Canada Steel Production and Exports

Production Exports


Exports Were 7.1 Million Tons in 2014, Up From 6.5 Million Tons in 2013; With 1.6 Million Tons of Sheet & Strip, 1.2 Million Tons of

Pipe & Tubing and 1.1 Million Tons of Galvanized Sheet

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Canadian Steel Exports

Sheets & Strip Pipe & Tubing Galvanized

Hot Rolled Bar Plate Semi-Finished

Wire Rod Tinplate & TFS Rails & Accessories

Source: AISI & Statistics Canada

Imports Surged 15% in 2014 Led By 2.2 Million Tons of Pipe & Tubing &

1.5 Million Tons of Coated Sheet

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Canadian Steel ImportsPipe & Tubing Coated Plate, Cut-To-Length

Hot-Rolled Structural Shapes Cold Rolled

Hot Rolled Bar Reinforcing Bar Semi-Finished

Source: AISI, Statistics Canada & Global Trade Atlas

Our New Challenging World

• Less homogeneous economic growth.• Commodity oversupply for the next half decade

will impact pricing.• China’s attempt to shift back to a consumer

based economy has stalled growth in many trade partner countries.

• Currency instability has disrupted global trade.• Managing through tumultuous times requires

tenacity.

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Steel Market Highlights

• Steel is oversupplied both globally and in the North American market (perhaps not currently with over 10.4 million tons of blast furnace capacity idle at the moment).

• Pricing globally has been driven by falling raw material costs and “cheap” foreign offerings.

• Demand is “ok” but not superb.• Commodity cycle will likely have a protracted

price bottom, which will keep downward pressure on steel prices for longer than “usual” – for an extended bathtub shape recovery.

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Global GDP More Than Doubled From 2003 to 2015;Up 4% On a CAGR Basis Over The Past Half Decade;

World Bank Estimates Growth At 2.4% for 2016

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Global GDP

Source: The World Bank

Global GDP Has Only Been Down 5 Years in the Past 55 Years – 10% of the Cycle

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Global GDP Growth


North America and Europe Account forAlmost Half of the Global Economy

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North America25%

European Union24%

East Asia & Pacific (all income levels) less

China14%

China13%

Latin America & Caribbean (all income levels)

8%

Europe & Central Asia (all income levels)

6%

MENA5%

South Asia3%

Other2%

Global GDP by Region, 2014


Top 10 Economies Account for 65% of Total Global GDP – Includes 3 Developing Countries

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United States22%

China13% Japan

6%Germany

5%

United Kingdom4%

France4%Brazil

3%Italy3%India

3%Russian Federation

2%

Other35%

Top 10 Economies Percent of Global GDP, 201465% of Total Global GDP


Global GDP in Sync in 2003/2004 and 2011

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016eWorld 38.6 43.5 47.1 51.0 57.5 63.1 59.8 65.6 72.7 74.2 76.2 77.8 79.7 81.6North America 12.4 13.3 14.3 15.2 15.9 16.3 15.8 16.6 17.3 18.0 18.6 19.2 21.0 European Union 11.9 13.7 14.3 15.3 17.7 19.0 17.0 16.9 18.3 17.2 18.0 18.5 East Asia & Pacific (all income levels) less China 6.8 7.5 7.8 8.0 8.5 9.3 9.2 10.6 11.8 12.2 11.4 11.1 China 1.6 1.9 2.3 2.7 3.5 4.6 5.1 6.0 7.5 8.5 9.5 10.4 11.1 11.8 Latin America & Caribbean (all income levels) 2.0 2.4 2.9 3.4 4.0 4.6 4.3 5.4 6.1 6.1 6.3 6.2 Europe & Central Asia (all income levels) 1.5 1.9 2.3 2.7 3.4 4.1 3.3 3.9 4.6 4.8 5.0 4.7 MENA 1.1 1.3 1.5 1.8 2.1 2.6 2.4 2.7 3.3 3.5 3.6 3.5 South Asia 0.8 0.9 1.1 1.2 1.5 1.6 1.7 2.1 2.3 2.3 2.4 2.6 Other 0.5 0.6 0.7 0.8 0.9 1.0 1.0 1.3 1.5 1.5 1.6 1.7 Arab World 0.8 1.0 1.2 1.4 1.6 2.1 1.8 2.1 2.5 2.8 2.8 2.8

Growth RatesWorld 12.3% 12.7% 8.3% 8.3% 12.7% 9.6% -5.2% 9.7% 10.8% 2.1% 2.8% 2.1% 2.4% 2.4%North America 5.7% 7.2% 7.3% 6.4% 5.1% 2.0% -2.9% 5.0% 4.4% 4.0% 3.4% 3.2%European Union 21.9% 15.5% 4.6% 6.7% 15.6% 7.6% -10.6% -0.4% 8.1% -5.9% 4.3% 2.9%East Asia & Pacific (all income levels) less China 9.3% 10.8% 3.8% 2.1% 6.3% 9.5% -1.0% 15.2% 11.1% 3.4% -6.8% -2.3%China 12.9% 17.7% 16.8% 20.3% 29.1% 29.4% 11.0% 19.4% 24.1% 12.9% 12.2% 9.1% 6.9% 6.5%Latin America & Caribbean (all income levels) 3.0% 16.2% 21.1% 17.4% 18.1% 16.2% -6.0% 23.8% 13.3% 0.5% 2.4% -1.4%Europe & Central Asia (all income levels) 22.2% 25.0% 20.2% 18.0% 24.1% 21.3% -18.7% 17.5% 18.8% 3.2% 4.3% -5.9%MENA 12.6% 16.3% 20.5% 17.1% 18.8% 24.9% -10.8% 16.4% 19.9% 7.8% 0.7% -1.8%South Asia 16.7% 16.0% 14.6% 14.3% 26.7% 1.7% 9.9% 22.7% 9.1% 0.8% 2.6% 9.6%Arab World 12.9% 17.3% 23.0% 18.6% 17.2% 26.8% -13.6% 17.0% 18.7% 10.5% 2.7% 0.6%


GDP by Region($ in Trillions)

Two of the Top 10 Economies – Brazil and Russia - Were Down in 2015; The USA Was Up 2.4% And Canada Was Up 1.2%

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015eUnited States 11.5 12.3 13.1 13.9 14.5 14.7 14.4 15.0 15.5 16.2 16.8 17.4 17.8 China 1.6 1.9 2.3 2.7 3.5 4.6 5.1 6.0 7.5 8.5 9.5 10.4 11.1 Japan 4.3 4.7 4.6 4.4 4.4 4.8 5.0 5.5 5.9 6.0 4.9 4.6 4.6 Germany 2.5 2.8 2.9 3.0 3.4 3.8 3.4 3.4 3.8 3.5 3.7 3.9 3.9 United Kingdom 1.9 2.3 2.4 2.6 3.0 2.8 2.3 2.4 2.6 2.6 2.7 2.9 3.0 France 1.8 2.1 2.2 2.3 2.7 2.9 2.7 2.6 2.9 2.7 2.8 2.8 2.9 Brazil 0.6 0.7 0.9 1.1 1.4 1.7 1.7 2.2 2.6 2.4 2.4 2.3 2.3 Italy 1.6 1.8 1.9 1.9 2.2 2.4 2.2 2.1 2.3 2.1 2.1 2.1 2.2 India 0.6 0.7 0.8 0.9 1.2 1.2 1.4 1.7 1.8 1.8 1.9 2.1 2.2 Russian Federation 0.4 0.6 0.8 1.0 1.3 1.7 1.2 1.5 1.9 2.0 2.1 1.9 1.8 Other 11.7 13.6 15.3 17.2 20.0 22.5 20.4 23.0 25.9 26.4 27.4 27.4 28.0

Top 10 26.9 29.9 31.8 33.8 37.6 40.6 39.4 42.5 46.8 47.8 48.9 50.4 51.7 Percent of Total 70% 69% 67% 66% 65% 64% 66% 65% 64% 64% 64% 65% 65%

Canada 0.9 1.0 1.2 1.3 1.5 1.5 1.4 1.6 1.8 1.8 1.8 1.8 1.8 Mexico 0.7 0.8 0.9 1.0 1.0 1.1 0.9 1.0 1.2 1.2 1.3 1.3 1.3

Top 10 Economies Growth RatesUnited States 4.9% 6.6% 6.7% 5.8% 4.5% 1.7% -2.0% 3.8% 3.7% 4.2% 3.7% 3.9% 2.4%China 12.9% 17.7% 16.8% 20.3% 29.1% 29.4% 11.0% 19.4% 24.1% 12.9% 12.2% 9.1% 6.9%Japan 8.1% 8.2% -1.8% -4.7% 0.0% 11.3% 3.8% 9.1% 7.5% 0.8% -17.4% -6.5% 0.6%Germany 20.5% 12.5% 1.5% 4.9% 14.6% 9.1% -8.9% 0.0% 10.0% -5.8% 5.8% 3.3% 1.5%United Kingdom 16.1% 18.2% 5.0% 7.1% 14.7% -5.8% -17.3% 4.3% 7.6% 0.9% 2.4% 9.8% 2.2%France 23.2% 14.9% 3.7% 5.5% 14.5% 9.8% -7.9% -1.7% 8.1% -6.3% 4.8% 0.7% 1.1%Brazil 9.9% 19.8% 33.2% 24.2% 26.0% 21.4% -1.8% 32.7% 18.4% -7.7% -0.9% -1.9% -3.7%Italy 23.9% 14.6% 3.0% 4.9% 13.4% 8.5% -8.6% -2.7% 7.1% -8.9% 2.8% 0.4% 0.7%India 18.0% 16.7% 15.6% 13.8% 30.5% -1.2% 11.5% 25.1% 7.5% -0.2% 1.6% 11.0% 7.2%Russian Federation 24.7% 37.3% 29.3% 29.6% 31.3% 27.8% -26.4% 24.7% 24.9% 5.8% 3.1% -10.5% -3.8%Other 16.1% 16.6% 12.7% 12.0% 16.2% 12.7% -9.3% 13.0% 12.4% 2.0% 3.6% 0.2%

Top 10 10.8% 11.0% 6.2% 6.6% 11.0% 8.0% -2.9% 8.0% 9.9% 2.1% 2.4% 3.2%

Canada 18.0% 14.7% 14.3% 12.6% 11.2% 5.8% -11.1% 17.7% 10.8% 2.5% 0.3% -2.8% 1.2%Mexico -3.8% 8.0% 12.5% 11.4% 8.1% 5.6% -18.9% 17.5% 11.4% 1.3% 6.3% 2.9% 2.4%


Top 10 GDP Economies($ in Trillions)

Global Economic Growth of 2%-2.5% Feels “Lousy” When You’re Used to 3%+

• Most economies had recovered by 2010 and the world was in positive sync again in 2011.

• In 2012, half of the top 10 economies contracted and the economies have been out of sync since.

• Global GDP growth for the past 3 years ranged from 2.0-2.8%.

• The world is still vulnerable to a slowdown which would approach a flat performance.

• Banking system has been shored up since the 2008 meltdown, but is still not resilient. There are concerns over “opening” the European banks.

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Not Only Are the Global Economies “Out of Phase”; the Long Cycle of Growth Has Likely Peaked

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• As early as the 1920s-1930s, theories emerged about a long cycle in the global economies. The Kondratieff Wave (or K-Wave) postulated that economies modulate between high and low growth over a 50-55 year cycle as measured by prices and the inflation rates.

• Over the years, theories about the length of the cycle have proliferated, generally ranging from 20-40 years, and have been tied to some new evolutionary change that refueled the growth engine.

Commodities Have a Non-Linear Supply Curve

• Classic economic theory quite accurately predicts that as prices rise with increased demand, supply will be developed to meet that demand.

• Regarding many, if not all, of the raw materials supplying the steel industry and basic industry in general, additional new supply is not linear, but rather choppy in that it takes a period of years to identify the new resource to be developed, obtain the required environmental licenses, establish funding and then develop the mine.

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Demand Goes Undersupplied, and Prices Rise To a Level Where Marginal Projects Get Financed

• Thus, the demand goes undersupplied for an extended period until supply catches up.

• And often then supply exceeds demand, pushing the cycle into the over-supply phase.

• Where marginal projects that should not have been completed, but were caught up in the exuberance of the shortage, now get terminated.

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Canada’s GDP Has Posted 55% Growth Over the Past Decade Or a 4.5% CAGR

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Canadian GDP


Canadian GDP Grew 0.3% in 2013, Was Down 2.8% in 2014 & Grew 1.2% in 2015

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Canadian GDP Growth


Many Macro Economic Events Have Created “Constant” Disruption

• The USA Federal Reserve Bank raised rates December 2015 despite multiple global objections and is talking about 2 increases in 2016.

• Greece’s debt issues have been seemingly resolved in the near term, but the region isn’t stable. The risk from the West’s perspective is that if Russia or China or Iran step up to provide a financial bridge, that would be a significant shift in the power balance of the region.

• EU remains in turmoil with Brexit replacing Grexit as the latest crisis (June 23 decision), provoked in part by the migrant crisis

• EXIM Bank in the USA was defunded mid-2015, but was refunded with the new Highway Bill in December 2015.

• More than one voice is prophesying a global economic recession. For sure, no one is predicting a strong global economy.

• Oil. The Saudi’s dropped the price to stem funding of new projects. The USA is now energy self sufficient, and there’s a tug-of-war for market share between OPEC, Russia, and now Iran.

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Global Dislocation & Other “Scandals” Are Also Disrupting Economies

• Russia Ukrainian border – Has seriously impacted steel production from Ukraine, which was low cost production, and has somewhat impacted raw material costs into Russia. Russia has rattled its saber about restricting scrap outflows due to shortages in the country.

• The Migrant Crisis has disrupted Europe on multiple levels: humanitarian, diplomatic, financial, security, religion, business

• ISIS – Disrupting Turkey, Russia, Paris, London, Brussels and the USA, Mexico and Canada.

• VW diesel emissions scandal could further derail Germany’s economic performance. Feb 2016 Germany Q4 growth 0.3%.

• FIFA corruption could impact the next two World Cups. Soccer is big business globally.

• Zika virus threatening participation & attendance at the Olympics in Rio.

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Higher Cost Energy – Could be Lower Cost, But Opting for a Cleaner Environment

• Oil has now been in global oversupply for 7 quarters starting Q3 2014 – the longest period in my adult lifetime. Bloomberg, June 16, 2015

• Pope Francis has entered the clean environment fray with an “encyclical” calling for more action to halt climate change.

• Renewable energy generation could overtake coal in 15 year. Financial Times, June 14, 2015

• Between now and 2040, expecting $3.7 trillion in solar energy capital investments. Bloomberg Business, June 23, 2015

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Global Crude Steelmaking Has Moved Into a Period of Consolidation After 15 Years of Unusually Strong Growth

Driven by Development in China

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Global Crude Steel Production


Period ofConsolidation

The Steel Industry is Highly Cyclical and Closely Correlated to the Commodity Cycle – The Current Correction is Moderate

Compared to Past Cycles – BUT BIG CHANGES IN STRUCTURE

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Global Crude Steel Production Year-Over-Year Change


China Added 900 Million Tonnes of Crude Steelmaking Capacity Over the Past 15 Years

And Now Accounts for 50% of Global Capacity

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Colonial Model of Supply No Longer Holds True as Two-Thirds of Global Crude Steel Production is in the Developing World Countries

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The OECD Estimates the Global Crude Steelmaking Overcapacity at 600 Million Tonnes, or 30% of Demand.

The Big Question is Which Countries Will Reduce Assets?

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China Is Capitalistic, Except When It Isn’t; The Country Will Enact Policies to Eliminate Steelmaking Overcapacity

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13th 5-Year Plan (2016-2020) makes it a priority to improve the environment and have the RMB included as a reserve currency.

The Steel Industry and improving the environment are conflicting priorities.

“Your turn to give back.”

“Steel production capacity will be cut by 100 million to 150 million tons, China’s State Council announced Sunday without specifying a time frame. That will translate into as many as 400,000 lost jobs, said Li Xinchuang, head of the China Metallurgical Industry Planning and Research Institute, according to a report by the official Xinhua News Agency Monday. China will raise funds to help dismissed workers, Xinhua said.

China’s leaders have vowed to reduce excess industrial capacity and labor in state enterprises even as they battle the slowest growth in a quarter of a century. They are grappling with a delicate balancing act as they strive to restructure the economy away from investment-led growth without tipping it into a deeper slump.” Bloomberg Business, January 25, 2016

But So Far, Net Reductions in Chinese Steelmaking Capacity Are Non-Existent Due To Other Country Objectives

• Maybe 60-70 million tonnes of steelmaking capacity was shut down, BUT they’re still building new “replacement” sheet mills, the bar mills are mostly independent companies and there were reports that when the prices increased in early May, most of that capacity came back on-line.

• The program to cut 500 million tons of coal mining has reportedly been more effective with 1.3 million jobs eliminated. Some in the West are now speculating there will be a coal shortage in China in the fall.

• Policy enforcement get more aggressive in the second half and last year of the 5-Year Plan. Before the Olympics in 2008, they shut the power plants down to improve air quality. It’s a Command Economy.

• China wants most favored nation trading status with the WTO – which is being aggressively fought by steelmakers and politicians in the West.

• Until the IMF deal adding the RMB to the trading currency basket is done in late 2016, China needs to keep its trade figure high, and will likely continue to permit substantial levels of steel exports.

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World Crude Production Reported Down 3.2% for 2015 at 1.62 Billion Tonnes; S-I Estimates 2016 Production Down 0.8%

(WSA SRO Forecast in May Matched S-I Outlook)

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1995 2000 2005 2010 2011 2012 2013 2014 2015 2016e 2013-14 2014-15 2015-16

China 95.4 128.5 355.8 638.7 702.0 731.0 822.0 822.8 803.8 799.0 0.1% -2.3% -0.6%Japan 101.6 106.4 112.5 109.6 107.6 107.2 110.6 110.7 105.2 101.5 0.1% -5.0% -3.5%India 22.0 26.9 45.8 69.0 73.5 77.3 81.3 87.3 89.6 92.7 7.4% 2.6% 3.5%South Korea 36.8 43.1 47.8 58.9 68.5 69.1 66.1 71.0 69.7 68.4 7.5% -1.9% -1.8%Other Asia 23.8 26.9 37.3 42.2 43.9 42.2 43.7 47.4 41.3 39.4 8.5% -12.9% -4.6%EU-28 189.7 192.3 195.7 172.9 177.8 168.6 166.4 169.3 166.2 165.4 1.8% -1.8% -0.5%Russia 51.6 59.1 66.1 66.9 68.9 70.2 69.0 71.5 71.1 70.4 3.6% -0.5% -1.0%Ukraine 22.3 31.8 38.6 33.4 35.3 33.0 32.8 27.2 22.9 21.8 -17.1% -15.6% -5.0%Other CIS 0.0 7.6 8.5 7.8 8.5 7.6 6.6 7.4 7.4 7.5 12.4% -0.2% 0.3%Turkey 13.2 14.3 21.0 29.1 34.1 35.9 34.7 34.0 31.5 32.3 -1.8% -7.4% 2.5%Other Europe 94.5 110.3 129.7 134.0 143.2 143.0 140.3 136.7 129.7 128.3 -2.5% -5.1% -1.0%NAFTA 122.7 135.4 127.6 111.6 118.7 121.6 119.0 121.2 110.7 111.3 1.8% -8.6% 0.5%USA 101.8 94.9 80.5 86.4 88.7 86.9 88.2 78.9 80.7 1.5% -10.5% 2.2%South America 34.6 39.1 45.5 43.9 48.2 46.4 45.8 45.0 43.7 42.6 -1.7% -2.9% -2.5%Middle East 8.1 10.8 15.3 20.0 23.2 25.0 27.0 30.0 29.0 28.5 11.2% -3.2% -1.9%Africa 13.7 13.8 18.0 16.6 15.7 15.3 16.0 15.0 14.6 13.9 -5.9% -2.7% -4.8%Oceania 9.3 7.8 8.6 8.1 7.2 5.8 5.6 5.5 5.7 5.8 -2.2% 4.6% 2.0%

Total Global 752 849 1,148 1,433 1,538 1,560 1,650 1,669 1,617 1,604 1.2% -3.2% -0.8%Developed World 509 544 565 528 547 540 536 538 512 506 0.3% -4.9% -1.0%Developing World 244 305 583 905 991 1,020 1,114 1,131 1,105 1,098 1.6% -2.3% -0.6%

Developed % of Total 68% 64% 49% 37% 36% 35% 32% 32% 32% 32%Developing % of Total 32% 36% 51% 63% 64% 65% 68% 68% 68% 68%

Source: World Steel Association, China Iron and Steel Association & Steel-Insights, LLC estimates

Crude Steel Production by Region(Million Metric Tonnes)

What’s Needed for the Cyclical Rebound

40

Adjustment to the New Normal

Stronger Global Economies

Global Crude Steel Consolidation – Natural Evolution – Darwin’s Survival of the Fittest.

Bottoming of the Commodity Price Cycle – Prices Are Likely to Stay Low for an Extended Period

Embracing & Navigating Disruption

Reduction of the Cash Cost to Produce

Continued Development of New Steels

The World Changes; The Only Way to “Win” Is To Anticipate and Adapt – Critical Resources of the Past Can

Become Irrelevant to the Future

41

Ingot CastingContinuous Casting

Bessemer Furnace

Blast Furnace& EAF

Canada Is The Fifth Largest Scrap Exporter At About 4 Million Tonnes Per Year

2006 2007 2008 2009 2010 2011 2012 2013 2014 % Chg

EU-28 10,083 10,566 12,799 15,779 19,033 18,813 19,579 16,806 16,859 0.3%USA 13,978 16,642 21,712 22,439 20,556 24,373 21,397 18,495 15,340 -17.1%Japan 7,654 6,449 5,344 9,398 6,472 5,442 8,586 8,129 7,351 -9.6%Russia 9,797 7,855 5,128 1,202 2,390 4,042 4,349 3,714 5,689 53.2%Canada 4,000 4,100 4,084 4,792 5,154 4,832 4,248 4,510 4,521 0.2%Australia 1,335 1,501 1,708 1,925 1,636 1,745 2,245 2,200 2,362 7.4%South Africa 555 752 1,271 1,144 1,224 1,436 1,632 1,732 1,486 -14.2%Total 47,402 47,865 52,046 56,679 56,465 60,683 62,036 55,586 53,608 -3.6%

EU % of Total 21% 22% 25% 28% 34% 31% 32% 30% 31%USA % of Total 29% 35% 42% 40% 36% 40% 34% 33% 29%

Source: World Steel Recycling in Figures, BIR

Global Scrap Exports by Region/Country(Million Metric Tonnes)

42

Canada Scrap Imports Have Ranged From1.5 To 2.3 Million Tonnes Per Year

USA2006 2010 2011 2012 2013 2014 % Chg %

Turkey 15,100 19,192 21,460 22,415 19,725 19,068 -3.3% 19%Korea 5,621 8,091 8,628 10,126 9,260 8,002 -13.6% 20%India 3,359 4,643 6,175 8,180 5,636 5,699 1.1% 9%Taiwan 4,459 5,364 5,328 4,955 4,453 4,272 -4.1% 56%USA 4,814 3,775 4,003 3,711 3,882 4,215 8.6%EU-28 7,294 3,646 3,714 3,203 3,191 3,137 -1.7% 0%China 5,386 5,848 6,767 4,974 4,465 2,564 -42.6% 17%Indonesia 1,063 1,642 2,157 1,944 2,399 2,137 -10.9% 16%Canada 1,476 2,226 1,911 2,343 1,746 1,520 -12.9% 43%Thailand 1,373 1,282 1,877 1,701 961 1,383 43.9% 34%

Source: World Steel Recycling in Figures, BIR and Steel-Insights, LLC Analysis

Global Scrap Imports by Region/Country(Million Metric Tonnes)

43

Steel-Insights, LLC – “Seeing” What Others Don’t

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In WWII, American submarine commanders endured despite being outclassed by superior equipment and outgunned (fully functioning torpedoes weren’t available to them for the first 21 months of the Pacific War). In the fog of war, as often is the case in business, decisions with long impacting outcomes have to be made without the luxury of complete or definitive information.

Steel-Insights was formed to assist executive management teams navigate the “noise of battle” by more effectively managing the abundant resources available today and

harnessing those resources to explore thought provoking and penetrating issues in order to magnify the pivotal decisions required for the long-term success of their companies in arguably tough industries that must survive challenging cycles, i.e. training and empowering submarine commanders.

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North of the Border,CARI, Ottawa, Jun 2016