Thomas A. Danjczek President Steel Manufacturers Association September 23, 2010

1. National Slag Association Steel Producers Issues in Today’s Economy Thomas A. Danjczek President Steel Manufacturers Association September 23, 2010

2. NSA Annual Meeting – 2010 Outline • SMA • Set a Tone - 2010 • US Steel Production/Capacity Utilization, Steel Usage • World Steel Outlook & Capacity Growth • Mercury Collection Status • Inflation/Deflation • What does the US need to do? • Conclusion • Steel and Slag Coordination / Cooperation

3. NSA Annual Meeting - 2010 SMA • The Steel Manufacturers Association (SMA) • 34 North American companies: 29 U.S., 3 Canadian, and 2 Mexican • Operate 125 steel recycling plants in North America • Electric Arc Furnace (EAF) steelmakers using recycled steel • EAF steel producers accounted for nearly 2/3 of U.S. production in 2009 • SMA represents approximately 90 million of U.S. 120 million ton capacity (75%) • 128 Associate members - Suppliers of goods and services to the steel industry

4. NSA Annual Meeting - 2010 Where SMA Member EAFs are located…

5. Steel / Slag Company Executive- 2010

6. Set A Tone - 2010 (O’Bummer)

7. NSA Annual Meeting - 2010 US Steel Production (All in Million Net Tons)(Numbers are Approximate) PAST –From 1986 through 2008, U.S. steel production has been around 100 m tons – up & down 10% 2009 1st Half 25m (45% utilization) 2nd Half 36m (62% utilization) Now 1.5m/week vs. 2.1m/week Year 63m (Minimills at 63% of production) 2010 – Today Capacity Utilization (70.4%); or approximately 83 million tons annual rate

10. In 2010, Apparent Steel Use in the NAFTA Region Will Be More than 30 Percent Below Pre-Crisis Levels Apparent Steel Use in NAFTA Region (millions of MT) Even if apparent steel use in the NAFTA region recovers to 107 million MT by 2011, as currently projected by the World Steel Association, it would still only match the 1993 consumption level – and be only 76% of the level in 2007. Source: Worldsteel

13. 2009 Was Only the Second Year Since 1963 in Which North America Produced Fewer than 9 million Cars and Trucks North America Car & Truck Production, 1963-2009 Recent gains in North American car and truck production notwithstanding, it is projected that it will take up to five years to return to pre-crisis ”normal” levels. 9 million cars and trucks produced 1982 Source: Ward’s Automotive.

14. NSA Annual Meeting - 2010 The Worldsteel Short Range Outlook Source: Worldsteel Economic Studies Committee, April 2010

15. Global Steel Capacity Continues to Increase World Crude Steel Capacity 2000-2012 World Crude Steel Capacity CAGR 2,055 2,100 20 1,997 1,917 1,816 1,850 1,654 1,583 1,600 1,453 15 1,356 1,350 1,245 1,170 1,095 1,062 1,062 1,100 Current Average Growth Rate (CAGR) 10 Steel Capacity (million metric tonnes) 850 600 5 350 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e) 2011(e) 0 NSA Annual Meeting - 2010 2012(e) Source: Worldsteel

16. “Some countries simply prohibit scrap exports. Others, like China, impose export taxes to impede the flow of their domestic scrap overseas. Not one of them would countenance the export of up to one-third of their available supply.” AMM, July 2010

17. “Some countries simply prohibit scrap exports. Others, like China, impose export taxes to impede the flow of their domestic scrap overseas. Not one of them would countenance the export of up to one-third of their available supply.” -AMM, July, 2010

18. NSA Annual Meeting - 2010 Raw Material Export Restrictions are Continuing to Disadvantage NAFTA Steel and Other Manufacturers • Many countries continue to impose a variety of restrictions on exports of vital raw materials • Export prohibitions • Export duties • Export quotas • Other measures • Trade-distorting restrictions on exports of raw materials • Give domestic producers in the exporting country an unfair advantage • Increase worldwide costs of production • Place a heavy burden on steel industries in developing countries that do not have substantial iron ore reserves or steel scrap supplies

19. NSA Annual Meeting - 2010 Mercury in Scrap Issue • Program is performing as the collection point for all convenience mercury switches removed from domestic automobiles; fully implemented in first quarter 2007 • All US EAF Carbon Steel Facilities are operating under EAF Area Source Rule mercury source control plan option, and depend upon ELVS as the national program to collect mercury convenience switches • Implementation Fund ($2 million from domestic auto makers & $2 million from US steel industry) exhausted in July 2009 • Last statistics supplied by NVMSRP Stakeholder Group (August 2010) shows performance in retorting of switches similar to previous years – switches continue to be submitted to ELVS, regardless of lack of Implementation Fund payouts – Total Collection for life of Program to date = 2.9 million mercury switches • Performance of program continues to lag, compared to EAF Area Source Rule “Goal” of 80% collection • Need for emphasis or supplier audits on mercury collection • EPA’s 114 Requests for Information

20. NSA Annual Meeting - 2010 Is Enough Being Done? Raw Materials No Barriers continue Lack of policy continues Energy No Currency manipulation, Subsidies, Not playing by the rules No China Distortions continue, Who’s the protectionist Trade No No long term structural policy changes are being proposed in Washington for taxes, trade imbalance, and energy.

21. NSA Annual Meeting - 2010 What does the US need to do? • Assume a Pro-Manufacturing Agenda • Business Tax Reform • Border Adjustable Taxes • Currency Adjustments • Energy Independence • Reasonable regulatory measures (Environment/Labor) • Climate for investments (Jobs, Jobs, Jobs) and Infrastructure • Solve the structural problems that caused the recession- Real Foundation • Bad loans and securities on bank balance sheets • Reduce huge trade deficits • Policy incrementalism is not sufficient

22. NSA Annual Meeting - 2010 • This 70% world is the new “norm” (Construction, Auto, Government driven) • The economy will come back as jobs are created President Coolidge: “When more and more people lose their jobs, unemployment results.” • We’re in a traffic jam, moving slightly forward, but don’t know other consequences • Don’t look to Washington for help. Pendulum moves slowly. • Reasons for optimism in steel • Scrap based • Low Cost on global bases • Relatively strong US market and US resiliency • Better US company balance sheets • Impact of Currency long term Conclusion

23. NSA Annual Meeting - 2010 Steel Companies fully support the use of slag as a valuable and usable co-product. On August 15, 2010, Steel & Slag Companies participated in a conference call to discuss items affecting slag usage in the U.S. Participation included – 37 steel company representatives & 16 slag company representatives Steel & Slag Cooperation & Coordination

24. NSA Annual Meeting - 2010 Steel & Slag Cooperation & Coordination

25. What can slag companies do for steel producers? Question From Ray • Work together, especially on environment • Spotlight on slag – consistency • Assist cost competitiveness (Slag companies do many things more efficiently than steel) • Safety (Learn from each other) • Build Relationships locally - Accountability

26. NSA Annual Meeting - 2010 • CONTINUE TO IMPROVE COOPERATION AND COORDINATION BETWEEN STEEL AND SLAG AT FACILITY, COMPANY, AND ASSOCIATION LEVELS. Steel & Slag Conclusion