1. This document is solely for the internal use of ArcelorMittal. Saldanha Works Achieving Energy Savings through a holistic focused management approach A Case Study ICUE Presentation Reinet van Zyl Aug 2012

2. Framework AMSA Background information Summary Background on Saldanha Plant and Process Electricity Price and Cost impact Saldanha Approach for Sustainable Energy savings Implementation Time line Performance Review Project Detail as examples 2012 Focus and Target Conclusions

3. 2 ArcelorMittal South Africa Overview of Operations Flat Steel Products Vanderbijlpark Works – 3.2 Mtpa* Saldanha Works – 1.2 Mtpa* Long Steel Products Newcastle Works – 1.5 Mtpa* Vereeniging Works – 0.4 Mtpa* Iron ore supply 6.25 Mtpa from Sishen 2.5 Mtpa from Thabazimbi Coke & Chemicals Coke - 597 000 tpa* Tar - 133 000 tpa* Vereeniging Johannesbur g Newcastle Sishen mine Vanderbijlpark Thabazimbi mines Durban South Africa Saldanha Cape Town * Based on 2006 actual final product sales Steel plants in close proximity of key markets

4. COREX DR-Plant Steel shop Mills RHF Statistical information Electricity consumption: 160 MW Daily water consumption: 8 000 kilo liters (world best for an integrated steel plant) Manpower: 548 permanent employees Sales output: 1,2 million ton HRC/annum

5. Budget 2012 Allocation 4 Energy related components is 46% of total cost structure. However, in the steel industry coal and coke it is strictly speaking a raw material. Coal and Coke is required for the Boudouard chemical reaction. (On this basis the AMSA CO2 tax calculation was reduced to the current R125 mil).

6. This document is solely for the internal use of ArcelorMittal. Achieving Energy Savings

7. Energy Review 2011 - Saldanha WHAT WENT WELLWHAT WENT WRONG 1.Good Progress on Strategy Implementation 2.7.7 MW av. Electricity demand saved (from expected 145.3 MW) 5.3% saving on baseline Electricity Saving value : R28.3m Actual Average Demand : 137.6 MW (2012 demand saving YTD 4 MW) 3.LPG Saved : 5798 t (compared to 2010) LPG saving 26% with value R52m (2012 YTD saving R35m) 4.$12.8/t Savings for Dec ’11 ($21/t Saving for Jun’12) 5.Three Project Engineers appointed 6.Energy Matrix Structure in place 7.Thirteen projects completed (mostly quick wins and efficiency related with some awareness focused projects). 8.Good progress on visibility and reporting of energy related information 9.EnMS implementation – good progress 1.EnMS require more system knowledge for proper integration. Some more work required to integrate into current ISO system. 2.Capital funding was cut 6

8. 7 Energy Management Sustainability WCM (World Class Manufacturing) Reliability centred focus WCM (World Class Manufacturing) Reliability centred focus Saldanha Approach Management Infrastructure

9. Step 1 : WCM (World class Manufacturing focusing on Autonomous Maintenance (TPM) Step 1 : WCM (World class Manufacturing focusing on Autonomous Maintenance (TPM) Roll Out 8 Step 2 : Energy Management Awareness and training Performance Measure and Control : Improved Metering and Reporting WCM : Autonomous Maintenance Appoint Energy Manager Appoint Energy Manager H1 2010 WCM : Professional Maintenance Energy Strategy Energy Strategy Energy Audit Energy Audit H2 2010H1 2011H2 2011H1 2012H2 2012 2013-2016 Energy Management System ISO 50001 Energy Management System ISO 50001 Energy Projects : prioritised implementation and tracking WCM : People Development and other 5 pillars WCM: Cost Deployment WCM : Focused Improvement Appoint 3 Team members Appoint 3 Team members Step 3 : Management Infrastructure

10. 9 Actions contributing to improved performance Energy Strategy An Energy Manager was appointed 1 May 2010. An energy audit was initiated to identify potential opportunities and expand the list of opportunities already identified. The team was later increased by a further 3 people focusing on project implementation to fast track potential savings. 25% of capital allocated to Energy Projects. WCM (World Class Manufacturing) The plant volunteered to be a pilot for the roll out of WCM within the AMSA group. The program is very much focused on equipment reliability and a “clean to inspect” approach Bronze status reached after 18 months (usual plan 3 years to reach) IEE Program and Energy Management System (based on ISO 50001) Pilot plant for the expert training in Energy Management, Electrical Motors and Pumps. Ensure sustainability of any energy savings made. Training of personnel in other IEE programs (20 people) Management Infrastructure (MI) – doing things more efficiently Implementation of a MI program in Feb 2012. Optimally utilizing the resources currently available within the plant. Improve the effectiveness of the organization and address deficiencies in current practices with standards and visual management.

11. Energy Projects Completed 2011 NrOpportunityDetailkWh Saving R 1000’s saving pa Cost (Rm) 1 De-dusting fan 2.2 MW Switch off during standing time > 2 hr. 623,624263 0 2 System 1Maintain water temp @ summer Temps (28  33 degC) 1,419,500686 0 3 Compressed AirRepair Leaks & prevent misuse 2,350,4001,207 0 4 Ladle HeatingPrevent unnecessary utilisation and LPG use 250 5 Power Optimiser Installed in main Building : 10% V drop, 7% kWh saving 55,091120 0.5 6 Low Production Periods Focus and awareness – switch off what is not required (Jun/Aug/Sep) 31,687,19813,308 0 7 Load SheddingUtilising Chemical energy during Winter Peak tariff (2% moved to outside peak) 5,000 (R20,000 planned 2012) 0 8 LPGReduce LPG cons. by 30% by changing operating philosophy 50,000 0

12. Energy Projects Completed 2011 (cont.) NrOpportunityDetailkWh Saving R 1000’s saving pa Cost (Rm) 9ConarcFoamy slag, Transformer operation & DRI Quality 42,180,00017,7150 10Mill Ancillary Switch off Switch off possible systems during standing 876,0004640 11VSD System 11Installed Variable Speed drive 6,464,8803,5003.16 EnMS helps you reach your targets and sustain performance! NrAwareness ProjectsDetail 12Solar Street Lights 13Solar Geysers 3bCompressed AirFixing leaks and Awareness Training

13. Performance YTD 12

14. Performance YTD 13

15. Project Detail : LPG Reduction Project StatisticsActions and detail LPG Reduced Consumption Trigger : Cost and shortage of LPG Approach : Review operational assumptions and change operational principles and philosophy. Implementation : Q4 of 2011 Value of Saving : 26% or R 52 million for 2011 A further 30% saving for 2012 Preparation : Restore Corex basic conditions with Tap hole repair and WCM program. This ensures stable operations and high availability of DR gas. Change in practice : Enrichment of DR gas No significant detrimental impact on throughput could be observed in the Midrex. The Midrex was one of the largest LPG consumers using LPG for cooling and increasing Carbon content The Midrex decreased the LPG consumption considerably and countered potential negative impact on quality without significant loss in production volumes or tempo.. Results : Midrex : LPG consumption was reduced at the from 18kg/t DRI to less than 14 kg/t DRI. RHF consumption was reduced from 9kg/t to less than 2 kg/t hot rolled coil. 14

16. Project Detail : ID Fan (Extraction system) Project StatisticsActions and detail ID Fan in Meltshop (2.2 MW) Trigger : Proposal to install soft starter from Energy Audit done at plant. Capex not readily available Approach : Review operational assumptions and change operational principles and philosophy. Implementation : Q1 of 2011 Value of Saving : 622 MWh savings R262,000/a ( price of 422R/MWh). Background : Flow from post combustion is induced through a forced draft cooler and bag filters by two radial fans. Each fan is fed from the 11kV supply and is rated at 2.2MW. These fans was left running when production on Conarc is limited by upstream or downstream production problems (around 30% of the time) Change in practice : Switch off 1 fan during standing periods longer than 2 hours. Results : Savings calculation only used planned stops, but the saving in effect is more since the same practice is used for unplanned stops longer than 2 hours. Assumptions : 876 hr./a planned stoppages Average fan power : 0.71 MW 15

17. Project Detail : Water System Set Points Project StatisticsActions and detail System 1 water set points Trigger : Focus area identified from Energy Audit done at plant. Approach : Question operational set-points. Implementation : Q3 of 2011 Assumptions : 3 months at ambient 16 degC (15% fans off = 0.525 MW saving) 3 month at ambient 23 degC (8% fans off = 0.3 MW saving) 6 months summer temps – no savings Value of Saving : This amounts to R686,000 /a for an electricity price of 422R/MWh and 7884 hrs./a operation. Background : System 1 supplies process cooling water to Conarc for process cooling duties. This system is a closed loop system, with the return water cooled by a bank of 98 air-cooled heat exchangers (ACHEs), each rated at 37kW. The total power consumed is thus around 3.6MW. Ambient temperature is the driver for the number of fans that is required to cool down to set-point temperatures Change in practice : Increase water set point with 10 deg C in Winter time to equal actual summer conditions. Results : Calculated savings: The power saving is thus: (0.25*0.525 + 0.25*0.3) x 0.9 = 0.21MW equivalent continuous (only 90% operational time during year) 16

18. Energy Contribution by Source 17 2012 Targets : Electricity 1199 kWh/t or 4.2 GJ/t LPG : 0.66 GJ/t Coal & Coke : 19.4 GJ/t

19. Energy Focus Areas 2012 Focus 2012Risks 1.Projects – high value Targets : 1.1MW saving on electrical demand baseline (YTD on 4 MW in 2012) R28m saving through energy projects (YTD additional or R34m) 2.EnMS (ISO50001) full implementation and integration on SEU’s with external audit. 3.Improved reporting and visibility to operator level for SEU’s to assist with proactive energy management. 4.LPG supply contract – put system in place with minimal day-to-day interface required. 5.Customer Service to Plants 6.Awareness and Training 1.Lack of Capital 2.Technology injection required for significant further progress 3.Carbon Tax 4.Electricity price increase 5.Electricity winter pricing – not viable to produce during peak hours. Impacts on viability. 18

20. 19 Conclusion Stability and reliability is a prerequisite for optimisation efforts. Management Commitment and Resource allocation essential. Energy Management System ensure sustainable energy improvements. Energy Management System allows a structured approach looking at all aspects (not just technical) Focus on Energy and Energy opportunities and savings will realise. Measuring and reporting important for both identifying opportunities and changing behaviour. The more you investigate potential opportunities the more opportunities are found. Awareness and education is a critical part for sustained savings.

21. 20 Questions? Thank You