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OUTOKUMPU AND THE ENVIRONMENT 2007

0014EN. Miltton/Libris, Helsinki, Finland. March 2008. . www.outokumpu.com What makes Outokumpu special is total customer focus – all the way, from R&D to delivery. from R&D to delivery. What makes Outokumpu special is total customer focus – all the way, know-how and support. best stainless steel, technical offer the world’s have the idea. We You activate your ideas. We Outokumpu is a global leader in stainless steel. Our vision is to be the undisputed number one in stainless, with success based on operational excellence. Customers in a wide range of industries use our stainless steel and services worldwide. Being fully recyclable, maintenance- free, as well as very strong and durable material, stainless steel is one of the key building blocks for sustainable future. ...FROM IDEAS TO REALIZATION Contact details

The theme that ran through our report last year was listening 1 Outokumpu and responsibility E-mails are in the format to our key stakeholders. This year, we’ve gone a step further: 2 CEO’s review fi [email protected] the ideas that emerged from our interaction have led us to take 4 How we understand our responsibility measures. We will now focus on putting ideas into practice. 5 Setting our sights on the number-one Environmental issues Authors of report Photos in this report: The cover of the report shows fi sh being stocked in the Tor- Tomi Parkkonen (cover and p. 3, 15, 17, 21, 43) position in stainless steel Jorma Kemppainen, Outokumpu Oyj, Corporate nionjoki river. We chose to commission fi sh stocking instead Communications Shutterstock (inner front cover) 6 Responsibility and management systems Senior Vice President of paying statutory fi sh management fees. And on this page, – Environment, health and safety Liisa Jalanko, Suvi Uotinen, Göran Wiklund (p. 7) 10 Dialogue with stakeholders you can see the fruits of the group work on corporate respon- Tel. +358 9 421 5504 Markku Rantala Pauli Järvinen / Pohjolan Sanomat (p. 27) sibility we organized at the Olari school in Espoo, Finland. Green Cargo (p. 31) ECONOMIC RESPONSIBILITY The ninth-graders thought about their responsibilities for the Human resources issues Your opinion matters in developing Next generation vehicle research project (p. 35), environment, their schoolmates and teachers, and a positive Contents 14 Targets and achievements Carita Himberg, Vice President reporting systems. Katri Pyynönen / Potkastudios (p. 49) school atmosphere. 16 Economic impact on stakeholders – Human Resources Development Please fi nd our feedback form on our Outokumpu Tel. + 358 9 421 2643 website. ENVIRONMENTAL RESPONSIBILITY 20 Key environmental events of the year Economic issues Outokumpu Oyj 22 Targets and achievements Mika Pyyskänen, Senior Vice President Corporate Management 24 Recycled steel is our main raw material – Corporate Controller Riihitontuntie 7 B, PO BOX 140, 02201 25 Energy efficiency as a target Tel. +358 9 421 5512 ESPOO, Finland 28 Climate change raises challenges Tel. +358 9 4211, fax +358 9 421 2429 E-mail: [email protected] 32 Water cools, rinses and cleans Corporate Responsibility issues Liisa Jalanko, Vice President www.outokumpu.com 33 Biodiversity – Corporate Responsibility 33 Emission control by best available Tel. +358 9 421 3265 techniques 39 Stainless steel is recyclable and sustainable 40 Environmental impacts of transportation are accounted 40 Investments in nature’s favor

SOCIAL RESPONSIBILITY 42 Personnel 44 We listen to personnel 46 Development opportunities and training THE WORLD’S STEEL 50 Diversity and equal rights > > 50 Supplier responsibility as a target Most of the steel in the world is carbon material in combination with ore when 50 Occupational health and safety steel. More than 500 million tons of re- manufacturing stainless steel saves natural 52 Co-operation with local communities cycled steel is used in annual global steel resources considerably and also reduces the and educational establishments production, which now totals some 1 343 amount of energy used, since producing 52 Close involvement with research million tons. Annual production of stain- metal from ore is a very energy-intensive 53 Product safety and product liability less steel totals about 27.5 million tons, process. Stainless steel is especially easy to and consumption is growing at an annual recycle since it is not coated with paint, rate of ﬁ ve to six percent. Stainless steel plastics, zinc or other coatings, which cre- 54 Independent assurance report now coming onto the market contains an ate harmful emissions when steel scrap is 55 Comparison with Global Reporting average of 60 percent recycled steel (both re-melted. Initiative guidelines carbon and stainless steels). Using recycled 56 Glossary Contact details Outokumpu and responsibility

> a reduction in the number of accidents GROUP KEY FIGURES (Million €) 2007 2006 2005 Net sales 6 913 6 154 5 016 > eyes on the sustainability of the supply chain Operating profi t 589 824 57 Return on capital employed, % 13.9 20.7 1.3 Earnings per share (€) 3.63 3.34 -0.14 > development of internal data collection processes Dividend per share (€) 1.20 1) 1.10 0.45 Investments in the environment, health and safety 12 8 12 Patent applications 3 3 29 > performance and development dialogues for everyone R&D 18 17 22 R&D (%) of net sales 0.3 0.3 0.4 Personnel on Dec. 31 8 108 8 159 8 963 Personnel expenditure Objective of the report as the report for 2006. Th e economic and so- (salaries) 355 361 448 Our objective is for our stakeholders to gain cial data cover the whole business area, but Debt-to-equity ratio, % 23.6 42.3 74.5 a better understanding of our business op- environmental data only covers production Income taxes and social erations and their implications on society. plants; they have impact on the environment. security payments 281 323 124 We strive to inform openly about our activ- Th e fi gures for Outokumpu Technology (now- Accidents rate (accidents/ million hours worked) 11 17 18 ities and their impacts on the natural envi- adays Outotec Oyj), which became a listed Carbon dioxide ronment that surrounds our plants and the company in October 2006, were not includ- emissions, million tons 0.93 1.05 1.02 well-being of people. In the area of corporate ed in the fi gures for 2005 and 2006 in order responsibility, we explain about the objec- to facilitate comparability; Outokumpu no 1) The Board of Directors’ proposal to the Annual General Meeting. tives we have set for ourselves and how we longer has ownership for the company. Outo- have achieved them. We report on matters kumpu Copper Tube and Brass, which we have that we consider important and essential in announced we are divesting, is not included our business operations such as our product in the report. It has no signifi cant eff ect on stainless steel – the material of sustainable overall environmental impacts or emissions. development – and its life cycle. In 2007, its total net sales accounted for 599 Outokumpu has traditionally maintained million euros and it had 882 employees. a strong culture of responsible action. We also strive to constantly develop our operations Compatibility of reports and statistics member of society. A brief environmental re- and our way of working. We believe that Th is report mainly surveys business opera- view was published in 2003. Socio-economic thorough reporting on matters of corporate tions in 2007 from the perspective of the matters were gradually included. Th e report responsibility furthers this aim. Besides the full scope of corporate responsibility. Th e for the following year still mainly focused on printed Corporate Responsibility Report, we report is based on the internationally recog- environmental aspects but also dealt with co- deal with matters pertaining to corporate re- nized and widely applied Global Reporting operation with stakeholders and society, and sponsibility in our Annual Report and on our Initiative guidelines (GRI) 2006 that direct compared our approach to reporting with website at www.outokumpu.com > About us corporate responsibility reporting, and it fol- the GRI guidelines. Th e statistical values in > Corporate responsibility, where the report lows the recommended format. We follow our reports for 2005, 2006 and 2007 were is available in electronic format. the tripartite division of the guidelines into compatible. Huge changes took place in our Th e report is intended for our person- economic, environmental and social respon- Group structure during those years but our nel, shareholders and customers as well as sibility and we deal with their impacts on our reporting was primarily concerned with our all parties interested in our company and various stakeholder groups. A table showing current main business, stainless steel. Conse- its activities. how this report corresponds with GRI guide- quently, the fi gures for businesses divested in lines is on page 55. 2005–2006 were not included. Our report for Scope of the report Outokumpu issued its fi rst actual environ- 2007 is our fi rst externally verifi ed corporate Th is report covers Outokumpu’s entire main mental report in 1975. Th e 2000 environmental responsibility report. Th e data based on the business area, stainless steel, in the same way report included a review of Outokumpu as a fi nancial statements has been audited.

Outokumpu and the environment 2007 1 CEO’s review

Only deeds matter

he theme that ran through our 2006 have started to bear fruit. Th e good results now participating for the fi rst time. Th ere is report was listening to personnel, cus- we’ve achieved – such as savings of 70 million still much to be done in many areas of both tomers and other key stakeholders. euros by the end of 2007 – encouraged us reporting and operations. Listening is always very important, to expand the excellence initiatives to sup- Th e Finnish press has sparked off a great Tbut it’s not enough. One must go further and ply chain management and procurements deal of discussion about Finnish Customs’ take action. In 2007, we devoted ourselves in 2008. We’re also pressing ahead with the investigations into Outokumpu’s Russian to putting ideas into practice. sustainable supply chain project. export practices. Our own investigation did Outokumpu took major steps forwards in not reveal any evidence that our employees 2007. We achieved our fi nancial objectives in Committing to objectives or company are guilty of the crimes suspected spite of the turmoil in the stainless steel market. We achieved the targets we set for our opera- by the agency. Finnish Customs is continu- Slack demand prevailed in this market due to tions in many important responsibility areas. ing with its investigations. distributor de-stocking – and it weakened fur- Th anks to our initiatives to reduce occupa- ther on the heels of the slump in nickel prices tional accidents, the lost-time accident fre- Theme year encourages to take action in the summer. However, the full-year result quency rate declined to 11, and no serious We forged ahead with the implementation of was good thanks to our excellent earnings in accidents occurred. We’re getting closer to ethical principles and the corporate respon- the fi rst half. Return on capital employed was our challenging target for 2009: less than fi ve sibility policy, a drive that began in 2006. To 13.9 percent exceeding our target of 13 percent lost-time accidents per million working hours. highlight the importance of responsibility, we and our gearing declined to 23.6 percent, far Our long-term target is zero accidents. Th e named 2008 the year of corporate responsi- below our target of under 75 percent. emissions of our plants were mainly within bility – this is an ongoing eff ort. We wish to permissible limits, although a few breaches raise awareness of environmental and social Investments are highly significant of environmental permits did occur. Th e tar- responsibilities among all our employees, and In autumn, we announced the next phase in get to certify the environmental management to encourage them to take action – not just our strategy and major investment decisions. system of Meadowhall was achieved. During at the plants, but also at the offi ces. We set We’ve earmarked almost 800 million euros the next fi ve years we aim to halve our land- concrete, measurable targets for ourselves. As to stepping up special grades capacity. Th ese fi ll waste. Our long-term target is to deposit in our internal improvement initiatives, our investments are not only highly signifi cant no waste in landfi lls. approach is very down to earth. We focus on to our company and our customers, but will Climate change and eff orts to slow it down small actions, encouraging each and every Ou- also be a boon to the communities where ca- are hot topics. Outokumpu takes these issues tokumpu employee to do his or her part. pacity is raised. By increasing the share of our seriously. We want to do our part. We’re pay- To gain more valuable information on the business accounted for by special grades, we’ll ing greater attention to both energy-effi ciency views and expectations of our external stake- get closer to the end users. Customer service and the energy sources we use. I have proac- holders, we’ll carry out online dialogue at the will become even more important. Our new tively sought to present the steel industry’s beginning of 2008. We expect to gain useful organization, aligned in terms of customer perspective on EU emissions trading and the feedback that will help us to further hone our segments, was launched at the turn of 2008. rise in electricity prices that came on its heels, responsible operations and meet our stake- Th is, coupled with our expanded service net- which has a great impact on our competitive- holders’ expectations. We’ll face a great many work, will upgrade our customer service. ness. Some companies – such as Outokumpu challenges in our drive to be the undisputed Th at said, we still have work ahead of us – already operate energy effi ciently and with number one in corporate responsibility, too. before we can call ourselves the undisputed low emissions. I hope that all the past eff orts Not through our words, but our deeds. number one in stainless steel. We’ll focus these companies have made to achieve this on further honing our operations through will be acknowledged. our internal improvement initiatives – our As in earlier years, our responsible op- Excellence programs. Safety and improving erations were recognized internationally. We Juha Rantanen both operational effi ciency and quality are stayed on as a member of the pan-European CEO prioritized in our production operations. On Dow Jones STOXX Sustainability Index and January 31, 2008 the commercial side of things, we’re upgrad- were for the fi rst time accepted into the Dow ing delivery reliability and our services. Th e Jones Sustainability World Index. In addi- Marimekko launched Eero Hyrkkää’s JAUR improvement initiatives hinge on employee tion, we’re included in the Carbon Disclo- collection in the fall of 2007. JAUR products participation and enthusiasm. Our measures sure Leadership Index for energy-intensive are made by hand from stainless steel to hone operations during the past few years companies, in which Nordic companies are produced by Outokumpu.

2 Outokumpu and the environment 2007

Outokumpu and responsibility

How we understand our responsibility

e take the view that responsible policy are available at www.outokumpu.com business operations, i.e. cor- > About us > Corporate responsibility. THE THREE MAIN OBJECTIVES porate responsibility, comprise Th e exemplary and fl awless management of > OF OUR CORPORATE economic, environmental and environmental aff airs and occupational safety RESPONSIBILITY POLICY: Wsocial responsibility and their impacts on our and health matters are of primary importance key stakeholders. Our major stakeholders at in terms of the company’s profi tability and 1) Corporate responsibility becomes Group level include personnel, customers, competitive edge as well as to the well-being of an integral aspect of all our suppliers, owners (analysts, investors, fi nan- personnel. We make no compromises in these activities and decision-making ciers), the competent people of the future as respects. Th e development of occupational process, from procuring materials well as representatives of local communities, safety is monitored through regular reports national and international business and in- at corporate management meetings, and all through to production and sales. dustry and organizations in the sector. Our management committees and equivalent bod- Economic, environmental and social ethical principles and our corporate respon- ies throughout the Group start their meet- responsibility issues are in balance. sibility policy constitute the foundation of ings with a safety review. We are particularly Compliance with legislation our activities and they are also incorporated attentive to the well-being of our personnel constitutes the bedrock of our in our leadership principles. Th ey are supple- and the wishes of our customers. As a listed operations. Continually improving mented by other more detailed policies. Our company, Outokumpu is committed to gen- our corporate responsibility ethical principles and corporate responsibility erating profi t for its shareholders. performance puts us on the path towards a higher level of achieve- ment. 2) Our business partners, subcon- • theme year tractors and suppliers become “from words familiar with our principles and • training in into actions” workshops apply the same high standards in • web-based • web-based • development of dialogue for their own activities. dialogues for internal proc- • ethical employees external principles esses; assurance stakeholders 3) To enhance transparency, we aim • training in • articles in and corporate workshops to establish continual, systematic responsibility employee and • articles in employ- stakeholder and open dialogue on corporate policy ee and stakeholder magazines ONE IN STAINLESS published magazines responsibility issues with our key in June • sites on internet UNDISPUTED NUMBER stakeholders, such as shareholders, and intranet employees, customers, suppliers and non-governmental organizations. ETHICS AND CORPORATE RESPONSIBILITY This co-operation contributes towards developing and dutifully ETHICAL PRINCIPLES human dignity reporting our corporate responsibility VISION our planet for the future performance. undisputed number one good corporate citizenship in stainless a healthy workplace

CORPORATE RESPONSIBILITY STRATEGIC GOALS economic excellence programs environmental social

OUTOKUMPU’S CULTURE leadership principles

4 Outokumpu and the environment 2007 Setting our sights on the number-one position in stainless steel

Outokumpu is one of the world’s leading producers of stainless steel. Hot and cold rolled stainless steel products form our core competence. Outokumpu operates in around 30 countries.

Outokumpu is an international stainless steel rolling mills at both) and Degerfors (hot roll- was generated outside Finland. Outokumpu’s company. Our customers include the processing mill) in Sweden; Sheffi eld (steel melting headquarters are located in Espoo. Outo- ing and construction industries, the transport shop) in Britain and New Castle (hot rolling kumpu Oyj has been listed on the Helsinki sector, the food and electronics industries, and mill) in the USA. Long products are manu- Stock Exchange since 1988. the producers of household and industrial factured in Sweden, the USA and Britain, machinery around the world. Our main mar- whereas welded tubes and tube components ket area is Europe. We are one of the leading are produced in Finland, Sweden, Estonia, STAINLESS STEEL – producers of stainless steel in the world and Canada and the USA. We currently operate > SUSTAINABLE MATERIAL a globally recognized innovator in the fi eld 12 sales and service centers. of technical support, research and develop- Th e Group also comprises Outokumpu ment. According to statistics issued by inter- Copper Tube and Brass, which produces cop- • fully recyclable national organizations in the industry, such as per tubes and brass bars (personnel 882; net • corrosion resistant Eurofer and the International Stainless Steel sales of around 599 million euros), which • high-strength Forum, our company holds 6 percent of the we announced we are divesting. Informa- world market and 16 percent of the European tion about this business is not included in • hygienic market for rolled stainless steel. this corporate responsibility report. • aesthetic In 2007, Outokumpu operated in around • low life-cycle costs Main products 30 countries and it employed 8 108 people. Our main products are hot and cold rolled Th e Group’s net sales amounted to 6.9 bil- stainless steel sheets, plates and strips that lion euros, of which more than 95 percent are used in numerous applications such as the construction industry, the automotive industry and equipment for the process industry. We also produce precision strips, tubes and tube components. Wide and thick indi- ORGANISATION vidually rolled quarto plates are used in the energy sector, to extract salt from seawater, to transport chemicals and they are wide- CORPORATE MANAGEMENT ly used in the process industry; in pressure cylinders, tanks, thick-walled tubes, bridge structures and process equipment. Our tubes are mainly used by the process industry, i.e. General Stainless Specialty Stainless the oil refi ning industry and the pulp and paper industries; bars are so-called long prod- GROUP SALES & MARKETING ucts, from which wire and concrete iron are manufactured. SUPPLY CHAIN MANAGEMENT Main production plants Our main production plants are in Tornio (ferrochromium plant, steel melting shop, hot OTHER GROUP FUNCTIONS and cold rolling mills) and Kemi (chromium mine); Avesta (steel melting shop, hot and cold rolling mills), Nyby, Långshyttan (cold

Outokumpu and the environment 2007 5 Responsibility and management systems

Responsibility and management systems

Outokumpu’s vision Guidelines and policies Compliance with Outokumpu’s vision is to be the undisputed the backbone to operations the principles of responsibility number one in stainless steel and to base its We start out by basing our operations on com- Outokumpu’s Board of Directors charges the success on operational excellence. Th is means pliance with local legislation in each country CEO with formulating and implementing that we want to be the most successful com- where we operate, but we aim to go further. the necessary measures to safeguard system- pany, the most effi cient producer, the most International recommendations issued un- atic compliance with the corporate respon- popular employer and the best customer re- der the auspices of the UN, to which states sibility policy and ethical principles of Ou- lationship manager in our sector – and to are committed, also govern the way we work. tokumpu. At least once a year, the Board of achieve all this through responsible business Our objective is to operate as one company Directors assesses Outokumpu’s corporate practices and with the help and support of whose activities are guided by Group-wide responsibility in the light of the CEO’s re- our key stakeholders. operating procedures and policies such as port. Th e company’s management and its ethical principles, a corporate responsibility employees are expected to comply with the Outokumpu’s strategic goals policy, an environmental policy, a human re- principles of corporate responsibility. Since Our strategic goals comprise the creation of sources policy and occupational health and May 2007, a confi dential help line has been value by establishing unparalleled produc- safety policies. Th e plants have more detailed up and running on the intranet and internet, tion and distribution operations in all the practical targets and guidelines, as well as en- which can be used to report anonymously principal global markets and then realizing vironmental management systems complying to our internal audit any action that contra- the value through commercial and produc- with the ISO 14 001 standard as models for venes the principles. No such notifi cations tion excellence as well as maintaining value the actions to take. Th e Group-wide ethical were received in 2007. through constantly developing personnel and principles, the corporate responsibility policy holding the customer as the focal point of and the environmental policy are available all operations. on our website.

> ETHICS

Th e cornerstones of Outokumpu’s ethical Outokumpu supports expanding inter- by contributing to economic well-being principles are human dignity, caring for the national co-operation to reduce emissions through its business operations. environment, good corporate citizenship and enhance global environmental pro- A healthy workplace: A healthy and posi- and a healthy workplace. tection. Outokumpu takes environmental tive workplace is a source of strength for Human dignity: Human beings should be aspects into consideration in making its all employees, and it also brings beneﬁ ts to treated equally and fairly irrespective of ethnic business decisions. families, friends and colleagues. At Outo- origin, nationality, religion, political views, Good corporate citizenship: Agreement kumpu, it is the responsibility of the whole sex, sexual orientation or age. Outokumpu on common rules is a precondition for the workforce to foster mental well-being and honors human dignity and diversity, and success of communities and individuals. to increase occupational safety. Compa- condemns discrimination and intolerance Outokumpu observes the laws and other ny management in particular has to set a of all kinds. Outokumpu complies with in- regulations of the countries it operates in good example by cultivating fairness and ternational labor treaties, and condemns and it complies with the agreements and conducting open and interactive commu- forced and child labor. Th ere is freedom commitments it has made. Outokumpu nications. of association at Outokumpu. condemns corruption and bribery and it Violations of general or internal regu- Our planet for the future: Our planet does complies strictly with competition legis- lations are not acceptable at Outokumpu. not exist just for today’s humanity and eco- lation. To prevent abuse, it is important to ensure system. Human beings have a responsibil- Outokumpu recognizes its corporate that Outokumpu’s interests on the one hand ity to safeguard the conditions for life and responsibility towards the communities it and the interests of employees on the other biodiversity for future generations as well. operates in, the nations it operates in and do not come into conﬂ ict. Outokumpu strives in all operations for the entire global community. As a good sustainable human, economic, social and corporate citizen, Outokumpu participates ecological development. in the lives of its communities, above all

6 Outokumpu and the environment 2007 Case among CarbonIntensive companies,i.e. tionnaire. Outokumpu wasrankedeighth to theCarbonDisclosure Project’s ques- nies from theNordic countriesresponded ership Index. Atotalof125listedcompa- fi provement insustainability. for ouroutstandingachievements andim- tle inTh gave Outokumpu aSAMSector Mover ti- ity from 57sectors.In January 2008,SAM nually theleadingcompaniesinsustainabil- Management CompanySAMreviews an- DJSI World Index. Th company waslistedforthefi of European companies.In addition,the dexes’ STOXX Index, whichiscomposed bership intheDow Jones Sustainability In- In 2007,Outokumpu maintaineditsmem- indicate wherethecompanyhasroomforfurtherimprovements. indexes, givingitabettercompetitiveedge.Theresults,however, also In 2007Outokumpuwaslistedonmoreandcorporateresponsibility Outokumpu amongthemostresponsibleinitssector rst timeontheClimateDisclosure Lead- Outokumpu wasalsoincludedforthe The CarbonDisclosureProjectisanindependent not-for-profi torganisationwhichaimstocreatearationalresponsethecha eSustainability Year Book2008 eSustainable Asset rst timeonthe companies consuminggreat amountsof still have room forimprovement. see whichareas ofcorporateresponsibility the independentindexes off responsible operations.On theotherhand, succeeded infulfi ognition ofthefactthatOutokumpu has in corporateresponsibility. It isalsoarec- ate itselffrom itscompetitorsasanexpert todiff Outokumpu theopportunity Class” by Storebrand. ity. Outokumpu wasacclaimedas“Best in on environmental andsocialresponsibil- tor. Storebrand SRIcompared companies companies inthemetalsandminingsec- Outokumpu amongthemostresponsible ing companies. energy, toppingallNordic metalsandmin- Being includedontheseindexes off Moreover, Storebrand SRIranked lling certain criteriaof lling certain er thechanceto erenti- ers

• • • ON MANYINDEXES OUTOKUMPU LISTED • Storebrand SRI:acclaimedas 2007. Index: listedforthefi rsttimein Climate DisclosureLeadership Sustainability Year Book2008 SAM SectorMovertitleinthe for thefirst timeontheWorld index again ontheEuropeanindexand DJSI Indexes:in2007,included in 2007. “Best inClass”forthefi rsttime

Outokumpu llenges oftheclimatechange. and theenvironment 2007

7 Responsibility and management systems

Corporate governance tokumpu Oyj, which comprise the Annual among other things compliance with Ou- Outokumpu Oyj, the parent company of General Meeting, the Board of Directors and tokumpu’s ethical principles and corporate the Outokumpu Group, is a public limited the CEO. Outokumpu’s corporate governance responsibility policy and the way in which company that is registered and domiciled in and the duties and responsibilities of its gov- the principles and policies are incorporated Finland. Th e company applies Finnish legis- erning bodies are presented in detail on pages into the general operational procedures in lation, the company’s Articles of Association 52–56 and the control system is presented on the Group’s companies and units. No sig- and the administrative procedures approved pages 56–57 of our annual report. nifi cant problems, malpractices or risks were by the company’s Board of Directors to its noted during the audits. Th e internal audit management and leadership. Outokumpu Audit of operations has investigated a couple of infringements complies with the recommendation issued Th e Group’s internal audit function provides and thefts within the Group and notifi ed by the Helsinki Stock Exchange, the Cen- consultative auditing on targets and issues the police authorities of these; an internal tral Chamber of Commerce and the Confed- that have been separately identifi ed by the investigation has been initiated. However, eration of Finnish Industry and Employers Board audit committee and the Group’s Ex- according to current understanding, these in December 2003 concerning the corpo- ecutive Committee. Th e focus of auditing is infringements or thefts were not on a sig- rate governance of listed companies, with on business risk as well as the dissemination nifi cant scale. the provision that Outokumpu has a nomi- of information. Th e internal audit co-oper- In March, Finnish Customs instigated a nation committee to the Board of Directors ates closely with the Group’s fi nance and risk criminal investigation into Outokumpu’s ex- and a Shareholders’ Nomination Commit- management, fi nancial administration and port practices to Russia. Th e enquiry related tee that was appointed by the Annual Gen- external auditors. Th e internal audit reports to another preliminary investigation focused eral Meeting of Outokumpu. Furthermore, to the audit committee, which approves its on a forwarding agent from southeast Finland Outokumpu complies with the regulations operating plan. who was suspected of having made errone- and guidelines issued by the Helsinki Stock In 2007, 21 diff erent units or functions ous and/or falsifi ed commercial invoices for Exchange. were audited by the internal audit working stainless steel exports to Russia. Th e Customs’ Th e ultimate responsibility for the Group’s independently or in co-operation with external preliminary investigation ascertained the level administration and operations rests with the service providers. Th e internal audit together of Outokumpu’s involvement in making the governing bodies of the parent company Ou- with the Group’s other functions monitors erroneous and/or falsifi ed commercial invoices with the said forwarding agent. Outokumpu initiated its own investigation into the com- > OUTOKUMPU’S LEADERSHIP PRINCIPLES mercial practices in stainless steel exports from Tornio to Russia. Roschier, Attorneys Ltd., Over the past years, an extensive dialogue on the subject of values has been which conducted the enquiry, issued a statement saying that the investigation had found ongoing with Outokumpu personnel on several occasions; the results of this no evidence that personnel or the company dialogue were used to identify the fundamental values of the company. We coined at Outokumpu’s Tornio Works were guilty the term ‘The Outokumpu Way’ to refer to these values. In order to come closer to of the crimes suspected by the Customs. Th e concrete recommended practices, the leadership principles were identifi ed and Customs investigation continues. determined in 2006. The Group’s Executive Committee and a number of key personnel from different parts of the Group participated in determining them. The Stronger risk management principles shown below were approved by the Executive Committee and presented In 2007, corporate risk management was rein- to the Board. One of them is explained in detail and serves as an example. forced through the Group’s safety and security • We make well-founded decisions procedures, with the aim of raising the level of safety with regard to personnel, materials • We achieve ambitious targets and information. Th e overriding objective of • We create an unbeatable team the safety and security procedures is to intro- • We inspire increasingly enhanced performance duce practices within the Group that can be used to reduce losses. Th e Group’s Executive • We build trust and respect Committee approved a new safety and security - we act consistently and we adhere to the determined ethical principles and policy in December. During the year, work values got underway to draw up common guide- - we encourage and expect others to act according to the ethical values lines and a working group was established - we demonstrate honesty, loyalty and integrity in our day-to-day work to handle these matters. Safety and security within the Group comprises personnel safety,

8 Outokumpu and the environment 2007 data security, physical and operational safety Corporate responsibility organization are conducted in a responsible manner and as well as crisis management. Accident, fi re, Outokumpu’s corporate responsibility aff airs that monitoring, data collection and report- operational error, sickness, theft, fraud, dam- are under the CEO’s area of responsibility. ing are duly carried out. age to property, sabotage, corruption, various A Corporate Responsibility Team compris- At the turn of the year, fi ve employees were infringements, bodily harm, blackmail and ing representatives from the diff erent func- engaged in environmental work at Group level. abduction constitute the greatest risks to the tions advises on these matters with Corporate Th irteen were charged with human resources safety and security of the company. Communications acting as the responsible matters and three with occupational health unit. Corporate Communications also coor- and safety. In addition, each production plant Rules of competition honored dinates all corporate responsibility matters has an environmental and a human resources Outokumpu honors the rules of competition across the Group. Th e business units and offi cer, and the larger locations also have a per- as an intrinsic part of its business operations. functions are responsible for ensuring that son responsible for safety issues. Th e fi nancial Th e legal aff airs department has actively pro- operations within their own organizations organization is Group-wide. vided training based on our ethical principles on the theme of competition legislation > KEY EVENTS IN 2007 – THE YEAR OF COMMERCIAL within the European Union for our sales and marketing people since October 2006. By the March October end of 2007, 300 people of a total of around • Sale of the minority shareholding • Listed in the Carbon Disclosure in Outotec Oyj Leadership Index 700 had attended training in line with the set • Publication of Outokumpu and • Ranking in Storebrand’s Socially objective. Th e training program comprised the environment 2006 Responsible Investments “best in class” a fi ve-hour course arranged by in-house and • Launch of the procurement • Sustainability reporting review: external legal experts. Th e aim was to alert the excellence program Outokumpu 8th out of a total of 29 trainees to problematic situations so that they May November are able to seek professional advice and avoid • Implementation of the Helpline • Supply chain management possible unlawful arrangements or discussions June – function established with competitors. An e-learning program is • Affi liation in Fennovoima Oy • Finnish Business and Policy Forum EVA, to be launched in 2008 with the aim of train- • Outokumpu Factor 1/2007: Corporations and Climate Change Report: ing, overseeing competence and reminding Climate change Outokumpu ferrochromium people of the importance of competition. It September December • will run for three years, and initially apply to • Membership of the Dow Jones Outokumpu Factor 2/2007: Stakeholder relations 500 people. It will be emailed directly and Sustainability Indexes automatic reminders will be sent until the • New phase in strategy; major investment program has been completed. decisions

MANAGEMENT OF CORPORATE RESPONSIBILITY ISSUES

Corporate Governance

PROPOSALS PROPOSALS Communications

Corporate Group Executive Finance Board of Directors responsibily team Committee

Environment

Human resources EXECUTION DECISIONS

Outokumpu and the environment 2007 9 Dialogue with stakeholders

Dialogue with stakeholders

We strive for open and regular dialogue with our key stakeholder groups with the aim of enhancing transparency. We consider it essential to be aware of the expectations placed on us.

Alongside the actual work of sharing informa- egy and its related investments. According to sibility policy at the beginning and end of tion, diff erent discussions, seminars, team- feedback interviews, the event surpassed the the chain. work, road shows, fairs and exhibitions, visits participants’ expectations. In addition to the In order to optimize the supply chain, we and open house days are the forums where we few visits organized to sites, the management are expanding our excellence programs to sup- meet our stakeholders face to face. We main- took part in various meetings and seminars ply chain management, with the initial focus tain an ongoing dialogue especially with ana- both in Europe and in North America. In on purchasing. In March 2007, we launched lysts, investors, employees, customers, goods Helsinki, we participated in an annual fair a program to develop a uniform ‘Outokumpu suppliers and service providers. Th eir involve- that targeted private investors. Last year, we Way’ with regard to purchasing. Our objective ment and the trust they place in us are funda- also commissioned two studies to ascertain is to reduce the total costs and risks involved mental to our business operations. In 2006, the ownership base. and to improve supply relations management we prioritized dialogue with our employees, throughout the Group. Th e fi rst concrete ob- both through the network and group work. Eyes on the supply chain jectives will be achieved in 2009. Th e year 2007 was the Year of Commercial Suppliers play a vital role in our procurement Th e emphasis is on high quality and re- and we engaged in particularly active interac- chain. Of all our procurements, around 80 sponsible operations. We are committed to tion with our customers. Close-knit interac- percent are raw material procurements and of constantly developing our culture of responsi- tion with our investors and analysts contin- these, 65 percent apply to recycled steel. We bility. Th e Sustainable Supply Chain Manage- ued the trend set in previous years. Both of have altogether about 3500 goods suppliers, ment Tool project that we launched in 2006 the 2007 issues of our stakeholder magazine, the largest being raw material supplier. Ex- in co-operation with Helsinki University of dealt with aspects of corporate responsibil- changing information and open dialogue with Technology is mapping out the requirements ity – the fi rst with climate change and the diff erent goods suppliers and service providers that the corporate responsibility policy places second with stakeholder relations. helps all parties to achieve the best possible on every phase of the supply chain and drawing results. Th e best, most productive and most up guidelines for the purchasing functions. Active contacts with cost-saving innovations, such as improve- Last year, this three-year project progressed to investors and analysts ments to transport and packaging, are often its second phase. We piloted the internaliza- In 2007, corporate management continued created in co-operation with suppliers. Th e tion of the corporate responsibility policy at the active pace set in previous years and met high level of the recyclability of stainless steel the beginning of the chain with experts from with investors and analysts at various events makes Outokumpu’s supply chain unique. In Helsinki University of Technology and Kuu- around the world. In addition to the Annu- our broad-spectrum so-called 360-degree way sakoski Oy, one of our recycled steel suppliers. al General Meeting, 13 road shows were ar- of thinking, our products change into raw Th e project is benefi cial and important for all ranged across Europe. We also visited North materials at the end of their life cycle. Our parties concerned. During 2007, we reached America. Luncheon meetings were held with responsible supply chain is like a loop whose agreement on a bank of questions that cover nine groups – a total of 60 people – during development starts out from the premise that all the important subareas. We conducted the road shows. During 2007, management we understand our role in the chain... and several bilateral meetings and held a joint had all together some 150 diff erent breakfast goes on to develop not only our own part meeting in November where all three parties and luncheon, as well as face-to-face meet- but also the chain as a whole. discussed partnership as well as responsibility ings with investors and analysts. Our objective is to give recycled steel a and the challenges it brings with it. Th e announcements of Outokumpu’s results new life cycle through as an eco-effi cient and We also provide training for our suppliers were videoed, and it was possible to watch responsible supply chain as possible. Develop- on matters relating to quality and the envi- them over the internet. For the fi rst time, ing the supply chain as profi tably as possible ronment. In 2007, we arranged with other presentations at the Capital Markets Days is to everyone’s advantage. Consequently, an members of Osuuskunta Teollisuuden Romu organized for investors and analysts were also overall vision of the chain is a fundamental a recycling day at our Tornio works for all shown over the internet. Th e Days took place condition for fi nding the most effi cient way Finnish recycled steel and iron suppliers. Dur- in Milan in October under the main theme to take development still further. In 2007, ing the day, we provided the suppliers with of Outokumpu’s customer and product strat- Outokumpu started to mobilize its respon- training and information concerning quality,

10 Outokumpu and the environment 2007 Case is already clear, however, isthathisfuture what hewishestodointhefuture. What He stilldoesnothave anyindicationof imagine hisfuture career afterhisstudies. tant world,butitiseven harder forEigo to an academiccareer insocialsciences. subject inhighschoolandhemaypursue for university. Historyhasbeenhisfavorite says. Eigo hasalready considered applying a closerlookatwhatI’m goingtostudy”, he army inthesummerandafterthatI’ll take withthe ing tobeginmynationalservice keeping hisfuture plansonhold.“I’m go- spring. For thetimebeing,however, heis written highschoolexaminationsinthe direction inlifeaftercompletinghisfi Eigo Retsä hopes tostrikeabalancebetweenhisfreetimeandwork. professionals. EigoRetsä,afinalyearstudentatOlariHighSchool, Outokumpu aimstounderstandtheexpectationsofitsfuture job moreimportantthanagoodsalary Olari HighSchoolstudentconsidersarewarding His lifeatuniversity seemslikeadis- , 18,willbefree totakeanew nal Eigo Retsä,aseniorattheOlarihighschool, wouldliketohaveaninspiringjobworkingwithintriguingproducts. more actively andstudymore.” don’t managetofi necessarily happenstraightaway. But ifI “Hopefully I’ll fi stances were suitable. if hiscareer demandeditandhiscircum- to him.He wouldconsiderworking abroad appeal environment doesnotparticularly the otherhand,working inaninternational On with pleasantcolleaguesasimportant. sees working oninteresting products and ance between free timeandwork. He also Eigo explains. should notfeellikeatediousobligation”, itoff tent ratherthanthesalary profession willbedecidedbasedonitscon- Eigo hasaconfi In thefuture Eigo hopestofi ndwork easily. It won’t nd work, Ihave tosearch dent view ofhisfuture.dent view ers. “Work nd abal- Sources: Tredence InstitutandUniversum • • • • PROFESSIONALS VALUE? WHAT DOFUTURE • • • • Outokumpu Responsibility andanethical Working oninterestingproducts possibility offurthertraining challenging worktasksandthe Development opportunities, Combining freetimeandwork environment Working inaninternational Innovativeness Management thatcanbereliedon A dynamicorganization approach and theenvironment 2007

11 Dialogue with stakeholders

environmental issues and product develop- attitude to diff erent services. Other matters ment. Th e program focused on the transport that customers have drawn to our attention > SUPPLIER OF THE YEAR of raw materials, product classifi cation, the are reusable packaging materials, a reduc- terms and conditions of commerce and the best tion in the waste generated by packaging and Victor Reinz, our customer of eight performances with regard to environmental repurchasing used materials. Based on the years, awarded Thin Strip Kloster, matters by comparing the practices of diff erent feedback, we are making improvements to an Outokumpu unit that produces suppliers and those of Outokumpu. our products and services and stepping up thin steel strips, as supplier of the customized solutions. year for 2006. The company, which Closer to the customer Our internet website also has a Product produces gaskets and heat shields Our customers constantly expect more from Tool service that presents the full range of our for the automotive industry, us. Because our ambitious and overriding ob- products and their dimensions in straight- jective is to become the number one in cus- forward graphics. Th e Steel Professional tool assessed its suppliers on criteria tomer service in the stainless steel business, on the internet is intended for designers and including quality, leadtimes and we launched a commercial excellence program engineers to help them select the most suit- service. The supplier had to turn in in 2005. Over the past two years leading up able stainless steel for their purpose. an excellent performance over a to the end of September 2007, we arranged Last year, we introduced a new sales re- two-year period before it could be as part of the excellence program training porting tool providing us with even more considered for the award. for around 550 people working in sales and comprehensive information specifi c to each marketing within our Group; the number of product, country and customer. Th e earlier training days was in excess of 1 700. Th e pro- tool had been in use since 2001. gram has provided us with practical tools to In order to safeguard optimal customer Our specialists also visit schools to give pres- develop our capacity to provide even better service, we decided to change over to a new entations on various themes. Last spring, we service for our key customers. Th e achieved organization that was formatted in line with arranged sessions for three groups of ninth- results have been tremendously encouraging. customer sectors, where the emphasis is on graders at the company’s adopted school in Key customers now receive service based on functioning as one company in all customer Espoo, Finland, on the theme of responsibil- global plans. Th e products of all the units relations. Th is move supports the new phase ity and how pupils could promote well-being come under the same plan. Pricing practic- of our strategy announced in September, in at school, energy saving and environmental es have also been standardized; the diff erent which we are seeking to attain an increase protection. Th e next group session will take units conform to the same pricing principles in the proportion of end users and project place in 2008. for the same customer. Interaction with key customers. customers was extremely lively in 2007, which We listen to our personnel was named the Year of Commercial. Expectations of future experts In order for us to exert an infl uence on the Interviews with our key customers con- In order to safeguard our future personnel motivation and job satisfaction of employ- stitute an important aspect of the excellence needs, we believe it is important to attract ees, it is vital to discuss matters openly. In program, and about 150 such interviews have the interest of young people in our sector. January 2007, we published on the intranet been conducted in the past two years. Th e We regularly follow the studies carried out the results of the second network dialogue objective was to gain a better understand- by various external research institutes and or- concerning corporate responsibility that took ing of customers’ current and future needs ganizations into young people’s values, their place at the end of the previous year. Opinions as well as to gauge what our various services expectations of future employers and their fl ooded in, including observations concerning mean to them. Our customers took a posi- image of Outokumpu as an employer. Th e shortcomings complete with concrete sug- tive view of our interest and considered it a international Universum Graduate Survey gestions. Anonymous messages presented di- clear sign of the degree of eff ort that Outo- conducted in 2007 indicated that students rectly to corporate management included the kumpu is putting into the matter, and they see Outokumpu as fi nancially sound, that it wish for systematic job rotation. Th e Group made good use of the opportunity by giving has a good reputation in the fi eld of education has now set the objective for 20 percent of feedback: Outokumpu produces quality prod- and that it performs well on the market. In Outokumpu employees to participate in job ucts and we provide good technical support. their opinion, Outokumpu provides career rotation during 2008. Matters relating to oc- A slightly less positive observation was that opportunities, competitive salaries, and is also cupational well-being also rose to the fore. Th e Outokumpu is often viewed as a complex or- a good reference. Th e results showed a slight staff were particularly concerned with older ganization diffi cult to work with. In general, improvement on the preceding year. employees being able to cope at work, the customers expect us to have greater fl exibility We also regularly engage in dialogue with advancement of women’s careers, and diver- in our operations, an understanding of the school pupils and students at recruitment sity. Based on the results of the network dia- customer’s business activities and an open fairs as well as when they visit our locations. logue, we have arranged 20 workshops since

12 Outokumpu and the environment 2007 2006 where we have jointly sought solutions eral communities, it exerts a major infl uence. nology Industries, the Association of Finnish to concrete shortcomings in our own places Corporate management and the experts from Steel and Metal Producers and Excellence Fin- of work. Measures have been implemented the diff erent fi elds maintained their network, land as well as the Confederation of Swedish to correct these shortcomings. and they actively participated in the activi- Enterprise and Jernkontoret - the Swedish Th e O’People personnel survey, which ties of the international and national cham- Steel Producers’ Association. takes place every second year, was conducted bers of commerce, organizations and central In order to augment its expertise and en- during November-December. Th e purpose associations. Th ey joined in the dialogue at hance its performance with regard to cor- of the survey is to understand the needs of various forums that dealt with such things as porate social responsibility, in 2007 Outo- our personnel, with the aim of developing the challenges set by climate change as well as kumpu joined Finnish Business & Society, personnel and the workplace. Th e results re- other topical and key issues relating to busi- the network that promotes corporate social leased in January 2008 are discussed on page ness life. Outokumpu is a member of inter- responsibility. As a consequence of its mem- 44 of the report. national organizations and confederations, bership, Outokumpu also gained membership including the World Economic Forum and of CSR Europe. To support the battle against Networking vital Eurofer, EuroInox, the International Iron and corruption and bribery, Outokumpu became Good and eff ective relations with the authori- Steel Institute, the International Chromium a member of Transparency Suomi-Finland, ties and diff erent organizations are vital for Development Association, EUROALLIAGES which is the national chapter of Transpar- our business operations. Outokumpu is an and the FME-CWM metal industry associa- ency International, the non-governmental active and responsible actor in society. As the tion. At the national level, Outokumpu is a organization that fi ghts against corruption world’s fourth largest producer of stainless member of the Finnish Business and Policy and promotes transparency. Outokumpu Oyj steel, the ninth-largest company in Finland Forum EVA, the Confederation of Finnish has also signed the International Chamber and the largest or a major employer in sev- Industries EK, the Federation of Finnish Tech- of Commerce (ICC) charter.

STAKEHOLDER EXPECTATIONS They want high-quality, safe They expect us to participate, products and services at a interact, provide support, be competitive price, reliable responsible, provide jobs They expect competitive deliveries, flexibility benefits, challenging tasks, Local communities Customers development opportunities, responsibility, a balance be- We need their approval, conﬁ - We need them to buy our tween work and leisure time dence, willingness to cooperate products − we also need them to trust us, be responsible and Future employees willing to cooperate with us We’ll need them to work for us in the future and expect them to OUTOKUMPU be motivated, responsible and How do we meet expectations? They expect us to be responsi- seek to improve themselves • ethical operations ble and give them challenging • open and regular communications tasks, security, occupational and dialogue, interaction safety and wellbeing, • a culture that stresses corporate responsibility development opportunities, They expect active • operating as one company recognition for their work participation, joint efforts to • safe working environment promote the industry’s interests Personnel • personnel development, job rotation National and international • development of products and processes, R&D We need their professional industry and business asso- • stainless steel is safe and sustainable material skills − we expect them ciations and federations to be responsible, motivated and committed We expect them to provide equal support to us, oversee our interests and They expect us to be profitable, They want to cooperate with us our business opportunities provide a return on their invest- and expect us to be respon- ment, and be responsible sible, be their partners and engage in open discussion Shareholders Suppliers of goods We hope they consider us and services a good, attractive investment − we hope they have We need raw materials, other confidence in us consumables and services; we expect them to be responsible

Outokumpu and the environment 2007 13 Economic responsibility

Economic responsibility

Our aim is to generate as much economic added value as possible for our stakeholders in a manner that is as sustainable as possible. As a listed company, we are committed to making a profit for our shareholders.

Outokumpu’s ethical principles and corporate In September 2007, Outokumpu declared policy also guide the Group’s operations in that the fi rst phase in the Group’s strategy to ECONOMIC TARGETS economic matters. As a listed company, Ou- become the undisputed number one in stain- > tokumpu is committed to making a profi t for less had been completed. In the next phase, Outokumpu has set the following its shareholders. We achieve this by develop- we aim to deliver a more stable and profi table economic targets for its operation ing and maintaining competitive and profi t- business model while also addressing the most to support its ongoing objective of able operations founded on ethical business attractive growth opportunities. Th e target of practice. Th e principles of good corporate a more stable and profi table business model being the number one in stainless: governance and transparent accounting ap- will be reached by increasing the proportion • Continuing to grow at a more plied by Outokumpu are guided by the rules of direct end-user and project sales customers rapid rate than the markets and regulations applying to listed compa- and by expanding our production capacity • Return on capital employed to nies, by international accounting standards, in special products to half of total capacity. exceed 13 percent and remain by the declaration of competition policy and During 2007, several investment decisions better than that of competitors insider rules, as well as by the Group’s divi- that implement the new strategy were made. dend policy. End-user and project sales will be supported • Debt to equity ratio less than Our operations have an economic impact by a number of investments in Outokumpu’s 75 percent on the local, national and global communities network of service centers. Special products within which the Group operates. Outokumpu capacity will be expanded at Avesta, Sweden pays taxes and employs people both directly and in quarto plate products in Degerfors, and indirectly. Our aim is to generate as much Sweden and in New Castle in the US. When economic added value as possible for our combined, investment decisions made in 2007 stakeholders in a manner that is as sustainable will total 1 300 million euros over the coming Chain Excellence program, targets for total as possible. Th e Group’s fi nancial results and 3 years, a considerable change compared to benefi ts from all programs have risen to 200 targets are detailed in Outokumpu’s annual the low levels of investment prevailing in the million euros in 2009 and 300 million euros report and accounts. Th is report concentrates last few years. In 2007, investments totaled from 2010 onwards. on the economic impact that Outokumpu 190 million euros (2006: 187 million euros). has on its stakeholders. In addition, in January 2008 an investment New investments will increase After a very successful year in 2006, the fi rst decision of over 300 million euros was made the number of personnel half of 2007 was characterized by a gradual to step up ferritic and bright annealed stain- At the end of 2007, the Group employed 8 108 slowing in demand for stainless steel com- less steel capability in Tornio. people in some 30 countries. Th e number of bined with record-high prices and excellent An important part of Outokumpu’s strat- employees was at much the same level as at fi nancial performance. After the summer, egy is maintaining the Group’s cost leadership the end of 2006 (2006: 8 159 people). the market situation turned downwards in in standard-grade volume production, which Investment decisions taken in the latter a dramatic fashion due to de-stocking and mainly takes place in Tornio, Finland. To part of 2007 will lead to active recruiting in only started to recover as the year-end ap- ensure that improvements in both effi ciency the next 2‒3 years. As most of the new opera- proached. One result was that the second and productivity continue, our excellence pro- tions and those being expanded are located half resulted in a loss. For the whole of 2007, grams were expanded to include supply chain outside major urban centers, Outokumpu’s Outokumpu achieved its target of a 13 per- management. Th e on-going Commercial and investment decisions will have a signifi cant cent return on capital employed by a small Production Excellence programs, which were positive impact – both directly and indirectly margin. Good cash fl ow and income from started in 2005, progressed very well during – on employment levels in those locations, i.e. divestments resulted in the debt-to-equity 2007. In total benefi ts totaling some 70 mil- Avesta and Degerfors. Finding and attracting ratio shrinking further to a level well below lion euros have been achieved. Th e aim is to the right type of personnel could be a chal- our target maximum. achieve benefi ts of 120 million euros by the lenge and Outokumpu is therefore working end of 2008. After including the new Supply with several communities, including Avesta,

14 Outokumpu and the environment 2007 Our stakeholders get economic beneﬁ t Economic responsibility

Degerfors and Fagersta, to off er both retrain- Outokumpu paid 355 million euros in sis, sales were as follows: Europe 73 percent, ing and relocation possibilities. salaries in 2007, a reduction compared to the Asia 12 percent, North and South America A decision to close the Stockbridge site fi gure for 2006 (2006: 361 million euros). In 12 percent and other countries 3 percent. in Sheffi eld, UK, in 2008 has been made. 2007, Group staff received bonuses on the Outokumpu’s European market share in the Part of the operations carried out there will basis of the fi nancial result of 2006. 4 mil- Group’s principal product, hot and cold rolled cease and part will be moved to the nearby lion euros was transferred to the personnel stainless steel, totaled 16 percent in 2007, Meadowhall site. Th is reorganization will be fund in Finland. while its global share was 6 percent. completed during the spring of 2008 and will To implement the new phase of the strategy, result in the loss of 50 jobs. New organization will improve service Outokumpu’s organization was redesigned Ninety-four percent of the Group’s employees to end-user and project customers during 2007 and the changes will be in ef- are located in Europe. Th e principal countries Outokumpu’s key customers are in process in- fect from April 2008. To achieve the targeted in which Group operations are carried out dustries such as pulp and paper and chemicals, increase in end-user and project customers, a are Sweden (38 percent of Group personnel), as well as in off shore oil drilling, the restaurant Group Sales and Marketing function staff ed Finland (34 percent) and Britain (11 percent). and domestic sector, the transport equipment with customer industry-based teams is being Compared to 2006, no major changes have industry and the construction industry. established. By combining industry knowledge, occurred in the numbers of people employed Group sales rose by 12 percent to 6 913 an understanding of our customers’ business by Outokumpu in each country. million euros in 2007. On a geographical ba- and product know-how, Outokumpu’s sales

WAGES AND SALARIES BY COUNTRY TAXES AND SOCIAL DUES BY COUNTRY € million 2007 2006 2005 Finland 125 125 154 € million 2007 2006 2005 Sweden 124 125 131 Finland 86 136 21 Britain 39 44 95 Sweden 127 126 91 Other Europe 39 41 44 Other Europe 34 60 -1 Other countries 29 26 24 Other countries 34 1 14 Total 355 361 448 Total 281 323 124

VALUE ADDED DISTRIBUTED TO OUTOKUMPU’S STAKEHOLDERS

Generation of value added € million 2007 % 2006 % 2005 % + Customers Sales 6 913 6 154 5 016 – Suppliers Cost of goods and services 5 623 81 4 604 75 4 194 84 = Value added 1 290 1 550 822

Distribution of value added – Employees Wages and salaries 355 5 361 6 448 9 – Public sector Taxes and social dues 281 4 323 5 124 2 – Creditors Interest on debt and borrowings -209 1) -3 39 1 67 1 – Shareholders Dividends 216 3 199 3 82 2 = Distributed to stakeholders 643 922 721 Retained in business 647 9 628 10 101 2

1) The ﬁ gure includes gain from the sale of Outotec Oyj shares, EUR 142 million, and gain from the Talvivaara transaction, EUR 110 million.

16 Outokumpu and the environment 2007 Case for Outokumpu, andhow theGroup will ket trends, theimplicationsofthesetrends position inthestainlesssteelmarket, mar- Executive CommitteeoutlinedOutokumpu’s days priortotheevent. lated investments announcedjustafew Outokumpu’s strategyphaseandre- new about Committee informedparticipants team. Th members oftheOutokumpu management forﬁ portunities of CapitalMarket Days. for Investor Relations andakeyorganizer gela Ulfves transparency incommunication,” says to emphasize ourdeterminationtoachieve “By makingthisevent public,we wanted The eventwasheldinMilanSeptember2007. were openedtoallinterestedpartiesviaalivewebcast. For thefirsttimeever, Outokumpu’s CapitalMarketDays Public CapitalMarketDaysincreasetransparency Four presentations by membersofthe These annualevents offergoodop- isyear, thecompany’s Executive , Outokumpu’s Vice President Bo Annvik,whojoinedOutokumpu’s GroupExecutiveCommitteein2007,presentedthegreatfeaturesofOutokumpu’s duplexsteelg nancialanalyststomeet In- environment. traveling isalsogoodforthe unnecessary becomes available. Avoiding excessive or need accesstoinformationassoonit groups whodonothave timetotravel but journalists andmembersofotherstakeholder people. the live webcast totaledaboutahundred kumpu’s Internet site.Th answer sessionwere broadcast viaOuto- excellence programs. broadening ofOutokumpu’s operational range, expansioningrowth markets, and commercial strategy, changesintheproduct respond by relying onfourpillars:anew live webcasts inthefuture. Webcasts are usefultoanalysts,investors, All presentations andthequestion Th eGroup’s plansincludeproducing eaudiencefor • • • • CAPITAL MARKETDAYS • Outokumpu Participants in2007: Shefﬁ eld,Britain(2004) Avesta, Sweden(2005) Tornio, Finland(2006) Milan, Italy(2007) Recent locations: Annual eventsince2001 First organizedinthemid1990s about 100 Audience forthelivewebcast: and theenvironment 2007 35 rades inMilan.

17 Economic responsibility

teams will be able to create and off er custom- As a proportion of the total cost of raw ma- sions, quality and environmental issues also ized value-adding solutions. terials, nickel’s share increased to 76 percent infl uence our selection of suppliers. in 2007 (2006: 69 percent). In addition to raw materials, a large share Dramatic variations in the nickel price Fluctuating raw material prices resulted of Group costs consist of purchased services In fi nancial terms, a major proportion of Ou- in substantial inventory losses. such as maintenance, which are in the main tokumpu purchases are made from suppli- As a result of lower production volumes, sourced locally. Doing this includes the risk ers of raw materials. Th e principal raw ma- energy costs fell by 21 percent in 2007 to a that Outokumpu purchases make up the terials used in the manufacture of stainless total of 189 million euros, and energy ac- majority of net sales by these often small, are recycled steel (both stainless and carbon counted for some 3 percent of the Group’s local service suppliers. Th e Group recogniz- steel), ferrochromium and nickel. Th e Group total costs. es its responsibility towards local economies has its own chromium mine in Kemi, Fin- and our future objective is that no supplier land, and a ferrochrome refi nery in Tornio, No supplier should be should be too dependent on business done Finland. Th e recycled steel, nickel and some too dependent on Outokumpu with Outokumpu. ferrochromium are purchased on the open We have a limited number of raw material market. Depending on the location recycled suppliers, only a few of whom are located Balance sheet very strong steel accounts for some 70 percent of the to- near our production sites. Th is is particularly In 2007, assisted by good cash fl ow from tal amount of raw material used. true of the Tornio site in Finland. As a con- operations and divestment of the remaining Raw material prices continued to increase sequence, our primary emphasis is on global shares in Outotec Oyj, interest-bearing debt in 2007. By mid-May, the price of nickel – rather than local sourcing. Th e proportion was further reduced. Th e resulting strong bal- the most expensive raw material – had risen spent on locally-based suppliers is not cur- ance sheet off ers excellent opportunities for to a record high, an increase of 58 percent rently monitored. On the other hand, our investing in both future growth and the new from the beginning of the year. Th e price units attempt to purchase raw materials on phase in Outokumpu’s strategy. then collapsed in a dramatic manner to less home markets whenever possible to reduce Net fi nancial costs in 2007 totaled 206 than half of its highest level in just a couple of any costs that will be incurred by additional million euros (2006: -48 million euros) and months. On average, the nickel price was 54 transportation. While total cost is usually a net interest costs totaled 58 million euros percent higher in 2007 than it was in 2006. major factor when making purchase deci- (2006: 62 million euros). At the end of 2007,

SALES BY REGION AND COUNTRY DIVIDEND AND DIVIDEND YIELD COST OF GOODS AND SERVICES € % Europe 73% Germany 19%, Italy 10%, 1.50 6 Sweden 7%, Britain 5%, € million 2007 2006 2005 Finland 5%, France 5%, 1.25 5 Spain 4%, Others 18% Raw materials and North and South 1.00 4 merchandise 4 556 3 466 2 935 America 12% 0.75 3 Fuels and supplies 325 325 330 Asia 12% China 2%, Others 10% 0.50 2 Energy expenses 189 239 221 Other countries 3% 0.25 1 Freights 187 227 214 0 0 Maintenance 106 111 138 03 04 05 06 07 Dividend per share, € Hire processing 48 44 43 Dividend yield, % Rents and leases 24 26 30 Other expenses 229 199 273 Total 5 662 4 637 4 184

18 Outokumpu and the environment 2007 Outokumpu’s net interest bearing debt to- In 2007, Group taxes and social security taled 788 million euros (2006: 1 300 million payments fell to 281 million euros (2006: Outokumpu euros) and the debt-to-equity ratio was 23.6 323 million euros). As the profi t reported by percent (2006: 42.3 percent), clearly below Outokumpu in 2007 was lower than in 2006, recognizes the target fi gure of 75 percent. the amount of income tax also fell to 138 mil- Th e majority of the Group’s interest-bearing lion euros (2006: 178 million euros). its corporate current liabilities are acquired by the Group’s treasury function. Methods used to minimize Grants and support responsibility risks relating to liquidity and refi nancing in- Wherever they operate, Group companies clude balancing loan installment schedules participate actively and openly in community towards and maintaining adequate fi nancial reserves. development by making charitable donations At the end of 2007, the Group’s unused and and providing fi nancial assistance in line with the local negotiated loan facilities and undrawn loans, the company’s ethical principles and its spon- together with binding credit promises, totaled sorship and donation policy. In 2007, the com- communities 1 000 million euros. pany’s support for events, sports (especially sports for young and disabled) and culture at it operates in Dividend level maintained, its largest locations in Avesta, Espoo, Tornio dividend policy adjusted and Sheffi eld totaled about 390 000 euros. Outokumpu’s two largest shareholders are Many of Outokumpu’s plants such as those the Finnish government with a 31.1 percent in Tornio in Finland, Avesta in Sweden and shareholding and the Finnish Social Insurance Sheffi eld in Britain are signifi cant local em- Institution with a 8.6 percent stake. In late ployers. Outokumpu also supports research metal and mining technology, ore geology and 2007, Finland’s Parliament passed legislation and development related to its fi eld of opera- related business activities, and the teaching that allows the Finnish government to sell the tion and engages in close co-operation with of these subjects in universities. It also off ers whole of its stake in the Group. local educational institutions. Several Outo- support to students and researchers working In January 2008, Outokumpu’s Board of kumpu units support technological research, in these fi elds. An independent organization, Directors adjusted the company’s dividend technology students and young people who the foundation’s Board of Directors is made policy, which now states that a minimum of are fi nancially disadvantaged. up of representatives of diff erent universi- one-third of the accounting period’s profi t is In 2007, instead of sending Christmas ties. Outokumpu’s CEO is the organization’s to be paid out as dividends over the economic cards and giving Christmas presents to its Deputy Chairman. cycle with the aim to have stable annual pay- stakeholders, Outokumpu donated money ments to shareholders. When drafting its an- to Médecins sans Frontières. nual dividend proposal, the Board of Direc- To contribute to the implementation of tors takes into account not only the Group’s environmentally-benefi cial projects with trans- performance trend, but also its investment boundary eff ects of interest to the Nordic re- and development needs. gion, Outokumpu joined the Testing Ground Th e proposed dividend payment for 2007 Facility (TGF), a carbon fund. TGF fi nances is 1.20 euros per share (2006: 1.10 euros per projects through the purchase of carbon credits share), representing a payout ratio of 33.9 per- and is managed by the Nordic Environmental cent. Th e eff ective dividend yield for 2007 is Finance Corporation. In 2007, Outokumpu’s 5.7 percent. Over the last fi ve years, dividends contribution to TGF totaled 0.5 million eu- distributed by Outokumpu have averaged 36 ros (2006: 1 million euros). percent of the Group’s result. Outokumpu receives assistance from the public sector. In 2007, this assistance totaled Lower profit led to lower taxes 603 000 euros. Grants are linked to research Outokumpu’s operations have an economic impact and to the development of new technologies, on the local, national and global communities products and applications. in which the company operates. Outokumpu In 2007, the Outokumpu Oyj Founda- contributes to these communities’ well-being tion distributed grants and diploma awards through the payment of taxes, through direct totaling 278 500 euros. Th e Foundation is and indirect employment and by participating charged with promoting research into the in social activities in other ways. manufacture and refi ning of metals in Finland,

Outokumpu and the environment 2007 19 Environmental responsibility

Environmental responsibility

Production of stainless steel has an impact on the environment. KEY ENVIRONMENTAL Within deﬁ ned ﬁ nancial and technical parameters, Outokumpu > OBJECTIVES: makes every effort to minimize environmental impacts.

• Preventing soil contamination Stainless steel is 100 percent recyclable, cor- Outokumpu has always sought to fi nd rosion-resistant and hygienic, and the envi- environmentally friendly solutions and has • Reducing emissions into water ronmental impacts resulting from its use are consciously developed its production methods and air negligible. Almost all environmental impacts to minimize their environmental load. • Improving energy effi ciency and therefore arise during the production, manu- enhancing the use of renewable facturing and reprocessing stages of the ma- Management of the environmental issues energy terial’s lifecycle. As a stainless steel producer, Outokumpu is • Optimizing the use of water Th e major environmental issues connected committed to responsible production. In line with stainless steel production are: dust and par- with the Group’s corporate responsibility policy, • Optimizing the use of recycled ticulate emissions into the air; soil contamination ethical principles and environmental policy, steel as raw material as a result of metals settling out of dust emissions Outokumpu aims to minimize the negative • Reducing the generation of waste or spills of metals, solvents and oil-containing impact of its operations on the environment liquids onto the ground; the intake of cooling as much as economically and technically pos- water; contamination of waters by discharges sible while achieving continual improvements from plant; and high levels of direct and indirect in overall performance. Local guidelines and energy consumption during production which environmental management systems that com- and external audits. Th e relevant authorities also contribute to global warming. In particular, ply with the ISO 14001 standard provide more receive regular reports on our operations. the use of primary raw materials consisting of detailed models for the actions we take. At Group level, operations are managed natural ores requires the consumption of a lot Environmental issues are an essential part of and best practices are applied through our of energy. Production techniques also create the management systems employed in Outo- environment network, whose working groups large amounts of landfi ll waste if determined kumpu’s plants and units, and the functioning and environment committee meet once dur- action to prevent this happening is not taken. of these systems is monitored by both internal ing each quarter.

> KEY ENVIRONMENTAL EVENTS IN 2007

REACH Flooding Material efficiency Registration required for all substances manu- Meadowhall and Stockbridge operations af- Tornio Works developed with Tapojärvi Oy factured/imported in more than 1 ton/year. fected in Sheffi eld. Local review to assess im- two processes: new spiral classifi er unit for Internal organization was built for pre-regis- pact to environment: e.g. 65 thousand liters fi ne ferrochrome slag to facilitate metal re- tration, which will be done during 2008. of oil to the environment. Authorities’ took covery and production of new rock material a pragmatic approach. First action: oil stor- for utilizing purposes; previously material Recycling and Lifecycles age to be resituated to reduce risks caused dumped as waste, and processing line for re- Important new data achieved for evaluating by possible future fl ooding. use of melt shop refractory bricks: 10 000 social and ecological benefi ts of steel’s mul- tons of material redirected from landfi ll to tiple lifecycles. Study on steel in Finnish na- Radioactive incident utilization. tional economy: average recycling rate more Excellent progress was made to transfer the Th e Hydrofl ux project continued: three than 90% and lifespan 42 years. four slag pots contaminated with Pu 238 year agreement signed with Minpro AB to from Sheffi eld melt shop area to proper re- keep developing and producing minimum Permits pository. Th ree slag pots transported; regula- of 1000 ton/year until permit granted for Investment decisions (Sweden, US): imminent tory approval sought for fourth and highest treatment in higher volumes. need for environmental permits. New permit activity slag pot. applied for whole Tornio site, as well.

20 Outokumpu and the environment 2007 Outokumpu is committed to responsible production Environmental responsibility

Achieving site specific targets set for 2007

AIR PROTECTION WATER PROTECTION ENERGY EFFICIENCY

Avesta Avesta Avesta > Goal: To decrease the carbon dioxide > Goal: To decrease the nitrate discharges > Goal: To improve energy effi ciency emissions by 2% to 375 kg/ton. to water by 10% to 1 kg/ ton as monthly – decrease electricity consumption by 3% > Result: Specifi c carbon dioxide average. by December 2007 from 980 to 950 kWh emissions increased by 7% due to the > Result: Not achieved due to increased per ton. changes in product mix and mill activity. share of special grade products. > Result: Not achieved due to changes in The increase was particularly caused by Sheffi eld, melting shop product mix. higher fuel consumptions in the rolling > Goal: To reduce water consumption by > Goal: To improve fuel effi ciency mills. 5%, against 2006 usage. – decrease the liquid petroleum gas Nyby > Result: Not achieved due to the consumption by 2% by December 2007 > Goal: To reduce nitrogen oxide emission incoming hardness in the town’s water from 608 to 596 kWh per ton. from the furnace in line 55 to max. 100 mg/ supply. This target continues for 2008. > Result: Specifi c target per ton not MJ power input. achieved, but total liquid petroleum gas Tornio consumption reduced by 2%. > Result: Flameless Oxy-fuel burners were > Goal: To implement new treatment installed into the furnaces. Improvement system for landfi ll water before end Degerfors will be fully capitalized during 2008. October 2007. > Goal: To reduce energy use for heating in Tornio > Result: Construction was fi nalized and the terminal dispatching area by 40% from > Goal: To raise utilization rate of dust test use is ongoing. 2005 as reference year. reduction units to over 97% per month. > Result: The goal was achieved: the > Result: Achieved, except during 3 energy use was reduced by 58%. months: malfunctions in November and Sheffi eld, melting shop December and fi re in April. SOIL PROTECTION > Goal: To implement an energy manage- Goal: Implementing new dust treatment ment system, including the formation of an unit by 1 September at the cooling section energy group and energy champion. To aim Sheffi eld, melting shop of AP1-line. for a reduction in non-production energy > Goal: To improve ground protection by > Result: Achieved. use of 10%, against 2006 usage. sealing protective bunds on site. To inves- > Result: This target is to be continued tigate sealing grinder cellars to prevent into 2008 as part of a group target to releases of hydraulic fl uids to ground water reduce energy consumption. and implement solution. WASTE MANAGEMENT > Goal: To reduce hydraulic oil consump- > Result: Not completed. Grinder cellars tion by 10% compared with 2006 through a have not been sealed. programme of leakage reduction measures. Kemi > Result: This target was completed, but > Goal: To reuse 70 000 tons of lumpy rock further improvements have been iden- from the concentrating plant to backfi ll the tifi ed and the target continues for 2008. stopes of underground mine. USE OF MATERIALS > Result: Achieved, 72 946 tons used. Sheffi eld, melting shop Tornio > Goal: To introduce further improvements > Goal: To produce more than 120 000 tons CERTIFICATIONS to the waste segregation and disposal steel slag products. systems, increasing recycling by 10%. > Result: Target was not met due to > Result: Achieved. reduced steel production. Production of Tubular products sites Sheffi eld, rod mill steel slag products was 60 200 tons. in Sweden and Finland > Goal: To improve site waste > Goal: To replace oil as heating fuel by > Goal: The sites are in process to combine management and fi nd alternatives for peat, biomass and recycled fuel before end the quality and environmental management reducing the quantity of waste sent to December 2007. system in one system, which covers the landfi ll. > Result: The commissioning of the new requirements of ISO 9001, ISO 14001 and > Result: Stirrers installed on two of fi ve power plant using these fuels started in PED 97/23/EC. The target is to have the waste acid neutralization tanks. Waste August 2007. The commercial production of system ready for multi-site certifi cation in management improved. this plant started on 28th of December 2007. the end of 2007. Sheffi eld, rod mill > Result: Achieved, fi rst audit of multi-site > Goal: To install acid recovery system to certifi cation was carried out April 2007. control tank iron levels and recover over Meadowhall 80% of the pickling acid. > Goal: To get the Environmental mana- > Result: Not achieved, investment gement system certifi ed by May 2007. decision is still pending. > Result: Achieved in August 2007.

22 Outokumpu and the environment 2007 Site-specific targets for 2008

WATER PROTECTION ENERGY EFFICIENCY MANAGEMENT SYSTEMS

Avesta Avesta The process of integrating management Reduce nitrate discharges to water by 10% Reduce electricity consumption by 3% systems that comply with the EN-14001, and achieve 1kg/ton as a monthly average. from 980 to 950 kWh per ton. EN-9001 and BS-18001 standards and Sheffi eld melting shop Reduce consumption of liquid petroleum relevant energy management systems into a Reduce specifi c water consumption by 5% gas (LPG) by 3% from 66 to 64 kg per ton. single environment, health and safety with 2007 as the reference year. Sheffi eld, melting shop quality system has been initiated. The target Reduce specifi c energy consumption by 2%. is for at least one business unit to be ready Degerfors for implementation by the end of 2008. Increase water fi lter capacity in the hot Nyby, tube mill rolling mill to minimize the risk of Reduce total energy consumption by 2%. accidental discharges.

AIR PROTECTION SOIL PROTECTION GROUP-WIDE ENVIRONMENTAL TARGETS FOR CORPORATE Tornio Sheffi eld melting shop RESPONSIBILITY THEME YEAR 2008 Increase usage of dust reduction units to Improve ground protection by installing more than 98% per month. storage tanks and bunds for grinder cellar • To reduce waste: landfi ll from plant Newcastle water. operations by 10 percent per ton Add a new scrubber to one of the processed, and non-classifi ed (e.g. production lines. plastic cups and other non-recyclable material) from offi ces by 5 percent • To reduce energy consumption: at plants by 2 percent per ton processed, and in offi ces by 5 percent (e.g. using energy saving lamps, turning off lights and WASTE MANAGEMENT USE OF MATERIALS computers when not in use, not leaving in stand-by position) • To contribute to reducing global carbon Tornio Kemi mine dioxide (CO2) emissions Reduce quantity of landfi ll waste by Reuse 200 000 tons of lumpy rock from the - New company cars to be low emission 10% per fi nal product ton. concentrating plant to backfi ll stopes in the cars (below 200g CO2 /km); Sheffi eld melting shop underground mine. company car policy to be revised Increase the quantity of waste being Sheffi eld, melting shop - Outokumpu promotes tele/video- recycled so that the amount of waste sent Reduce consumption of hydraulic oil by conferences vs. fl ying; travel policy to to landfi ll is reduced by 10%. 10% (with 2007 as the reference year) be revised - Outokumpu invests 5 million euros in Örnsköldsvik tube mill through a program of leakage reduction measures. an environmental target to be identi- Reduce deposited material by 10%. fi ed through a group wide competition Sheffi eld rod mill Maintain the on-site recycling for primary Reduce the quantity of general waste being dusts to match dust output from the sent to landfi ll by 10% by identifying melting shop. additional opportunities to reduce, reuse or Tornio recycle material that is currently being Produce more than 120 000 tons of steel disposed of in this way. slag products.

Outokumpu and the environment 2007 23 Environmental responsibility

Recycled steel is to the metals recovered for use on stainless MATERIAL BALANCE our main raw material steel production, a zinc-rich fraction is sep- Th e primary raw material used in manufac- arated and sent to other operators who re- 2007 2006 2005 turing stainless steel is recycled steel, both cover the zinc. Materials used, tons stainless and carbon steel. In 2007, Outo- In the Nordic countries, dust from the Recycled steel 1 480 332 1 797 000 1 597 000 kumpu used 1 480 000 million tons of recy- Group’s melt shops is collected and sent to Ferrochrome 282 001 354 987 340 092 cled steel in producing 1 719 000 million tons an external facility outside the Group in Swe- Nickel alloys 105 697 130 829 129 743 Other alloys 100 274 103 084 90 347 of stainless steel. Th e production process also den that treats the dust to recover the metals employs alloying elements such as ferroalloys it contains. Th ese metals are then returned Additives, tons containing iron and other metals including to the melt shops for use as raw material. In Slag formers 237 454 264 711 251 875 nickel, chromium or molybdenum. the Group’s UK operations, dust recovery is Meltshop Although recycled steel represents the carried out on site. process gases 181 048 241 349 217 794 majority of the raw materials used, other re- Pickling acids cycled materials are also employed. Usually, Other materials are also required bought 11 322 23 286 21 013 these consist of metal-containing wastes or by- In addition to the raw materials used to make Pollution prevention materials 17 365 16 700 16 000 products from manufacturing processes. In a stainless steel, other materials are needed for small number of cases (such as swarf and heavy the manufacturing process but do not be- Packaging materials used for fallout dust from slab, coil and billet grinding come part of the steel product. Examples of fi nal products 11 797 14 200 12 100 operations) these residual products can be re- these are slag formers such as lime, and gases used as such in the stainless steel production such as oxygen, nitrogen and argon which Energy, million GJ process, but in most cases they are treated to are used to ensure the correct atmosphere in Electricity 10.5 11.3 10.7 recover the metals from the residue. the melting stage of the process. At Avesta, Propane 4.4 5.1 5.1 these gases are manufactured on-site by an Carbon monoxide gas 1.7 1.9 1.7 Metals are recovered external supplier. Acids used for the pickling Natural gas 0.6 0.9 0.8 One example of such treatment is the recovery of stainless steel are immediately recycled as Light and heavy fuel oil 1.4 1.9 1.8 of metals from dust. Th e stainless steel man- part of the process and re-used. ufacturing process generates a huge amount Th ere are also materials which are used Output, tons of dust and scales. To minimize emissions to to minimize or prevent harmful emissions to Steel 1 718 704 2 078 888 1 920 516 the environment these are collected using fi l- the environment. Examples of these are lime ters. In 2007, 60 000 tons of dust and scales used to neutralize the effl uent rinse water, am- Emissions to air, tons were collected with approximately 21 000 monia or hydrogen peroxide used to reduce Carbon dioxide 932 000 1 050 000 1 019 000 tons of metals being recovered and re-used emissions of nitrogen oxides into the air, or Nitrogen oxides 1 653 1 942 1 646 in the steel production process. In addition chemicals used for water treatment. Sulphur oxides 451 736 629 Dust 265 276 179 Ozone-depleting substances 20 14 23

Emissions to water, tons Metals 17.2 18.6 16.6 Nitrates 575 600 580 USE OF RAW MATERIAL

Hazardous waste, tons BY VALUE BY VOLUME Oily sludge to the treatment 4 834 5 800 5 200 32.3% nickel, primary 3.3% 43.3% nickel, in scrap 4.9% Hydroxide sludge 7.8% molybdenum, primary 0.5% landﬁ lled 44 967 53 000 53 000 4.3% molybdenum, in scrap 0.4% Steel making 4.0% chrome, primary 8.4% dust to recovery 39 000 42 000 45 000 3.7% chrome, in scrap 10.4% 0.6% iron, in alloys 28.8% Wastes and by-products, tons 2.9% iron, in scrap 33.8% 1.1% other, primary 5.1% Slag, total 547 620 624 000 480 000 0.0% other, in scrap 4.6% Slag utilized 220 000 223 000 148 000

24 Outokumpu and the environment 2007 Packaging materials recycled Another category of material used in stainless MATERIAL FLOWS Sulphur Nitrogen Carbon Particles steel production is packaging. Waste sorting dioxide oxides dioxide guides have been issued to encourage recycling of the packaging material used to protect our products while they are being transported to customers. In Sweden and Finland Raw materials Outokumpu participates in the nationwide recycling system for packaging. Packaging Fluxes Products material used by our suppliers for deliveries Chemicals to Outokumpu plants is also sorted and recycled in accordance with local practice. Water By-products Th e melt shop in Sheﬃ eld, UK receives Fuels certain types of steel scrap that was previously Electricity used as packaging material. After gaining the status of a registered packaging reprocessor under the UK government’s Packaging Waste Regulations in 1997, regularly audits are carried out and Packaging Recovery Notes can Discharges Waste Waste be sold. to water water

Integrating environmental costs into the material value chain Being the undisputed number one in environmental matters requires Outokumpu to create maximum value while using as little resources as possible and minimizing any re- Outokumpu to maximize the eco-effi ciency households, assuming one household consulting ecological burden. To achieve this, the of the Group’s production. sumes about 25 000 kWh, or 0.09 TJ, of Group has initiated a challenging project to energy annually. According to the Statistics develop an internal environmental value chain. Energy efficiency as a target Finland, in 2006 Finland as a whole con- Th e objective of the project is to construct a Th e steel industry is traditionally viewed as a sumed 1 492 000 TJ of energy. model which integrates environmental costs major consumer of energy and the steel mak- Th e total energy used by Outokumpu each into the material value chain. Environmen- ing and rolling processes operated by Outo- year includes fuel and electricity consumed at tal costs and the use of resources connected kumpu are indeed energy intensive. Con- company sites. Analysis of the Group’s energy with the process and Group products will be siderable eff ort, however, has been put to consumption over the last four years (2004–2007) evaluated from a value-creation perspective, improve the overall energy effi ciency of the shows that energy consumption per produced with the aim of employing resources in the Group’s operations. Furthermore, many of steel ton has increased about 10 percent due most effi cient ways. the processes operated by Outokumpu are to increased share of receycled steel used in Th e fi rst phase of the project was con- considered to be “Best Available Techniques” Tornio and lower production levels. ducted in Tornio during 2007 and the re- to minimize the emissions as defi ned by the Th e need to use energy effi ciently has been sults have been very promising. Th e project European Union as part of the implementa- recognized for many years and Outokumpu has includes the analysis and valuations of specifi c tion of the Integrated Pollution Prevention worked hard to achieve an impressive record emissions, side streams and environmental and Control Directive. We seek reliable en- in reducing the amount of energy consumed. costs for diff erent stainless steel grades and ergy sources, security of supply and predict- Energy reduction plans are incorporated into product phases. ability of prices in a world where energy costs our Group’s Environmental management sys- Th e environmental burden related to Group can be very volatile. tems. Our sites, including the major energy operations is one important component in Electricity and several other energy sources consumers in Finland, Sweden and Britain, the optimization process. Th e new model such as coke, natural gas, propane and fuel are certifi ed to the international standard ISO takes Outokumpu one step further. Evaluat- oil are used at Outokumpu sites. Our direct 14001. Th e larger Swedish units are also certi- ing value-creating phases in relation to their energy consumption in 2007 amounted to fi ed according to SS 627750. It is a standard environmental consequences and material 18 500 terajoules (TJ). Th is equates to the to work with continuous improvements in requirements by grade and by process allows annual energy consumption of about 206 000 energy usage.

Outokumpu and the environment 2007 25 Environmental responsibility

Committed to saving energy companies to identify new, economically- collection systems and have done so in order Faced with the threats from climate change viable energy-reduction projects and fi nan- to make their work on energy improvement associated with global warming, governments cially support relevant investments. Similar issues more eff ective. and industry are increasingly working to- agreements in Sweden and Britain have re- Th ere are many ways to improve energy gether through voluntary agreements. Outo- sulted in lower levels of energy taxation in effi ciency. Initiatives in place within Outo- kumpu participates in such agreements with return for agreement to targets for improve- kumpu are many and range from promoting the national authorities in Finland, Sweden ments in energy use. each individual’s awareness of energy issues and Britain and many of these arrangements Continual improvement in the effi ciency of through training programs, maximizing the have now been in place for a number of years. using energy demands priorities to be assigned recovery of energy from sources of waste heat, In Finland, the Tornio site joined a volun- to projects in a systematic way. Outokumpu using new energy effi cient technology, inte- tary energy-conservation agreement scheme uses a management system in which the en- grating production processes and improving in the beginning of 1990 and the contract ergy consumption for each object is listed and the material effi ciency by reducing the gen- was renewed in 1999. quantifi ed. Projects are then selected from eration of waste. Th e main objectives have been to pro- the larger energy consumers. Most our sites mote energy audits and reviews in member have found it necessary to improve their data

REDUCING ENERGY CONSUMPTION IN 2007 WATER WITHDRAWAL IN TORNIO > million m3/a tons 25 1 500 000 • Routines have been implemented at the largest Swedish sites to always purchase the most energy-effi cient equipment when payback time is less than three 20 1 200 000 years. These assessments are made using the energy classifi cation of electrical 15 900 000 equipment and using life cycle cost calculations when applicable. 10 600 000 • Tornio Works in Finland will replace most of the oil boilers currently used for 5 300 000 heating with energy from a new power plant fueled by peat, biomass, recycled 0 0 98 99 00 01 02 03 04 05 06 07 fuels and carbon dioxide gas. The new plant will also generate electricity. Water withdrawal (million m3/a) • A new energy reporting system at the Tornio Works has been fi nalized. Stainless steel slab production, t Ferrochrome production, t • Tornio Works is a member of a pilot group which is developing a standard for Energy Effi ciency Systems. This work is being carried out in cooperation with Motiva Oy, a Finnish state-owned company which provides expert services on energy issues. Energy effi ciency contracts were renewed at the end of 2007. • Tornio Works has also initiated several investigations with the target of increas- WATER WITHDRAWAL AND DISCHARGES ing energy effi ciency at the plant. • 2007 2006 2005 Outokumpu’s tubular product units aim to reduce their electricity consumption by Water withdrawal by source three percent each year. The results achieved so far look promising. Surface water, million m3 20.3 25.9 22.7 • New routines for maintenance shutdowns have been implemented at the Avesta Municipal water, Works in Sweden: motors are shut down when they are not being used. million m3 1.1 1.2 1.2 • Energy consumption in the terminal dispatching area at Degerfors in Sweden has been reduced by 58 percent after replacement of an oil-fi red boiler system Water discharges by type and destination with infrared heaters fueled by liquid petroleum gas. A decision has been made Cooling water out, million m3 10.6 16.4 14.8 to extend this replacement process into other areas. Waste water out, • Degerfors has worked with the general utilization of buildings within the plant million m3 8.6 7.2 8.4 area and this will result in lower energy consumption. Metal discharges to water, t 17.2 18.6 16.6 • New steam pipes have been installed at Degerfors to minimize the heat losses Nitrogen in nitrates, t 574 600 580 from pipes. The benefi ts achieved will be evaluated during 2008.

26 Outokumpu and the environment 2007 Case the fi of tions alsoincludetheregular surveying of highquality. made sure thatthefi fi ofLapland’sstitute underthesupervision Finnish Game andFisheries Research In- 10 000euros. Th life andtheinhabitantsofarea. will mostlybenefi commonwhitefi trout andmigratory namely itsindigenousstocksoflocalsea local stocksofvaluable fi used specifi fi Th and projects selectedby theauthorities. ments are usedtofi payments tothefi the Outokumpu Tornio facilities’ statutory Th The fishpopulationistoberestockedannuallyinthefutureaswell. 24 000migratorycommonwhitefishintheTornio Riverdeltain2007. Outokumpu commissionedtheplantingofabout3300seatroutand Trout restockedinTornio River shing authoritieswhich,atthesametime, shing authoritiesthattheirpaymentsbe erestocking of wascarriedoutasapart e Tornio facilitieshave agreed withthe Th Outokumpu’s environmental obliga- sh stocksandthebottomfaunafound evalue oftheplantedfi cally forreviving thedepleted e fi t theendangered marine shing industry. Th nance current research sh were plantedby the sh were healthyand sh in Tornio River, Juha Ylimaunu,Manager, EnvironmentalAffairsatthe Tornio Works participated instockingfi shintheTornionjoki riverinMay sh wasabout e pay- sh. Th is linked to the facility or its sewage water.linked tothefacilityoritssewage not, according toexistingdata,bedirectly changes inthebottomfaunapopulationcan- waterhasnotbeentoxic,sewage andthe however, have indicatedthatthefacility’s accumulated metaldeposits.Th bottom sedimentswhichhave, over time, species fi higher contentsofmetals,becausethese found nearthefacility’s sewer are showing tom fauna,suchasmusselsandgastropods, in thearea alsoaff the harborandheapingofdredged earth opening ofashippinglane,thedredging of species’ naturalvariation. Furthermore, the are more diffi practically notincreased. amounts ofmetalsfoundinthefi are healthy, reproductive andedible.Th found inthewatersfront ofthefacility indicatethateven thefi of thesesurveys adjacent tothefacilities.Th Th e results of the surveys of bottom fauna ofbottomfauna eresults ofthesurveys lter theirnutrientsfrom mudand culttointerpret duetothe ect theresults. Some bot- emainresults e surveys, sh have e sh • • • • RESTOCKING FISHPOPULATIONS • Outokumpu 24 000commonwhitefi sh Fish species: When ittookplace: Background: trout intheTornio River commissioned theplantingof What isitabout: carried outincomingyears fi shstocks ing industrywereusedtorevive ty’s statutorypaymentstothefi sh- Future: morerestockingwillbe and theenvironment 2007 theTornio facili- 3300seatroutand Outokumpu spring2007 2007.

27 Environmental responsibility

Climate change raises Tube mill in Florida ENERGY SOURCES in a “regional hotspot” challenges Electricity 56.9% According to the Corporate Ethics Statement, Physical risks relate to, for example, fl oods, Propane 23.5% Responsibility Policy and Environmental Policy, hurricanes and drought. An analysis was made Carbon monoxide gas 9.0% Outokumpu aims to minimize the impact of based on World in Transition: Climate Change Natural gas 3.1% its activities on the environment. Th is, among as a Security Risk, a report issued by the Ger- Light fuel oil 4.4% other things, is our contribution to combating man Advisory Council on Global Change in Heavy fuel oil 3.1% global climate change. Th e share of recycled May 2007. Of its current production opera- material in our production is higher than the tions Outokumpu has just one tube mill in global industry average of 60 percent and our Florida, USA in an area which the report de- ferrochromium production technology is the fi nes as “regional hotspot” with an increased ORIGIN OF ELECTRICITY world leader in energy effi ciency and in curb- frequency of more intense hurricanes. Th is area (fi gures based on estimates) ing carbon dioxide emissions. Outokumpu is however already hurricane sensitive and the pays serious attention to climate change is- necessary measures have been taken. Renewable sources 53 % sues and takes them into account when mak- Nuclear 27 % ing business decisions. A recent review of the Influence of the European Union Fossils and turf 20 % Outokumpu approach can be found in the Emission Trading Scheme The carbon dioxide emissions of our purchased electric energy report Corporations and Climate Change – Regulatory risks relate to the cost of comply- are 66g/kWh Views of International Finnish Corporations ing with new regulations. Outokumpu has published in November 2007 by the Finnish sites in the UK, Finland and Sweden which Business and Policy Forum EVA. participate in the European Union Emission Th e major greenhouse gas emissions from Trading Scheme (EU ETS). In the period Outokumpu operations are direct releases 2005–2007, our UK site used the opt-out of carbon dioxide from the company’s sites possibility, but it is part of the scheme in as a result of using fossil fuels, and process- the so-called Kyoto period 2008–2012. As related emissions from the Group’s steel mak- regards the direct costs of emissions, gov- ing operations. In 2007, these emissions to- ernments in all three countries granted free taled 932 000 tons (1 050 000 in 2006 and allowances to Group sites. All our sites had more or less according to need. In Finland, 1 045 000 in 2005). When combined with a surplus of allowances, primarily because the government cut Group allowances by indirect emissions of carbon dioxide from production levels were lower than planned, nine percent. Purchasing this amount would purchased electricity, Outokumpu’s emissions the use of recycled steel as a raw material was cost 1.5 million euros per annum, if the price in 2007 totaled 1 150 000 tons. maximized and improvements in effi ciency of a carbon dioxide ton is 20 euros. On the It is a fact that both the changing climate were achieved. other hand, our evaluation indicates that even and the fi ght to inhibit it create risks and For the 2008–2012 period, governments in Finland we will be able to cope with the opportunities which have fi nancial implica- have also granted allowances at no cost. Al- situation, as improvement measures taken tions. Th ere are both physical and regula- lowances are allocated to the Outokumpu early have a proportionally greater eff ect as tory risks. sites in Sweden and the UK by governments production levels grow. Th e direct impacts and risks that will result from regulation after 2012 are very diffi cult to evaluate because the debate is still weakly focused. A European Commission draft pro- ENERGY USED 2007 poses a gradual decrease in free granting of emission allowances instead of granting them for free for industrial installations and power Electricity Fuel energy Total Unit (GWh) (GWh) (GWh) plants in the EU. Th e industry opposes this Tornio 1 935 1 367 3 302 proposal as long as the system is not global. Avesta 415 450 865 Sheffi eld 265 132 397 The price of electricity Other 306 264 570 is a constant concern For Outokumpu, the indirect infl uence of the Total 2 921 2 213 5 134 European Union Emission Trading Scheme on the price of electricity is far more important

28 Outokumpu and the environment 2007 Case Th Group’s tubularmillinStorfors, Sweden. workingthe everyday environment atthe uous improvements process haschanged seen withtheirown eyes how thecontin- Lars Törnander changes inworking conventions. not onlyconstantimprovements butalso for thisis5Smethodology, whichtargets ous improvements. One ofthetoolsused levels ofcustomersatisfactionandcontinu- environment, reduced leadtimes,improved of safety, highereffi on achievinghighquality, improved levels terms, thismeansanever increasing focus world-class inthespringof2005.In practical Finland begantheirjourneytobecoming Outokumpu’s tubularunitsinSweden and make everydaylifeinOutokumpu’s millseasierandsafer. The 5SConstantImprovementsprogrambringsresultsthat On theroadtobeingworld-class eobjective istomakesure everything Peter Harnesk General ManagerPeterHarneskandProduction ManagerLarsTörnander are satisfi edwiththeresultsofwide-rangingimprovem , Production Manager, have ciency, agoodworking , General Manager, and safety. “Every employee of the im- ispart is intherightplaceandimprove levels of safer,” hesays. own placeandthework we doiseasierand isinitsis muchcleanerhere, everything to be,there have beenmajorchanges.It changed. “Compared tohow thingsused has along-termperspective onwhathas Ståhl ments tohave beenwell worthwhile. electricity outletsare shielded. fi on thefl ments includeadditionalprotection forrails Törnander. Recent safety-related improve- of themare considered,” sayHarnesk and improvements have beenproposed, andall provement process. Many ideasformaking re doorsandrethinking thewaysinwhich Storfors’ employees considertheimprove- , anoperatoratthemillsince1989, oor, increasing lightlevels around Leif • • • AT STORFORS 5S –CONTINUOUSIMPROVEMENTS • • Outokumpu One ofthegoalsfor2008isto in 2007 improvement groupsestablished All employeesparticipateinthe Clean, SecureandStandardize al guidance:Sort,Systematize, words whichprovideoperation- “5S” standsforfi veSwedish A changeinwaysofworking program 12 tubularunitsinvolvedinthis Storfors isoneofOutokumpu’s further reduceleadtimes and theenvironment 2007 ent initiative.

29 Environmental responsibility

PARTICLE EMISSIONS TO AIR than the emission allowances. Th is is because issues on growth in these industrial segments, t Outokumpu is a major user of electrical en- but the average annual growth in global use of 500 ergy. Th e market price of electricity is deter- stainless steel is 5–7 percent and the industry 400 mined by condensing power plants and the segments aff ected constitute some 65 percent 300 power companies transfer the cost of their of the market for stainless steel. allowances to the market price. According to 200 a study carried out by the Technical Research Investment in a local carbon fund 100 Centre of Finland VTT, the price of electric- Direct fi nancial impacts resulted from the 0 03 04 05 06 07 ity increases 7–9 euros per MWh when the sale of surplus carbon dioxide allowances and price of one ton of carbon dioxide grows 10 opitional profi ts from investments in carbon NITROGEN OXIDES TO AIR euros. For the 2008–2012 period, the Eu- funds. Due to lower production than planned ropean Commission will be allocating emis- in 2005–2007, Outokumpu was able to sell t 2 500 sion allowances that are much lower than in 889 000 tons of allowances for a total of 9.38 2005–2007. Hence the forecast prices of al- million euros. In 2007, the Group invested 2 000 lowances in 2008–2012 are 20–25 euros per 0.5 million euros in Testing Ground Facility, 1 500 ton of carbon dioxide, whereas during the fi rst a local carbon fund which fi nances projects 1 000 period they had almost no value. primarily in Poland, Lithuania, Latvia, Esto- 500 nia and Russia (2006: one million). 0 Own power solutions Impacts on the price of electricity are 03 04 05 06 07 To protect itself against increasing price risks, more diffi cult to evaluate. In the main, they Outokumpu has reinforced its power pro- depend on the share of electricity produc- CARBON DIOXICE TO AIR curement policy through strategic, long-term tion creating carbon dioxide emission, the t electricity agreements. Th e Group has also hydropower reserve in the Nordic countries 1 250 taken a position in effi cient power produc- and competition between the power compa- 1 000 tion by acquiring Norwegian hydropower, nies. Th e European Union Emissions Trad- 750 participating in the construction of a new ing Scheme will certainly not result in lower 500 multi-fuel power plant in Tornio as a minor- energy costs. ity shareholder, investing in a new Finnish In the 2008–2012 period, we do not ex- 250 nuclear company, applying for a building per- pect our carbon dioxide allowances to result 0 03 04 05 06 07 mit for a nuclear power plant, and working in a surplus. Th e Group’s investment in the on a windpower farm in Tornio. local Testing Ground Facility carbon fund, METAL DISCHARGES TO WATER Th e average proportion of our total con- mentioned above, is expected to bring us ex- t sumption represented by Outokumpu’s “own” tra allowance units, but evaluating the actual 25 power in 2008–2012 will be about 16 percent. amount is not possible at this time. 20 Th e company hedges itself against variations in electricity prices on a staggered basis such that Ozone-depleting substances 15 a total of 12 percent of electricity purchases in still used to some extent 10 2008 are exposed to price risks due to emis- Outokumpu has eliminated the use of ozone- 5 sion rights. Th e fi gure for 2012 is 68 percent. depleting substances from its steel process 0 With this hedging pattern, an increase of 10 operations and has also phased out the use 03 04 05 06 07 euros per ton of carbon dioxide will increase of halons in fi re protection systems through- the Group’s electricity bill about 1.5 percent out our operations. Methylbromide treated MELTING SHOP PARTICLE in 2008 and 15 percent in 2012. wood is not used in the product packages. EMISSIONS But a number of air conditioning systems, g/t 120 Also opportunities opened which have ozone-depleting substances as re- 100 Regulations and other measures to curb cli- frigerants, are maintained. Our production mate change also result in opportunities for units are subject to ongoing maintenance 80 Outokumpu. Stainless steel is used as a con- programs that are designed to minimize the 60 struction material in many projects, which risk of any releases. Th e use of ozone-deplet- 40 aim at prevention of the climate change. No ing substances will be phased out in line with 20 quantitative analysis has been made of the nationally agreed timetables or earlier if ap- 0 03 04 05 06 07 individual impact of climate-change-related propriate.

30 Outokumpu and the environment 2007 Case tons ofcarbondioxide emissions,whereas steel by road wouldgenerateabout660 15000tonsof emissions, astransporting thisamountofsteel. to transport Several hundred wouldberequired trucks ing atotalof15000tonssteelannually. the Green Cargorailwaycompany, carry- is operatedby atotalof12‒14wagons leave Torniofi a railwayconnection. were2007, road transports replaced with but,in center inEskilstunausingtrucks the Tornio facilitytotheFolkesta service In thepaststeelrolls were from transported central Sweden isabout1200kilometers. tip oftheGulf ofBothniatoEskilstunain Th transports createenvironmental,safetyandcostbenefits. Eskilstuna inSwedenusingrailwaysinsteadofroads.Therailway Steel isnowbeingtransportedbetweenTornio inFinlandand Steel movesontorails edistancefrom Tornio atthenorthernmost Th Steel shipmentsdestinedforEskilstuna emove reduces torailwaytransports ve timesaweek. Th e route In itschoiceoftransportmodes,Outokumpu accountsnotonlyforthecosts,butalsoenvironmentalimpacts. well. Th railway transports for12percent. railway transports accountfor41percentand ship transports products, accountingfor47percent,while forfi largest modeoftransportation ment ofrawmaterials. Trucks remain the ferent inthemove- modesoftransportation has yet beencompiledontheshare ofdif- No transports. cal andsaferthantruck data friendly totheenvironment, more economi- in itstotaltraffi ofrailwayandshiptransports proportion euros forOutokumpu. annual savingsofapproximately 275000 the changehasmadesensefi generates amere sixtonsofemissions. thesameamountby railway transporting In additiontoenvironmental benefi Outokumpu isaimingtoincrease the erailwayroute willbringabout c,becausetheyare more nanciallyas nished ts, • ESKILSTUNA BYRAILWAY FROM TORNIOTO • • • • • Outokumpu 15 000tonsofsteelrolls about 1200kilometers 275 000eurosannually transport: Carbon dioxideemissionsfrom Annual transports: Journey length: Railway traffic began: instead oftrucks Steel transportedonrailways Financial savings: truck transport. transport, 660tonsayearfrom and theenvironment 2007

6 tonsayearfromtrain

2007

31 Environmental responsibility

Water cools, stations and associated piping are therefore temperature than the incoming water before rinses and cleans carefully monitored and rebuilt as and when it is pumped back to the watercourse from Steelmaking is a high-temperature process. For required to meet updated needs. which it was extracted. many years, water has been the natural choice In 2007, water extracted during Outokumpu’s Th e use of re-circulating cooling systems for cooling in high-temperature sections of operations mostly consisted of surface water and water treatment programs results in high the process, protecting people and equipment. from rivers or the sea (a total of 20.3 million levels of recycling in both cooling and proc- Outokumpu’s main production operations m3, about 20 percent less than in 2006) or ess waters being achieved at many of Outo- also use water for rinsing and cleaning. municipal water (1.1 million m3) originally kumpu’s sites. Th e actual recycling rate can In overall terms, large volumes of water derived from a river or lake. Rainwater is vary on a seasonal basis. In winter, only partial are employed, particularly in melting and not employed in the Group’s processes, but recycling of cooling water at Tornio is car- rolling operations. To minimize any risk of treated together with indirect cooling water. ried out, with the balance being discharged pollution that could aff ect local resources, A positive aspect is that only small amounts into the harbor basin to assist in reducing a high proportion of the water used in the of groundwater were used. the amount of seaborne ice. production process is recirculated. Outgoing water streams are clean water, waste- In autumn 2007, a second seawater pump- In many areas where the Group operates, water, rainwater and domestic sewage. ing station constructed to provide cooling local water supplies are abundant and amounts None of the Group’s operational sites water for a new heating and power plant was extracted by Outokumpu have only a minimal are located near protected wetlands listed completed and commissioned in Tornio. In eff ect on the resources available. At Avesta, for in Ramsar List of Wetlands of International a cold climate, the prevention of ice forma- example, water intake is less than 0.05 percent of Importance. tion in harbors is an important task, helping the total volume contained in the river fl owing to avoid the regular use of energy and fuel to past the plant. Th e impact at this site is further Cooling and process waters recycled power icebreakers. Th is is why cooling waters reduced, since most of the water is used for Cooling water is used either directly in con- are mainly pumped to the harbor in Tornio cooling and then returned to the river. tact with the steel being produced, or indi- instead of circulation. Even so, the amounts Th e availability of water is also of great rectly when fresh water meets a circulating of water used in Group operations has been importance in high-temperature processes, stream of cooling water in a heat exchanger. considerably reduced. At Avesta, more than where disruption of the water supply can re- In the latter case, the outgoing water is only 90 percent of process water is recycled. sult in major damage. Both water pumping “contaminated” by being raised to a higher

AVESTA WORKS WATER BALANCE SHEET Annual water consumtion and waste water amounts x 1 000 m3

Evaporation

Avesta works Waste water 566 Municipal water 182 Municipal COOLING waste water Cooling water 4 149 treatment plant PROCESSES River water 4 971 SANITATION 90% recirculation Treated process water 510

DALÄLVEN RIVER

32 Outokumpu and the environment 2007 Rainwater is also used found to disturb biodiversity in any unac- Rain falling on Group sites amounts to sig- ceptable way. Stainless steel nifi cant volumes. At Avesta, for example, at Scientists and environmental authorities least a million cubic meters of water falls have evaluated marine environment and EU is 100 percent each year in the form of rain or snow on the Natura areas near the Tornio site in Finland. works area of 2.4 km2. Some of this water A Finnish consulting fi rm Jaakko Pöyry Infra recyclable evaporates, but a large proportion is collect- has made a report on the environmental im- ed and run together with used cooling water pacts of Outokumpu Tornio site’s enlargement through oil separation facilities before fl ow- in the area. Lapland Regional Environment ing to the recipient. Centre has given a statement on the report. In Sheffi eld, the old British Steel Tinsley According to the report and the statement, Park melt shop (dismantled many years ago) Outokumpu’s activities are not threatening used to operate a wet fume dust collection or having a negative impact on biodiversity system. Th e sludge settlement lagoon from in these areas. this system remains intact and has been used to settle out solids from collected surface drain Former production locations and rainwater. Some of this water is now being returned to their natural state nesting birds are not being disturbed and recycled for use in dust-suppression bowsers. Outokumpu operates in a responsible manner ringing to establish future breeding and mi- As this has reduced the consumption of potable towards nature and biodiversity. Areas once gration patterns. mains water, further recycling opportunities utilized by production operations are returned A marine study, conducted by Helsinki will now be investigated. Rainwater falling to their natural state. At the Kemi mine, the University and led by professor Erkki Pul- within the boundary of the landfi ll site fi lters whole of the oldest concentrating sand bond, liainen, near the Tornio site waterfront con- through the tipped slag and becomes alka- an area of 20 hectares, was landscaped and re- cluded that the fi sh population in this location line leachate, which has to be pumped from forested during 2007. Th e two bonds that are is healthy, edible and reproductive. One of a collection chamber to a drain. Th e newly- still in active use, one of 22.5 and the other of the sampling points was located right in front issued separate landfi ll pollution prevention 34.5 hectares, are home to a rich waterfowl of the plant’s main sewage outlet. Measured and control regulation permit requires that population that includes rare species. metal concentrations were well within the this liquid has to be eff ectively neutralized. Outokumpu closed two production sites required limits. A capital investment of 154 700 euros was in 2006, one in Sheffi eld, Britain (30 hec- Avesta has some 300 hectares of forest land. therefore made in 2006 for a new automatic tares) and the other in Sorsakoski, Finland (5 Outokumpu maintains public footpaths in leachate treatment plant. However, the reali- hectares). Site restoration and aftercare has areas where walking is very popular and has ability of the system has not been satisfactory. been initiated in these locations in accord- taken measures to run a forestry operation Pump manufacturers have been consulted and ance with local regulations. that protects wildlife and plants. Th is work is it has been found that an alternative system certifi ed according to regulations laid down is hard to fi nd. Impacts on biodiversity in standards issued by the Forest Steward- evaluated at regular intervals ship Council, an international organization Floods in Sheffield None of the IUCN’s (International Union which promotes the managing of forests in During 2007, water was abundant in more for Conservation of Nature and Natural Re- environmentally, socially and economically- than one respect. In June, the centre of Shef- sources) Red List species, or species on na- responsible ways. fi eld, where Outokumpu’s Th in Strip unit has tional conservation lists are known to be af- operations, was fl ooded after record rainfall fected by the Group’s activities. Even though Emission control by raised the level of the River Don. Th e whole Outokumpu does not have any signifi cant best available techniques of the works area was aff ected by the two- operations in sensitive areas, impacts on bio- Outokumpu follows the principle of using meter rise in water level. diversity at Group production sites are evalu- best available techniques (BAT) to reduce ated regularly. emissions and minimize any harmful envi- Biodiversity Th ere are locally-rare graylag nests on the ronmental impacts resulting from its opera- Outokumpu production sites are not located Tornio site and nesting has now been ongo- tions. Th e term BAT applies to pollution in sensitive areas such as UNESCO World ing for two consecutive years. prevention technology that is economically Heritage locations, protected wetlands listed At the Group’s Sheffi eld site, an area was and technically the best available as agreed in Ramsar List of Wetlands of International established to provide protection for wading and made public by the EU. While employ- Importance and UNESCO Biosphere Re- birds who might decide to nest there during ing BAT means that emissions are at the low- serves. None of the Group’s sites have been the spring. Activities include checking that est level currently achievable with modern

Outokumpu and the environment 2007 33 Environmental responsibility

technology, Outokumpu is also continuously fi ltering process which enabled the prob- developing its processes and pollution control lematic fi lter to be replaced. Recycled steel techniques so that levels of emission control • Th e major fl ooding on June 15 caused will also be good in the future. several problems for the Group’s UK pro- accounts for duction units. Th e breaches mentioned Some non-compliances occurred above at the Special strip unit in Shef- some 70 percent All Outokumpu production sites have en- fi eld, Meadowhall, were caused by the vironmental or risk-based management fl ooding. Th e fi rst period of fl ooding was of the raw systems. Altogether 88 percent of these sys- overshadowed by subsequent, city-wide tems are certifi ed according to ISO 14001, fl oods that occurred on June 25. It af- materials used in the international standard for environmen- fected seriously the Stocksbridge site and tal management systems. When it comes to temporarily stopped whole operations at the production of the service centers, 45 percent of them have Meadowhall. the ISO 14001 certifi cate. Th is way of work- • On June 21, a low level of radioactivity stainless steel ing helps to avoid many of the spills and ac- being emitted by a source of the radio- cidents that could be harmful to humans or active isotope Am241 was registered in a the environment. slag sample from the electric arc furnace Th e general level of emissions and dis- at the Sheffi eld melting shop. Th ree slag charges in 2007 was normal and in compli- pots of a total of four contaminated by the ance with environmental permits. A total radioactive isotope Pu 238 from an earlier of 23 spills and non-compliances occurred incident in 2000 were transported to the during the year. Th e problems were quickly low-level waste depository near a village identifi ed and preventive action resulted in Drigg in North-West England. Th e total ticle emissions using a continuous emission only minimal environmental impact: weight of the slag pot and its protective measurement system. It helps to detect and • At the Sheffi eld meltshop, the automatic package, containing approximately 0.02 repair potential fi lter leakages more quickly. breach alarm system indicated 13 minor grams of Pu 238, was 120 tons. Regulatory A new dust fi lter was also installed at the breaches in the DC arc-furnace extraction approval is still being sought for transpor- Tornio cold rolling unit in August 2007. In system. Restrictions on emission levels at tation of the fourth pot, in which the level 2007 the emissions from this source were 88 this location are extremely tight. of radioactivity is highest. percent less than in 2006. • Two reports from the special strip unit in • At the Tornio Works in Finland, slag con- Dust emissions from Outokumpu’s op- Sheffi eld, one for a minor breach of hexava- taminated with low levels of radioactivity erations typically contain some quantities of lent chromium levels and one for a release was separated and stored in a safe man- metals (including iron, chromium and nickel) of rolling oil resulting from the signifi cant ner according to guidelines issued by the which are mainly present in a harmless form. fl ooding incident on June 15. national authority (STUK). For example, chromium is usually in its triva- • A total of 5 non-compliances occurred lent form and not in the hazardous hexavalent at the Tornio Works, all of them related Emissions to the air reduced form. In recent years, Outokumpu has sup- to dust emissions. Only one resulted in Dust emissions have traditionally been the ported many studies that have examined the permitted levels being exceeded. main cause of releases by the steel manufactur- eff ects of metal emissions on human health • Tests on wastewater from the Wildwood ing industry. Th e main particulate emissions and the environment. For instance in Tornio tube mill in the United States showed by the Outokumpu group originate from the area the studies are done by University of Jy- higher than permitted chromium and Tornio, Avesta and Sheffi eld steel mills and the väskylä, Finnish Meteorological Institute and nickel levels in February and June. New Castle hot rolling mill. In 2002‒2006, Institute of Occupational Health. • One breach of the 24-hour limit set for investments totaling 20 million euros have Emissions of nitrogen oxides by Outo- nitrogen oxide was recorded at the rod been made at Outokumpu’s steel plants to kumpu’s units have also fallen. Th ese reduc- mill in Sheffi eld. improve their environmental performance tions have been achieved by investing in new • At Tornio Works, the most signifi cant and minimize these dust emissions. Th e net technology and abatement plant. For example, emissions of dust particles resulted from result is that dust emissions have been reduced production sites in Tornio, Avesta, Nyby and malfunctions in the dust fi lters at the fer- signifi cantly in spite of increased production Sheffi eld use both the latest burner technol- rochrome plant. Th e annual permitted levels: during 2002–2007 the dust emissions ogy and selective catalytic reduction. Selec- level of particle emissions at this facility reduced by more than a half. tive non-catalytic reduction technologies are (20 tons) was exceeded by 18 tons. Th e At the beginning of 2007, the steel melting also used in certain processes to minimize malfuntions led to changes in the dust shop in Tornio began monitoring dust par- their emissions.

34 Outokumpu and the environment 2007 Case used incars.Using high-strength stainless components alternative forthestructural joined forces topresent stainlessasaviable and sixmajorautomotive companieshave steel producers -includingOutokumpu - this, three oftheworld’s largeststainless potential forweight reductions. Realizing als employed: stainlesssteelhaspowerful ger safety. to dothiswithoutcompromising passen- used inthestructure, thedilemmaishow this weight mostlyderives from thesteel will have tobereduced dramatically. As environmentally sustainable,vehicle weight from vehicles andthusmakethemmore safety. To reduce carbondioxide emissions vironmental standards andhow toimprove are howtive industry toachieve highen- Two majorconcernsintoday’s automo- industry tousestainlessinthestructuralcomponentsofcars. the automotiveindustryonasustainablepathbyenabling Stainless steelproducersandcarmakersjoinforcestoput Stainless forthecarsoftomorrow A keysolutioncomesfrom themateri- The carbondioxideemissionsofvehicles canbereducedbymanufacturingvehiclepartsfromstainlesssteel:is light carmakers’ toolkits. of and establishthemasapermanentpart fi Th attheendof2007. automotive industry design toolswere madeavailable tothe components from stainlesssteel. Virtual ers indesigningandfabricatingstructural developing toolsforuseby new carmak- launched in2005,theresearch are partners Next Generation Vehicle research project processes. hardening behaviorduringcold-forming include excellent fabricabilityandunique Other benefi er, whilesafetylevels are actuallyhigher. be madeconsiderablythinnerandlight- can steel,carparts steel ratherthanordinary nal ‒12monthsistofi egoaloftheproject over thenext‒and Working undertheumbrella ofthe tsofstainlessforcarmakers ne-tune thetools RESEARCH PROJECT NEXT GENERATION VEHICLE • • • • • Outokumpu Volvo Cars Ugine +ALZ, Thyssen KruppNIROSTA, Saab AutomobileAB, Outokumpu Oyj, DaimlerChrysler AG, Centro RicercheFiat, Bayerische MotorenWerke AG, AUDI AG, Research partners: Goal: To becompleted: Launched: www.ngvproject.org For moreinformation: Lightercarcomponents and theenvironment 2007 2005 2008 er thanordinarysteel.

35 Environmental responsibility

Th e main origin of sulphur dioxide emis- environmental responsibility. In recent years, sions is the district-heating unit at the Tornio the Group has conducted many research and The long-term Works, which has to be used mostly in the development projects targeting material-relat- cold winter period. ed issues and has also implemented a number target is Recovering heat from waste furnace gases of schemes to reduce the volumes of waste at the Tornio and Avesta Works leads to lower generated. One of the most important ways to deposit overall energy consumption. Th is also has to reduce the amount of waste generated by a benefi cial eff ect on the level of nitrogen the steel manufacturing industry is to mod- no waste oxides, carbon dioxide and sulphur dioxide ify melting shop processes so that slag can be emitted at the site since the emissions which turned into a product that can be put to some in landfills would otherwise be associated with combust- useful use. Since 2004 Outokumpu has in- ing fuels to provide this heat are avoided. In vested over three million euros in developing general terms, the energy effi ciency meas- slag-based products, including an investment ures which have been implemented have re- of 1 million euro in an automatic steel-slag duced, among others, specifi c emissions of analyzer in Tornio to help ensure that new carbon dioxide. steel slag products comply with the necessary Outokumpu. To recover the valuable alloy- Th e impact of emissions on local air quality environmental and technical requirements. ing elements such as nickel, chromium and in the vicinity of Outokumpu’s major pro- As a result, an increasing number of stainless molybdenum that are present, these waste duction sites are studied on a regular basis steel slag products are being sold and used materials are collected and recycled where by external experts. At Avesta, measurement each year in Finland, the UK and Sweden. practicable. To do this, we use either special- of mercury emissions from the steel melting Th ese products are used mainly as construc- ist recovery equipment such as our DC arc shop have begun. On the Swedish side of the tion materials. At Tornio, over 60 000 tons of furnace in the Sheffi eld melting shop or ex- border near Tornio, discussions took place stainless steel slag and 315 000 tons of ferro- ternal treatment facilities operated by other during the autumn of 2007 about releases of chrome slag were sold and used as products companies. Dusts and scales collected and osmium by the Tornio ferrochrome plant. in 2007. In addition, almost 90 000 tons of treated in Tornio, Avesta, Sheffi eld, Nyby and Osmium is a very rare metal which is present mixed fi ne slag was used in Tornio for Ou- Degerfors in 2007 totaled 60 000 tons. in very low concentrations in chromite ore tokumpu’s own purposes, among others for Wastes from the Group’s production units extracted from the Group’s Kemi mine. For building projects. Traditionally, more than 70 are sent to appropriate treatment facilities the fi rst time in the world, Swedish research- percent of the slag produced in the Group’s or to landfi ll sites licensed to accept such ers analyzed and documented the association Sheffi eld unit has been reused, primarily as material. between osmium concentrations in humus building material. At Avesta, a test road was Waste streams include both hazardous and and a metal industry plant. Discussions be- built in 2005–2006 using slag as the con- non-hazardous materials and pre-treatment gan because one form of osmium is toxic. struction material. In May, the Tornio Works of the wastes is carried out where required. According to the researchers, however, con- received its fi rst CE-certifi cates for new steel Hazardous wastes (oily waste, steel-making centrations of osmium in the ambient air slag products. CE marking is a manufacturers dust and hydroxide sludge) generated by the in the area are 20 000–50 000 times lower declaration that the product complies with company’s operations in 2007 totaled 88 700 than the risk limit and there is no reason for the essential requirements of the relevant Eu- tons (101 000 tons in 2006 and 103 000 tons speculation concerning health eff ects. ropean health, safety and environmental pro- in 2005). All hazardous wastes are treated, Th e quality of ambient air in the Tornio and tection legislation. reused or disposed of in accordance with cur- Haparanda communities is generally just as Avesta, Nyby and Degerfors are engaged in rent legislation and best practices. good as in other small communities of similar a project to develop further uses for hydroxide Outokumpu owns and manages landfi ll size in Finland and Sweden. Emissions by traffi c fl ux, thus avoiding it ending up in landfi ll areas at some of the Group’s production sites and dust arising from the streets are the factors sites. Working with the Finnish chemicals in Finland, Sweden and the UK. In Tornio, which have the most signifi cant impact on air company Kemira, Tornio Works continued a new large fi ve-hectare landfi ll site suitable quality in these communities. According to a a development study on treating metal sul- for hazardous waste stands ready, but the study carried out with the local municipalities fate salts produced during the pickling-acid old one is still in use. Both sites fulfi ll all and authorities, the eff ect that Tornio Works recovery process. demands and standards laid down in Euro- has on air quality is very local. pean legislation. Waste As the effi cient use of materials is a corner- Developing the use of by-products Th e collected dusts and scales that result from stone of Outokumpu’s strategy, Tornio Works Th e effi cient use of materials is one of the stainless steel manufacturing operations are has begun investigating the fl ow of each waste cornerstones of Outokumpu’s thinking on considered to be signifi cant waste streams for material stream on its site. Th e aim of this

36 Outokumpu and the environment 2007 > FROM ORE TO STAINLESS STEEL – CASE TORNIO

Th e Tornio ferrochrome plant manufactures 2005, the Kemi mine moved from open- chrome is delivered in molten form, and ferrochrome from ore produced at the Kemi pit operation to underground mining. Th e the carbon monoxide produced during fer- chromite mine. Chromium is the most im- eff ect of particulate emissions on air qual- rochrome manufacture is used as fuel in the portant raw material in the manufacture of ity is monitored by studying Suspended steel mill, replacing other fuels. stainless steel as it contributes the majority Particulate Matter (SPM). of the end product’s corrosion resistance. Th e piles of gangue (waste rock), open- From hot and black to Th e Group’s Kemi mine is the largest chro- pit mining activities and benefi ciation and cold and gleaming mium mine located in the European Union clarifi cation basins at Kemi all have a long- In the steel melt shop, recycled steel and and the only one in western Europe. term eff ect on the landscape. Tailings ponds other alloying elements are added to the Because the ore minerals extracted are are landscaped after they have fi lled up. molten ferrochrome while impurities det- very stable and no chemicals are used in Th e gangue will be used in backfi lling the rimental to the steel’s fi nal properties are the benefi ciation process, operations at the underground mine. removed. After it has been worked into its Kemi mine have only a minor eff ect on wa- fi nal composition in the melt shop, the mol- tercourses. Metal discharges in particular are Molten ferrochrome means efficiency ten stainless steel is cast into slabs. At the small, their eff ect only being observable as All the concentrate produced at the Kemi hot rolling mill, these slabs are rolled into slightly-higher nitrogen, solids, calcium and mine is delivered to the Tornio ferrochrome black hot strip which is delivered to the iron concentrations in watercourses. plant, which employs the best and most steel mill’s largest unit – the cold rolling In the mining industry, the largest emis- energy-effi cient technology available. Th e mill – for further processing. At the cold sions into air result from open-pit mining ferrochrome produced is delivered to the rolling mill, the black steel strip is formed activity, the transportation of ore and waste Tornio steel melt shop with the processes into gleaming sheet steel and coil in accord- rock, from operations in the product-loading involved being linked in an energy-effi cient ance with customer requirements. area and from piles of concentrate. During manner. A large proportion of the ferro-

Emissions

Emissions Recycled steel + other raw material Steel products

Other raw material STEEL MILL Mineral-based products Ferrochrome FERROCHROME PLANT Chrome concentrate Recyclable MINE materials Waste

Waste Mineral-based products

Tailings sand

Outokumpu and the environment 2007 37 Environmental responsibility

project is to establish the most cost-eff ective On the other hand, the pollution prevention ways of recycling, re-using, treating or dis- The long techniques now being employed mean that posing of each material, and of minimizing corresponding increases in emissions will not the amount of waste produced. service life of take place, and that reductions from previous levels will be achieved in many instances. Water discharges stainless steel A number of studies, including the con- Th e most signifi cant discharges to water from tinuous monitoring of discharges, show that the stainless steel manufacturing process are products the levels of chromium and nickel discharged the metal compounds and nitrates which re- have fallen by 60–80 percent from the levels sult from the neutralization of acidic wastes conserves discharged a couple of years ago. Th ese two produced in cold rolling units. Effl uent dis- metals are considered to be the most signifi - charges at all Outokumpu’s production units natural cant ones released by the Tornio Works into are controlled in order to minimize the en- the sea. Current discharge levels are only few vironmental impact of such releases. At the resources percents of the total metal loading, most of Tornio Works for example, the natural load which originates from natural sources, in the of metals carried by local rivers into the sea northern part of the Gulf of Bothnia. Th is is (i.e. the Gulf of Bothnia in the Baltic Sea) because the local Tornionjoki and Kemijoki is much higher than the primary metal dis- rivers carry far greater concentrations of these charges (iron, chromium, nickel, zinc) from Impacts of water discharges and runoff metals into the sea than combined releases the steel works. Outokumpu’s production sites are located in by the Tornio Works and the Kemi mine. Th e nitrate load referred to in the previous many diff erent areas of the world and the im- Th e chromium discharge from Tornio site paragraph results from the pickling acids used pacts of water discharges diff er from site to site. and Kemi mine has been 20–30 percent of in descaling stainless steels. A number of dif- At small production units, wastewaters may the total chromium releases and the share of ferent techniques are employed to reduce the be pre-treated on site prior to fi nal treatment nickel and zinc less than 10 percent. nitrate load in the effl uent discharges from in local municipal water treatment plants. Th e It is worth noting that fi sh caught close these operations, including a range of dif- Group’s facility in Wildwood, Florida has in- to the Tornio Works have been found to be ferent pickling-acid recycling technologies. stalled a new two-step pre-treatment system healthy and that commercial fi shing is also Outokumpu is developing the Group’s dis- to reduce variations in nickel and chromium carried out near the site. Research made by charge handling techniques to further reduce content in effl uent discharged to the City of the University of Helsinki and experts of en- the effl uent load. Wildwood’s treatment facilities. Th is is im- vironmental monitoring has shown that re- A research project on using bacteria to portant to the City of Wildwood, as its treat- leases from the works do not accumulate in reduce nitrate discharges by the Kemi mine ment plant has a limited capacity. fi sh or the marine food chain. was completed. Th e results indicate that fu- Outokumpu’s most sensitive production ture investment in additional nitrate removal site from an environmental perspective is per- Impacts on soil and groundwater at the Kemi site is unlikely. Th e two current haps the Tornio Works, which is located in Preparations to handle environmental re- ponds, which together cover an area of almost the estuary of the Tornionjoki river on the sponsibilities resulting from closure of the 100 hectares, already form natural removal coast of the Gulf of Bothnia. On the border Fagersta tube mill in Sweden are ongoing. units for nitrates and there are no negative between Finland and Sweden, this site is close In 2007, intrusive samples were taken from impacts on the recipient water system. to a number of nature reserves. Many bio- soil and groundwater as part of an environ- Research projects studying ways to reduce logical, physical and chemical monitoring mental study. nitrate discharges at several of the Group’s studies have been carried out in the vicinity A survey of soil and groundwater contami- production sites in Sweden were undertaken of the Tornio site since the 1970s. In 2007, nation using intrusive sampling methods is in 2007. together with experts from consulting fi rm under way at the Group’s Avesta site. At the Avesta site in Sweden, the oil sepa- Pöyry and the University of Oulu, the Tornio Normal remedial procedures related to ration station handling cooling water and Works initiated a voluntary research project groundwater continued at the Tornio site in rainwater was rebuilt to incorporate a modern to evaluate the impact of nitrates on recipi- 2007. Groundwater under old landfi ll suf- lamella fi lter unit with process control, thus ent water systems at the Tornio site and the fered local contamination as a result of dust ensuring that oil in the water stream is sepa- Group’s Kemi mine. stored in the 1970s and 1980s. Good re- rated. A study to optimize the operation of In the last few years, production of stain- sults, i.e. lower concentrations of metals in neutralization plant at Tornio was initiated. less steel at Tornio has doubled and further groundwater, have been achieved through this Th e aim of this study is to minimize releases expansion is currently under way which will remedial action. Planning related to closure of solid material into wastewater. result in a tripling of output from the site. of the whole landfi ll site is ongoing.

38 Outokumpu and the environment 2007 There are many phases in the life-cycle of stainless steel products. It is Outokumpu’s aim to improve the sustainability of each phase – from production to re-use. Outokumpu’s sustainable supply chain from supplier of recycled steel to production of stainless steel products.

RECYCLING OF END OF LIFE OF STEEL PRODUCT STEEL PRODUCT

STEEL RECOVERED STEEL PRODUCT AND RECYCLED IN USE

SUPPLIER OF PRODUCTION OF RECYCLED STEEL Outokumpu’s sustainable STEEL PRODUCT supply chain

TRANSPORT OF TRANSPORT OF RECYCLED STEEL STAINLESS STEEL

OUTOKUMPU’S PRODUCTION OF STAINLESS STEEL

Stainless steel is recyclable and a long service life ensured. Outokumpu number of times to form new high-quality and sustainable has skillful and motivated customer support stainless steel products. Th e high-speed train Most of the environmental impacts associated personnel who provide expert help in resolv- you are traveling in could easily have been a with stainless steel manufacturing come from ing questions concerning material choice and kitchen sink in its previous incarnation. the raw materials and the steel production material handling. In general terms, recycling rates are higher processes. Th e usage phase results in a very when stainless steel can be easily identifi ed low burden. Stainless steel products do not Steel is the world’s in the waste sorting process. For example, require coatings, corrosion-protection meas- most recycled material excess or waste stainless steel resulting from ures or signifi cant amounts of maintenance Even though steel is the most recycled ma- industrial manufacturing processes has an es- which could add to the environmental bur- terial in the world, the amount of stainless timated recycling rate of almost 100 percent den. Stainless steel is also very durable, and its steel being recycled is insuffi cient to satisfy because knowledge about what materials have long service life reduces the need for replace- the current need for raw materials in stain- been used and routines for separating valuable ment materials thus saving resources. less steel melt shops. Th is is a result of the metals still exists. When stainless steel is used Th e best way to ensure that stainless prod- strong increase in stainless steel consump- in construction or for architectural purposes, ucts have a minimal impact over their lifetime tion – 5–6 percent per annum – in recent similar high rates of recycling can be safely is to ensure that the right grades are chosen decades and to the long service life of stain- assumed for the same reasons. Recycling rates for products in relation to their operating less steel products. for consumer goods are lower, and will vary environment, and that good manufacturing Furthermore, the quality of stainless steel depending on the kind of product the mate- practice is employed in stainless applications. is not adversely aff ected by recycling. Th e rial has been used to make. Small items such In this way, corrosion risks are minimized same stainless steel can be recycled an infi nite as cutlery that enter municipal waste streams

Outokumpu and the environment 2007 39 Environmental responsibility

may not be identifi ed and sorted out. Large Th e Group’s Logistics strategy is formulated kitchen appliances such as dishwashers are accordingly. Outokumpu usually easier to identify, allowing the stain- Emissions caused by the transportation less steel they contain to be reclaimed. of fi nished products include 285 629 tons seeks to increase Estimates by the International Stainless of carbon dioxide, 7 018 tons of nitrogen Steel Forum (ISSF) indicate that some 80 oxides and 4 270 tons of sulphur dioxide. use of trains and percent of the stainless steel currently being Th e calculations that result in these fi gures discarded is collected and remelted. Recent include fi nal products leaving Avesta, Tornio, ships to reduce research results published in the magazine of Terneuzen, Nyby, Degerfors and the Group’s Iron and Steel Institute of Japan suggest that tubular units in Sweden and Finland, a total emissions the actual end-of-life recycling rate could be quantity of approximately 1 600 000 tons. even higher at more than 90 percent. On average, every ton of fi nished prod- Statistics supplied by ISSF show that the uct transported to customers resulted in the total volume of recycled steel used for pro- generation of about 180 kg of carbon di- duction of new stainless steel amounts to oxide, 4 kg of nitrogen oxides and 3 kg of 60 percent of annual global stainless steel sulphur dioxide. production. In Europe, the input of recycled Th e calculations on emissions resulting steel is slightly higher than the global average from the transportation of fi nished products Expenditure on at some 70 percent. to customers reveal that by far the largest environmental protection In 2007 Outokumpu used 1 480 000 emissions of – for example – carbon diox- and investments tons of recycled steel which is 86 percent ide can be attributed to ship transport. One Environmental investments by Outokumpu of the total amount of stainless steel pro- reason for this is that in general terms, the in 2007 totaled some 12 million euros. Op- duced and 63 percent of total raw material distances involved in ship transportation are erational costs in 2007 totaled 44 million consumption. more than ten times longer than the average euros, of which the treatment of waste and Outokumpu used 11 800 tons of packag- trip by truck. Of the almost 290 000 tons of disposal amounted to 2.7 million euros. Pro- ing materials in 2007. Th e Group’s Nordic carbon dioxide generated by fi nished product visions and guarantees related to environ- production facilities are part of nation-wide transportation in 2007, 87 percent resulted mental considerations at the end of 2007 packaging recycling systems. from long-distance journeys by ship. Almost totaled 23 million euros. In addition, the 100 percent of the sulphur dioxide emissions provision for aftercare of old mine sites was More transportation using also resulted from ship transportation. 0.35 million euros. ships and trains When choosing a mode of transportation, Group-wide manual for the Largest environmental environmental aspects are taken into account correct handling of products investments in 2007 in addition to the elements that aff ect cost. and transportation claims • Energy effi ciency in Tornio: New pipeline On average, ships and trains are more envi- In 2007, a new Group-wide Cargo Handling to transport carbon monoxide gas to the ronmentally friendly than trucks and lorries. Manual was published. Th is manual includes Tornion Voima Oy power plant, 1 040 000 Outokumpu’s aim is to increase the use of basic rules and procedures for the correct han- euros, and renewal of carbon monoxide ships and trains in order to reduce the amount dling of Outokumpu’s products during logis- storage tank, 3 805 000 euros. of pollution generated. tical operations. It is intended for all Group • Investments in production of by-products Currently, conventional trucks are used employees working in material handling, sales at Tornio, 1 500 000 euros. to transport the largest proportion of Outo- and logistics, and also for external suppliers. • Air protection in Tornio: dust removal kumpu’s fi nished products. In 2007, 47 percent Observing the instructions and guidance it unit for AP1 line, 633 000 euros. of transportation was carried out by truck, 41 contains helps in avoiding transportation losses • Wastewater treatment system for landfi ll percent by ship and 12 percent by rail. and acting correctly in cases of damage. waters in Tornio, 498 500 euros. Th ere are two ways of increasing the use Th is is the fi rst Group-wide cargo handling • Installing mechanical stirrers in two spent of ships and trains in transportation. First- manual that Outokumpu has issued. Previ- acid tanks and replacement of one of the ly, by fi nding ways of making the current ously, instructions were provided at local level. tanks in Sheffi eld, 127 500 euros. systems more systematic: certain trains and Th e Group-wide manual harmonizes work • Investments at Avesta totaled 530 000 eu- ships operate the same distance according in the whole organization and is published ros, including continuous measurement to regular, fi xed schedules. Secondly, by fo- on the Outokumpu intranet. It is updated of mercury levels, an oil separation unit cusing on the development of new rail and continuously as and when best practices are for rainwater and improvements to the ship systems that enable new material fl ows. determined. pickling section in the AP line.

40 Outokumpu and the environment 2007 TRANSPORTATION AT OUTOKUMPU MELTING SHOPS HOT ROLLING COLD ROLLING

Tornio Tornio Tornio

Sheffield Avesta Avesta Nyby/Kloster CUSTOMER Hot rolled Avesta Sheffield plate

Bar products

MATERIAL FLOWS, EXPORTS

MATERIAL FLOWS, IMPORTS Tornio

Avesta

Sheffield

Terneuzen

Outokumpu and the environment 2007 41 Social Responsibility

Social Responsibility

Outokumpu’s goal of becoming the undisputed number one in stainless steel not only shows that we need to achieve better earnings than our competitors but also that we aim to become an attractive employer and a member of local communities.

Our ethical principles and corporate respon- Personnel sibility policy provide sound guidelines for At the end of 2007, the Group employed PERSONNEL BY COUNTRY the way in which we shoulder social respon- 8 108 people in around 30 countries. Th ere sibility within our company. People must be was a decline in the number of Outokumpu 31.12. 2007 2006 2005 treated equally and fairly irrespective of ethnic personnel on the previous year’s fi gure; at Europe origin, nationality, religion, political views, the end of 2006, the Group employed 8 159 Sweden 3 070 3 061 3 697 sex, sexual orientation or age. Outokumpu is people. Finland 2 759 2 802 3 275 opposed to the use of forced and child labor, Th e average age of employees was 43.5 Britain 862 845 1 397 and it condemns corruption and bribery. years. Th e average length of service was 16.3 The Netherlands 253 233 243 Th e backbone of Outokumpu’s human years, and personnel turnover was 6.1 per- Germany 194 216 574 resources policy is that success is based on cent. It has been estimated that the average Italy 141 138 142 people. Th e objective is to become an at- employee turnover in the industry in Finland Other European countries 321 379 440 tractive and long-term employer that mo- might be around fi ve percent. 7 600 7 673 9 768 tivates its employees, provides them with Th e majority of our employees, over 7 000 development opportunities and shows clear in total, fell within the scope of the collective North America direction. We prioritize the importance of agreements in 2007. Of our personnel, 441 The United States 394 388 411 quality management because it plays a vital were on fi xed-term contracts. Canada 34 33 289 role in ensuring that the company’s personnel Of all Outokumpu employees, 94 per- 428 421 700 are motivated and enthusiastic about their cent were located in Europe. Th e majority work and know their targets. Other key ele- worked in Sweden (38 percent), Finland (34 Asia 51 35 57 ments include reinforcing unity within the percent) and Britain (11 percent). Men ac- Australia 25 26 177 company and safeguarding the availability counted for 82 percent of employees and Africa 5 5 62 of competent personnel. women for 18 percent. Group total 8 108 8 159 10 764 Th ere is freedom of association at Outo- kumpu. In practice, this means that the personnel in all operating locations are members of trade unions in line with the rules and regulations of the local labor market culture. Th e strike by the Finnish Union of Salaried Employees TU in October 2007 resulted in KEY FIGURES a brief 4-day disruption to production in Tornio. A total of 1 235 working days were EK, which have about 950 000 employees 2007 2006 2005 lost throughout the Group due to strikes in in all. Th ere were 140 strikes at these com- Sales/person, € million 0.8 0.7 0.5 2007. Th ere were 15 strike days in 2006 and panies in 2007. Incentives of total 510 in the preceding year. Along with the organizational change, remuneration costs, % 5.6 4.2 4.6 In general, the number of strikes in Finn- wide-scale internal recruitment was launched Training costs of total ish industry has remained steady over the at the end of the year. All the key positions remuneration costs, % 1.4 1.1 1.5 past ten years. With the exception of 2005, a in sales came up for open internal applica- Training days/person 3.3 2.9 5.0 peak year, industrial actions have numbered tion. Th e investment decisions made in 2007 Days lost due to strikes 1 235 15 510 slightly under one hundred a year. Th ese sta- placed challenges on recruitment to which Personnel turnover, % 6.1 10.1 5.7 tistics include the 16 000 member companies we must be able to respond within the fore- of the Confederation of Finnish Industries seeable future.

42 Outokumpu and the environment 2007 We are committed to our goals Social Responsibility

A reduction of 50 jobs in Sheffield provide them with the necessary education In 2007, the Group recruited 437 new em- and training to work at Outokumpu’s nearby Our goal: ployees. Avesta facility where the need for personnel Th e number of jobs in Sheffi eld, Britain, will increase by 200–300 when expansion of performance was reduced by 50 due to restructuring at the the plant is completed in 2010. Outokumpu Stocksbridge special strip mill. Th e need to Stainless Tubular Products has invested about and development reduce the number of employees was met by 211 000 euros in education and training, some employees volunteering for early retire- the majority of which will be used for this dialogue to all ment, and arrangements were made with local program. trade unions to minimize any problems faced by individual employees as an outcome of We listen to personnel the change: An agreement was made regard- Personnel at Outokumpu play an important ing redundancy pay and employees’ advance role in the search for solutions to problems pension rights. Assistance was also provided as well as when issues concerning work are with the preparation of CVs, fi nancial plan- being ameliorated. In 2007, we arranged our ning and job interview skills. third extensive personnel survey. Personnel representatives were given the opportunity Follow-up arrangements for the 2006 to hold discussions with management at the redundancies in Sheffield and Fagersta annual meeting of the Outokumpu Personnel Th e closure of the Sheffi eld cold rolling plant Forum in October 2007. A working commit- resulted in 670 redundancies in 2006. Outo- tee elected by the Outokumpu Personnel Fo- kumpu wanted to ensure that as many people rum is responsible for ongoing co-operation as possible would be assisted with fi nding new between personnel and management. Devel- parent manner throughout the organization employment. In order to achieve this objec- opment dialogues are also a key element in and action is being taken to address key areas tive, we purchased the services of a reinvest- mapping out the views of personnel. for improvement. ment company. Th e company co-operated Th is was the third time that O’People was with the local personnel department. Th e re- The survey told us where we are arranged. Th e previous survey was carried out dundant employees received IT training, as- In the autumn of 2007, a Group-wide per- in 2004–2005. At that time, the response rate sistance with working on a curriculum vitae, sonnel survey was carried out at Outokumpu of close on 70 percent was higher than for and they were given guidelines for job inter- under the title O’People. Th e survey mapped the 2007 survey. Th e survey indicated that views and the benefi t of being able to check employees’ opinions concerning their work- people who worked in units where develop- for open positions before they were placed ing environment, working practices, company ment dialogues took place regularly showed on the job market. Th e arrangement proved strategy and leadership. Responses from 64 a considerably higher level of satisfaction to be extremely valuable. Of those that lost percent of employees were collected. and commitment to their work. Th e signals their jobs, 98 percent found new positions According to the survey results, a key focus given by O’People encouraged us to build a or some other alternative occupation. area for development is raising levels of moti- Group-wide performance and development Th e Fagersta tube mill in Sweden will be vation and commitment within Outokumpu. dialogue model that was adopted for clerical closed in 2009. By the end of 2007, 78 of Special attention should therefore be given staff in 2007. Our objective is for all of the the 144 employees at the plant and 14 of the to managers’ leadership skills, the quality of Group’s employees to fall within the sphere 27 offi ce staff had already found new jobs. performance and development dialogues, ca- of the dialogues in 2008. Some people chose retirement programs. Two reer planning, competence development and activities were launched in November 2007 recognition for a job well done. Co-operation between to assist the remainder. Strengths highlighted by the survey indi- management and personnel Outokumpu is supporting a two-year pro- cate that employees view the Group’s vision Th e Outokumpu Personnel Forum is a joint gram being run by the Fagersta and Norberg and strategy as clear. Organizational effi ciency consultative and information channel and municipalities to stimulate the creation of job was considered to be very strong, and actually collaborative body for personnel and man- opportunities in the area. For Outokumpu, resulted in a best-in-class benchmark for a agement at Outokumpu that complies with a the total cost of this program will be some process industry. Employees gave very high European Union directive. Its members com- 157 000 euros. ratings to safety conditions and also considered prise representatives from personnel, senior Th e Group will also carry out a compe- that team spirit and support for others within management and human resource manage- tence reinforcement program for some for- their working environment was good. ment, and it includes 21 personnel represent- ty blue-collar employees. Th is program will Th e results are being examined in a trans- atives from Outokumpu’s various operating

44 Outokumpu and the environment 2007 Case new challengesawaitedhim. new transferred toSheffi opment. At theturnofyear Shahin was he worked onprocess andproduct devel- eeship attheNyby unitinSweden, where Shahin Rouhani and qualifi takes intoaccounttheirareas ofinterest trainees received atailored program that the companyinSeptember. Eachofthe year traineeperiodsindiff process. Th being selectedintherigorous recruitment key responsible tasksintheGroup. ment personnelwho,inthefuture, mayhold lected graduatestobecomeskilledmanage- Th in 2007foryounggraduateswhohavecompletedauniversityleveldegree. Outokumpu launchedtheStainlessPro-InternationalGraduateProgram Stainless Protrainsfutureleaders plications, witheighttalentedgraduates eobjective oftheprogram istotrainse- One oftheeighttraineesis27-year-old Th eprogram received almost900ap- cations. eybegantheirintensive two- . Shahin histrain- started eld intheU.K.,where erent of parts these are justideas.” managerial orstrategicrole. But rightnow outa liketotry tasks, andIwouldcertainly to behandlingstimulatingandchallenging and seewhatmynextstepshouldbe.Ihope fi plenty ofpeople.“It’s goodthatnothingis kumpu anditsbusinessesgettoknow wants toacquire ofOuto- agoodoverview to do.” have beendiffi which mightotherwise aspectsofthebusiness–something new outsome the possibilitytolearnandtry managerial role,” hesays.“It alsogave me toevolveattracted by theopportunity ina lenging, internationalanddynamic.“Iwas cause hewantedwork thatwasmore chal- xed asyet. Aftertwoyears, we’ll sitdown During histwo-year traineeship, Shahin Shahin appliedtojoinStainless Pro be- Shahin Rouhani,aStainlessProtraineeat Outokumpu,aimshigh. cult • • • • GRADUATE PROGRAM STAINLESS PRO–INTERNATIONAL • Outokumpu initiated inSeptember2007 Schedule: Number ofparticipants: can alsoapply graduates,internalcandidates Target group: leadership talentforOutokumpu Objective: 6–10, 8participantsin2007 Next program: and theenvironment 2007 two-yearprogram, developingfuture talented 2008

45 Social Responsibility

locations. In line with the reduction in Group employer and employee sectors were brought Outokumpu provides continuous train- personnel, the number of representatives in on board for this stage of development and ing and opportunities to develop skills and the Personnel Forum was 12 fewer than in comparisons with other companies were also competence. Th e most visible projects are the previous year. carried out. It was decided that the current an extensive management training program Th e Personnel Forum generally convenes role of the committee – a communication as well as a training program on production once a year. Th e 2007 meeting was held in channel between management and person- excellence. Avesta, Sweden. Th e personnel representa- nel – is adequate for the purpose. Training costs amounted to 1.4 percent tives were given the opportunity to pose their In November 2007, six personnel repre- of total salaries in 2007 whereas in 2006, questions directly to senior management. Th e sentatives had the opportunity to become they accounted for 1.1 percent. Th e Group management was particularly interested in more familiar with China’s steel industry. provided 3.3 training days per employee, and hearing the views of personnel concerning Operations at three Chinese steel compa- the corresponding fi gure was 2.9 for 2006 the change in the operating and organiza- nies were examined during a six-day trip. and 5.0 for the preceding year. tional model, which is based on the com- Participants were excited by the new perspec- pany’s strategy. Th e forum in Avesta was the tives this provided. A uniform model the basis for sixteenth annual meeting. development dialogues A working committee elected by the Ou- Development A uniform model was adopted throughout tokumpu Personnel Forum is responsible for opportunities and training the Group as the basis for performance and ongoing co-operation between personnel and Personnel training and development are one development dialogues. In 2007, discussions management. It is charged with acting as the of the main priority areas of Outokumpu’s on objectives and development took place corporate management’s consultative body human resources policy. Development and with all clerical staff , who account for about on matters concerning personnel and the hu- training needs are mapped out during the third of all personnel. Our objective is for all man resources strategy. In order to further the performance dialogues that each employee Group employees to fall within the sphere of fl ow of information, the working commit- has with his or her supervisor. the dialogues in 2008. tee meets with senior management regularly When we are seeking suitable people for A uniform model does not exclude taking every quarter and more often if required. Th e new positions, we map out precisely the com- innovative approaches. For instance, a man- committee met six times in 2007. petencies of people who already work within ager at the Sheffi eld unit in Britain, which Th e role of the Group Working Com- the Group. Key positions in particular are produces special strips, was open to new mittee has been under review during the last mainly fi lled by people already employed by ideas. Th e manager rejected the traditional two years. External specialists from both the the Group. offi ce environment and instead arranged for

PERSONNEL AGE PROFILE PERSONNEL BY YEARS OF SERVICE EDUCATIONAL BACKGROUND (Permanent employees) (Permanent employees) Primary 32% 1 500 2 500 Secondary and lower 1 200 2 000 tertiary 58% Higher tertiary 9% 900 1 500 600 1 000 300 500 0 0 -5 31- -25 61- 6-10 11-15 16-20 21-25 26-30 26-30 31-35 36-40 41-45 46-50 51-55 56-60

46 Outokumpu and the environment 2007 Case opportunity.” activity. Th thiskindof is thatmanagementsupports job rotation. “Inoticedhow it important role inpromotingtudes playanimportant opment aswell.” able experienceforyour personaldevel- company culture. Job rotation isavalu- elsewhere. It canhelpcreate aconsistent your understandingofwhatisbeingdone rience. “Job rotation broadens andexpands man resources inEspoowasaterrifi to leave. His jobrotation withGroup hu- tokumpu’s Terneuzen unitinHolland. works asahumanresources offi for me”, recounts ed tome,myfi ”When thejobrotation schemewassuggest- months atOutokumpu’s headquartersinEspoolastspring. scheme. BartRammelaere,27,fromtheNetherlands,workedforfour Outokumpu encouragesitsemployeestoparticipateinjobrotation From Terneuzen toEspoo Bart pointsoutthatmanagement’s atti- Now Bart isgladhemadethedecision ankstothem,Iwasgiven this rst reaction wasthatitisn’t Bart RammelaereBart cer in Ou- The DutchmanBartRammelaerehadfruitful discussionswiththeheadsofdifferentdepartmentsatEspooheadquarters. c expe- , who scale thanin Terneuzen.” entire Group. Everything isonamuchlarger work onmattersconcerningthe quarters workingto new methods.“People athead- and, duringhisstint,eyes were opened with themanagementofotherdepartments Hedepartment. hadproductive meetings including areas outsidethehumanresources insightintoOutokumpunew asawhole, Group-wide orientationprogram. the secondcoordinator ofOutokumpu’s gram’s recruitment process andworked as Stainless Pro International Graduate Pro- tool forhumanresources, inthe tookpart inthedevelopment oftheSAP participated to work onmanyinteresting projects. He During hisjobrotation Bart wasable Bart ispleasedthathewasabletogain • • WORKING ELSEWHEREINTHEGROUP • • Outokumpu Jobs canberotatedbetweencoun- Group during2008 ticipate injobrotationwithinthe Outokumpu’s keypersonnel par- The goalistohave20percentof out moreeffi ciently that jobrotationwouldbecarried Outokumpu’s personnelwished alogues in2006revealedthat The corporateresponsibilitydi- business location other tasktemporarilyintheirown Employees canalsotakeupan- tries, unitsandbusinesslocations and theenvironment 2007

47 Social Responsibility

dialogues with her subordinates during walks. investment in training. Th e training waves Th e exercise stimulated the discussions to a Behind every resulting from the launch of the programs in more fruitful level. the latter half of 2005 continued in 2007. Th e new development dialogue model clari- motivated and Change agents, who take forward the ob- fi es the link between work performance and jectives of the programs, are being trained for reward for certain personnel groups, and it enthusiastic both programs. Th e training for the produc- facilitates immediate feedback. tion excellence program includes theoreti- Incentive bonuses paid in 2007 amounted employee is a cal studies, real project work and leadership to 5.6 percent of total salaries. Th e correspond- training. Each training program lasts about ing fi gure for 2006 was 4.2 percent. good leader one year. Students get to apply in practice Th e SAP human resources management the lessons they learnt during the theoretical system, which will gradually be introduced module on projects that deal with reducing in 2008, will assist with knowledge manage- production losses and increasing effi ciency ment and identifying the needs for personnel in their own units. At the end of 2007, fi fty- development. It will provide a basis for plan- two employees were attending the program ning development functions at the level of the and 30 participants in all had completed the individual and the organization, and it will course. In the future, a questionnaire will be facilitate data collection and reporting. sent to those who have completed the training in order to determine how they have benefi t- Good leadership of primary importance ted from the course in their daily work. Here at Outokumpu, we prioritize the importance of quality management because it Continuously updating competence – plays a vital role in ensuring that the compa- as fairly as possible for everyone ny’s personnel are motivated and enthusiastic A question about the equality of training op- about their work. According to Outokumpu’s portunities came to light in the 2006 corpo- leadership principles, a good manager makes rate responsibility dialogues that mapped out sound decisions, achieves ambitious targets, the views of personnel. Some of the respond- creates a winning team, inspires to perform ents were concerned whether such matters as and builds trust and respect. motivation is in connection with career plan- one’s educational background or supervisor Th e year 2007 saw the continued imple- ning, competence development, recognition aff ected access to training: did the subordinate mentation of the leadership principles and for a good job, quality of the performance of an active supervisor or a highly educated practices through the strategic leadership train- and development discussions and leadership employee have an added advantage? ing program. Th e aim of the program is for skills of the managers. Outokumpu’s human resources manage- participants to get to grips with Outokumpu’s Middle management has its own devel- ment is aware of the problem. Th ey are doing leadership principles and their internalization opment program that enhances managers’ their utmost to safeguard the fair treatment as well as with leadership skills. Important skills in strategic thinking, transformational of personnel with regard to training but it skills include the ability to prioritize, to think leadership and their understanding of the is diffi cult to monitor the degree to which analytically and to resolve problems. Th e pro- business. Managers are also given the tools to the objectives are achieved with respect to gram also provides the tools for successfully strengthen their personal leadership skills. One each individual. applying the lessons in practice. training program comprising three modules An eOrientation induction system based In February 2007, senior management was was arranged in 2007, and it was attended by on multiform learning, which targets new and given the mission to carry forward the mes- a total of 25 middle-level managers. old employees, has been up and running at sage of good leadership in accordance with a The annual management evaluation Outokumpu since 2005. specifi c plan. Th e implementation of the plan procedure expands knowledge about Outo- A Group-wide training program that sup- was monitored through two questionnaires kumpu’s leader resources and potential and ports professional development is available that were emailed to the participants. contributes towards determining the needs for university-educated people who have been Th e O’People personnel survey also mapped for development. working at Outokumpu for a few years. Em- out how well the leadership principles were ployees who have the potential and desire becoming entrenched. Th e main development Excellence programs call for huge to take on increasingly challenging tasks in area for Outokumpu’s leaders according to investment in training the future are selected for the program. One the survey is increasing employees’ motiva- Outokumpu’s production and commercial of the program’s advantages is that it gives tion and level of commitment. Employees’ excellence programs have involved substantial participants the chance to build their own

48 Outokumpu and the environment 2007 Case ceive himself to be? “I am a very openperson. ceive himselftobe?“Iamavery and sensitive discussions.” Th persons, whoothersare ready tofollow. in dailylife.Leadersmustbetrustworthy he orshemustreally follow theprinciples foraleader. important is very “It meansthat he says. training anddiscussedtheissuesindepth,” “We have integratedthemintoleadership familiar to people withtheinspirationtoperform. respect, create winningteamsandprovide andachieve ambitiousgoals,buildtrust sition shouldaimtomakesounddecisions, At in aleadingpo- Outokumpu, everyone principles andbehaviorsineverydaylife. and Avesta, knowshowtouseOutokumpu’s leadership Leif Rosén,SeniorVicePresidentworkinginDegerfors Good leaders“walkthetalk” eyshouldalsobeabletohandlediﬃ So whatkindofleaderdoesRosén per- Rosén pointsoutthat‘walking thetalk’ Th eseleadershipprincipleshave been Leif Rosén forquitealongtime. cult in ethicalandmoralissues.” yourself donotbehave absolutelycorrectly won’t andrespect bebuildingtrust ifyou singleday.to earnyour positionevery You pointed aboss,buttobeleaderyou have andrespect.trust “Everyone canbeap- tokumpu’s leadershipprinciplesisbuilding strategic direction ofourbusiness.” inform peoplemore frequently aboutthe to provide more positive feedback-andto “From timetoIhave toremind myself however areas hewouldliketoimprove. harmony withinthoseteams.” Th I likebuildingstrong teamsandcreating been set.AndI’m concernedaboutpeople. organization toreach thetargetsthathave I’m targetorientatedsoIpushour alsovery I thinkdiscussingthingswithmeiseasy. For Rosén, ofOu- themostimportant Senior VicePresidentLeifRosén:“To bealeaderyouhavetoearnyourpositioneverysingleday.” ere are • • • • TOWARDS GOODLEADERSHIP • Outokumpu Checkpoints: began in2007 Education formiddlemanagement management in2006–2007 Cascading theprinciplesfortop- March 2006 Leadership principleslaunchedin a thirdwillbesentin2008 sent totopmanagementin2007, of 2007 survey foremployeesattheend Measuring change: and theenvironment 2007 twoquestionnaires O’People

49 Social Responsibility

contact networks within the Group. Th e pro- Supplier responsibility in their business activities. Paying increased gram also includes group work on the theme as a target attention to responsible procurement is a fu- of corporate responsibility. In 2007, 42 em- Outokumpu’s business units use diff erent proc- ture target for the Group. Th e Sustainable ployees attended the program. esses for screening supplier responsibility. Supply Chain Management Tool project was In addition to Group-wide training pro- Th e Avesta Works in Sweden requires that launched in 2006. More about the project can grams, diff erent locations provide training all the Swedish service providers supplying it be found on page 10 of this report. to maintain professional skills. Units also ar- have a collective agreement to secure decent range training for their staff . working conditions. Th e Tornio Works in Fin- Occupational land tracks of qualifi ed domestic suppliers of health and safety Diversity and equal rights recycled carbon steel, auditing them every Outokumpu is committed to providing its Outokumpu’s ethical principles require that third year on the basis of safety, quality and personnel with a healthy and safe working all people be treated equally. Discrimination environmental criteria. No violations of the re- environment. Th e Group is also accountable and intolerance are not tolerated. Th e Group quirements have been found in these audits. for the safety of subcontractors and suppliers complies with international labor treaties, On occasions, Outokumpu’s business units when they are working at Outokumpu’s pro- and condemns the use of forced and child have discontinued cooperation with a sup- duction plants. Th e basic principle is that they labor. plier if everyday quality control procedures receive the same occupational safety training A recommendation for a statutory equal- reveal that the supplier in question does not and induction as Outokumpu’s own employ- ity plan for Outokumpu’s business units in have an environmental licence, has not paid ees. All management committees and equiva- Finland was drawn up in co-operation with taxes or other social payments or does not lent bodies throughout the Group start their personnel representatives. meet quality requirements, and is not willing meetings with a safety review. Th e wage and salary comparison that got to make the necessary corrections. Our employees have access to occupa- underway at the units in Sweden in 2006 re- Currently, Outokumpu does not have a tional health services. We arrange regular ceived the approval of the Swedish equality common process for screening human rights health checks for those employees who are authority in 2007. Th e comparison is up- and contracts in force do not include criteria exposed to health risks. Outokumpu provides dated annually. Th e aim is to assure statu- relating to human rights. However, our basic its employees with rehabilitation and off ers tory equality in wages and salaries, where principle is to deal only with suppliers who various sports activities in order to foster oc- the amount of pay is in direct proportion to comply with all applicable laws and regulations cupational well-being. an employee’s duties and competence and not to gender. Th ere are constant deliberations in search of more eff ective measures to achieve equality. For instance, participants in a teamwork discussion on corporate responsibility arranged in Sheffi eld observed that cultural diversity should feature more prominently. Th e teamwork discussion concluded that a training OUTOKUMPU’S SAFETY PRINCIPLES program would enhance understanding and > respect among employees and would lead to a stronger one-company culture. Th e sugges- • Make it Zero – all injuries are preventable tion was made to apply this practice through- • Management as well as each individual employee and contractor are accounta- out the Group. ble for safety No information has been systematically collected concerning the proportion of wom- • Safe work practices are an essential part of the work skills and a condition of en at diff erent levels of the Group. Th ree employment members of Outokumpu’s Board of Direc- • Safety training is continuous tors are women. Six of Outokumpu’s 95 key • Safety audits are conducted regularly personnel are women, and eight of the 142 local key personnel are women. Outokumpu’s • Incidents and near misses are investigated and reported without delay Board of Directors and Executive Commit- • Corrective actions are properly taken tee are presented on pages 58–61 of the an- • Safety means good business, and well-being for our employees nual report.

50 Outokumpu and the environment 2007 Accident prevention, risk awareness workplace. Th e accident rate at the cold rolling Th e annual theme for 2005 was occupation- plant was 10.9 per million man-hours. The long-term al safety at Outokumpu. Th at year, a tar- Compiling data on hazards and near get was set to reduce the accident rate to misses is an essential aspect of raising safety target is zero less than fi ve per one million man-hours by awareness and risk prevention. Outokumpu 2009. Th e target set for 2007 was a maximum employees are encouraged to report all the accidents of 12 accidents per one million man-hours, dangerous situations they confront during and the actual rate was 11.2 accidents (17.0 working hours. Th ere were 3 478 reports in in 2006). Sick leave days per million hours 2006 and 4 480 in 2007. worked numbered 137. Th ere were a total of Tornio received the Safety Buoy award for 175 individual accidents during the review 2007 for good safety development in terms year. As in the previous year, there were no of statistics as well as for good practices to fatal accidents. In 2005, one employee died enhance safety. Th e competition covered the at the Nyby mill in Sweden. Th e fi gures in- entire area of the Occupational Safety and clude accidents suff ered by Outokumpu’s own Health Inspectorate of Northern Finland. employees as well as those suff ered by sub- contractor personnel. In 2006, the accident Information system bolsters rate for the member companies of the Inter- occupational safety national Iron and Steel Institute within the Work on developing a new occupational safety EU was 7.7 per million man-hours. information system for the entire Group got Th e Tornio cold rolling mill received the underway in February 2007. Th e system is Outokumpu occupational safety award for supplied by Sofor Oy and it is customized to 2007. It has systematically developed oc- correspond with the varied requirements of cupational safety training, risk assessment Outokumpu’s production plants. Th e project and the use of personal protective gear. Th e group includes occupational safety experts preventative new occupational safety culture from all of the business units. Alongside the has noticeably raised the level of safety in the defi nition work for the actual information system, it was also possible to create a new and hands-on basis for co-operation in occupational safety between the Group’s various production plants. Th e system is being brought into production use at the beginning of 2008, and it can be used to generate and report in real-time comprehensive information concerning occupational safety that can be used as the grounds for decision-making.

Staying healthy in the workplace Outokumpu provides occupational health services at its operating locations in line with ACCIDENTS (Employees and contactors) national legislation and local needs. Th e serv- days accidents ices are provided either by the company’s own 400 25 occupational health centers or by external 320 20 service providers. Activities focus on improv- 240 15 ing the working environment. Th e health of employees is also monitored by various occu- 160 10 pational health checks and ﬁ tness tests. Th e 80 5 occupational health centers at some locations 0 0 03 04 05 06 07 also provide routine medical services. Accidents per million hours worked In 2007, an average of 6.2 percent of work- Sick leave days per million hours worked ing time at the Group’s production plants was

Outokumpu and the environment 2007 51 Social Responsibility

lost due to sickness and accidents. A total of 4 main locations in Avesta, Tornio, Sheffi eld occupational diseases were diagnosed during and Espoo to a total of 390 000 euros in Research the year. Industrial hygiene measurements are 2007. In sports the focus is on juniors and carried out at production plants to monitor the disabled. focused on work-related exposures such as noise and dust. Outokumpu is a corporate partner of the Issues relating to the work environment are Finnish Millennium Technology Prize, the the utilization also studied in joint research projects carried largest technology award in the world. Th e out in collaboration with universities and prize is awarded for a technological innova- of slag specialist institutions. tion that signifi cantly improves the quality AIDS awareness at Outokumpu is handled of life. Th e award takes into consideration as part of the healthy lifestyle counseling pro- all fi elds of technology, and it aims to steer vided by occupational health staff . Th e HIV the course of technological development in infection rate in the communities around the a more humane direction. Th e one-million- production sites has not given cause for more euro award is presented every other year. Th e extensive campaigns. prize will next be awarded in 2008. More in-depth information about Outo- Co-operation with local kumpu’s dialogue with its various stakeholders communities and educational appears on pages 10–13 of the report. establishments Outokumpu may be a global company but Diverse co-operation with schools, in numerous ways, it is also a major actor in colleges and universities several small and slightly larger communi- Outokumpu values its co-operation with uni- ties. As a member of the local community, versities. As in previous years, we continued Close involvement Outokumpu provides employment, engages our activities as a corporate partner to the with research in co-operation with universities and educa- Helsinki School of Economics and partici- Collaboration with educational establish- tional establishments, supports local activi- pation in the Stratos International Business ments is not the only way that Outokumpu ties and arranges open house events for lo- program, which is run by the Helsinki Uni- supports the expansion of knowledge and cal inhabitants. versity of Technology. In 2007, we took part skills in steel and technology. Th e company Outokumpu also has a signifi cant indirect in three debates on the theme of corporate continues to play a role in the Triple Steelix impact on employment in several communi- responsibility. project in the Bergslagen district of Sweden. ties. A study conducted by the University of University students from various disciplines Th e project supports new inventions and pro- Oulu in the 2000s showed that the impacts of completed theses for Outokumpu units. In duction ideas relating to stainless steel. Tornio site and Kemi mine on employment in 2007, a total of ten theses were completed Outokumpu invested 18 million euros in Northern Finland and Northern Sweden were for the Tornio research center and four for research and development in 2007. Th e cor- 3.5 times compared with in-company jobs. In the Avesta research center. responding amount for 2006 was 17 million essence, this means that while Outokumpu In September 2007, Outokumpu an- euros. Outokumpu conducts research inde- employs around 2 300 people in Tornio and nounced it was investing 550 million euros pendently as well as in collaboration with its Kemi, Outokumpu actually sustains around in Avesta. In the light of this decision, work customers, research institutes and universities. 8 000 jobs in the area. Th e Tornio plants were has got underway to plan customized train- Our objective is to develop new, more durable expanded in 2000–2003, and the social im- ing in order to safeguard the availability of and lightweight steel grades and increasingly pacts of the extensions were mapped out in competent personnel in the future. environmentally friendly stainless steel pro- a follow-up report conducted in 2005. Th e Besides our activities with universities and duction methods. We also study innovative extensions to the plant generated more than vocational education establishments, we also applications for stainless steel. Environmental 300 jobs. An assessment carried out by the collaborate with comprehensive and upper friendliness constitutes a vital aspect of process City of Tornio showed that the indirect em- secondary schools. Such collaboration ena- development. Th e Avesta and Tornio research ployment generated for the local community bles us to heighten the awareness of children centers have collaborated with universities and the surrounding areas (580–830 jobs in and young people about the steel industry to develop waste utilization. One of the key all) was on a scale of 1.8–2.6 times that of and to encourage them to train for the sector. research areas in 2007 was the utilization of permanent jobs at the steel plant. Outokumpu has adopted schools in several slag. Th ree patent applications for new inven- Outokumpu donated in charity and spon- locations where it operates. tions have been submitted. Th e inventions sored events, sports and culture, in line with were associated with rod and strip production its sponsorship and donation policy, in its and sheet and strip processing.

52 Outokumpu and the environment 2007 Product safety and of stainless steel. Information is also available product liability from the product liability bulletins of inter- THE OBJECTIVE Stainless steel is a versatile and completely national nickel, chromium and molybdenum > IS THAT IN 2008 recyclable material. It is an ideal choice for organizations, and Outokumpu contributes the foodstuff s industry because it does not towards drafting these communiqués. • 20 percent of key personnel will give off any taste or odor and it is an ex- Outokumpu supplies its customers with participate in job rotation within tremely hygienic material. Heavy industry product liability descriptions for its own prod- the Group uses tough stainless steel to transport and ucts. Th ese descriptions provide information store oil, gases and other hazardous materials on the environmental and health impacts of • Performance and development whereas the automotive industry uses it for the products. dialogues will take place with all catalyzers and exhaust pipes. In most homes, Although stainless steel is safe in its fi nal Outokumpu employees in line with stainless steel is found in cutlery, kettles and form, there may be certain risks involved in a uniform model household appliances. its downstream processing that need to be For decades, stainless steel has made it taken into consideration. For instance, inhal- easier to prepare, handle and transport food. ing welding gases can be harmful. Th erefore, Th e metal concentrations of foods cooked in the use of the correct protective gear and stainless steel receptacles have been tested and compliance with safety guidelines are of pri- found to be negligible when compared with mary importance. Th e safety guidelines are SOCIAL RESPONSIBILITY the levels that occur naturally in foodstuff s. available in the Material Safety Data Sheet TARGETS FOR RESPONSIBILITY Th e properties of stainless steel diff er from for Outokumpu stainless steel. > THEME YEAR 2008 those of the individual metals from which it is All Outokumpu products undergo testing made. For instance, the most common stainless in the company’s own laboratories in order steel grades that contain nickel do not cause to ensure that they meet the strictly defi ned • To decrease number of accidents allergic reactions, even in individuals who have technical criteria. by one third been diagnosed with a nickel allergy. All units have a quality management system • To improve well-being at work in place. Th e ISO 9001:2000 management through concrete actions (e.g. Guidelines for standard constitutes the minimum require- to combat workload, uncertainty safe downstream processing ment for the Group’s quality policy. Ninety- Th e industry’s marketing organizations, such seven percent of production plant and service related stress, unclear responsibil- as Euro Inox, issue reports on the health and center quality management systems have been ities, discrimination) environmental impacts associated with the use given certifi cation.

Outokumpu and the environment 2007 53 Assurance

Independent assurance report

t the request of Outokumpu Oyj we Th e inherent limitations of completeness Conclusion have assured the economic, social and comparability of the data and statements Based on our engagement undertaken, noth- and environmental information of are set out in Th e Report. ing has come to our attention that causes us the Outokumpu and the environ- to believe that the information presented in Ament 2007 report (further Th e Report). Work undertaken Th e Report would not be appropriate. Th e Report has been prepared in accord- We have undertaken the following proce- ance with the Global Reporting Initiative G3 dures: guideline. Th e Report, including the preparation • discussions with two members of the Group Helsinki, 12 February 2008 and the data presented, is the responsibility Executive Committee and other persons KPMG OY AB of the management of Outokumpu. responsible for preparing Th e Report; • a review of background information re- Mauri Palvi Scope garding the data presented; Authorized Public Accountant Our engagement, which is of limited level of • a review of compiling and reporting the assurance, has covered assurance of the data data presented in Th e Report; Olli Miettinen concerning year 2007 in Th e Report. • a review of the systems for gathering and Advisor, Sustainability Services We conducted our engagement in accord- processing data at site level in Tornio and ance with the assurance engagements stand- Avesta. ard (ISAE 3000) “Assurance Engagements Our work was planned and performed in a other than Audits or Reviews of Historical way that we have gathered necessary evidence Financial Information”. for the basis of our conclusion.

54 Outokumpu and the environment 2007 Comparison with Global Reporting Initiative guidelines

Comparison with Global Reporting Initiative guidelines

Global Reporting Initiative (GRI) is an international initiative of the United Nations, which aims to apply to reporting on corporate Responsibility More information/ responsibility the same widely accepted op- GRI contents report, page annual report, page erating model as already applies to fi nancial Vision and strategy 2 reporting. Over thousand companies world- Profi le 1, 5, 12, 18, 51 2–3, front inside cover, 20–28, 46 wide report on the economic, environmental Report profi le back cover, 1 and social aspects of their operations in line Report scope and boundary 1 Governance, commitments and engagement 4, 6–9, 13, 20, 44, 46 44–45, 52–57 with the indicators given in the GRI guide- Stakeholder engagement 10–13, 44, 46, 52 lines on the reporting of sustainable development. Outokumpu follows the GRI G3 Economic performance indicators guidelines set in 2006. Value added to stakeholders 14, 16, 18, 19, 50 46–51 Impact of climate change 28, 30 Market presence 18 Core indicator EC7: data not systematically collected; larger sites have their own practices. Additional indicator EC5 is not relevant, majority of workforce falls within scope of collective agreements.

Environmental performance indicators Materials 20, 23–25 Energy – climate change 22–26, 28, 30 3, 39 Water 26, 32, 33, 36, 38 Biodiversity 33 Emissions, efﬂ uents, and waste 22–24, 30, 33, 34, 36, 38 42–43 Signiﬁ cant spills 33, 34 42 Products and services 53 Compliance 27, 33, 34, front cover 42 Transport 31, 40, 41 Environmental expenditure and investments 40 42 Core indicators have all been reported, from additional indicators we report those from which we have collected data from the whole Group; we are developing our reporting system.

Social performance indicators Employment 6, 42, 44 40–41 Labour/management relations 12, 44, 46 40 Occupational health and safety 6, 50–53 43 Training and educations 9, 46–48 Diversity and equal opportunity 6, 48, 50 Human rights 6, 48, 50 Investment and procurement practices 50 Non-discriminations 6, 42 Freedom of association and collective bargaining 6, 42 Forced and compulsory labor 6, 42 Community 6, 11, 13, 18, 19, 50, 52 Corruption 6 Public policy 13 Anti-competitive behavior 6, 8, 9 Report applications level of GRI G3 guidelines (A/B/C+) Customer health and safety 53 Product and service labeling 53 38 Outokumpu’s own and third party estimate is C+ Core indicators LA2, LA14, HR4, HR5, HR6 and HR7: no systematic data collection from the whole Group; reporting system under development. Indicators PR5, PR6 and LA6-8 are relevant, and data collected has More information on our internet site: been reported. Indicators PR2, PR4 and PR7-9 as well as LA9 are not so relevant to our business. www.outokumpu.com

Outokumpu and the environment 2007 55 Glossary

BAT (Best Available Techniques) Slag former tion to reach the level of environmental pro- The technology that takes into consideration A substance that forms slag, for example, cal- tection which it has set for itself, including the technologically and economically most ef- cium oxide, quartz or magnesium oxide. control and monitoring. For example, the ISO fi cient and highly developed solutions. 14001 standard defi nes the requirements of Hot rolling mill, cold rolling mill an environmental system. Life cycle A plant where steel slabs go into manufactu- The stages of a product or service, including ring steel products by shaping them with hea- By-products the procurement and transport of raw mate- vy rollers. In the shaping processes, the slab A product arising in conjunction with the pro- rials and the fi nal processing of wastes that is given the desired dimensions and form. cess of manufacturing the main product. For arise, recycling or events connected with win- example, in the manufacture of stainless steel ding up the service. Neutralization (the main product), nowadays the by-pro- A measure by means of which a neutral solu- duct can be used to manufacture material for Energy-effi ciency tion is produced from acidic and alkaline solu- uses such as soil conditioning and road buil- Energy-effi ciency means that the product tions. Neutralization enables a material going ding (slag granules). In this way, the volume of is manufactured with the smallest possible to a landfi ll or into the sewage system to be waste that arises can be reduced and, in the energy consumption. Energy-effi ciency is also rendered safe for the environment. best case, there is no waste at all. referred to when speaking about products: products that consume a low amount of ener- Specifi c emission Seepage gy are energy-effi cient. Emissions per ton of molten metal. Water or wastewater that leaches into the environment (mainly into a watercourse) or Ferrochrome Pickling process the groundwater from a basin, landfi ll or piling An important alloying element in stainless A method whereby an oxide layer or other sur- area through dams or the ground. steel: it contains chromium, iron, carbon and face material (such as rust) is removed from silicon. the surface of the metal by immersing it in a Steel slab solution of appropriate chemicals (e.g. dilu- A general term (cf. billet, bloom) for a piece of Granule te acid) that affect the surface layer but leave steel that is manufactured by casting, rolling, A granular (under 5 mm in diameter), vitreo- the metal itself virtually unchanged. forging or in some other manner and goes on us product that is made from slag, for examp- to further processing. le, by means of rapid water cooling. Granules Regeneration plant are used, say, as a material in earthwork At a regeneration plant, spent pickling acids, Smelting plant (melt shop) constructing. for example, are reclaimed so that they can be In a smelting plant (melt shop) the dressed ore recycled back into the process. is melted down with additives to make hot Fugitive emissions metal and slag. Emissions, effl uents or discharges into the soil Ore dressing, concentrate, tailings resulting from a non-intended discharge point. The valueless minerals contained in mined Environmental effi ciency rock are separated from the valuable minerals Environmental effi ciency refers to addressing Recycled raw material in an ore dressing process. The separation is environmental considerations (such as air pro- The reuse of products that have been removed performed on fi nely ground rock, for example, tection, water protection, energy consump- from a process (e.g. metal, paper and glass) by means of a foaming process with chemi- tion). The principle is to obtain “more from as a raw material or principal material. cals or by gravitation. The fraction containing less”. This can thus involve factors such as valuable minerals is called the concentrate, more effi cient use of resources, maximizing Slag and it goes on to further processing. The va- the use of renewable natural resources, mini- A by-product arising when metals are melted. lueless minerals fraction is called tailings, mizing energy consumption and increasing the The mass consists of fl ux and impurities. which are stored in a tailings basin in the mi- recyclability of products. Being lighter, slag rises to the surface of the ning area or used as fi ll in the mine. molten metal, forming a layer of slag that is Environmental impact then removed. Slag serves a number of pur- Certifi ed environmental system An environmental change caused by an orga- poses such as removing impurities, protecting A certifi ed environmental system is verifi ed nization, products, services or some other hu- steel from oxidization, and it can be turned by an external body to show that the site has man activity. The change can be either detri- into products that fi nd reclaimed uses in vario- undertaken a commitment to developing and mental or benefi cial. us applications. managing environmental matters and achieving related targets. It enables the organiza- A more comprehensive glossary is available on our website at www.outokumpu.com.

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OUTOKUMPU AND THE ENVIRONMENT 2007