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Arrium Sustainability Report 2015 Contents Glossary Print

Arrium Limited is an international diversified mining and materials company with three business segments:

Arrium Mining Arrium Arrium Consumables Mining Steel supplies resource companies with a includes the Company’s export iron ore includes both the Steel and Recycling range of key mining consumables, business and a wholly-owned port at businesses. The Steel business is including grinding media and rail wheels. Whyalla, both in South Australia. The Australia’s only manufacturer of steel Through its Moly‑Cop brand, it is the business was restructured during the long products with steel-making largest supplier of grinding media in financial year to focus on its lower cost capacity of approximately 2.5 million the world with leading market positions Middleback Ranges operation. Export tonnes per annum. It is also Australia’s in North America, South America and sales of hematite iron ore for the year leading steel distributor and reinforcing Australasia. were 12.5 million tonnes. In addition, steel supplier. The Recycling business Arrium Mining also supplies iron ore to has operations focused on the southern the Company’s integrated steelworks and eastern coasts of Australia, as well at Whyalla. as non-ferrous operations in Asia.

Arrium Sustainability Report 2015 / Page 1 Contents Glossary Print

Milestones 2015 financial year

July August September/October November – J im White Scholarship launched – Mr Jerry Maycock joined – R aised ~$750 million from fully – 2014 Annual General Meeting 2014 Arrium Board underwritten capital raising – 2 014 Safety Excellence Awards – Mr Peter Smedley retired as – FY14 results announcement Chairman – C ommenced construction of Moly-Cop La Joya, Peru facility – Mr Jerry Maycock appointed Chairman

January/February March/April May June – A nnounced re-design of – First ores railed from Iron Knob – C elebrated golden jubilee of – Celebrated 100th anniversary 2015 Arrium Mining Whyalla Steelworks of and steel related – Completion of sale of Wire Ropes activities in Newcastle – 1 H15 results announcement to Bekaert – M r Douglas Ritchie joined Arrium Board – Whyalla reheat furnace upgrade – “Swear by Safety” campaign completed launched in Whyalla – S uccessfully refinanced ~A$200 million of FY17 maturing – Announced Strategic Review and debt facilities for four-year period further restructuring of Mining business – Moly-Cop Kamloops, Canada expansion commissioned

Arrium Sustainability Report 2015 / Page 2 Contents Glossary Print Where we do business

In addition to our Australian operations, Arrium operates 13 key facilities overseas, with the majority of these Mining Consumables and Recycling sites in North America, South America and Asia.

North and South America Australia

x Darwin

Edmonton x Broome x Cairns

Kamloops Canada Townsville x Port Hedland x Asia x Karratha Mount Isa x x Mackay Kansas City Emerald x x Rockhampton USA x Gladstone x Bundaberg

Sunshine Coast x El Salto Ipswich x Mexico Toowoomba x x Brisbane China x Geraldton x Gold Coast Hong Kong x Moora x Kalgoorlie x Merredin Lismore x x x Northham x Coffs Harbour Perth Tamworth x x Port Macquarie Bangkok Manila Dubbo x Whyalla xx Port Hexham Philippines Adelaide x Newcastle Thailand Mandurah x x Wagin x Esperance x Mildura Orange x Albany x x Gosford Bunbury x Chipping Norton x x Lima Adelaide Wetherill Park x Sydney Wagga Wagga x Wollongong x Peru Arequipa Malaysia Shepparton x Canberra Bendigo x Albury x Mejillones Mt Gambier x Ballarat x x Somerton Melbourne x x Santiago Key Chile Geelong Cilegon Iron Ore Mine Sites Devonport Talcahuano Key Mining Consumables Sites x Indonesia x Key Steel Sites x Key Recycling Sites Launceston x Hobart Tasmania

Arrium Sustainability Report 2015 / Page 3 Contents Glossary Print

Introduction by Managing Director and Chief Executive Officer

I am pleased to introduce Arrium’s Sustainability Report for the financial year This is reflected in our decision to move to the next level in sustainability reporting ended 30 June 2015. through adoption of the Global Reporting Initiative G4 reporting guidelines. Our Recently I reported that this was a very challenging year for the Company due to report includes many noteworthy achievements in the year, with the following few external factors, including a significant and sharp fall in iron ore prices. We have, that I would like to highlight: and we continue to respond to these challenges with speed while maintaining – Supporting the communities in which we operate, such as through the our commitment to conducting our business to global environmental, social appointment of a local indigenous business, Walga Mining, to provide services and commercial standards. This remains integral to our continued growth and at our Iron Knob mine site; development as a business – it is our platform for providing value to our wide – G enuine progress in Arrium’s quest for diversity, including promotion of the role range of stakeholders. of women through the “Women at Arrium” program; and We are committed to our two core values of Safety and Customer, and we have – Translation of Arrium’s commitment to World Class Safety into initiatives such strengthened our commitment to diversity and inclusion. It is no coincidence that as Whyalla’s award-winning “Swear by Safety” campaign. our core values are also two of Arrium’s five sustainability drivers – the others being Economic, Community and Our People. Our Sustainability Report presents I hope that you find this year’s Sustainability Report informative and I encourage achievements and challenges for each of these drivers while also demonstrating you to provide feedback through the online feedback facility. progress in our drive for continuous improvement in Sustainability.

Andrew Roberts Managing Director and CEO Arrium Limited

Arrium Sustainability Report 2015 / Page 4 Contents Glossary Print Scorecard

Sustainability Planned Initiatives Outcomes Planned Initiatives Drivers in FY15 in FY15 in FY16 Safety Arrium continues to work to achieve “Goal Zero”, a The Lost Time Injury Frequency Rate (LTIFR) was 1.2, Arrium continues to work to achieve “Goal Zero”, a workplace free from injuries, incidents and illness. an 8% reduction on the previous year and a new record workplace free from injuries, incidents and illness. low. The Medical Treatment Injury Frequency Rate (MTIFR) increased slightly by 0.1 to 5.4 for the year. Release of updated and new Codes of Practice, The new Code of Practice was released in July 2015. Introduction of Recordable Injury Frequency including “Crane Integrity and Safe Access”. Rate as an additional safety lag indicator. Focus on prevention of falls and molten High Potential Incidents in the areas of Fall Prevention Reduction in the number of “Zero Barrier” High Potential material safety for Arrium Steel. and Molten Materials were reduced by 10% and Incidents that represent incidents with high potential 38% respectively in FY15 compared to FY14. risk through the commencement of deployment of Arrium Code of Practice Engagement Training. Arrium will continue to promote and reward employees The annual Arrium Safety Excellence Awards were and contractors for their safety excellence. held in July. In 2015 a record 175 nominations were received and 28 finalists recognised at the Arrium Safety Excellence awards. A record seven finalists were from outside Australia. Senior Leadership Team to develop core elements of the During FY15, a further two groups of senior leaders Continue the development of senior leaders plan to implement “World Class Safety” performance visited World Class facilities in the United States. A “World through opportunities to experience World within the business. Focusing on leadership, employee Class Safety” Framework has also been developed. This Class facilities and progress the deployment engagement and clear standards and expectations. framework has identified six themes of work to improve of the World Class Safety Framework. safety leadership, engagement and operational discipline. Development of a new Risk Management Framework document to provide more context for leaders deploying risk management systems within the business. People Communicate the Arrium diversity framework The Arrium diversity framework has been Ensure that employees have clarity about the business globally, implementing programs that help Arrium adopted globally with businesses running context and their role in delivering the required outcomes. better harness the benefits of workplace diversity. programs and initiatives focused on diversity. Continued investment in building the skills of our Arrium has worked with external specialists Continue to build leaders’ engagement and inclusion leadership community to actively identify and including Symmetra to build skills in inclusion. skills to ensure we fully leverage the skills and leverage diversity and ensure there is an inclusive This included workshops looking at unconscious capabilities of all our employees. Implement the environment where all stakeholders feel valued. bias and creating a respectful workplace. leadership learnings from “World Class Safety”.

Commence the “Women at Arrium” program “Women at Arrium” sessions have Continue to expect leaders to implement initiatives in North America and South America. been hosted in Chile and Peru. and programs which actively raise awareness and deliver better diversity outcomes for Arrium.

Arrium Sustainability Report 2015 / Page 5 Continued Scorecard Contents Glossary Print

Sustainability Planned Initiatives Outcomes Planned Initiatives Drivers in FY15 in FY15 in FY16 People Implement revised diversity training (incorporating A comprehensive online training program Implement eLink, an integrated HRIS which continued harassment and anti-bullying content) across has been developed and is currently being provides employees, leaders and HR with selected businesses for all employees. piloted ahead of global roll-out. better information to manage talent, career planning and employee engagement. Continued engagement in our regional Arrium teams have continued to build relationships and centres with community stakeholders. add value in the communities in which they operate. Customer Promote improvements to the Green Star Design Produced a Guidance Note titled “Green Star – Design OneSteel will continue to promote the Green Star tool and Market and As Built Tool, and how OneSteel product can and As Built” outlining the changes from the legacy and how OneSteel product can be best used to deliver be best used to deliver more sustainable outcomes Green Star tools to the new 2014 As Built tool. more sustainable outcomes as measured by the tool. as measured by the tool. Promotion will be through This material was distributed directly to enquiries received, printed material, material in electronic format distributed via the OneSteel Communique, available for download through website and by email, and seminars. on our www.BuildwithStandards.com website and presentations. During the past year over 120 presentations were made to Builders, Engineers and Architects. Develop an options paper and business An options paper and business model recommendations OneSteel remains an active member of the Steel model recommendations for delivery of were developed. Global parties Arcelor Mittal, Stewardship Forum but is not currently engaged in further Responsiblesteel, a steel certification system. Mahindra-Sanyo and World Wildlife Fund joined the development of the Responsiblesteel business model. project and supported the direction proposed by the steering committee of the Steel Stewardship Forum. Commence Phase 3 of the Responsiblesteel project, Phase 3 of Responsiblesteel had not commenced in FY15. ie. delivery of an operational certification system. Promote the changes to the standards on ecolabels, During the past financial year work has begun to Continue the work in collecting the EPD data and ultimately environmental product declarations (EPDs) and produce EPDs for a range of OneSteel products. have third party certification of the data. EPDs will be made sustainable design, with the emphasis that compliant available for sustainability practitioners to use in 2016. The OneSteel Communique, an email sent to over 3,800 materials reduce waste. Promotion will be through printed customers and other interested people, keeps readers Promote EPDs for use in the Green Star tool, the IS tool, material, material in electronic format distributed through informed with case studies and building information and generally as a measure of environmental sustainability. website and by email and national seminars series. related to steel framing. The July 2015 edition featured the new rating tool and provided a download for the guidance note “Green Star – Design and As Built”. Continue to promote software and its benefits for Continued to promote CheckSteel and CompSoft Continue to promote software and its benefits for minimising steel sizes and thus reducing material usage. with a combined total of approximately 2,600 minimising steel sizes and thus reducing material usage. registrants in FY15. Working with Standards Australia Develop a new software package to implement to produce a new Composite Structures Standard the new Composite Structures Standard to realise to improve the efficiency of Composite Design the potential material savings available. and ultimately lead to further material savings. Continue liaison with the New Zealand Green Building OneSteel made two submissions to the NZGBC through Council (NZGBC) to influence them to adopt the latest the New Zealand Steel Sustainability Council regarding changes made by the Green Building Council of Australia the 2015 draft Green Star tool. The submissions directly (GBCA) to the “Design and As Built” rating tool. led to the replacement of credits for recycled content of steel with Ecolabels in the tool and the introduction of points for Environmental Product Declarations.

Arrium Sustainability Report 2015 / Page 6 Continued Scorecard Contents Glossary Print

Sustainability Planned Initiatives Outcomes Planned Initiatives Drivers in FY15 in FY15 in FY16 Customer Determine market demand and resources required to Market analysis undertaken and decision made to Complete project to create and publish two EPDs, and Market generate Environmental Product Declarations (EPDs) progress with creation of EPDs for the suite of OneSteel one for structural products (including rail) and one continued for the suite of OneSteel manufactured steel products. manufactured steel products. Project Sydney planned for reinforcing products. EPDs to be compliant and launched and data collection stage initiated. with EN 15804 and externally verified. OneSteel has provided the Infrastructure Sustainability OneSteel’s representative will continue to serve in this Council of Australia with a resource for their Material working group until the revised tool is released for use. working group to help review the material part of the IS tool. Our representative provided expert advice in both engineering design and steel as a construction material. Environment OneSteel Whyalla Steelworks will continue to work towards Projects completed: Projects planned for FY16: minimising its use of Murray River water through an active – Upgrade of water pump seals; – Increase use of recycled water as demineralisation plant water efficiency program. This will include: – Automation of fresh water input into Quench Basin at feed at Steelmaking; – Diverting blowdown water from the Power House to be Cokemaking; – Convert Steel Products Reheat Furnace cooling system reused as process water; – Use of demineralisation plant blowdown water in coke to potable water; and – Automation of the freshwater input into the Quench ovens quench pond; and – Identification of further water efficiency projects. Basin; and – Scoping of extended use of caster dam – Assessment of extended use of Caster Dam water for implementation in FY16. recycled water to offset Murray River water. Arrium Mining is implementing a program to reduce Improved water intensity compared to an average of the Increased reuse of mining processing the amount of Murray River water consumed by last three years due to: tailings water to displace Murray River water the Pelletising Plant through better management – Improved chemistry monitoring to mitigate/reduce and further improve water intensity. of water and water infrastructure, as well as further corrosion and scaling; improvements to tailings water recovery. – Optimisation of processes to reduce water loss and increase water reuse; – Improved water mapping, leak surveying, metering and tracking; and – Full water balance model of the magnetite stream. Continue active participation in the Middleback Efforts of MBA, including active participation by Continue rehabilitation works and predator and pest Alliance (of Landholders) (MBA) to control pest plants Arrium, resulted in pest animal control including herbivore control to enable the recovery of vegetation and and animals. Targeted rehabilitation works. foxes, cats and 1,654 goats removed from the fauna populations on completed waste rock dumps and on region. Targeted rehabilitation works completed. land that Arrium owns or has a responsibility to manage.

Closure of open areas, extension of unsealed Closure of an additional 10,000m2 of open areas, Unsealed roads dust suppression chemical expansion, road upgrade, Cokemaking door seal upgrade of 3km of unsealed roads, accelerated Mining fixed plant dust suppression upgrade improvements, embedding of BOS fume control Cokemaking door seal program, improved BOS fume implementation, dust control network pilot in mining practice, and improvements to dust suppression control practices in place, dust suppression system area, BOS precipitator upgrade work on ESP 1 and 2. spray systems on screening plants. upgrade on fixed plant planned for October 2015. Further deployment of the Energy Audit Tool Energy Audit tool deployed across additional Deploy children’s drawing competition across across Arrium sites will continue during FY15. businesses during FY15, along with audits being greater number of domestic and international Arrium updated for businesses which had previously carried businesses, for use in developing 2016 Arrium them out. Piloted children’s drawing competition Energy, Environment and Sustainability Calendar. to assist in building the 2015 Arrium Energy, Environment and Sustainability Calendar. Further evaluation of the business case for charcoal Evaluation undertaken which demonstrated inadequate use and trials at the Sydney . Final reporting of business case for continuation of the project. Final progress achieved through this initiative since 2006. report generated forming a valuable resource should a similar project be undertaken in future.

Arrium Sustainability Report 2015 / Page 7 Continued Scorecard Contents Glossary Print

Sustainability Planned Initiatives Outcomes Planned Initiatives Drivers in FY15 in FY15 in FY16 Community Continue to build relationships with universities Arrium continued to sponsor PhD, Masters and Continue to build relationships with universities to collaboratively develop solutions to improve undergraduate students at UNSW. Arrium has to collaboratively develop solutions to improve Arrium operations and expose students to the similar partnership arrangements with the University Arrium operations and expose students to the opportunities our business can provide. of Newcastle and the University of South Australia opportunities our business can provide. and in FY15 new support was made available through the inaugural Jim White Scholarship. Continued improvement of the workplace giving Arrium and OneSteel staff have implemented a quarterly Continued improvement of the workplace giving program and continued communication and program to promote Arrium’s charity partners and program and continued communication and engagement with staff to raise staff awareness build a stronger bond between our staff and the charity engagement with staff to raise staff awareness for the program and our charity partners. including staff volunteering within the community. for the program and our charity partners. Execute major operating contract with Indigenous Walga Mining was awarded the contract to provide Ongoing support for Walga Mining and Services. mining company Walga Mining and Services services at the Iron Knob mine site. This will for crushing and screening, material handling directly employ between 30 and 40 people. and train loading services at Iron Knob.

Work with the Antakirinja Matu-Yankunytjatjara Arrium continued to support its commitment for funding Continuing support for the BDM role, an Administrative Aboriginal Corporation (AMYAC) in the Coober Pedy for a BDM. This role was appointed in March 2015. Training Role, and cultural programs. region to appoint a Business Development Manager The ALO role is due to be appointed prior to December (BDM) and Aboriginal Liaison Officer (ALO) and 2015. The cultural programs are yet to be established implement their economic development plan. This and Arrium will continue with its commitment to is directly funded by Arrium. Sponsorship of cultural support these programs when they are established. programs identified with the AMYAC people. Sponsorship of Coober Pedy football and netball Sponsorship was provided to send netball and football teams to participate in the annual Indigenous teams to the Indigenous sporting carnival held in Adelaide. sporting competition in Adelaide.

Economic Export sales 12.5 Mt in line with lowered target for FY15. Significant cost reductions to lower targeted breakeven costs. Further evaluation of the business case for charcoal Evaluation undertaken which demonstrated inadequate use and trials at the Sydney Steel Mill. Final reporting of business case for continuation of the project. Final progress achieved through this initiative since 2006. report generated forming a valuable resource should a similar project be undertaken in future.

Arrium Sustainability Report 2015 / Page 8 Contents Glossary Print About this Report

This report is Arrium’s sixth stand-alone annual sustainability report. Each report has been aligned with the Global Reporting Initiative (GRI) framework for sustainability reporting and this report is the first to utilise the G4 version of that framework. The report outlines our performance on sustainability topics that are material to Arrium’s operations for FY15, presented together with year-on-year data trends. The report has been aligned with the GRI’s ‘In-Accordance core’ reporting requirements and a GRI Content Index is included. External assurance has not been sought for this report. The Arrium 2015 Annual Report also contains information relevant to the GRI reporting requirements. This process identified the most material topics Defining report content Materiality assessment as being: The GRI’s “Principles for Defining Report Content” process > Business and sustainability strategy (Materiality, Stakeholder Inclusiveness, Sustainability > Environmental impacts and benefits Context and Completeness) have been applied in 1. Representative topics from existing sources this report. (such as standard GRI disclosures, previous > Safety performance Arrium’s activities have been represented within reports and existing stakeholder input) were > Employee benefits and conditions identified and collated. the broader context of sustainability, that is, the > Local community benefits and impacts short-term, medium-term and long-term impacts 2. Representative topics were rationalised (to and influence on the environment and society at a remove duplication), adjusted to an appropriate > Economic benefits and impacts local and global level. This information is arranged level of detail and, in some cases, reworded to > Market presence according to our sustainability drivers: Safety; make their meaning clearer. > Customer satisfaction People; Customer and Market; Environment; 3. K ey internal stakeholders who held an Community; and Economics. > Climate change advanced understanding of the position of external stakeholders on these topics then > Governance ranked them based on materiality. > Supply chain impacts and benefits Boundary and scope 4. Further consultation allowed some re-grouping > Product benefits and impacts This report covers Arrium’s global operations with and final ranking to produce a “short list” of the > Workforce diversity some minor exceptions where noted. most material topics, and formed the basis for sustainability reporting. The scope of reporting has not changed from previous years except for adjustment to G4 5. Additional direct validation with external requirements. stakeholders is on-going.

Arrium Sustainability Report 2015 / Page 9 Contents Glossary Print Stakeholder Engagement

Arrium proactively engages with its stakeholders as a matter of standard business practice. Most of this engagement was not undertaken specifically for the preparation of this report; however, the outcomes of engagement strongly informed the material topics reported. Methods of stakeholder engagement are tailored to specific operational locations and types of stakeholders. Key operational locations (e.g. Whyalla/Middleback Ranges) maintain formal procedures for engagement. Such procedures are also maintained for stakeholder groups engaged at a corporate level, e.g. shareholders and the investment community. Key stakeholder groups, their interests and concerns, and typical methods of engagement are listed below.

Stakeholder Group Stakeholders Interests and Concerns Engagement Customers Steel manufacturers and fabricators; Total product offer, value, quality, price, Regular formal and informal communication with mining companies; commercial, reliability of supply and delivery. marketing staff. Personal visits by marketing and infrastructure and residential builders; operations staff. Site visits to customers’ plants and wholesale and retail customers. customers’ representatives encouraged to visit Arrium sites. Various technical training and support offerings. Employees Employees. A wide variety of interests and concerns. Regular communication with staff through presentations and discussions, through the intranet, email alerts, hard copy newsletters and noticeboard items. Twice‑yearly performance reviews for staff and some wages employees. Governments Local, state and national governments Regulatory compliance, land use, Regular formal and informal communications with and government agencies. access permits, licences, closure external relations, operational senior management and provisions and plans, product staff through site visits, meetings, events and reporting stewardship, environmental (including Annual Reports and Sustainability Reports). performance, community relations, socio-economic benefits. Industry Associations Associations of the steel (structural and Representation of industry interests. Representatives on boards and committees; engagement reinforcing) and mining industries. on specific projects.

Arrium Sustainability Report 2015 / Page 10 Stakeholder Engagement Continued Contents Glossary Print

Stakeholder Group Stakeholders Interests and Concerns Engagement Investment Community Mainstream brokers, financial analysts Financial returns, growth, governance, Annual General Meeting, Annual and Sustainability and fund managers, sustainability risk management. Reports, Results materials and briefings, Quarterly and ethical investment analysts, Reports, ASX releases, Company website, direct phone retail investment advisers, existing contact with investor relations, presentation at industry and potential shareholders; both conferences, briefings and site visits. domestically and internationally. Local Communities Individuals and groups local to our Employment, business development, Location-specific community relations personnel, operations, including pastoralists, infrastructure, land access, cultural community meetings, formal and informal communication. traditional landowners, local Indigenous heritage, sponsorship and donations, groups, development groups, local environmental performance and businesses. impacts, transparency. Schools and Local and state schools and universities, Interaction with the mining and Site visits, vacation and traineeship employment, Universities teachers and students. manufacturing industries, potential scholarships. career pathways within the industries, sponsorship, scholarships and donations. Research collaboration. Suppliers Local and international supplier Supply agreements, reliable payment Regular meetings with commercial and operational staff. businesses. processes, social and environmental requirements.

Arrium Sustainability Report 2015 / Page 11 Contents Glossary Print Sustainability Governance

The Arrium Board is the most senior governance body in the Company. The Board operates a number of committees which deal with a variety of issues, including aspects of sustainability. These committees are:

The Occupational Health, Safety The Human Resources Committee The duties of this committee include reviewing processes relating to the and Environment Committee identification and development of high-potential future leaders, reviewing This committee assists the Board to fulfil its OHS&E roles and obligations by policies and processes in relation to workforce diversity, and ensuring adequate providing the Board with additional resources to monitor and review OHS&E succession planning is in place for senior executives. issues such as the effectiveness of the OHS&E governance structure, policies, management systems, performance and compliance. Operational Control Operational control on sustainability matters is maintained by the Chief The Audit and Compliance Committee Executives and Lead Teams of the Arrium Business Units. In some cases these This committee monitors and reports to the Board on the framework, matters are specific to a single business unit, but where they span multiple adequacy and security of internal control, accounting and management business units then the OHSE Council will play a role. The OHSE Council information systems. consists of all members of the Arrium Lead Team. The Operational Risk Committee This committee ensures that appropriate monitoring, review and audit coverage of operational and business risks is undertaken. It may also initiate investigations or reviews for specific critical operational or business risks.

Arrium Sustainability Report 2015 / Page 12 Contents Glossary Print

Safety

Arrium Sustainability Report 2015 / Page 13 Continued Safety Contents Glossary Print Safety

Arrium is committed to achieving the highest performance in workplace health and safety, believing that all injuries, occupational illnesses, and incidents are preventable. “We will not compromise on safety” is one of the Company’s two core values of the organisation and, as a result, a focus on the health and safety of employees, contractors, customers and visitors underpins each of Arrium’s activities. At Arrium, workplace health and safety is everyone’s responsibility. Our goal is to establish a workplace free from injuries, incidents and illness. Arrium has six Safety Principles which outline the philosophy guiding Arrium’s approach:

Arrium Safety Principles All injuries can be prevented Working safely is a condition of employment

Employee involvement is essential

Management is accountable for safety

All operating exposures can be safeguarded Training employees to work safely is essential

The role of management is to provide direction, set the safety standards and drive improvement within the business to encourage all employees, contractors and visitors in working towards the goal of ZERO incidents, injuries and occupational illnesses.

Arrium Sustainability Report 2015 / Page 14 Continued Safety Contents Glossary Print

LTIFR* MTIFR * Safety performance 2.0 10 Arrium’s Lost Time Injury Frequency Rate (LTIFR) for FY15 was 1.2, which is an 8% improvement on the previous year. The Medical Treatment Injury Frequency Rate (MTIFR) for FY15 was 5.4. This is slightly higher than the rate of 5.3

8 recorded the previous year. 1.5 In an effort to better understand safety performance there are a number of other indicators, both leading and lagging, 6 that are recorded. The most recent indicator to be added is the Recordable Injury Frequency Rate. This has been 1.0 recorded since December 2013 and has displayed a drop of 9% to the end of FY15. 4 Another relatively new indicator is the Significant Near-Miss Frequency Rate (SNMFR), which has been recorded since FY12. Recent performance against this metric is shown in the graph below. 0.5 2 World Class Safety 0 0 11 12 13 14 15 11 12 13 14 15 Arrium’s commitment to be world class in safety has seen 45 of our senior leaders engaged in a personal and collective development experience which includes the opportunity to experience safety excellence at DuPont in the United States * The FY11 figures have been restated to include the as well as learning from leadership thought-leaders at Harvard University. The benchmarking with DuPont identified the Moly-Cop Group businesses’ safety performance as strength of Arrium’s safety principles and systems, and opportunities for improvement in the area of personal leadership if they were part of Arrium from 1 July 2010. and situational awareness. The senior leaders involved have in turn shared the approaches, behaviours and skills they have been exposed to with their own teams, with a culture of visable and authentic leadership now establishing across SNMFR the organisation. 50 One example of the impact of this work has been the development and implementation of the “Swear by Safety” campaign by our Mining and Steel businesses at Whyalla. This initiative has recently received international recognition, 40 and also received the highest award at the recent Arrium Safety Excellence Awards (see case study below).

30 Self -insurance and workers’ compensation Arrium has been granted self-insurance status for workers’ compensation in all eligible Australian states. Arrium’s 20 continued safety performance and compliance with OHS systems and practices is a key component to maintaining self-insurance status. If Arrium fails to maintain adequate occupational health and safety systems and practices, Arrium 10 may lose its self-insurance status, which may have a material adverse effect on the financial performance of Arrium. This is considered to be an Arrium-wide material business risk. 0 12 13 14 15 In FY15 Arrium continued to experience a reduction in the cost of workers’ compensation claims across Australian businesses. Payments on claims reduced by $2.4 million during the year and there was a $1.2 million reduction in self insured workers’ compensation provisions over the year. While there was a slight reduction in the number of claims received during the year, the number of open claims reduced by 18%. This was driven by the resolution of longer-term claims and effective injury management practices. The Company maintained self-insurance status in the relevant jurisdictions. Arrium Sustainability Report 2015 / Page 15 Continued Safety Contents Glossary Print

Arrium Safety Excellence Awards The annual Arrium Safety Excellence Awards are an opportunity to recognise and reward those employees, contractors and suppliers who made an outstanding contribution towards our goal of injury prevention and the reduction of incidents. These Awards also provide a platform to encourage the sharing of best practice across the organisation. In 2015, the Awards received a record total of 175 nominations from across Arrium from which 28 finalists were selected across seven categories. All finalists were recognised with an award (Merit, Highly Commended or Excellence) and received a cash prize which was donated to a charity of the recipient’s choice. In total, $15,800 was donated to various charities as a result of the 2015 Safety Excellence Awards. During the year a number of our people and businesses were also recognised externally for their safety performance. These included: our AusTube Mills business which was awarded the National Endeavour Award for “Zero” (an educational campaign based upon the Arrium Codes of Practice), and the Hunter Manufacturing Safety Excellence Award; AltaSteel was awarded the Strathcona Park and District Chamber of Commerce Occupational Health and Safety award, and two safety initiatives from Whyalla; and “Whyalla Rail Handling” and “Engineering Forklift Exclusion in the Workshop” both received awards at the Australian Steel Institute National Health and Safety Excellence Awards. Jim Wensley won Individual safety awards at both the Australian Steel Institute Awards and the Workcover NSW SafeWork Awards. Craig Dahlin won the “Best Individual Contribution” award at the WorkSafe SA Awards. The Newcastle Rod Mill was also recognised at the Hunter Manufacturing Awards through receiving the prize for Excellence in Safety for its campaign “Take 2 for Injury Prevention”. Of particular note was the Whyalla “Swear by Safety” campaign which was one of six recipients of a Global Award for Excellence in a Health and Safety Program as awarded by the World Steel Association.

Robert Fenwick (L) and Richard Hallett at the Arium Safety Excellence Awards 2015.

Arrium Sustainability Report 2015 / Page 16 Continued Safety Contents Glossary Print

Arrium Safety Excellence Awards

Employee Front Line Leader Contractor/ Work Team Workplace Department/Site Leader Supplier Initiative

Greg Robert Darren Transpacific Moly-Cop Swear By Grinding Media Wilcox Fenwick Newbegin Industries Peru Logistics Team Safety Moly-Cop Waratah Moly-Cop Waratah REMS Newcastle ATM Acacia Ridge Whyalla Arrium Mining and Alfredo Bustamante Steel Whyalla Moly-Cop Peru Excellence Award

Greg Wilcox Robert Fenwick Alfredo Bustamante (L) Darren Quinn (L) Angela Cornejo Daniela Dean Chris Sharman (L), Dwayne Fleming, Karen Robinson, and Darren Newbegin and Chris Coathupe Richard Hallett, Graham O’Neill and Rick Dunn

Anthony Richard Daniel BIS Industries Arrium Electrical Living Safely REMS Workshop Bryant Hallett Montero Manufacturing Safety Network with Electricity Newcastle Austube Mills Moly-Cop Moly-Cop Chile Whyalla Engineering and Engineering and Highly Newcastle Waratah Reliability Reliability Commended Mark Hand Injury Unlinder Reduction Team Moly-Cop Canada Moly-Cop Waratah

Renzo Michael Sergio SIS Security SSM Melt Yard Safety Site Operations Leadership Group Jaramillo Densen Rolon Mayfield and Shop ARC Sunshine ATN Acacia Ridge Moly-Cop Peru Sydney Steel Mill Moly-Cop Mexico Waratah Maintenance Team Replacement Midalia Steel Merit Jackie Harsco Metals Sydney Steel Mill of Sledge Western Australia Award Cotton and Minerals Hammers Midalia Steel Whyalla Moly-Cop Peru

Arrium Sustainability Report 2015 / Page 17 Continued Safety Contents Glossary Print Case Study

“Swear by Safety” With Safety being an Arrium core value it is important that all employees possess a personal commitment to safety – believing rather than simply complying. To help bring about this mindset the Arrium Mining and OneSteel Whyalla teams launched a community movement known as “Swear by Safety”. This movement has encouraged the entire community to make safe choices and start thinking about why safety is important in everything that they do – not just at work. The campaign started with detailed research into current thinking, attitudes and behaviour across the Whyalla community. The results were used to develop promotional materials that would reach the entire community, as well as resources for use within Arrium. This included television and radio ads, posters and print advertising. To maximise local ownership and impact, the casting for this material consisted entirely of local Whyalla residents, only some of whom were Arrium employees. The aim of this campaign is to inspire employees and residents to take personal responsibility for safety by creating a desire to change current thinking and behaviours. The campaign was launched in early 2015 with the release of the advertising, promotion at numerous community events and roll-out within the Arrium sites.

Recipients of an Arrium Safety Excellence Award for the Whyalla “Swear by Safety” campaign.

“Swear by Safety” Campaign.

Arrium Sustainability Report 2015 / Page 18 Continued Safety Contents Glossary Print Case Study

“Living Safely with Electricity” In FY14 there were 26 electric shocks recorded at Arrium – roughly one every two weeks. Analysis of these incidents found that 50% were due to portable appliances, including extension leads and power boards, and 85% happened to people who didn’t work with electricity. In response the Arrium Electrical Safety Network (AESN) developed a campaign to improve awareness and understanding and eventually eliminate electric shocks from Arrium. This campaign was called Living Safely with Electricity and was particularly aimed at non-electricians. The campaign included production of a booklet and two videos. The videos had two distinctive objectives. Firstly an emotive video to make the audience aware of the risks, and secondly an educational video to provide advice on how to be safe around electricity. For added effect the videos were made using employees and their families. Since completion, the videos and booklets have been seen by thousands of employees and hundreds of school children and are available in six languages and on YouTube. Pleasingly, in FY15 electric shock incidents for all Arrium workers were reduced by 38% from the previous year.

Incidents down

Arrium Sustainability Report 2015 / Page 19 Contents Glossary Print

Suzanne McKell Transhipping Manager,People Arrium Mining Whyalla Port, South Australia, Australia

Suzanne oversees the transhipping operations Arrium Sustainability Report 2015 / Page 20 in Whyalla Port, liaising with shore operations, marketing and the transhipper to ensure that all vessels are safely loaded and meet the customer requirements. In FY14, a total of 73 vessels were loaded with iron ore in Whyalla Port. Continued People Contents Glossary Print People

At Arrium, we know business success comes from empowering and valuing our people. Arrium directly employs around 8,350 people across 15 countries and it is these women and men who are focused on delivering value to our customers, our shareholders and the communities in which we operate. Across diverse businesses, regions and jobs, our people thrive on challenge and opportunity and work together to develop and build on Arrium’s reputation around the world. We respect our people and are committed to their growth.

We are a company with two Core Values:

Safety and Customer and these values are reflected in everything we do.

Our approach to people management We strive to attract and develop capable people and afford them a high performing and motivating workplace. We value leaders who bring out the best in their teams. Our leaders are responsible for appointing, developing, motivating and retaining high performing employees who actively demonstrate our core values. We invest in our managers to help them become more effective leaders. Our global Human Resources (HR) function supports our leaders to attract, retain and develop talent. Our mix of functional specialists, HR business partners and HR shared services allows us to deliver Arrium-wide talent programs while supporting the specific talent and change support needs across our diverse business portfolio.

Arrium Sustainability Report 2015 / Page 21 Continued People Contents Glossary Print

273 chile 43 philippines 6971 australia 88 mexico 85 150 indonesia peru 86 1 521 thailand china canada 1 netherlands 3 india 42 3 hong kong 68 uk usa 2 s.africa

2 new zealand

This year, we have continued to actively promote all three areas of diversity in Where we work our global businesses. Our Managing Director and CEO hosts a comprehensive Almost 7,000 Arrium employees are based in Australia, with 1,100 across North annual talent review that specifically looks at diversity, and acts as a sponsor America and South America, approximately 250 in Asia and a small number in for diversity initiatives across the Group. Diversity plans are in place at both an Europe and Africa. The majority of our workforce are directly employed, although Arrium and Divisional level. Current diversity initiatives include: some operations (for example, our South Australian mining operations and our – Women at Arrium, a program that engages current and future female leaders in Mining Consumable business in Peru) partner with labour hire and contractor both Australia and the Americas (see case study below); organisations whose people work with us on our sites. – Male Champions of Change, a group of senior male leaders who are passionate about gender equality and have been invited to collectively lead through action and advocacy to advance diversity and inclusion within and Benefitting from diversity across our organisation; We believe that there is strength in diversity, and what sets us apart as individuals – Arrium Global Development Program an exchange program for finance makes us stronger as a team. It’s about making sure we have different and professionals between Australia and the Americas. The objective of this differing voices across all parts of the business to make us the best we can program is to better balance expatriation ensuring a flow into Australia but more be. As Andrew Roberts, our Managing Director and CEO says, “A diverse and importantly to build global mindsets across our organisation; inclusive environment that is dynamic, global and broad-minded will underpin – Building a Respectful Workplace, an innovative blended learning program that our drive to be a world class organisation.” Our diversity focus includes three key explores diversity, bias, discrimination, bullying and inclusion; areas: diversity of thinking; gender diversity; and cultural diversity. – Developing employee value propositions and sourcing strategies to target more diverse talent pools; and – Training for senior leaders in unconscious bias and inclusion.

Arrium Sustainability Report 2015 / Page 22 Continued People Contents Glossary Print Case Study

Women at Arrium The Women at Arrium program aims to provide talented women from all parts of Arrium an opportunity to work on their personal development, build a network of peers and learn about the broader business. Two groups of women from around Australia have participated, and in March the third Women at Arrium program was launched for employees across the Americas. 14 women from our businesses in Canada, Peru, Chile and Mexico came together in Lima for the first of three workshops, which was simultaneously translated into Spanish and English. Our Managing Director and CEO, Andrew Roberts, participated in a Q&A session which gave participants the opportunity to hear directly from him and ask questions. General Manager HR Talent, Remuneration and Diversity, Sarah Livissianis, facilitated the workshop and said the program is an important platform within our diversity agenda, providing the participants with great opportunities and exposure. “It’s great to work with such outstanding women from such diverse operations and backgrounds,” she said. “The feedback we’ve received is that they have already benefitted not only from what they learnt, but also by being exposed to the other senior and inspirational women who participated.” Participant Maria Fernanda Lara, Import and Export Coordinator Moly-Cop, Mexico, said the highlight was meeting other women from across Arrium. “To have gotten to know them and their cultures that are so different but at the same time hold so many similarities. They all have challenges in their work life and at the same time are very fulfilled in what they do and feel proud in what they have accomplished. To identify with them in this way was really the best part of this experience, and that makes me feel motivated.”

Arrium Sustainability Report 2015 / Page 23 Continued People Contents Glossary Print

Employee gender profile by employment category

100

80

60

40 Percentage (%)

20

0

Developing our people EBA Junior Staff Professional Senior Executive Non- Overall Staff Staff Staff Executive Our people development efforts are focused on ensuring we build and Director sustain the capabilities critical to our success across our varied industries Male Female and markets. We also invest in ensuring our employees have the skills to work safely as well as growing our leaders to create an environment where people can be their best. Our approach to development covers learning Employee gender profile by age through experience, learning from others and structured learning courses 100 and programs. In 2015 Arrium is investing in a fit-for-purpose human capital management 80 solution to support employees and their leaders in their learning, career development and succession management. The new system will also afford 60 increased transparency and sharing across our global business. 40

Arrium Insight affords senior leaders the opportunity to explore strengths and Percentage (%) development needs in the context of their career aspirations and provides them exposure across the breadth of our global businesses while building 20 their leadership skills. Over the past five years, over 70 senior leaders have participated in Arrium Insight and its predecessor the Accelerated 0 Development Program for Senior Managers. Pleasingly, eight of our current 15-19 20-24 25-29 30-3435-39 40-44 45-49 50-54 55-59 60-64 65-70 70+ executives are past participants from this program. Male Female

Arrium Sustainability Report 2015 / Page 24 Continued People Contents Glossary Print

Arrium also runs a number of cross-business networks to build technical and Arrium operates a number of localised talent pipelines across its Australian and commercial capability and facilitate sharing of best-practice. These networks international businesses. These include apprenticeships for developing trade- including the +MAS and best practice forums cover a range of critical areas such qualified employees along with cadet and graduate programs, predominantly for as steelmaking, rolling, commercial, product development and innovation, asset professional technical staff. These talent pipelines are continually resized to take management and safety. These networks are further enhanced through Arrium’s account of projected business needs and labour market forecasts. involvement in various global industry forums and technical exchanges with At the end of FY15, 5.5% of the Australian workforce had commenced with several world-leading manufacturers. Arrium in the preceding 12 months. 17% of those new employees were female. Our businesses and regions also provide a range of learning initiatives for This is significantly more than the 11.1% female proportion of the Australian employees of all levels. These include programs such as Leading People to permanent workforce. Of all new starters in FY15 the highest percentage Safety, Regional Manager Development, Coaching the Arrium Way and Value (18%) were in the age range of 30-34 years. 15.9% of the Australian workforce Based Selling, as well as mentoring, study support, exposure to senior leaders, employed at the start of FY15 had ceased employment by the end of that year. stretch projects and secondments. Of those employees leaving in that year 5.4% did so voluntarily and 10.5% did so We also take a very targeted approach to blended learning. This year we have involuntarily. For further details refer to the table below. invested in and piloted online learning materials to provide additional training for our regionally-dispersed workforce. We are planning to expand the roll-out of this material over the coming year. Employee Turnover (Australia Only)

Talent attraction and retention Male Female Total In the last year we have invested in developing a unique employment brand to New employees (as % of total employees diversify our external talent pool. Insights from our people around the world about 4.5 0.9 5.5 what differentiates Arrium and our business divisions was used to redevelop our at end of FY15) employment brand and inform our sourcing strategies. Our recruitment materials and candidate experiences better reflect our culture and the growth opportunities Leaving employees (voluntary – as % of total 4.6 0.8 5.4 we can offer, seeing us reach a broader, more diverse candidate pool in the employees at the start of FY15) external market. Leaving employees (involuntary – as % of total 9.5 1.0 10.5 employees at the start of FY15)

Leaving employees (total – as % of total 14.1 1.8 15.9 employees at the start of FY15)

Arrium Sustainability Report 2015 / Page 25 Continued People Contents Glossary Print

Employee engagement Our leaders regularly engage their people in the broader context of our business, including thorough updates on financial and safety performance, video interviews with senior leaders, conferences and regular business and global newsletters. Managing change We have processes in place to proactively manage change around the business, with significant focus on employee impact and welfare. Across several years of significant change across all our businesses, we are proud of our efforts to support affected employees including retaining people in positions in other parts of the business. Managing performance Across Arrium, we know the performance of our people is vital, so we work hard to make sure everyone knows the role they play in our success. Formal and informal processes are used to align individual efforts to business priorities, and establish clear performance expectations; as well as provide feedback on performance and development needs. Reward Arrium’s remuneration and reward policies are designed to ensure we are competitive in the various labour markets in which we operate. Reward structures are designed to both support delivery of business objectives and reflect contemporary remuneration practice. Staff salaries are set and regularly reviewed against similar roles in the labour market. In light of the challenges we have faced as a business, there were no increases to remuneration for salaried staff and no payments under the Arrium Short Term Incentive Plan in the 2015 review, except for a small proportion of employees subject to specific contractual or statutory arrangements. Our salaries remain market competitive. 56% of our Australian-based employees are engaged under one of around 40 registered Enterprise Agreements (EAs). In recognition of competitive pressures and a slowing Australian labour market, EAs negotiated over the past year provide for substantially lower wages growth than those in recent years. The majority of negotiations over the past 12 months have been settled without protected industrial action.

Arrium Sustainability Report 2015 / Page 26 Continued People Contents Glossary Print

Working together Employee relations Arrium encourages a healthy work-life balance for employees and offers a range Arrium takes an open and positive approach to employee relations. of flexible work options. These include part-time employment, job sharing, remote Arrium maintains a wide range of policies dealing with various employee rights working, non-standard hours, paid maternity benefits, career breaks, return to and obligations such as workplace behaviour, discrimination, whistleblowing work programs, transition to retirement arrangements and the opportunity to and bullying. Employees have the opportunity to have matters raised and purchase additional annual leave. Currently, 1.5% of our permanent workforce dealt with by their managers and are also afforded the opportunity to seek the are engaged on a part-time basis. Less than 10% of Arrium’s Australian independence of the HR function to resolve concerns. workforce are engaged as temporary or casual employees, or through labour hire contractors. While the majority of Arrium’s workforce is not unionised, the majority of employees within our Australian based manufacturing operations elect to be members of a union. Unions are respected as bargaining agents in accordance with Australian industrial law and also represent employees’ interests in questions over the applications of enterprise agreements. Over the last financial year, no time has been lost in our Australian business due to illegal industrial disputation.

Arrium Sustainability Report 2015 / Page 27 Continued People Contents Glossary Print Case Study

Learning Spanish and learning English It’s believed that more than half of the world’s population speaks at least two languages; but as anyone who has tried to learn a second language as an adult knows, it’s a challenging experience. Which makes it all the more impressive that every morning in our Mining Consumables plant in Guadalajara, Mexico, around 15 people gather for an hour of English language studies. These classes have now been running for three years, and Moly-Cop Mexico’s General Manager Roberto Zaragoza says the dedication of the students is outstanding. “Half the class is in the employees’ own time since they arrive to work half an hour early, but the benefits are very clear, when they have to communicate with Australia, USA or Canada, or when they have an English-speaking visitor.” Production Manager, Australian Joe Ellison, who himself studies Spanish three times a week, has noticed a real improvement. “Many of the guys here had only a few words of English when I arrived two years ago, but now we can have technical conversations,” Joe said. “A lot of the technology, equipment and assistance here comes from America or other English speakers so the ability to speak some English helps them on the job and as part of their personal development.” In Australia, 15 Arrium people recently completed a beginner’s Spanish course, held at our office in St Leonards, North Sydney. Two classes were also run at Moly-Cop’s Waratah plant. Steel’s Market Development Officer, Ashleigh Gay, said it was a worthwhile challenge. “Being part of a global company is exciting but sometimes hard to relate to working in Steel. The course helped me build some context around the cultural and language differences within our diverse global operations,” Ashleigh said.

Arrium Sustainability Report 2015 / Page 28 Contents Glossary Print Customer and Market

Arrium Sustainability Report 2015 / Page 29 Continued Customer & Market Contents Glossary Print

We are committed to meeting our promise to customers and dedicated to servicing their requirements today and in the future. “Meeting our promise to Customers” is a core value that is actively embedded throughout Arrium.

Arrium relies on various key customer and supplier relationships, and the loss or impairment of any of these relationships could have a material adverse effect on Arrium’s operations, financial condition and prospects. As such, a dependence on key customer and supplier relationships is seen as a Company-wide material business risk and Arrium has implemented the necessary steps to ensure that this risk is appropriately managed. Similarly, Arrium maintains an internal risk management process and also follows quality assurance procedures in relation to the manufacture of its products and materials. For example, Arrium’s steel mills are accredited to internationally recognised standard ISO9001. However, due to the nature of its operations, it is possible that claims against Arrium could arise from defects in materials or products manufactured and/or supplied by Arrium. This is also recognised as a Company-wide material business risk. Outstanding recent examples of Arrium meeting its promise can be seen in an innovative commercial building project in Brisbane and the latest state-of-the-art Moly-Cop facility being constructed in Peru. These are just two of the diverse Arrium customer case studies presented over the next few pages.

Arrium Sustainability Report 2015 / Page 30 Continued Customer & Market Contents Glossary Print Case Study

Moly -Cop’s “jewel in the crown” takes shape in Peru In Spanish, “La Joya” translates to “The Jewel” and Moly-Cop’s latest grinding media facility at La Joya, Peru will certainly be the jewel in the crown of Moly-Cop’s international manufacturing facilities when it is fully commissioned in 2016. Moly-Cop has operated a grinding media facility in Arequipa, Peru since 1981 with an initial capacity of 10,000 metric tonnes per year. For the past 34 years this operation has gradually increased its grinding media production capacity to 60,000 metric tonnes per year as a consequence of increasing demand in the Peruvian mining market for grinding balls. However, the further growth in demand has resulted in Moly-Cop management making the decision to construct a new grinding media facility 48 kilometres from Arequipa in the town of La Joya. The location of the site is important as La Joya is strategically located close to major southern mining projects such as Freeport’s Cerro Verde mine, the Cuajone and Toquepala operations of SCC, Glencore’s Antapaccay, Hudbay’s Constancia and MMG’s Las Bambas projects. Moly-Cop also operates a plant in Lima that services the central and northern grinding media markets of Peru. This greenfield project is being constructed on a 148,000m² site located in the La Joya district. Civil works commenced in October 2014, and building construction in May 2015. The facility is expected to be completed in mid-2016 and will have the capacity to manufacture approximately 175,000 metric tonnes of grinding media per year. The project will also have flexibility for future market growth with space allocated for additional production capacity. Due to its strategic location, the facility will have a short and responsive supply chain and in-market presence. This will make it an extremely important supplier of grinding media to customers in southern Peru. According to Moly-Cop Country Manager for Peru, Javier Castro, “Moly-Cop has an international supply network of nine grinding media facilities located in key mining regions around the world. The La Joya project will be a state-of-the-art grinding media facility that will provide us with the capability to meet forecast growth for grinding media in southern Peru. Also, once completed, the facility will be a major employer in the region, both directly and indirectly.”

Arrium Sustainability Report 2015 / Page 31 Continued Customer & Market Contents Glossary Print Case Study

Moly -Cop Tools a popular choice for 20 years Over the last 20 years, Moly-Cop Tools has become a widely accepted resource within the mineral processing industry. Moly-Cop Tools is a set of 63 easy-to-use EXCEL spreadsheets designed to help process engineers characterise and evaluate the operating efficiency of any given grinding circuit, following standardised methodologies and widely accepted evaluation criteria. Moly-Cop Tools incorporates a full set of digital simulators for conventional and semiautogenous grinding applications with the corresponding mass balance and parameter estimation routines; plus complementary spreadsheets regarding Bond’s Law calculations, grinding media “algebra” and other useful utility functions. The third version of this resource, known as Moly-Cop Tools© 3.0, is offered on an “open-access” basis, meaning that it is free-of-charge with no restrictions on copying and sharing. Its popularity is due in part to the quality of the mathematical models incorporated into the tool and its powerful model calibration capability. Moly-Cop provides complimentary training in Moly-Cop Tools to customers, potential customers and other interested people.

Moly-Cop Tools Course in Belo Horizonte, Brazil

Arrium Sustainability Report 2015 / Page 32 Continued Customer & Market Contents Glossary Print Case Study

Arrium responds to changing market by adding magnetite to export blend Arrium Mining’s efforts to increase its magnetite concentrate production is assisting the Company as it responds to ongoing low iron ore pricing. The closure of the Southern Iron operations resulted in the removal of Peculiar Knob material from export products. The recent Magnetite Optimisation Project resulted in the creation of an additional 600,000 tonnes of magnetite concentrate per year. This is now being introduced as another option for blending with hematite product as part of the export blend. This iniative also delivers environmental benefits. The magnetite ore is sent as a slurry concentrate from the Concentrator at the South Middleback Ranges operations, through to the filter plant at the Whyalla Steelworks, and then as a damp filter cake to the inner harbour for export. Being damp, this material is generally not a source of dust. First iron ore railed from Iron Knob this century Iron Knob, which is renowned as being the birthplace of the Australian steel industry, was originally mined up until the late 1990s. Arrium Mining recommenced activity at Iron Knob in 2013 and initially ore was transported to Whyalla by road-train. In March 2015 a significant milestone was achieved when the rail line was commissioned and the first ores were railed to Whyalla. The commencement of railing ore from Iron Knob to Whyalla was significant because it minimises impact on the local community by reducing potential interactions between light and heavy vehicles. It also contributes to the success of the business given the current low price for iron ore. A further positive arising from this milestone was the involvement of Indigenous mining company Walga Mining. The 100% aboriginal-owned company provides crushing and screening, material handling, and train-loading activities at Iron Knob, and directly employs 30-40 people.

Arrium Sustainability Report 2015 / Page 33 Continued Customer & Market Contents Glossary Print Case Study

480 Queen Street – the first of its kind for 40 years In 2014, OneSteel Metalcentre (OMC) secured an order from Pacific Industrial Company (PIC) for the supply of steel and logistics for a new 34-level office tower being constructed at 480 Queen Street in the Brisbane Central Business District. This building is one of very few that has been constructed in Queensland using a steel frame design, and the first to be constructed in Brisbane for over 40 years. PIC, which is based Perth, had the technical expertise and experience needed for the project but lacked a partner in Brisbane and a way to overcome the prohibitive distance from the west coast to the east coast of Australia. This is where Arrium provided significant competitive advantage. Due to OMC’s strong relationship with this customer they could make an offer that included processing, fabrication, steel supply, storage and delivery. Specifically, OMC was able to offer the use of the Arrium Steel rail freight network providers to back-load fabricated product from Perth at a competitive rate. This enabled PIC to utilise its substantial Perth-based fabrication capability for about 1,500 tonnes of the total 4,500 tonnes required. OMC also offered the use of an OMC site close to the project for light fabrication and storage, and an office location in Brisbane for the PIC Project Management team. This allowed for faster responses and better delivery and production performance. Finally, OMC could provide a supply and logistics offer that included delivery of fabricated sections, decking, large bore pipe and other material from various suppliers. The role of OMC and the Arrium Steel Freight and Logistics Team was crucial to PIC securing this work and this project is a great example of meeting a new and challenging customer promise.

480 Queen Street Project in Brisbane Arrium Sustainability Report 2015 / Page 34 Continued Customer & Market Contents Glossary Print The Arrium OSCAs

The Arrium OSCAs, or “Outstanding Service to Customer Awards”, are designed to reinforce “Customer” as a core value across Arrium. The OSCAs identify, recognise and reward employees and work teams who achieve an improved business outcome through the delivery of an enhanced customer experience. The criteria against which nominations are assessed is as follows:

Development Consistent Creating Creating a new Proactively of a competitive customer service at an permanent behaviour customer promise mitigating risk advantage or best exceptional level change within Arrium practice outcome

In 2014, there were 82 nominations for the award categories of Work Team, Individual and People’s Choice. Nominations are open to all employees globally. 2014 Winners of the Arrium OSCAs Team Award Individual Award People’s Choice Award Chris Comyns, OneSteel Metalcentre, Luke Walker, OneSteel Rod Bar Wire and Steel Freight and Logistics Moly-Cop, Kansas City Sydney Steel Mill

Winners For working together to develop a partnership For work with key Moly-Cop customer For work in developing Customer Principles, with Pacific Industrial Company for the Freeport McMoran rebranding the Sydney Steel Mill site, and putting 480 Queen Street project Customer at the heart of the business

Mike Pfabe (L), Marco Mosole and Frank Van Der Weyer Luke Walker Chris Comyns

Grant Millard Moly-Cop Ropes RAPTEK Team Moly-Cop Ropes OneSteel Metalcentre, Rod Bar Wire and Austubemills David Bell Finalists for the Meriton 80 Arthur Street project OneSteel Rod Bar Wire Chris Comyns OneSteel Recycling IT for Non-Ferrous Touch Kiosks OneSteel Rod Bar Wire

Arrium Sustainability Report 2015 / Page 35 Contents Glossary Print Environment

Suzanne McKell Transhipping Manager, Arrium Mining Whyalla Port, South Australia, Australia

Suzanne oversees the transhipping operations Arrium Sustainability Report 2015 / Page 36 in Whyalla Port, liaising with shore operations, marketing and the transhipper to ensure that all vessels are safely loaded and meet the customer requirements. In FY14, a total of 73 vessels were loaded with iron ore in Whyalla Port. Continued Environment Contents Glossary Print Environment

Arrium is committed to pursuing a high standard of environmental management throughout its operations. Arrium strives for continual improvement in environmental performance, the efficient use of resources, and the minimisation or prevention of pollution. The following section details our performance in environmental areas as the organisation seeks to use energy, fresh water and other resources more efficiently. Environmental regulation and performance The Arrium Group’s operations are subject to various environmental regulations at national, state and local levels. Where this regulation is particular and significant, compliance is assured through Environmental Management Systems to the ISO 14001 standard. Compliance with this regulation was generally achieved in FY15 and there were no monetary penalties issued. Environmental management systems Arrium seeks to comply with applicable environmental laws, regulations and mandatory standards. Where these do not exist, we apply appropriate internal standards that reflect Arrium’s commitment to preventing or minimising adverse environmental impacts resulting from its operations, products and services. Environmental Management Systems (EMS) are a key tool in maintaining environmental compliance and managing environmental risk. The following is a list of Arrium’s major facilities that are externally certified to Environmental Management System standard ISO 14001.

Arrium Sustainability Report 2015 / Page 37 Continued Environment Contents Glossary Print

Environmental management system ISO 14001 certification

Australia North America and South America Ardrossan Dolomite Quarry AltaSteel – Edmonton, Canada Austube Mills – Acacia Ridge Moly-Cop – Kamloops, Canada Austube Mills - Newcastle Moly-Cop – Lima, Peru OneSteel Traklok Moly-Cop – Arequipa, Peru Geelong Wire Mill Moly-Cop – Mejillones, Chile Laverton Steel Mill Moly-Cop – Santiago, Chile Arrium Mining – Middleback Ranges Moly-Cop – Talcahuano, Chile Newcastle Rod Mill Newcastle Wire Mill Sydney Steel Mill Indonesia Moly-Cop – Waratah Steel Mill Moly-Cop – Cilegon Whyalla Steelworks

Certification is not held for Arrium sites where they represent low environmental risk and a customised “fit-for-purpose” EMS is more appropriate.

Arrium Sustainability Report 2015 / Page 38 Continued Environment Contents Glossary Print Energy

Total global energy consumption for Arrium in FY15 was 41.28 petajoules. The majority of this energy was consumed at Arrium’s steelmaking facilities at Whyalla, Sydney, Waratah and Laverton in Australia and Edmonton in Canada. Whyalla Steelworks is Arrium’s largest energy consuming facility although it currently generates more than 35% of its own energy through the reuse of waste gases (see table below). There are a range of energy efficiency improvements in progress to increase this percentage.

Whyalla Steelworks Electricity Purchased electricity from the grid 209,095 MWh Energy Use* Self-generated electricity 127,147 M W h On-sold electricity 17,119 MWh 50 Export back to grid 16 MWh 40 Net site electricity consumption 364,108 MWh

30 Electricity for the Southern Iron operations was generated by on-site diesel generators. This represented 4,337 MWh for all self-generation units above 0.5 MW capacity. Southern Iron was mothballed in FY15. 20

Net energy use in PJ 10 Energy Intensity

30 0

11 12 13 14 15 25

Whyalla Steelworks 20 Sydney Steel Mill Laverton Steel Mill Waratah Steel Mill 15 Edmonton Steel Mill Arrium Mining 10 All other energy use GJ/tonne crude steel Whyalla Steelworks 5 Sydney Steel Mill * Includes crude steel production and other activities (e.g. rolling and forging). Electricity use accounts for self-generated Laverton Steel Mill Waratah Steel Mill electricity at Whyalla Steelworks. Arrium Mining energy use 0 included as “All Other Energy Use” unless specified. Edmonton Steel Mill 11 12 13 14 15

Arrium Sustainability Report 2015 / Page 39 Continued Environment Contents Glossary Print

Greenhouse gas emissions Approximately 85% of Arrium’s global greenhouse gas emissions derive from the steelmaking and hot roll/forging operations in Whyalla in South Australia, Sydney and Waratah in New South Wales, Laverton in Victoria and Edmonton in Alberta, Canada. FY15 Direct, Indirect And Total Greenhouse Gas Emissions Scope 1 Scope 2 Total million tonnes CO2 -e Whyalla Steelworks 2.39 0.14 2.53 Electric arc furnaces (Sydney, Laverton, Waratah) 0.20 0.73 0.94 Arrium Mining 0.18 0.09 0.27 Remainder of Arrium Australian operations 0.08 0.21 0.29 Total Arrium Australian operations 2.85 1.18 4.03 Greenhouse Gas AltaSteel EAF Edmonton, Canada 0.08 0.20 0.28 Remainder of non-Australian operations 0.06 0.06 0.13 Emissions by Type Total Arrium non-Australian operations 0.14 0.26 0.41 Total Arrium greenhouse gas emissions 3.00 1.44 4.43 Greenhouse Gas Intensity 3.0

2.5

2.0

1.5 -e/t crude steel 2 1.0 Indirect electricity – 32.4% Use of carbonates – 3.6% t CO Whyalla Steelworks 0.5 Sydney Steel Mill Natural gas – 10.6% Laverton Steel Mill Other – 5.3% Waratah Steel Mill 0 Steelmaking industrial process – 48.0% Edmonton Steel Mill 11 12 13 14 15

Arrium Sustainability Report 2015 / Page 40 Continued Environment Contents Glossary Print

Data disclosure and methodology Arrium discloses energy and greenhouse gas data under various global, national and regional schemes. At a global level, Arrium provides energy and greenhouse data to the Carbon Disclosure Project (www.cdproject.net). At an Australian national level, Arrium submits annually a detailed National Greenhouse and Energy Reporting Scheme (NGERS) Report to the Australian Government. Arrium is also a Climate Action Member of the worldsteel CO2 data collection program. Within Australia, Arrium also reports annually on a wide range of pollutants to the National Pollutant Inventory. The methodologies used for the calculation of total energy and greenhouse gas inventory for Australian sites are those of the NGERS. The methodologies for non-Australian sites are based on NGERS with some modifications. Energy and greenhouse gas reduction activity During FY15, further identification, assessment and implementation of energy reduction opportunities was undertaken across Arrium’s major energy-consuming businesses. Seven energy reduction projects were implemented during FY15, resulting in an additional saving of 0.6 PJ/year. Three of these projects are presented below as case studies.

Arrium Sustainability Report 2015 / Page 41 Continued Environment Contents Glossary Print Case Study

Reheat Furnace rebuild delivers significant energy efficiencies The Rolling Mill at the Whyalla Steelworks incorporates a reheating furnace used to heat up steel blooms prior to rolling into various shapes though the mill. The furnace can operate at rates up to 200 tonnes per hour and is required to heat the steel blooms up to 1,350oC to make the steel pliable enough for shaping though the mill process. To heat steel at this rate, and to this temperature, requires a significant amount of energy. The furnace was commissioned in 1975 and has been running continuously for 40 years. The only significant modification to the furnace was its conversion from oil to coke ovens gas in the 1980s. Due to its age and high temperature use, the furnace was in need of a significant rebuild; and this occurred in FY15. This included reshaping the furnace to achieve better heat transfer to the steel blooms. Modern low-emission burners were installed to provide better combustion and improved burner efficiency. The heat exchanger was replaced with a new design, and a new modern variable speed drive combustion air fan was installed to run at reduced power consumption. New doors were installed to reduce air leakage; as was new refractory to reduce heat loss. The furnace fuel supply was changed from coke ovens gas to natural gas. Although natural gas is not necessarily a better burning gas than coke ovens gas, it is of a much more consistent quality. A modern combustion control system and burner management system were also installed to improve the overall safety of the plant. These changes are expected to result in gas savings of 620,000 GJ p.a., along with a saving in electricity of 2,000 MWh p.a. Combined, this will create a significant reduction in carbon emissions of 33,000 t CO2-e p.a.

The Reheat Furnace rebuild team.

Arrium Sustainability Report 2015 / Page 42 Continued Environment Contents Glossary Print Case Study

Laverton Steel Mill fume system damper A project was initiated at the Laverton Steel Mill to improve the efficiency of the 2.1MW fan on the fume extraction system. This was achieved by installing an actuator on the existing fan damper, which was then programmed to restrict airflow to the fan during prolonged production delays and on down days. The damper restriction has reduced energy consumption by the fan by 500kW, which amounts to an estimated saving of 640MWh per year. Waratah furnace insulation upgrade The Rotary Hearth Furnace at the Waratah Steel Mill heats steel “cheeses” which are then formed into rail wheels in subsequent forging and rolling operations. Thermal imagery taken of the furnace revealed that a large amount of heat was being lost through the furnace roof due to poor insulation properties. The furnace was first installed in 1964 and the original insulation thickness was still in current operation. An extra thermal layer was installed to the roof to minimise heat losses, and this has resulted in a reduction of 3,500 GJ of natural gas consumption per year.

Arrium Sustainability Report 2015 / Page 43 VERSION 2

Total Energy Use *

50 50

40 40

30 30

20 20 Net energy use in PJ 10 10

0 0 11 12 13 14 15

Whyalla Steelworks Edmonton Steel Mill Sydney Steel Mill Arrium Mining Laverton Steel Mill All other energy use Waratah Steel Mill

Greenhouse Gas Intensity

2.5

2.0

1.5

Environment Continued Contents1.0 Glossary Print -e/t crude steel 2 t CO Water 0.5 0 11 12 13 14 15

Whyalla Steelworks Waratah Steel Mill Sydney Steel Mill Edmonton Steel Mill Laverton Steel Mill

Towns Townswater-Water Consumption Consumption

7,000

6,000 In FY15, townswater use by Arrium globally was approximately 8,620 million litres, of which 93% was used at the five main manufacturing and ore processing sites. 5,000 The largest use of townswater within Arrium occurs at the Whyalla Steelworks and the ore processing operations within the South Middleback Ranges. 4,000 In FY15, townswater use at the Whyalla Steelworks and Middleback Ranges mines was 6,519 million litres. This represents an increase of 3% on the previous 3,000 year, due to increased production of processed magnetite product. This increase Million Litres occurred despite a 7% improvement (reduction) in water intensity at the mines 2,000 and steelworks in the same period. The Whyalla Steelworks and Arrium Mining Whyalla continue to work towards 1,000 minimising their use of Murray River water through an active water efficiency program, ongoing use of desalinated water, use of recycled Municipal Water 0 Treatment Plant water, reuse of process and tailings water, and use of seawater 11 12 13 14 15 for cooling. Why alla Steelworks Waratah Steel Mill and Arrium Mining Edmonton Steel Mill Sydney Steel Mill Laverton Steel Mill

* Includes crude steel production and other activities (e.g. rolling and forging). Electricity use accounts for self-generated electricity at Whyalla Steelworks. Arrium MiningArrium energy Sustainability use Report 2015 / Page 44 included as ‘All Other Energy Use’ unless specified.

Continued Environment Contents Glossary Print Case Study

Optimised flow control for Blast Furnace water pump seals One of the many water efficiency projects that contributed to the 11% improvement in water intensity at the Whyalla Steelworks was the optimisation of flow control for the Blast Furnace water pump seals. The four Blast Furnace salt water booster pumps have mechanical seals that require flushing with fresh water to ensure longevity. Fresh water from the Murray River is used for that flushing. The flow rate of the fresh water for flushing the mechanical seals was measured and found to be around 25 litres per minute (L/min). In fact, the seal only requires a rate of around 8 L/min for adequate flushing, but with the existing control valves it was not possible to limit the water flow to a consistent 8 L/min. In order to reduce the amount of flow into the seals, flow control valves were fitted to the system. These valves limit the flow rate to 8 L/min regardless of fluctuations in supply pressure. This simple change, which cost around $1,000, is now saving more than 63,000 kL of Murray River water per year. That is equivalent to 25 Olympic swimming pools! This, and other water efficiency improvements, now means that the original water use improvement target for the Blast Furnace area has been met and a new target is being considered.

Automation of fresh water inputs into the Quench Basin At the Whyalla Steelworks, process water inputs to the Coke Ovens Quench Basin are sourced from various locations around the Iron Making department and topped up with water from the Murray River. When the Quench Basin is full, excess water can overflow to the tailings system and be wasted. Previously, Murray River water input was controlled by a manual valve which was not responsive to water levels in the Quench Basin. This valve was then automated so that it only opens when the Quench Basin is at a certain level, thus eliminating the possibility of inputting Murray water when the basin is full and overflowing. This simple change has reduced water usage for the Quench Basin by 43% from 5,300 kL/month to 3,000 kL/month.

Arrium Sustainability Report 2015 / Page 45 Continued Environment Contents Glossary Print Recycling, Materials, By-Products and Waste

Steel is 100% recyclable and recycling utilises the embodied energy within scrap. Site % Post- % Post- % Internal Total Arrium trades ferrous scrap and also uses it as an input in the manufacture Consumer Industrial Mill Scrap Scrap of steel in both the BOS and EAF processes. During FY15, Arrium used Scrap Scrap approximately 1.78 million tonnes of scrap steel, including internal site scrap, in steel production. This recycled scrap generated approximately 65% of Arrium’s EAF Steelmaking global steelmake for the year. Sydney Steel Mill 91.8% 1.2% 7.0% 100% Collected scrap that is not used by Arrium for steel manufacture is sold. Arrium Laverton Steel Mill 92.4% 0.0% 7.6% 100% uses scrap steel at both its integrated steelmaking facility at Whyalla and the Waratah Steel Mill 81.5% 0.3% 18.2% 100% four electric arc furnace (EAF) steelmaking facilities at Newcastle, Sydney and AltaSteel 81.6% 5.1% 13.3% 100% Laverton in Australia and Edmonton in Canada. Typically, Whyalla Steelworks Integrated Steelmaking uses approximately 17-25% scrap feed whereas the EAF facilities use 90-100% Whyalla Steelworks 3.0% 0.0% 15.2% 18.4% scrap feed. Weighted Average for EAF Steelmake 100% There are three general classes of scrap. Most scrap used at EAF sites is Weighted Average for total Arrium Steelmake 64.6% post-consumer scrap. This scrap is derived from items such as discarded cars, whitegoods and other consumer items, but also includes structural steel and cladding from demolished buildings. The next class is post-industrial scrap. This As part of its commitment to sustainability, Arrium continues to participate as a is scrap from other industrial manufacturers and includes turnings, cast iron member of the Australian Council of Recycling (ACOR), the national peak industry and steel off-cuts. Finally, there is internal mill scrap which is derived from the body for the recycling industry. ACOR advocates for the sustainable management steel manufacturing process at the same site and includes off-cuts and off-spec of materials across the economy through improved resource recovery and product. The proportional contribution of each of these sources at Arrium’s steel recycling. Arrium (as OneSteel Recycling) is a Platinum Corporate Member of manufacturing sites for FY15 is shown in the following table. ACOR and is represented on the ACOR National Board. Arrium will continue to play an active role in ACOR’s efforts to promote improved economic and environmental outcomes through sustainable materials management.

Arrium Sustainability Report 2015 / Page 46 Continued Environment Contents Glossary Print

Apart from scrap steel, various other materials are required to manufacture steel. General industrial garbage generated mainly consists of miscellaneous non- Key manufacturing input materials consumed, and output wastes generated, are hazardous waste items including a significant amount of packaging and shipping shown in the following tables. materials such as wood pallets and crates. Various programs exist across Arrium to segregate and better manage various waste streams including paper and cardboard, wood, green waste, E-waste (batteries, printer cartridges etc) Material Unit FY15 Usage and PVC. Magnetite iron ore (as pellets) kt 1,565 FY15 Hematite iron ore (as lump) kt 198 By-Product or Waste type Tonnage Destination Scrap steel (purchased) kt 1,413 Blast furnace slag 260,469 On-site mounds and other uses Scrap steel (internal) kt 371 BOS slag 216,332 On-site mounds Metallurgical coal kt 941 EAF and LF slag 156,238 Sold for reuse, mostly as road base Coke and anthracite products (purchased) kt 30 Millscale 38,754 Sold for reuse Limestone and dolomite (unburnt, purchased) kt 389 EAF dust 25,516 Mostly 3rd party zinc recovery Natural gas, LPG, diesel and petrol TJ 12,515 BOS precipitator and 20,890 On-site landfill Townswater ML 8,620 secondary fume dust General refuse 5,349 Municipal or on-site landfill Blast furnace scrubber Arrium endeavours to maximise the efficiency of resource use across all 2,887 Tailings dam operations, and this includes minimising waste wherever possible. Wastes are underflow recycled or treated; and where this is not possible, delivered to landfill. In general, Blast furnace flue dust 2,165 On-site landfill waste paper, cardboard, timber and metals are recycled where viable and services available. Key waste streams from Arrium operations are provided in the following table. As part of steel recycling operations, Arrium in Australia produced 202,923 tonnes of waste “floc” in FY15. Floc is non-metallic residual waste, generated by shredding metal products, such as cars and white goods. Floc is mostly composed of mixed plastics, but also includes glass, soil and other contaminants. Research and development work continues into the alternative uses of floc.

Arrium Sustainability Report 2015 / Page 47 Continued Environment Contents Glossary Print Biodiversity

Seed boxing of topsoil on the rehabilitated waste Ningaui (Ninggaui yvonneae), adult marsupial rock dump at Iron Chieftain, SMR. carnivores, found during January fauna monitoring.

The protection of biodiversity is a key consideration in the planning, development This significant expansion calls for a variety of techniques to match the and operation of Arrium’s mining, processing and manufacturing operations. challenging conditions. Maintaining unconsolidated soil cover on slopes is an Each mining development has an approved Program for Environmental Protection example of these challenges. Different final cover establishment techniques, such and Rehabilitation (PEPR) in place. A PEPR identifies all relevant environmental, as “seed boxing”, are being trialled with good early results. Seed boxing refers social and economic impacts that may result from the proposed activities and to a technique in which repeated depressions are created in the soil surface of a how each of the identified impacts will be managed or avoided. The PEPR also rehabilitated area. This captures rainwater and so minimises runoff and erosion sets out an integrated approach to managing all the stages in the life-cycle of the and maximises infiltration, and provides localised areas in which seeds are more mine, including its closure and completion through rehabilitation. likely to germinate and establish. Flora and fauna surveys are used to assess the success of rehabilitation Significant expansion in mine rehabilitation activities. These show that good early coloniser vegetation cover has established on completed surfaces. It is anticipated that locally native perennial vegetation adds to biodiversity cover will establish in time. The return of such vegetation supports the return of In the reporting period, 218ha was disturbed due to mining activity in the local fauna. Middleback Ranges and Iron Knob areas near Whyalla. During the same year approximately 6ha was rehabilitated, whilst rehabilitation is planned for a further 82ha in FY16. This means that planned rehabilitation in FY16 will be the same as the sum of all rehabilitation undertaken in all years up to the end of FY15.

Arrium Sustainability Report 2015 / Page 48 Continued Environment Contents Glossary Print

This is an environment clearly worth protecting and Arrium has, for many years, Supporting the biodiversity undertaken activities to monitor and improve the health of the Gulf close to its operations. For example, recent investigations into seagrass in the upper Spencer of Spencer Gulf Gulf have shown a significant expansion in the health and extent of previously The operations of Arrium Mining, and the OneSteel Steelworks at Whyalla, have impacted seagrass adjacent to the steelworks discharge point. always been closely linked to Spencer Gulf. Not only is the Gulf the route by Arrium is also proud to have recently provided sponsorship for a book focused which iron ore is exported by Arrium, but also how important inputs such as coal, on the natural history of the Gulf which was published and launched by the Royal alloys, limestone and dolomite are delivered to Whyalla. The Whyalla Steelworks Society of South Australia. and Arrium Mining also discharge treated effluents into False Bay, which is part of the Gulf, and each day millions of litres of seawater are extracted and returned for In addition, Arrium contributed funding and input to a Phase 1 scoping study cooling water, or extracted for conversion to freshwater in the desalination plant. of the Spencer Gulf Ecosystem and Development Initiative. The aim of this Clearly the Gulf is integral to Arrium’s operations. initiative is to work towards providing stakeholders and Gulf users across industry, government and community with access to independent and credible Spencer Gulf was recently described as: information about Spencer Gulf and opportunities to develop it without “…a unique ecosystem, an inverse estuary on a temperate coast of an arid, compromising its environment. This was achieved by creating an independent ancient and weathered continent. The Gulf is both highly productive and uniquely and credible decision support system that enabled evidence-based assessment fragile where a complex interplay of ecological and biophysical processes has of development options with consideration of social and economic benefits and resulted in an environment with an incredible diversity of flora and fauna. In short, cumulative environmental implications. Spencer Gulf is an environment that is as beautiful as it is rare, and one which deserves a special place in our hearts and minds.” (Professor Anthony Cheshire 2014)

Arrium Sustainability Report 2015 / Page 49 Contents Glossary Print Community

Suzanne McKell Transhipping Manager, Arrium Mining Whyalla Port, South Australia, Australia

Suzanne oversees the transhipping operations Arrium Sustainability Report 2015 / Page 50 in Whyalla Port, liaising with shore operations, marketing and the transhipper to ensure that all vessels are safely loaded and meet the customer requirements. In FY14, a total of 73 vessels were loaded with iron ore in Whyalla Port. Continued Community Contents Glossary Print Community

Arrium recognises that achieving positive sustainable relationships within the communities in which we operate is imperative to doing business. At Arrium, we have fostered a responsible approach to demonstrating social responsibility by promoting values and initiatives, such as investment and engagement, that show respect for the people and communities associated with our business. There are a number of key initiatives and consultation-based programs that have been formed or further strengthened to reflect key issues that affect our local communities. In addition, Arrium and its employees pride themselves on physically and/or financially supporting regional and local activities through providing education and training, donations and sponsorships through to charity fundraising events, all of which require personal commitment and the dedication of individuals. To monitor the ongoing impact of Arrium’s operations, we invest, inform, consult and develop relationships with local communities to work towards mutually beneficial outcomes and to continually earn our social licence to operate. Community financial support Arrium and our employees provide community financial support through two key mechanisms: Arrium’s workplace giving program “OneCommunity” and other community investments outside this program.

OneCommunity Arrium’s OneCommunity Workplace Giving Program supports 12 charities and is the primary mechanism through which Arrium and its employees contribute to charities in Australia. The program was established to provide employees with an easily accessible way to donate to a range of charities. Arrium matches employee contributions up to $250,000 per annum. The current charities supported through OneCommunity are Alzheimer’s Australia, The Cancer Council, CARE Australia, Guide Dogs, Hunter Medical Research Institute, Landcare Australia, Lifeline, Royal Flying Doctor Service, the RSPCA, The Smith Family, The Salvation Army and the Westpac Rescue Helicopter Service. Arrium and its employees assisted these charities by donating approximately $223,000 in FY15.

Arrium Sustainability Report 2015 / Page 51 Continued Community Contents Glossary Print

Other community support Stronger relationships with Indigenous In FY15, the value of financial donations and other support in addition to the OneCommunity program was approximately $927,000. This included support communities in South Australia through community fundraising events, training, sponsorships, scholarship Supporting the communities in which we operate is an important principle at programs and other donations in all countries in which Arrium has operations. Arrium, and at our Mining operations in Whyalla, South Australia, we maintain The Company wishes to thank all employees who have participated for strong relationships with the local Indigenous communities and traditional owners their support. of the land. A local Indigenous business, Walga Mining, was recently awarded the This support includes ongoing support of students through various schemes. contract to provide services at the Iron Knob mine site. This will directly employ Arrium continues to provide $75,000 per year to the University of NSW for between 30 and 40 people. research, and supports six students each year with a scholarship of $18,000 (two According to Walga Mining Executive Director, Elliott McNamara, this is a each in their second, third and fourth years of study). A further university student, major milestone for the Company which aims to be a profitable, 100% of Adelaide University, was the recipient of the inaugural Jim White Scholarship. Aboriginal-owned company that is a benchmark and role model for other In FY14, over $40,000 was contributed by Arrium sites in North America and Indigenous groups. South America as direct scholarships and to school-aged children. “There has been a significant amount of work in recent years to help give our Company a start in business, so we truly value and appreciate the support Arrium Mining has provided in enabling us to achieve this milestone,” he said. “We are keen to demonstrate the capability of the local Aboriginal community in the mining industry, so this contract presents us with the perfect opportunity to achieve this.” Mining Chief Executive, Matthew Reed, said that this contract was a significant step forward in a relationship that has been developing for many years.

Arrium Sustainability Report 2015 / Page 52 Continued Community Contents Glossary Print

“The Iron Knob region is rich in indigenous heritage sites, so we would like to acknowledge the support of the Barngarla people to date in supporting the Moly-Cop Chile assists local community recommencement of mining in the area,” Matt said. after floods “We will continue to work closely with the Barngarla people now full mining is underway, including through our work with Walga Mining, to further develop our The worst floods in over 80 years struck northern Chile in March 2015, impacting mutually-beneficial relationship for the long term.” over 30,000 people and leaving 2,700 survivors homeless in the regions of Antofagasta, Atacama and Coquimbo. Unusually heavy thunderstorms brought torrential rainfall to northern Chile’s Atacama Desert, flooding one of the driest regions in the world. Flash floods swept down valleys, cutting off villages, destroying structures, and carrying vehicles for miles. The reported cost of the damage caused by the flooding and mudslides was $1.5 billion. Some Moly-Cop employees had family or friends in areas directly affected by the flooding. Given the extensive damage in the region, Moly-Cop Chile decided to help the communities in the area of Tierra Amarilla, Atacama, where Moly-Cop Chile has a logistics facility. This included a delegation of Moly-Cop employees delivering 5,000 bottles of water to victims in that region. “Moly-Cop has always maintained a constant concern for communities in which we operate. This is a sensitive and difficult time for northern localities and we were compelled to provide our support and help as fast as we could,” said Hector Toro, Commercial Manager Moly-Cop Chile.

Arrium Sustainability Report 2015 / Page 53 Continued Community Contents Glossary Print

OneSteel Recycling in Victoria raises money for cancer research and treatment In 2014, OneSteel Recycling in Victoria was involved in two important fund raising activities to support the Peter Mac Cancer Foundation. The Foundation supports the Peter MacCallum Cancer Centre – Australia’s only public hospital soley dedicated to cancer, and Australia’s largest cancer research group. The first of these activites was a new campaign called “Scrap for Mac” in which the value of all scrap donations over a six-week period was donated to the foundation. The second activity was the involvement of a team from OneSteel Recycling in the ‘Ride to Conquer Cancer’. A team of nine Recycling employees joined this ride after each having committed to raising money for the Peter Mac Foundation. In total these activities raised more than $80,000 for cancer treatment and research.

The Scrap for Mac community fundraising initiative will take place from 21st of September to 25th of October 2015. Scrap for Mac encourages our customers to bring their scrap metal to one of our Recycling Centres and donate a portion of the load to the Peter MacCallum Cancer Foundation. In 2014 we were able to raise over $32,300 thanks to the generosity of our customers and employees.

Peter Mac is Australia’s only public hospital solely dedicated to

cancer and is the home of Australia’s largest cancer research In 2014 OneSteel entered a team into the Ride to Conquer group. Cancer and raised over $47,800 for the Peter MacCallum Cancer If you have scrap metal lying around, bring it into us and you will Foundation. This year OneSteel will again be entering a team be helping a great cause! Brooklyn 750 Old Geelong Road into the event.

The Ride to Conquer Cancer is a great opportunity to cap off the Dandenong Scrap for Mac program, with OneSteel employees challenging 21-23 Elliot Road themselves over two days on a 200 km course, riding alongside

Somerton their colleagues for a great cause. Each participant has 70 Cliffords Road committed to raising $2500 for

Peter Mac.

Ballarat 5-7 Coronet Street, Wendouree If you would like assist, ask us how

you can sponsor one of our riders! Bendigo 6 Baldock Court, Eaglehawk For further details head to www.conquercancer.org.au

Phone: 13 METAL [email protected]

The OneSteel Recycling Team

Arrium Sustainability Report 2015 / Page 54 Contents Glossary Print Economic

Arrium’s approach to Economic performance is presented in the Arrium Annual Report 2015. This report should be referred to for detailed information. The GRI Index provides guidance on the location of various GRI requirements in the Annual Report. The following tables present key information that can also be found in the Annual Report and elsewhere in this Sustainability Report.

Arrium Sustainability Report 2015 / Page 55 Continued Economic Contents Glossary Print

Financial Ratios

Arrium Underlying Financial Ratios – Year ended 30 June1

FY15 FY14 Change FY15 FY14 Change $m $m % $m $m % Sales Revenue 6,086 7,0 07 (13%) Capital and investment expenditure 424 435 (3%) Other Revenue/Income 94 126 (25%) Return on equity % (0.2%) 8.1% (8.3pp) Total Income 6,180 7,13 3 (13%) (PAT/average total equity) Gross Profit 376 1,180 (68%) Return on funds employed % 0.1% 8.9% (8.8pp) (EBIT/average funds employed) EBITDA 351 864 (59%) Sales margin % 0.1% 7.1% ( 7.0 p p) Depreciation, amortisation Gross profit margin % 6.2% 16.8% (10.6pp) (345) (367) (6%) and impairment Earnings per share (cents)2 (0.1) 20.5 (100%) EBIT 6 497 (99%) Dividends per share (cents) – 9.0 (9.0c) Finance costs (91) (118) (23%) Dividend payout ratio (dividend/NPAT) – 41.4% (41.4pp) (Loss)/Profit before tax (85) 379 (122%) Leverage Ratio 5.0 2.0 150% Tax benefit/(expense) 79 (82) (196%) (net debt/EBITDA, 12m rolling basis) (Loss)/Profit after tax (6) 297 (102%) Gearing (%) (net debt/net debt + equity) 40.7% 31.4% 9.3pp Non-controlling interests (1) (1) 0.0% Interest cover 3.9 7.4 (3.5 times) Net (loss)/profit after tax (7) 296 (102%) (times EBITDA, 12m rolling basis) Net tangible assets per share ($) 0.27 1.29 (79%) Total assets 6,241 8,002 (22%) Total liabilities 3,686 4,271 (14%) Employees 8,662 9,269 (7%) Total equity 2,555 3,731 (32%) Sales per employee ($000s) 703 756 (7%) Net debt 1,750 1,708 2% Funds employed 4,305 5,439 (21%) Iron ore tonnes sold (Mt) 12.48 12.47 0% Raw steel production (Mt) 2.43 2.36 3% Number of shares on issue (millions) 2,937 1,366 115% Steel tonnes despatched (Mt) 3.29 3.2 3%

Operating cash flow 49 746 (93%) Free cash flow (376) 311 (221%)

1 Unless otherwise stated, financial measures in this table are underlying results and are non-statutory financial measures, which have not been audited or reviewed as part of KPMG’s audit report on the full year financial report. However, KPMG has undertaken a set of procedures to agree the financial information in the Operating and Financial Review to underlying information supplied by the Company. The Directors believe that using these non-statutory financial measures appropriately represents the financial performance of the Group’s total operations including continuing and discontinued operations. All balance sheet items are based on statutory financial information. Details of the reconciliation of non-statutory to statutory results can be found on page 39 of the 2015 Arrium Limited Annual Report. This information should be read in conjunction with other 2015 Full Year Financial Materials released to the ASX on 19 August 2015. 2 June 2014 earnings per share has been restated as a result of the Placement and Entitlement Offers in September and October 2014.

Arrium Sustainability Report 2015 / Page 56 Continued Economic Contents Glossary Print

Key Sustainability Data

Unit FY15 FY14 Unit FY15 FY14

People and Safety Community LTIFR MHW 1.2 1.3 Community Investment $M 0.9 0.7 MTIFR MHW 5.4 5.3 Key site statistics Average Age Yrs 44 43 Energy intensity % Female % 11.4 11.4 Whyalla GJ/t 26.03 26.39 Number of Employees n 8,662 9,269 Sydney GJ/t 4.23 4.70 Workers’ Compensation Provision $M 24.2 26.1 Laverton GJ/t 4.93 4.64 Customer and Market Waratah GJ/t 8.78 8.86 Raw Steel Production Mt 2.43 2.36 Edmonton GJ/t 4.31 4.50 Steel Tonnes Dispatched Mt 3.29 3.20 Greenhouse gas intensity

Iron Ore Tonnes Sold Mt 12.48 12.47 Whyalla CO2/t 2.38 2.33

Recycled Metal (ferrous and non-ferrous) Mt 1.40 1.44 Sydney CO2/t 0.67 0.72

Environment Laverton CO2/t 0.94 0.93

Energy Use PJ 41.28 41.46 Waratah CO2/t 1.08 1.12

Greenhouse Gas Emissions MT 4.43 4.35 Edmonton CO2/t 1.05 1.04 Water Use ML 8,620 8,335

Arrium Sustainability Report 2015 / Page 57 Contents Glossary Print GRI Index General Standard Disclosures

Key: SR = 2015 Sustainability Report, AR = 2015 Annual Report

General Standard Disclosure Reference Strategy and Analysis G4-1 Statement from the most senior decision-maker about the relevance of SR: Introduction by Managing Director and Chief Executive Officer sustainability to the organisation AR: Chairman’s Review and Managing Director’s Review Organisational Profile G4-3 Name of the organisation Arrium Limited G4-4 Primary brands, products and services SR: Page 1 G4-5 Location of headquarters Sydney, Australia G4-6 Countries located SR: Where we do business G4-7 Nature of ownership and legal form AR: Page 112 G4-8 Markets served SR: Customer and Market G4-9 Scale of organisation SR: People, Economic G4-10 Employee profile SR: People G4-11 % of employees covered by collective bargaining agreements SR: People, Employee Relations G4-12 Supply chain SR: Customer and Market G4-13 Significant changes in the reporting period AR: Segment Overview G4-14 Precautionary approach AR: Risk Management G4-15 Commitments to externally developed economic, environmental and social SR: Data Disclosure and Methodology charters, principles or other initiatives G4-16 Memberships and committees SR: Stakeholder Engagement Identified Material Aspects and Boundaries G4-17 Entities included in reporting AR: Page 112 G4-18 Process for defining the report content and aspect boundaries, and SR: About this Report implementation of the reporting principles for defining report content G4-19 Material aspects SR: About this Report G4-22 Restatements from previous reporting periods Noted as applicable within AR and SR G4-23 Significant changes from previous reporting periods in Scope and No significant changes Aspect boundaries

Arrium Sustainability Report 2015 / Page 58 Continued GRI Index Contents Glossary Print

General Standard Disclosures Continued

Stakeholder Engagement G4-24 Stakeholder groups engaged by Arrium SR: Stakeholder Engagement G4-25 Basis for identification and selection of stakeholders SR: Stakeholder Engagement G4-26 Approach to stakeholder engagement SR: Stakeholder Engagement G4-27 Key topics and concerns raised through stakeholder engagement, and responses Throughout the Sustainability Report G4-28 Reporting period 1 July 2014 to 30 June 2015 (FY15) G4-29 Previous report November 2014, covering FY14 G4-30 Reporting cycle Annual G4-31 Contact details [email protected] Arrium Limited Level 40, 259 George Street Sydney NSW 2000 Australia +61 2 9239 6666 G4-32 “In-accordance” option SR is “In accordance core” G4-33 Policy and practice in seeking external assurance SR: About this Report AR is audited by an independent auditor (KPMG) Governance G4-34 Governance structure and committees SR: Sustainability Governance Ethics and Integrity G4-56 Values, principles and standards Throughout the Sustainability Report

Arrium Sustainability Report 2015 / Page 59 Continued GRI Index Contents Glossary Print

Specific Standard Disclosures

Specific Standard Disclosure Reference Category – Economic Economic Performance G4-DMA Disclosure on management approach AR: Strategic Framework and Segments sections G4-EC1 Direct economic value generated and distributed SR: Economic, AR: various G4-EC3 Coverage of Arrium’s defined benefit plan obligations AR: Page 115 Category – Environmental Materials G4-DMA Disclosure on management approach SR: Recycling, Materials, By-Products and Waste G4-EN1 Materials used by weight or volume SR: Recycling, Materials, By-Products and Waste G4-EN2 Percentage of materials used that are recycled input materials SR: Recycling, Materials, By-Products and Waste Energy G4-DMA Disclosure on management approach SR: Energy G4-EN3 Energy consumption within the organisation SR: Energy G4-EN4 Energy consumption outside the organisation SR: Energy G4-EN5 Energy intensity SR: Energy G4-EN6 Reduction of energy consumption SR: Energy G4-EN7 Reductions in energy requirements of products and services SR: Energy Water G4-DMA Disclosure on management approach SR: Water G4-EN8 Total water withdrawal by source SR: Water G4-EN9 Water sources significantly affected by withdrawal of water SR: Water G4-EN10 Percentage and total volume of water recycled and reused SR: Water

Arrium Sustainability Report 2015 / Page 60 Continued GRI Index Contents Glossary Print

Specific Standard DisclosuresContinued

Biodiversity G4-DMA Disclosure on management approach SR: Biodiversity G4-EN11 Operational sites owned, leased, managed in, or adjacent to, protected areas and SR: Biodiversity areas of high biodiversity value outside protected areas G4-EN12 Description of significant impacts of activities, products and services on SR: Biodiversity biodiversity in protected areas and areas of high biodiversity value outside protected areas G4-EN13 Habitats protected or restored SR: Biodiversity MM1 Amount of land disturbed or rehabilitated SR: Biodiversity MM2 Sites requiring biodiversity management plans and number with plans in place SR: Biodiversity Emissions G4-DMA Disclosure on management approach SR: Environment G4-EN15 Direct greenhouse gas emissions (Scope 1) SR: Greenhouse Gas Emissions G4-EN16 Energy indirect greenhouse gas emissions (Scope 1) SR: Greenhouse Gas Emissions G4-EN18 Greenhouse gas emissions intensity SR: Greenhouse Gas Emissions G4-EN19 Reduction of greenhouse gas emissions SR: Environment G4-EN20 Emissions of ozone-depleting substances SR: Data Disclosure and Methodology G4-EN21 NOx, SOx, and other significant air emissions SR: Data Disclosure and Methodology Effluents and Waste G4-DMA Disclosure on management approach SR: Recycling, Materials, By-Products and Waste G4-EN23 Total weight of waste by type and disposal method SR: Recycling, Materials, By-Products and Waste G4-EN24 Total number and volume of significant spills SR: Environmental Regulation and Performance Compliance G4-DMA Disclosure on management approach SR: Environmental Regulation and Performance G4-EN29 Monetary value of significant fines and total number of non-monetary sanctions SR: Environmental Regulation and Performance for non-compliance with environmental laws and regulations

Arrium Sustainability Report 2015 / Page 61 Continued GRI Index Contents Glossary Print

Specific Standard DisclosuresContinued

Category – Social Employment G4-DMA Disclosure on management approach SR: People G4-L A1 Total number and rates of new employee hires and employee turnover SR: People by age group, gender, and region Labour/Management Relations G4-DMA Disclosure on management approach SR: People G4-LA4 Minimum notice periods regarding operational changes, including whether these SR: People are specified in collective agreements MM4 Number of strikes and lock-outs exceeding one week’s duration, by country SR: People Occupational Health and Safety G4-DMA Disclosure on management approach SR: Safety G4-LA6 Type of injury and rates of injury, occupational diseases, lost days, absenteeism, SR: Safety and total number of work-related fatalities, by region and gender Diversity and Equal Opportunity G4-DMA Disclosure on management approach SR: People G4-L A12 Composition of governance bodies and breakdown of employees per employee SR: People category according to gender, age group, minority group membership, and other AR: Page 50 indicators of diversity Other sector-specific disclosures MM6 Significant disputes relating to land use, customary rights of local communities Nil and Indigenous people MM7 Use of grievence mechanisms to resolve significant disputes Not applicable (see MM6) MM8 Artisinal and small-scale mining occuring at or adjacent to the site Nil MM9 Sites where resettlement took place Nil

Arrium Sustainability Report 2015 / Page 62 Contents Glossary Print Glossary

Billet Section of cast steel approximately 127mm to 175mm square and 12 metres long which is used to produce rod and bar Blast furnace Used for converting iron ore into pig iron Boundary Refers to scope of the report

CO2 Carbon dioxide Coke Carbonised coal used in blast furnaces Electric Arc Furnace (EAF) Converts scrap steel into molten steel Employee initiated Number of employees who voluntarily leave OneSteel turnover rate Grade Refers to composition and physical properties of steel Green Star An environmental rating system that evaluates the environmental design and construction of buildings

Hematite Type of iron ore used mostly for export (Fe2O3) Integrated steelworks An integrated steelworks uses blast furnace and basic oxygen steelmaking technology to manufacture steel from iron ore Loss Time Injury A statistical measure of safety performance. A lost time injury is an injury which is attributable to a workplace incident and which results in Frequency Rate at least one full shift of work being lost at some time (not necessarily immediately) after the shift during which the injury occurred. Lost time (LTIFR) injury frequency rate is the number of lost time injuries per million hours worked and is calculated as follows: lost time injury frequency rate equals number of lost time injuries per reporting period times one million, divided by hours worked per reporting period.

Magnetite Type of iron ore used for pellet processing (Fe3O4) MPa Grade Unit of pressure/stress Medical Treatment Injury A medical treatment injury is an injury which is attributable to a workplace incident, requires medical treatment (including restricted work) Frequency and results in less than a full shift of work being lost. Injuries which result in at least one full shift of work being lost are classified as lost Rate (MTIFR) time injuries. The medical treatment injury frequency rate is the number of medical treatment injuries per million hours worked and is calculated as follows: medical treatment injury frequency rate equals number of medical treatment injuries per reporting period times one million, divided by hours worked per reporting period. Ore Mineral bearing rock Pellet Plant The pellet plant takes iron ore and produces hard balls of iron ore that can be fed into the blast furnace Post-consumer scrap Scrap arising from end‑of‑life consumer items Post-industrial scrap Scrap arising from industrial/manufacturing processes, other than those on-site Raw steel Raw steel is produced at the Whyalla Steelworks and the EAF Steelworks and is cast in the form of billet, bloom and slab steel

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Rod and Bar Rod and bar is a semi-finished product that can be used for further value-added products such as wire, reinforcing steel, grinding media, posts, etc. Scope 1 Direct emissions generated. Emissions that are the release of greenhouse gases into the atmosphere as a direct result of an activity, or series of activities (including ancillary activities), that constitute the facility. Scope 2 Indirect emissions generated. Emissions that are the release of greenhouse gases into the atmosphere as a direct result of one or more activities that generate electricity, heating, cooling or steam that is consumed by the facility but do not form part of the facility. Scrap Post-consumer and post-industrial steel waste Structural steel Large steel sections used for frames for buildings, factories, bridges and other infrastructure Total scrap Combination of internal returns, post-consumer and post-industrial scrap Townswater Water withdrawn from a climate‑sensitive source that provides water to regional and urban populations

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ASI Australian Steel Institute MRRT Mineral Resource Rent Tax ATEN Arrium Technical Energy Network NGERS National Greenhouse and Energy Reporting Scheme CEO Chief Executive Officer OHS&E Occupational Health, Safety and Environment Commonwealth Scientific Industrial Research PJ Petajoules CSIRO Organisation PPM Performance Planning and Management EBA Enterprise Bargaining Agreement R&D Research and Development ECG Environment Consultation Group SMR South Middleback Ranges EEO Energy Efficiency Opportunities SRIA Steel Reinforcement Institute of Australia EMS Environmental Management System SSF Steel Stewardship Forum FY Financial Year TJ/yr Terajoules per year GBCA Green Building Council of Australia UNSW University of New South Wales GRI Global Reporting Initiative WHS Workplace Health and Safety ktCO2-e/yr Kilotonnes of Carbon Dioxide Emissions per Year WSA WorldSteel Association KWh Kilowatt hour LCA Life Cycle Analysis LCI Life Cycle Inventory

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