DERICHEBOURG - Universal registration document 2018-2019

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CSR report (serving as statement of extra-financial performance) Overview of businesses and business model

The following factors affect the ferrous scrap metal market: Global steel production p

In millions of tonnes

1,808

1,730

1,800

100%

1,649 1,669 1,619 1,625

90%

1,537 1,559

1,600

1,432

80%

1,400

880

1,237

860

70%

1,200

827 846 815 818

835 828

60%

793

1,000

50% 49% 50% 50% 50% 51%

660

50%

45% 46% 47%

800

47%

40%

600

30%

400

20%

577 639 702 731 822 822 804 808 870 928

200

10%

0

0%

2009 2010 2011 2012 2013 2014 2015 2016

2017

2018

China as a % of total

Rest of world

China

Source: Worldsteel Association.

Global steel production has grown 1.9% per year over the last five years. China alone accounts for 51% of global production. Distribution of steel production between blast furnaces and electric p steel mills

As you can see in the previous graph, the share of steel from electric steel mills tends to increase from year to year, on a regular basis in countries other than China, and more recently in China. The competitive advantages of steel from electric mills are as follows: less investment; ● increased flexibility of use, with the ability to stop and restart ● production; very clear environmental benefit (fewer greenhouse gas emissions ● per ton produced with a ratio of 1 to 2.3) and energy benefit (less energy consumed per ton produced) advantage compared to blast furnaces, especially in countries where the nuclear share of the energy mix is high; local supply; ● ease of access to steel production for developing countries thanks to ● lower investment. However, blast furnaces generally have lower production costs per ton. In China, 95% of steel was produced in blast furnaces. To reduce pollution, it decided to encourage steel production from electric mills in the coming years, by setting up its own ferrous scrap metal collection network, opening new electric steel mills and closing old blast furnaces.

Blast furnaces consume iron ore, coke, and a small proportion of ferrous metals (10-15%), which reduces greenhouse gas emissions. Electric steel mills consume ferrous metals almost exclusively. In theory, both types of mills can produce any type of steel. In practice, steel from electric mills is used to produce long steel and reinforcing bars. Coils are made mostly at blast furnaces.

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

1998

1996

1992

2001

1999

1997

1995

1993

1991

2004

2002

2000

1994

2007

2005

1990

2003

2008

2006

2009

2012

2010

2015

2013

2011

2016

2014

2017

2018

Share of EAF China Share of EAF rest of world

Source: Worldsteel Association.

DERICHEBOURG p 2018/2019 Universal Registration Document 15