RSE - Reporte de Sustentabilidad de Arcelor Mittal Brasil 2010

8/7/2019 RSE - Reporte de Sustentabilidad de Arcelor Mittal Brasil 2010

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SustainabilityReport2009

ArcelorMittal Stainless Brazil


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03

03Introduction

contents

SustainabilityReport200904Message from the CEO

06Corporate Profile

10Corporate Governance

142009 Highlights

22Economical and Operational Performance

27Social Performance

38Environmental Performance

46Glossary

50Responsible sources

51GRI Indicators


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introduction

The present Sustainability Reportpresents the main results achievedby the Company in 2009 througha synthesis of its economical-operational, social and environmentperformances. The document alsoincludes a highlighted chapter, in whichare covered the remarkable factsabout the Companys path along theyear and those that became evidenceof its capacity to overcome the

adversities imposed by the worldwideeconomic crisis.

In addition to its own internally definedindicators, ArcelorMittal StainlessBrazil, for the second consecutive year,follows the Global Reporting Initiative(GRI) guidelines, an international reportgeneration methodology adoptedby some of the main organisations inthe world. In order to subsidise the

production of the present Report,the Company gathered a group of facilitators to bring awareness of andcompliance to GRI indicators. Thepresent Document focus on the reportof actions and results by ArcelorMittalStainless Brazil Plant located in Timteo,in Minas Gerais State.


As the name suggests, theSustainability Report shall summarisethe decisions, actions, processesand results of an organisation thathas ensured the sustainability of itsbusiness without losing perspectiveof the welfare and satisfaction of its interested parties (stakeholders,customers, employees, suppliers andcommunities) and respect to the

environment.

Through this document, ArcelorMittalStainless Brazil complied with 39 GRIperformance indicators as comparedto the 20 ones responded in the2008 Report, as shown by the tablepublished as of page 51. In theenvironmental aspect, for instance,the Company complied with 23 of 30 indicators set forth by GRI. The

continuous improvement is one of theCompanys management principlesand it is also revealed by the evolutionobserved on the preparation of itsSustainability Report. The Companyconsiders itself to be included inLevel C as regards GRI requirementcompliance.


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The crisis that hit theworldwide economy causeda strong deceleration toArcelorMittal Stainless Brazileconomical activities in 2009. Itwas a difficult path as revealedby the main figures consolidatedin the end of the year. Only70% of our installed capacityhas been used, which, allied to asignificant price fall, and reducedthe operational cash generation(EBITDA) down to levels of 45%of the historical values.

In spite of that, we havefinished the year aware thatwe did the job, for we haveachieved positive results that arecompatible with those of the steelindustry, one of the most harshlyhit sector. We have achieveda net income of R$ 2.1 billion,operational cash generation of R$ 403.2 million and an EBITDAmargin of 18.9%. The net resultwas R$ 562.2 million.

Amid the difficulties, weachieved important triumphs.We have invested in thedevelopment of new products,which were decisive for the

outcomes, contributing with10% of the sales in the firsthalf of 2009. In addition tocontribute to sales, theseproducts are a result of proactive actions carried out bythe Company, which is alwaysaware of the opportunitiesoffered by the market, such asthe emerging pre-salt. Also inthe commercial sector, we havebroadened the stainless steelshare in the Brazilian market,jumping from 74% to 78%. And,as the main response to thecrisis, we have implemented anexpense reduction programmethat resulted, at the end of theyear, into a decrease of our fixedcost by 20.5% as compared to2008. Once more, we provedour capacity of interpretingscenarios, reacting quickly andadopting efficient measures.

The creation of ArcelorMittalSumare, dedicated to theautomobile segment andthat represents an expressivecompetitive differential; the finalincorporation of BarranquillaService Centre, in Colombia,thus expanding our leadership

message fromtheCEO

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message fromtheCEO

in the Latin American market instainless steels; the unification of ArcelorMittal Stainless Brazils andArcelorMittal Brazils forest activitiesthrough the creation of ArcelorMittalBioEnergy, are also facts that provethat the Company has kept itself dynamic.

As regards investments, the yearof 2009 was outlined by a changeof direction. Instead of thoseyears guided towards expansion,we routed for projects intendedto improve competitiveness.An example of that was theapplication of 25 million dollars tothe construction of an internal gasdistribution circuit and adaptationsto Timoteo Plants blast furnaces,which, as of second half of 2010,will start consuming Natural Gas asa substitute for Liquefied PetroleumGas (LPG).

Still in 2009, the GMB (GroupManagement Board), ArcelorMittalsmain decision making body approvedapproximately 95 million dollars forthe project involving the substitutionof coke for charcoal in No. 2 BlastFurnace, which will make us evenmore competitive.

The approval of that investmentmay be interpreted as a proof of trustby the stakeholder in our capacity togenerate results. A trust that is alsopresent in the mission of technicalleadership that has been assignedto us for the implementation of theelectrical steel project in Hunanprovince, in China.

We harvested victories in thesustainability field, an importantdimension of our business. We brokesuccessive records of reducing theresidues disposed off in out yard, anindex 54% lower than the one in 2008.As for health and safety, we spentmost of 2008 and 2009 371 days without registering lost-time accident(LTA) events at Timoteo Plant.

After going through an economicalcrisis, we started 2010 with veryencouraging perspectives. As forlast years fourth quarter, we wereoperating at a pace higher than90% of our installed capacity. Ourchallenge now is to recover theprofitability achieved in other timesof our history and, for that, we willgo deeper into a strategy alreadysuccessfully adopted: enhance our

product line making use of ouroperational flexibility, which allowsfor the compliance of product mix tomarket demands and opportunities.

The good moment experiencedby the Company coincides with anew reality that is being revealed toBrazil in 2010. The investment in theoil and gas sector, the execution of large projects for power generation,the establishment of milestones inthe worldwide automobile industry,such as hybrid and electrical cars,the construction of an infrastructurethat will prepare the country tohost the 2014 World Cup and the2016 Olympic Games have madeclear that the country is in face of arare maybe unique opportunityof changing levels and definitivelyconsolidating itself as an importantplayer in the global economicalscenario.

With its innovative solutions andproducts, ArcelorMittal StainlessBrazil is ready to contribute to thebest of our history.

Paulo Magalhes ArcelorMittal Stainless Brazil CEO

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ArcelorMittal Stainless Brazil is aninternational reference in steelmakingtechnology thanks to its continuedinvestments in research, development andmanagement. The Companys capital is100% controlled by ArcelorMittal and isone of the main growth platforms of theGroup in the Americas.

Its special stainless, electrical and

carbon steel grades contribute to thedevelopment of capital goods, power,and food industry, sugar and ethanol,petro-chemical and automobile sectors.The applications also extend to civilconstruction, architecture and arts. Inover 65 years of existence, the Companywas present in all remarkable evolutionmilestones of the Brazilian industry. Itssolutions will continue to serve to new

economical fronts opened in Brazil, suchas the promising pre-salt industry, andcontribute to help the Country to promotea quality boost to its infrastructure bymeans of the opportunities created bythe 2014 World Cup and 2016 OlympicGames.

ArcelorMittal Stainless Brazil moulds itsproductive profile to the Brazilian and

international market needs. In addition toits steelworks in Timteo, in Vale do Ao,with capacity to produce approximately900 thousand tons of steel slabs a year, itmaintains a capitalised product distributionsystem and a network of service centres

and tube manufacturing units in the statesof Minas Gerais, So Paulo and Rio Grandedo Sul as well as in Argentina, Uruguay andColombia.

Its productive structure is also supportedby ArcelorMittal BioEnergy, which suppliesthe bioreductant for Timteo Plant No.1 Blast Furnace, and, as of 2011, alsofor No. 2 Blast Furnace, which nowadays

operates with coke.

Responsible for generating 3,700 owndirect jobs, ArcelorMittal StainlessBrazil presents a social-environmentalperformance that is compatible to itseconomical-operational performance.Its activities cause impact to the life of several towns located in Vale do Aoand Jequitinhonha, its main operational

bases. With programmes invested in theeducational, cultural, environmental andsocial promotion areas, ArcelorMittalAcesita Foundation is the main relationshipinstrument of the Company with itscommunities of influence.

Guided by the Corporate Values,Sustainability, Quality and Leadership,and giving priority to Health and Safety in

its routine, ArcelorMittal Stainless Brazilacts in line with its controller guidelines,which trusts in the principle that the steelindustry, due to its technical, economicaland environmental characteristics, will playa leading role in transforming tomorrow.

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corporate profile


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Under the co-ordination of ArcelorMittal Stainless Brazil Services, ArcelorMittal Stainless Brazils subsidiary, theService Centres make up a network comprised by units responsible for several processing operations for stainless,electrical and carbon steels: slitting and cut-to-length cuts of plates, finishing, transformation and distribution.The Company also has tube manufacturing units.

Subsidiaries, controlled companies and affiliates

corporate profile

Located near Timteo Plant (MG), it trades anddistributes flat stainless steel products and tubes inVale do Ao region. It supplies small volumes to localcompanies and motivates the development of stainlesssteel applications.

ArcelorMittal Timteo CommercialLocated inside Timteo Plant, it able to process 18thousand tons/year of stainless steel. This servicecentre allows for the increase in the use of the coilsmanufactured in the Plant.

ArcelorMittal Timteo Services

ArcelorMittal Timteo ServicesArcelorMittal Timteo Commercial

ArcelorMittal Barranquilla Services

ArcelorMittal Caxias do Sul

ArcelorMittal Campinas ServicesArcelorMittal Ribeiro Pires

ArcelorMittal Timteo Tubes

ArcelorMittal MontevideoMT Majdalani

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ArcelorMittal So Paulo ServicesArcelorMittal Sumar


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With capacity to process 55 thousand tons/year of stainless, electrical and carbon steels, it operates inan area of approximately 33 thousand square metersof constructions, near Viracopos Airport. It offers adedicated assistance to white line and automobile sectors.

ArcelorMittal Campinas Services

Located in the capital of So Paulo State, it is the mosttraditional service centres of the Company and has thecapacity to process 40 thousand tons of stainless steel

per year. It also trades tubes and bars in its area of 17thousand square meters.

ArcelorMittal So Paulo Services

Located 100 kilometres from Porto Alegre (RS), in SerraGacha, it occupies an area of 79 thousand square

meters. It distributes stainless steel plates, strips, coilsand tubes and render services such as slitting andlongitudinal cuts of steel products according to therequirements and needs of each customer. It has thecapacity to process approximately 71 thousand tons/year of stainless, electrical and carbon steels.

ArcelorMittal Caxias do Sul Services With a total area of 26 thousand square meters, it is themain stainless steel distributor in Argentina, representing30% of the market share of the country. Its processingcapacity is 18 thousand tons/year in three working shifts.Established in 1941, it offers cutting services on stainlesssteel strips, plates and blanks according to the sizesrequested by the customer for each application andtrades tubes and other accessories dedicated mainlyto the civil constructions and automobile industry. Inaddition, it has a network of seven distributors located inthe main cities of that country.

MT Majdalani

Incorporated in 2009, this service centre is located inColombia and it will enhance the Companys share inCentral Americas and Andes Regions markets. It offersplate cutting and polishing services to the market, inaddition to a distribution centre.

ArcelorMittal Barranquilla Services

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It is a manufacturing unit of seam-welded austenitic

stainless steel tubes located in Ribeiro Pires (SP), withcapacity to transform 18 thousand tons of productsper year.

ArcelorMittal Ribeiro Pires

Located inside Timteo Plant (MG), a unit of seam-welded stainless steel tubes and has the capacity toprocess approximately 16 thousand tons/year of strips.It serves mainly the automobile market, which absorbs

80% of the production.

ArcelorMittal Timteo Tubes

It is responsible for the manufacturing of tubes intendedmainly to the automobile sector. It has a nominal capacityto annually trade 36 thousand tons of products having asmain product the stainless and aluminium-coated carbonsteel tubes for the South American market.

ArcelorMittal Montevideo

Specialised in the manufacturing of stainless steeltubes for the automobile industry, capital goods anddistribution. It comprises the following units:

ArcelorMittal Stainless Brazil Tubes

Tube manufacturing

corporate profile

Located in the Eastern side of So Paulo State, it wasstructured by ArcelorMittal Stainless Brazil in 2009. Ithas capacity to process 21.6 thousand tons of tubes andperform 14.4 million cuts per year within an area of 4.4thousand square meters.

It is a centre that distributes seam-welded tubes intendedto assist automobile exhaust system manufacturers.

ArcelorMittal Sumar

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ArcelorMittal Stainless Brazil,a company controlled byArcelorMittal, acts in line withthe three values of the Group Sustainability, Quality andLeadership , keeping a dialoguerelationship with all segments:

customers, employees, suppliersand society. The Companysoperations are recognised by theoffering of quality products andservices and by the respectfulhandling of the issues involving thecommunities and environment.

ArcelorMittal Stainless Braziltop decision-making bodies arethe Board of Directors and theManagement Board, which areindependent from. Their heads areappointed by representatives of the controlling stakeholders group.

Board of DirectorsIt consists of three members, appointed by stakeholdersArcelorMittal Spain Holding S.L. and ArcelorMittal France.The current members of the Board were appointed inJune 2008 and will hold the position through the GeneralStakeholders Meeting to be held in 2010

Chairman: Jean-Yves Andr Aim GiletVice-Chairman: Paulo Roberto Magalhes BastosCounsellor: Suzana Fagundes Ribeiro de Oliveira

corporate governance

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Management BoardComprised by career professionals of the Company, ArcelorMittal StainlessBrazil Board serves its terms throughApril 2011.

CEO: Paulo Roberto Magalhes Bastos

Financial Director: David Vincent Claude Veysset*Commercial Director: Frederico Ayres LimaProduction Director: Clnio Afonso GuimaresTechnical Director: Frdric Jrome Franck Midy

From left to right: Frederico Ayres Lima (Commercial Director), Clnio Guimares(Production Director), Paulo Magalhes (CEO), Frdric Midy (Technical Director)and David Veysset (Financial Director)

Changes in the boardArcelorMittal Stainless Brazil Management Board has recently gone through two changes. David Vincent

Claude Veysset is the new Financial Director, who took over the position as a substitute of Guy Lucien AndrBroutechoux, whereas Frederico Ayres Lima has substituted Srgio Augusto Cardoso Mendes as CommercialDirector. Both are career executives in ArcelorMittal Group and became part of the Companys chart in the sameyear: 1996. David Veysset started serving the Group in Zurique, in Switzerland. He has worked in ArcelorMittalParis and ArcelorMittal Luxemburg, and in the latter as Corporate Controller Manager. He worked asArcelorMittal Stainless Brazil industrial cost control manager between March 2001 and May 2005. Afterwards,he worked at ArcelorMittal Vegas (SC) Financial and Controlling Management, where he served until April 2006.As for Frederico Ayres Lima, he started his journey at former Acesita, in 1996, as metallurgic engineer. Between2001 and 2003, he worked as trader (foreign market sales) and in France between 2004 and 2006, in whichperiod he worked as Arcelor Stainless International Sales Manager and Export Manager at Ugine and ALZ,

currently ArcelorMittal Stainless Europe. Back to Brazil, he worked as Export Manager and Electrical and CarbonSteel Business General Manager.


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Responsible conduct

In line with its controllinggroup, ArcelorMittal StainlessBrazil maintains a ComplianceProgramme that is made upby the following policies: Codeof Conduct, Guidelines forcompliance with Anti-trustLaws, Policy on Confidential

Information and Anti-corruption Policy. The latter

was implemented in 2009 andengaged all employees. Thetraining sessions on its guidelineswill be carried out in 2010.

The Company broadlycommunicates such policies to itsemployees and periodically train

them as a function of their areaof expertise, in addition to assess

the efficiency of the programmeand carry out periodicalaudits intended to check itscompliance. The main goal of the Compliance Programme isto establish in a clear way thecontrol mechanisms to detectand prevent any deviations or

non-conformances as regardsbusiness.

All employees follow the rules of the Compliance Programme


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2009H

ighlights


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highlights2009

Established in 2009, ArcelorMittal Sumar has consolidated asa trump with which ArcelorMittal Stainless Brazil counts on toexpand its share in the automobile market. The unit is located inthe Eastern side of So Paulo State, at a radius of 200 kilometres

from the main seam-welded stainless steel tube consumer, whichare used in the manufacturing of automobile exhaust systems. TheUnit offers customised products on a just-in-time basis and keepsa lead time a time between the beginning of the productiveprocess and product expedition more suitable to marketrequirements, increasing competitiveness of the productive chain.It has capacity to process 21.6 thousand tons of tubes and 14.4million cuts per year within an area of 4.4 thousand square meters.

Sumar Unit, in So Paulo, offerscustomised products

At the customers door

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operation and sales


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Presence inColombiaThe Company incorporated in 2009 a service unit locatedin Barranquilla Free Zone, in Colombia, an acquisition thatexpands its leadership in the special stainless steel marketin South America. ArcelorMittal Barranquilla now assistsCentral America and Andes Region markets and, in thefuture, the NAFTA countries.

Green power

2009 highlights

operation and sales

An old ArcelorMittal StainlessBrazil subsidiary, ArcelorMittalJequitinhonha has joinedArcelorMittal Forests, a companyfrom the Groups long steelproducts, to generate ArcelorMittal

BioEnergy. The company hascapacity to produce 2.2 millioncubic meters per year of thissolid, renewable bioreductant thatfeeds Timteo and Juiz de ForaPlants, the latter associated to

ArcelorMittal Brazil Long Products.The production is concentrated inMinas Gerais (Jequitinhonha andRio Doce Valleys, Centre-West andSoutheast of Minas Gerais) and inSouthern Bahia State.


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One of the factors that contributed tominimise the effects of the crisis on theCompanys commercial performance was thedevelopment of new products, such as: Austenitic stainless steel 310, 317 and 347; Duplex stainless steel series withapplications to petro-chemical industry; Hot-and cold-rolled stainless steel 1500mm wide for capital goods sector; Oriented grain electrical steel M3 degreefor transformers; Micro alloyed carbon steels for gascylinders.

The development of those products, whichreached a sales volume of more than 24thousand tons in 2009, is in line with theCompanys long-term strategy, whichenvisages opportunities with the pre-saltindustry and with an increasing concern aboutpower efficiency.

In addition to increase sales, the new productscause a positive impact to the Companysprofitability, far they are nobler and morevalued in the market.

Products and applications developed in thelast three years were responsible for 14% of the Companys EBITDA generation in 2009,which is equivalent to R$ 57 million.The Research Centre is one of the Companystrumps in the innovation area, which works

integrated with the Research and Developmentsectors of the stainless steel segments and toother ArcelorMittal Group research centres.

Investing ininnovation

2009 highlights

Research Centre Laboratory, in which newproducts and applications are developed:positive impact to the Companys sales

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operation and sales


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2009 highlights

Natural gas will save moneyAs of 2010, ArcelorMittalStainless Brazil will startsubstituting liquefied gas (LPG)for natural gas as power source.That will be possible with theopening of Vale do Ao gas duct,of which construction was startedin 2009 and will supply gas to themain companies of the region.

ArcelorMittal Stainless Brazil is oneof the undertaking anchors. Thegovernment of the State of Minas

Gerais is investing R$ 625 millionin the project, which will be 333kilometres long and a capacity toconvey 2.4 million cubic metersof natural gas per day. TheCompanys share is estimatedto be US$ 25 million, a valuethat includes the contribution tothe construction of the ct andthe adaptation of its industrial

facilities to operate with the newpower source. At the Plant, alsoforeseen were the construction

of a pipeline (gas conveying line)of 5.4 thousand meters and theadaptation of the equipment thatcurrently consume LPG.

Economical and environmentaladvantages justify thatsubstitution. The cost of energygenerated by natural gas is 30%lower than that of LPG. The

project has a flexibility naturewhen allowing LPG to be used incase of shortage of natural gas.

The Company is adapting its industrialfacilities to operate with natural gas

operation and sales


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The only steelmaking group in Brazil that offers solutions insteel to all phases of a project from foundations to finishing ArcelorMittal formed in 2009 a work group to identifybusiness opportunities provided by the World Cup event inBrazil in 2014 and the Olympic Games in 2016. It is expectedthat the first event will demand investments of R$ 130 billionin infrastructure works in the 12 hosting cities, whereas theOlympic project for Rio de Janeiro is estimated by R$ 20 billion,

from which 72% are reserved to infrastructure works andsports facilities.

ArcelorMittal Group has prepared a catalogue with all solutionportfolio offered by the Brazilian units to the civil constructionsegment. ArcelorMittal Stainless Brazil is represented bystainless steel, with 25 solutions for facade cladding andexternal sealing, frames and brises, roof tops, interior design,accessibility and street furniture, flooring and ceiling, in additionto 10 applications with beams: tiles, thermo-acoustic panels

and structural steel.

Stainless Steel at the World

Cup and the Olympics

2009 highlights

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Stainless steel facade, one of many applications of the product inarchitecture

Launched in Brazil in 2009, thebrand KARA creates a new and

unique identity to ArcelorMittalferritic stainless steel solutionsworldwide. Such uniqueness allowsfor highlighting the competitiveadvantages of this steel grade.

KARA solutions add value tothe products of the Companyscustomers in all phases of theirprojects. They are applied to

architecture and civil constructionareas, cutlery, home appliances,

white line, automobile industry,tubes and capital goods.

Performance, intelligence, accuracyand responsibility are values of thebrand KARA, which, together theyprovide stable prices, high qualitystandards and added value for thecontinuous support to customers.The name KARA is a referenceto karat a measuring unit usedin gems and jewellery business to

evaluate gold purity level or themass of a precious stone.

KARA all around the world

operation and sales


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2009 highlights

Since 2001, ArcelorMittal Stainless Brazil has a Suppliers

Qualification Programme (PQF) to follow up and awardthe performance of 147 suppliers considered critical orstrategic to its productive process. The criteria evaluated

are quality, delivery date, safety and compliance, which

are measured based on Supplier Performance Index (IPF).In 2009, 100 companies were awarded; nine of themwere awarded in all editions of the Programme.

Award winning suppliers

suppliers

In the end 2009, ArcelorMittal Stainless Brazil had aninvestment of US$ 95 million approved for the conversionof No. 2 Blast Furnace and expansion of charcoalproduction infrastructure. The equipment operates withcoke and will start operating with charcoal.

With operation startup foreseen for 2011, the project haseconomical and environmental implications and allows forbetter managing the supply of the reductant, one of themain critical factors of its business.

Since it is a renewable energy source of lowerenvironmental impact, charcoal will also allow theCompany to generate carbon credits, which may betraded or used by ArcelorMittal Group for meeting itsgoals for reducing CO 2 emissions.

A decisive step was taken in 2009 with the approval of the methodology of the No. 2 Blast Furnace conversionproject by Meth Panel, a UN department. The Companynow lies over the second phase of the process, theso called PDD (Project Design Document), based onthe survey of project technical aspects and on thedetailed description of its social-environmental benefitsand impacts. The conversion is expected to provideapproximately 500 thousand tons/year of carbon credits.

Another initiative is the substitution of Liquefied

Petroleum Gas (LPG) for Natural Gas, a process that willnot only bring economical benefits (see page 18) but also

will cause positive impact to CO2 emissions. Being a lesspolluting power source, the use of natural gas will causea reduction in CO 2 emissions by 37 thousand tons peryear. The substitution of LPG for natural will take placegradually as of 2010.

Clean technologies andcarbon credits

environment

20

No. 2 Blast Furnace will operate with

charcoal as of 2011


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2009 highlights

Since August 2009, the Company offers theIndustrial Learning Programme for physicallyimpaired people. With duration of two years, thecourse enables the development of theoretical andpractical skills in industrial electrical maintenance.The area was chosen by the Company in orderto make it easier for disabled people to work andprovide them good work market opportunities.At the end of the course, held through a partnershipwith the National Industrial Learning Service

(Senai), the participants will be able to work incompanies demanding that type of work force.

Inclusion and learning

Students participating in the Programme: development of maintenance skills

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in-house employees

Voluntary ResignationLaunched in 2009 to reduce fixedcosts as a function of the economicalcrisis, the Voluntary ResignationIncentive Programme (PDV) wasembraced by 334 employees inall ArcelorMittal Stainless Brazil

units. The initiative, which was partof ArcelorMittal worldwide plan,preserved 100% of the operationalwork force.

The programme offered an attractive

financial package and retained healthplan and life insurance benefitsfor two years and, in some cases,advancement of full retirementpayment by Aceprev, a pension fundsentity.

community

A partnership for developmentOne of the main operating bases of

ArcelorMittal BioEnergy, a charcoalproducer for ArcelorMittal StainlessBrazil, Vale do Jequitinhonhaacquired a new reinforcement to itsinfrastructure: the modernisationof Capelinha Airport, a townwith approximately 53 thousandinhabitants.To make it feasible, ArcelorMittalBioenergy bestowed an area of

approximately 40 hectares for theexpansion, took over the costs of topography activities and suppliedrubble fields to be used in the

works. Additionally, the Company,

established in 2009 through thefusion between ArcelorMittal Forestsand ArcelorMittal Jequitinhonha (untilthen controlled by ArcelorMittalStainless Brazil), expedited togetherwith Minas Gerais State Governmentto bring forward the airportmodernisation schedule. As partof the Airway Plan of Minas GeraisState (Proaero), the modernisation

project received investments of R$10.2 million. The works includedbackfilling, draining, implementationof the runway and airplane parking

area. Also implemented were the day

signalisation and night beaconingsystem, fire fighting system andadaptation of the protection fencearound the airport premises.The airport modernisation is strategicto Vale do Jequitinhonha economyand to ArcelorMittal BioEnergyactivities. Because of the projectto convert No. 2 Blast Furnace tooperate with charcoal, BioEnergy will

expand the bioreductant productionin the region from 800 thousandcubic meters/year to 1.8 millioncubic meters/year.


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18

Economicalandoperationalperformance


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economical and operational performance

The crisis that has reduced theeconomical activities in the world hada great impact to the steelmakingmarket, including ArcelorMittal

Stainless Brazil. In 2009, the Companyoperated at an average rate of 70%, whereas in the first monthsof the year, only 50% of its installedcapacity was used. Additionally, a fallin steel price was recorded, whichreduced the Companys profitabilityby approximately 45% of its historicallevels.

The turnaround started at the end of the first quarter and increased in thesecond half of the year. In the lastquarter, the Company already operatedwith a capacity higher than 90%.

The net income in 2009 wasR$ 2.1 billion in face of theR$ 3.6 billion achieved in 2008.Whereas the operational cash

generation was R$ 403.2 million;EBITDA margin dropped from 27.3%,in 2008, to 18.9%, in 2009. Thenet result was R$ 562.2 million ascompared to R$ 38.4 million achievedin 2008. That difference is due to thefact that, in 2008, the Companysdebt was revalued in dollars, inconsequence of the increase inthe American currency rate, which

increased 32% along that year,reaching R$ 2.34.

Economical and

operationalperformance


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The effects of the crisison ArcelorMittal StainlessBrazil were faced withactions that resulted intothe optimisation of industrialand administrative processesas well as renegotiation of contracts. One of them wasthe implementation of adaring programme of costmanagement, which was rolledout to the entire Company. In a

whole, the Company managedto reduce R$ 106.7 million of its fixed cost in 2009, a savingsof 20.5% as compared to 2008.

One of the main initiatives inthat sense was the AccountManagement project. Its goalswere agreed upon between thesite managers and the accountmanagers professionalsresponsible for monitoring their

compliance and validated bythe Companys Board. The resulthas overcome the one plannedby more than 30%, giving atotal of R$ 101.75 million. Thegoal set out was R$ 76.56million.

Another similar programme,the Ideal Cost, has provided asavings of R$ 13.3 million in2009.

Cost reduction


Net income (in billions of R$)

2.1

3.64.0

200920082007

EBITDA(in millions of R$)

403.2

980.51,065.3

200920082007

EBITDA Margin

18.9%

27.3%26.7%

200920082007

Net results(in millions of R$)

562.2

38.4

807.7

200920082007

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Once more, the stainless steels responded with greatersales volumes, 52% of the total, followed by the electricalsteels (OG and NOG), with 29%, and special/alloyedcarbon, 19%. One of the commercial performancehighlights in 2009 was the resumption of exports, whichabsorbed 27% of the steel produced by the Company, ascompared to 21% in 2008.

Commercialperformance

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The main destinations of the stainless steel were distributors,cutlery and home appliances, capital goods and outsideprocessors, automobile and transportation sectors, tubesegment, white line and civil construction. Leader in stainlesssteel sales in Brazil, the Company expanded its share from74% to 78% in 2009. Another highlight was the increase instainless steel exports. In 2009, 33% of the stainless steelproduced by the Company was exported, as compared toprevious years 28%.

Stainless Steels

ArcelorMittal Stainless Braziltotal sales volume(in thousands of tons)

666

507

690

2007 2008 2009

Stainless steel sales volume(in thousands of tons)

325266

370

2007 2008 2009

Total sales percentageper market

2007 2008 2009

73%

27%

79%

21%

73%

27%

DOMESTIC

FOREIGN

Destination of the Companysexports in 2009

41%21%

20% 12%

6%

Latin America and MercosurEuropeAsiaNaftaMiddle East


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Intended to the rerolling (with final application to auto parts industry), cutlery and tool segments and resales, alloyedcarbon steels completed 2009 with 93 thousand tons traded.

Carbon steels

The electrical steel (OG and NOG) exports totalised 37thousand tons in 2009, a performance slightly higherthan that recorded in the previous year, with 36 thousandtons. Transformer, hydrogenerator, motor, compressor,power meter and reactor industries and outsideprocessors were the segments with higher application of those products.

Electrical steelsOG and NOG electrical steel salesvolume (in thousands of tons)

185196

2007 2008

149

2009

Special alloyed carbon steelsales volume(in thousands of tons)

145

93134

2007 2008 2009

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18

Socialperformance


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The construction of a safe andhealth working environment withmotivated people and continuousdevelopment process characterisesArcelorMittal Stainless BrazilsHuman Resources policy. Onehundred percent of employeesare benefited from collectiveagreements and conventions agreedupon with local labour unions.

ArcelorMittal Inox Brasil believesin social dialogue and promotes itas a fundamental part of its labourrelations.

At the end of 2009, the Companyhad 3,771 employees, includingall its affiliates and controlledcompanies, as compared to 5,500from last year. That difference

is explained by the fusion madeby the forest companies thatresulted in the absorption of theformer ArcelorMittal Jequitinhonhapersonnel by ArcelorMittalBioEnergy; by the implementation of the Voluntary Resignation IncentiveProgramme (PDV), responsible forthe dismissal of 334 employees andby the turnover recorded last year.

In-house employees

socialperformance

Motivated employees are the key to the Companys results

28


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29

socialperformance

Work satisfaction has improved in the five aspectsassessed by the last Mood Survey

The Mood Survey carried out among ArcelorMittal StainlessBrazils employees in 2009 recorded an average favourabilityrate of 69% as compared to 63% achieved in the previoussurvey informed in 2008. The satisfaction increased in thefive aspects assessed: credibility, respect, impartiality, prideand fellowship.

The survey carried out by the Great Place to Work had theparticipation of 93% of the employees. The result contrastedwith the difficult moment experienced by the Companyin 2009, which demanded the adoption of measures withstrong impact to the organisational environment. However,the actions were well engaged thanks to a transparent,straightforward and open communication kept with theemployees. That attitude has finally contributed to thepositive perception as regards the Company.

Work satisfaction

Through Aceprev, a closed pension funds entity,ArcelorMittal Stainless Brazil keeps a benefit plan thatcovers 99% of its manning chart. The Entity ended2009 with 3,847 participants, with 3,085 activemembers and 762 pensioners (retirements, pensions,sick pay and impairment). Aceprev paid R$ 14.6 millionin benefits, being R$ 11.8 million to retirement and theremaining to risk benefits (sick pay, impairment anddeath pension).

Aceprev benefit plan is characterised by variablecontribution. When retiring, the employee ensures, atleast, 50% of contribution salary. The Company andthe employees contribute to the plan with equivalentamounts, corresponding to up to 5% of the salary. In2009, the amount contributed by the Company to theentity was R$ 16.5 million.

Pension funds

ArcelorMittal Stainless Brazil keeps abenefit pack that makes it distinguishedfrom others in the Brazilian workingmarket. On its medical, dental andpharmaceutics care programme, theCompany invested approximately R$ 17million in 2009, reaching approximately10 thousand people among employeesand family members. Life insurance, schoolsupplies and Christmas baskets are otherbenefits offered by the Company.

The organisation develops a variableremuneration policy in line with itsperformance and result goals. It includesexecutive bonus, result and profit sharing(PLR) and team performance goals, which,in total, distributed R$ 26 million in 2009.

Remuneration

and benefits


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Training needs are depicted through interviewsand performance evaluation tools, which arecarried out to 100% of the employees. Eachprofessional has a development plan with actionsin the fields of education, training skills andefficiency evaluation of the methodology applied.

In 2009, the average training time was 49hours per employee in ArcelorMittal StainlessBrazils Timteo Plant. In order to keep its

development plan updated, the Company madeuse of ArcelorMittal University on-line trainingas well as courses given by in-house instructors.The priorities were given to training on Safety,Total Preventive Maintenance (TPM), LeaderDevelopment and High Performance Teams. Thelanguage programme was continued as well as thepost-graduation courses directly related to thebusiness. Functional trainings based on processpriorities were managed by the relevant areas.

Human Resources Development

Category

Director and ManagerSupervisor

TechnicianHigh School TechnicianOperatorTotal

Training by category/ArcelorMittal Timteo (2009)Hours Attendance Number of employees by

category (average)Number of hours trained/ employee by category (average)

30

Each employee has a professional development plan

socialperformance

6.6165.670

16.65412.27690.792

132.008

614947

1.2632.472

13.06018.356

7892

307526

1.6832.686

9262

54235449


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31

Student from Professional Education Programme:it includes theoretical and practical classes and

apprenticeship in the Plant

In 2009, the Company formed 43 youngsters

in the Professional Education programme,which prepares hand labour in mechanics andelectric-electronic fields. The course, given bythe Companys Professional Education Centre,is carried out in partnership with Senai. Theyoungsters, aging between 17 years and threemonths and 19 years old, attend 11 months of theoretical and practical classes at the FormationCentre and, afterwards, they go through a six-month apprenticeship on site. From the 43

apprentices graduated in 2009, 36 were hired.The investment in the programme was R$ 520thousand.

Professional Education

In 2009, Timteo steelworks, ArcelorMittal Stainless Brazils

main operational unit, broke the record on a period withoutlost-time accidents (LTA), including employees and thirdparties. It was a period of 371 days between August 27th2008 and September 1st 2009. Another record was theperiod of 136 without LTA and N-LTA (non-lost time accident)events achieved at the beginning of 2009. In a whole, therewere in Timteo 17 N-LTA events and six LTA in 2009.

It is a good result as far as steelworks standards are concerned,but it is lower than the performance achieved in 2008, which

was the best in the history of the Company. Twenty-twoN-LTA and LTA events were recorded. The frequency raterecorded was 1.87 and severity rate 12, including in-houseand contractors employees

Another highlight was the decrease in the absenteeism rate,thanks to a work developed by the Company in the past years.Between 2007 and 2009, the absenteeism rate decreased byapproximately 40%.

The Companys Occupational Health and Safety Managementcomprises programmes of a broad range: occupationalmedicine, physical fitness (which involved 482 employees),sleep therapy, vaccination, nutritional counselling, dengueprevention and treatment, ergonomics, birthday check-up(to annually identify diseases that can be controlled) andmanagement of risk group intended to follow up employeeswith diabetes, high blood pressure and epilepsy.The Companys performance in this field is, above all, a resultfrom a continuous leadership work process to make people

aware of the importance of acting preventively, using themethodologies available in the Company and informed to allown employees and third parties.

Health and Safety

Occupational health and safety programmes are oriented toprevention and concerns all employees

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Accident frequency rateOwn employees: 2.15Third parties: 3.22Own employees + third parties: 2.60Calculated by the following formula: (No. of N-LTA + LTA events) x 1,000,000 / Man/HourWorked

Main safetyindexes in 2009*

Accident severity rateOwn employees : 18Third parties: 109Own employees + third parties: 56Calculated by the following formula : No. of lost days x 1,000,000 Man/Hour Worked

Absenteeism Rate2007 = 1.542008 = 1.102009 = 0.92(Lost time due to sick leave + Social Security leaveshorter than 6 months x 100) / Regular HoursWorked

Rate of occupational diseasesand deaths in 2009: 0

* Including Timteo industrial plant and offices in Belo Horizonte, So Paulo and Rio de Janeiro

The In-house Accident Prevention Committee (Cipa) is one of

the main supporters of the Companys Occupational Healthand Safety Management. It comprises 38 members (ownersand substitutes), which represent the Company and theemployees on a proportional basis. One of the highlights in2009 was the work developed in partnership with the QCCgroups (Quality Control Circuits) to improve the ergonomicsconditions of the industrial and administrative facilities andthat resulted in the formulation of 1,269 projects, from which848 are implemented and 421 in progress. On Cipa Portal, alsocreated in 2009 and available in the intranet, the employee find

information on the Committee work and the monthly safetyresults.

Another important Cipa initiative together with Health andSafety Area was the training of motorcyclists, in partnershipwith Honda local representative, which gathered almost 1000own employees and third parties.

Cipa

Occupational health and safety are the theme of seven clauses of the Collective Labour Agreement(ACT) annually signed between the Company andthe Metallurgic Labour Union of Timteo and CoronelFabriciano (Metasita). They are related to additionalpayment due to insalubrious and dangerous work,food pay, health care, uniform, rehabilitation of injuredpersonnel, medical treatment and transportation.

In 2009, the Company and the Labour Union signedtwo other commitments related to this field: creationof a work group, with two representatives from eachparty, to present proposals for the improvement of environments considered insalubrious; and a healthand safety committee, of which goal is to motivate thedialogue and locally communicate themes handled byArcelorMittal Global Health and Safety Committee.

Safety and collectiveagreement

32

Records136 days without N-LTA + LTA events involving own employees and third parties.Period: 27/09/2008 to 08/02/2009It is equal to 3.7 million MhW (man/hourworked).

371 days without LTA events involving ownemployees and third parties.Period: 27/08/2008 to 01/09/2009It is equal to 9.5 million MhW (man/hourworked).

socialperformance


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33

Steel coils: product quality is one of the indicatorsof customers satisfaction survey

The Companys success relies mainly on the good relationship withits customers, based on integrity, honesty and mutual respect. AllArcelorMittal Stainless Brazil efforts are intended to ensure themanufacturing of quality products, with competitive prices anddelivered on time as agreed.

Customers satisfaction is one of the main ArcelorMittal StainlessBrazil efficiency indicators. In 2009, the Company achieved a

favourability rate of 97.2%. The Company makes use of themethodology called Customer Score Card to internally measureits performance based on a score that monthly monitors threeindicators: order confirmation according to the dates requested bythe customers, compliance with delivery dates agreed upon withthe customers and complaint levels. Additionally, on a monthlybasis, the Board of Directors and the commercial area assess thecustomers satisfaction levels as regards quality, products, marketsegment and, when required, on customers level as well.

The survey is carried out by an independent specialised instituteand is another tool to assess satisfaction. The informationis collected through individual live interviews with the mainspokesmen of each customer. Five factors are evaluated: IntrinsicQuality of Products, Commercial Assistance, Customer Service,Technical Assistance and Services and Logistics Themes.

The score 7.87 achieved in 2009, in a range between 1 and 10,puts the Company in the group of the competitive organisations asregards customers services, according to international parameters.

The survey involves the majority of the customers, who areresponsible for approximately 80% of the Companys income.

Relations with customers Customers satisfaction

in-house survey97.2%97.%97%

200920082007

external survey

7.877.477.57

2009200820070

10

socialperformance


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In 2009, the Purchasing Department had torenegotiate the volumes and values agreed upon asa function of production and sales decrease in theCompany. Part of that review involved ArcelorMittalBrazil sales platform, which is responsible forpurchasing regular consumables and services usedby several units of the Group in the country, and by

ArcelorMittal Sourcing, which plays the same role asregards international purchasing.

The Company ended 2009 with 2,253 suppliersregistered and in operation. Together approximatelyR$ 1.4 billion were spent in the purchasing of materials, services and consumables.

Relations with suppliers

Once having assured the technical capacity,quality and competitive prices from itssuppliers and contractors, ArcelorMittalStainless Brazil takes into consideration otherperformance criteria, such as safety at work,compliance with environmental and labourregulations, repudiating child and slave work.

Those aspects are described in the clausesof the contracts signed. Their complianceare followed up by means of annually heldquality audits and in-house audits in theCompliance area, carried out by ArcelorMittal

Group representatives among the Companysstrategic suppliers and contractors. In thatcase, the objective is to check, for instance,that the conduct of the suppliers is based onethical parameters and is in compliance withthe Companys principles of not admitting,under any circumstances, degraded workingconditions in its productive chain.

Values purchased in 2009 (in millions of R$)

Local purchasingPurchasing in domestic market (outside the region of Vale do Ao)Purchasing in foreign marketTotal

1991,0211731,393

Catering is one outsourced services: technical and socialperformance is the basis when choosing a supplier

34

socialperformance


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Being the Companys main instrument of relations withcommunities, ArcelorMittal Acesita Foundation celebratedin June 2009 15 years of activities, period in which an

efficient working model was consolidated for the socialdevelopment of Vale do Ao and Jequitinhonha. Evenwith the investments restructured as a function of theeconomical crisis, ArcelorMittal Stainless Brazil kept itssocial programmes during the past year and continued tobe one of the main development agents in both regions.

Its actuation covers Vale do Ao region, notably the townof Timteo, and six towns in Vale do Jequitinhonha, whereforest and charcoal production is carried out.

The investments in 2009 reached R$ 6.6 million,covering the fields of education and culture, environmentand social promotion. Also included in that amount arefiscal waiver resources intended to social and culturalinitiatives in the communities. In 2009, R$ 1.7 millionwas spent in cultural projects by means of culturepromotion acts, R$ 109 thousand to Infancy andAdolescence Fund (FIA) and R$ 109 thousand for sportprojects though Sport Promotion Act.

Relations withcommunities

Investments in 2009 (per area)AreaEducation and CultureEnvironmentSocial Promotion

Total

Value (in millions of R$)3.51.21.9

6.6

Investment per region

Vale do Ao

Vale do Jequitinhonha

83%

17%

35

Transitland, in Timteo, one of the socialprogrammes supported by the Company

ArcelorMittal Acesita Foundation headquarters, the Companysmain instrument of relations with communities

socialperformance


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Education is the main focus of ArcelorMittal StainlessBrazils social responsibilities activities. Its flagshipis the Learning Quality Improvement Programmes,through which projects such as school managementand training of teachers from public schools inTimteo are developed. More than 1.9 thousandteachers attended workshops and training courses in2009 in Timteo and 10 other towns under the rulingof Regional Educational Bureau of Coronel Fabriciano.

In addition, 13 improvement initiatives related to theeducational process were implemented to the schools in

Timteo, kindled by the ArcelorMittal Acesita FoundationAward Valorisation of Quality Education.

One of the main targets of ArcelorMittal AcesitaFoundation is the State School Ana Letro Staacks, which,in 2009, started a project to become a model institutionin learning quality. The aim is to improve the studentsperformance by strengthening the relationship with theirfamilies, as well as to implement improvements as regardsmanagement and infrastructure.

Complementary education projects, such asentrepreneurism, education in the transit, fightagainst drugs, and sports complete the educational

actions promoted by the Foundation, hence benefitingapproximately three thousand students.

The actions in the educational field are also developedin Vale do Jequitinhonha, where ArcelorMittalBioEnergy, a charcoal producer, is located. In 2009,approximately 600 teachers from Minas Novasattended the 5th Seminar in Education. ArcelorMittalAcesita Foundation gave assistance to the constructionof the Education Decennial Plan of Minas Novas andto the Plan of Actions Structured for Ministry of Education in Itamarandiba.

The Company also believes in improving its employeesand contractors level of education. The Study Project hasgraduated, in Timteo, 61 employees and contractorsand 59 employees of ArcelorMittal BioEnergy, in Vale doJequitinhonha, in junior and high school. Because of theinvestments made in education to its manning chart, over70% of the employees have full high school and technicalschool degree.

As for culture, the Foundation organised 260 activitiessuch as plays, music concerts and ballet presentations,art exhibitions and workshops involving more than 65people.

Education and culture

Learning improvement is the main actuation focus of ArcelorMittal Acesita Foundation

36

socialperformance


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One of the main fronts in the social promotion area are the

initiatives to generate employment and income. In 2009,through the Stainless Institute, a partnership betweenthe Company and the Timteo Retired and PensionerAssociation, 238 people had attended courses in TIGwelding, boiler and workability of stainless steel.

Whereas through Timteo Development Agency (ADT),seven companies and 100 jobs were created in thecity. Another innovation was the transformation of theexhibition centre, Expo Inox, located in Timteo, into a sales

area for the trading of stainless steel products, enablingthe inhabitants and visitors to purchase stainless steelproducts.

The Company also is part of the Municipal Network forJob and Income Generation, which provides resourcesand technical assistance to the improvement andimplementation of projects in social entities in Timteo.

As for the volunteer works, they have already benefited

31 entities; involving approximately 1.5 volunteers ininitiatives such as campaigns to fight against dengue, ArraiDAjuda, Young Mobilisation and Solidarity Gymkhanaduring Volunteer Day. Projects to improve two schoolsand two social entities involved 82 employees fromArcelorMittal Stainless Brazil that comprise the QualityControl Circles (Social QCC) groups.

In 2009, 12 projects were developed in Timteo, CoronelFabriciano and Vale do Jequitinhonha, by transferring

resources to the Infancy and Adolescence Fund (FIA),benefiting 2,420 children and adolescents. The campaignto kindle resources to FIA was held among ArcelorMittalStainless Brazils employees to increase money collection of the municipal funds.

The development of activities for the third age is

also in the scope of work of ArcelorMittal AcesitaFoundation. In partnership with Timteo Retired andPensioner Association and the Town Hall, the AndanasProgramme involves more than one thousand elderlyin training courses, health care, culture and leisure. Thealphabetisation groups were attended by 90 people and11 volunteer teachers.

In Itamarandiba, in Vale do Jequitinhonha, CommunityAssociation office of Nova Fazendinha was inaugurated

assisting approximately 800 families. Workshops of sports,culture and education for professionalization of low incomeyoungsters are developed locally. A rural area and a farmingschool received technical assistance for instructors of biodigestors, equipment that produce power from organicwaste. The work also benefits the rural producers inTurmalina.

Social promotion

Employees engaged in the Social QCC programme developvolunteer actions in schools and entities of the third sector

37

socialperformance


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Environmentalperformance


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39

environmental performance

In 2009, ArcelorMittal Stainless Brazil invested approximately R$ 11.7 million in environmental management and

protection, waste disposal, emission treatment and mitigation of impacts; installation of technology and paymentof the personnel involved in site activities. The Company develops power efficiency programmes; works towardsmaximum rationalisation of water consumption and collection; invests in technologies for reusing materials and isreducing, on a yearly basis, gas emissions that cause the greenhouse effect.

Environmental performance

The Company consumed, in 2009, 12.97 million Gigajoules (GJ) of energy. From that, 7.6 million GJ came fromrenewable sources such as hydraulic, wood and air. The remaining amount came from non-renewable sources charcoal and petroleum. Almost all energy consumed by the Company used for the operations were purchased fromexternal suppliers.

Energy

Non-renewable sources

Primary source

CoalPetroleum

Renewable sourcesHydraulic

Wood

Air

Total

Consumables

CokeLPGFuel oil 1ADiesel oil

Electric energyHydrogenCharcoalCharcoal finesNitrogenOxygenArgon

5.313.2552.868.2281.992.167

393.10359.757

7.665.5332.748.817

74.1612.456.5071.237.154

568.861521.583

58.45012.978.788

Total Energy Consumed(in GJ)

Renewable sources59%

Non-renewable sources41%

Origin of the energy consumed Origin of the energy consumed

12.97 million GJ

Producedenergy

Purchasedenergy

0

68.5 thousand GJ(hydrogen fromhydraulic source)


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40

In 2009, the consumption of recyclable materials in ArcelorMittalStainless Brazils productive process has reached approximately 171thousand tons among scale, chrome ore fine briquettes and steel scrapinternally generated and acquired. That volume represented 7.15% of all raw material used for producing steel, or 2.39 million tons.

Use of recycled materials

Recycled material used 2009 (t)

ScaleSteel scrap acquiredSteel scrap (internal recycling)Chrome fines briquetteTotal

10,08620,032135,0465,988171,152

Almost six thousand tons of briquettes were used in theproductive process in 2009

In 2009, the Company saved 91.7 thousand GJ of energy, which is equivalent to 16.4 thousand MWh of electric energy that is enough to supply 7.6 thousandhomes during one year. This saving was made possibleby several projects such as installation of a more

modern and efficient air compressor; substitutionof diesel oil for blast furnace gas in the HydrochloricAcid Regeneration Plant; improvement of Steel Plantladle heating control, resulting in the reduction of LPGand oxygen consumption.

Other improvements adopted were the use of instrument air in place of nitrogen in the stainlesssteel Annealing and Pickling Line and optimisationin the use of cooling tower pumps and exhaustfans by adapting the distribution, monitoring andmanagement system.

In addition to invest in energy saving, ArcelorMittalStainless Brazil develops materials that contributeto the power efficiency of its customers products.Among them are the electrical steels, which areused in the manufacturing of high yield transformer

and motor core, with low magnetic losses and lessemission of pollutants. Additionally, as a resultof the work done in the past years, ArcelorMittalStainless Brazil has developed steel grades for themanufacturing of electrical motors used in hybrid

cars, i.e., with the traditional combustion motor andthe electrical motor, generator and battery.

The stainless steel line is also an essential rawmaterial for the manufacturing of energeticallyefficient products. That is the case of the steelgrades used in the construction of ethanol plants,a fuel that still today is the main alternative topetroleum in Brazil, and the stainless steel used forthe manufacturing of automobile exhaust systemcomponents, produced in compliance with theguidelines of the Programme for Controlling AirPollution from Automobiles (Proconve), establishedby the National Environment Council (Conama).

Another advantage of the stainless steel is that it isa fully recyclable product, which affords it a long lifecycle.


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By recirculation 95% of the water used in its productiveprocess, ArcelorMittal Stainless Brazil assures therational use of that natural resource. Its main collectionsource is the Piracicaba River, in Vale do Ao, from which13.2 million cubic meters were collect in 2009. The

collection is carried out based on the license granted byWater Management Institute (Igam) and monitored atthe Companys Water Treatment Station by means of flow rate records.

The effluents generated in Timteo Plant are submittedto physical-chemical treatment to remove metals such

as chrome, nickel and iron. As for the slurry resultingfrom the treatment process, it is dehydrated through apress filter or similar device and transferred to the wastedisposal yard, according to the environmental standardscurrently in force. In the rolling areas, there are boxes to

separate water from oil and settling tanks.

Before being discarded into the river, the effluentsgo through a hydric quality analysis involving 18parameters. In all analysis carried out, the figuresfound were below the limits set forth by environmentaldepartments.

Hydric resources and effluents


Collected from Rio Piracicaba, the water used in the industrial process goes through a flow rate control and analysis of 18 quality indicators

Volume of water collected: R$ 13.2 million cubic meters

Average volume collected by the Company: 1,505 cubic meters/hour

Volume of recycled water: 279 million cubic meters

Volume of effluent disposals (except rain water): 8 million cubic meters in 2009.

41


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42


ArcelorMittal Stainless Brazil emitted, in 2009, approximately 525 thousand tons of carbon dioxide (CO 2). Thecalculation of those emissions is based on the Site Balance precepts, of World Steel Association (WSA), an entity that

gathers the main steelmaking organisations in the world.

Gas emissions

CO2 emissions (in thousands of tons)Generation of electricity, heat or steamPhysical-chemical processingTransportation of materials, products and wastesIndirect emissionsTotal

160.1306.93.754.5525.2

The energetic matrix of the Company is more and more based on renewable sources as well on projects of energyefficiency and preservation and has contributed to systematically reduce carbon dioxide emissions. In 2009,ArcelorMittal Stainless Brazil stopped emitting 8.3 thousand tons of gas.

Thanks to a strong proactive work, the Companydid not registered leakages or spillages of hazardousproducts during its operations in 2009. To be on thesafe side, ArcelorMittal Stainless Brazil makes use of acontractual clause requiring its suppliers, or those thatsigned a contract with companies specialised in thattype of work, to provide means to solve emergencysituations related to material transportation andhandling. ArcelorMittal Stainless Brazil has a controlsystem called Emergency Assistance and Response

Plan (Pare), which sets forth the procedure to identify

potential emergency events and respond to suchsituations accordingly.

Served oils and materials contaminated by oil, dust,slurry, hospital residue, rock and glass wool scrap,emulsion and battery are the main hazardous wastesgenerated by the Company and that require beingtransported to recycling or disposed off to an industrialdump. In 2009, 60.6 thousand tons of waste on thatkind were generated, from which 31.7 thousand were

reused both internally and externally.

Leakages

ArcelorMittal Stainless Brazil did not received any penalty fine, non-economical sanctions or law suits bymechanisms of arbitration in 2009 as a result of impacts to the environment caused by its operations. Allrestrictions for releasing its environmental licenses (two for operation and one for installation) have beencomplied with within the period set forth.

In 2009, the Company had its ISO 14001 certificate revalidated and legal compliance evaluated, consideringfederal, state and municipal legislation applicable to its activities, products and services. The non-conformancesdetected were handled and corrected.

Legislation and compliance

The emissions in 2009 were 30% lower as compared to2008, when the amount of CO 2 released to the atmospherereached 749 thousand tons. That difference is due mainlyto the reduction in productivity caused by the worldwideeconomical crisis, which, in turn, caused an impact to energyconsumption. No. 2 Blast Furnace, a consumer of coke andmain gas releaser, remained shut down for almost five months

last year.


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The wastes generated by industrial activitiesare disposed of according to the environmentalregulations and classifications recommendedby the NBR 10004 standard. However, a largeamount of the waste is reused when there is nochange in properties in order to be used in otherprocess , or recycled when the properties and

the use in other materials are modified.

The Company broke successive records inreducing waste disposal in its yard by achieving,in 2009, an average rate of 84 kilos per ton of gross steel produced, as compared to 159 kilosregistered in the previous year. The goal is toreach, until 2011, 50 kilos per ton of gross steelproduced, an index determined by ArcelorMittal.From the total volume of wastes generated,

88% are recycled or reused, either internally orexternally. In 2009, ArcelorMittal Stainless Brazilgenerated approximately 454 thousand tons of wastes in its productive process.

Wastemanagement


43

Waste management

ReutilisationRecyclingRecoveryIncinerationSanitary dumpYard disposalTotal

07,988

000

28,88236,880

Internal use

022,981

35743

00

23,759

External use

22,44514,811

000

22,29355,549

Internal use

82.839250,219

00

7250

333,783

External use

105,284296,009

35743725

51,175453,971

TotalProcess

Hazardous waste (t) Non-hazardous waste (t)

Non-hazardous87%

Hazardous13%

Type of waste


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44


A significant number of products manufactured byArcelorMittal Stainless Brazil arrive at the customerspremises by means of specialised vehicles (fitted withcoiler), which contribute to reduce the environmentalimpact during the trips. In the year 2009 alone, theCompany transported 300 thousand tons of productsin vehicles of the like in a total of 7.5 thousand trips. Totransport the same volume in regular trucks, it wouldbe necessary to make approximately 11.2 thousandtrips. That difference resulted in a reduction of 3.3thousand tons of carbon dioxide (CO2) released to theenvironment.

Another initiative that contributes to reduce theenvironmental impact caused by the transportation

activity is the control of dark smoke emission by trucks,which is the soot generated by incomplete fuel burning.That control is done by means of a contractual clausedemanding the carriers to comply with the legislation;by monitoring emissions and using an opacimeter, aninstrument for measuring the smoke level of trucks

assisting the Company. Weekly, three vehicles, in average,are inspected at random, a total of 160 trucks per year.

With investments of R$ 2 million in 2009, the Companyfinished the asphalt paving of the raw material supply

and product shipping gate, thus reducing the levelsof emission of local dust. The pavement, suitable forheavy duty, substituted the one made of earth andslag. That measure complies with the action definedby ArcelorMittal Stainless Brazils environmentalmanagement plan.

Environmental impacts

of transportationactivities

The Finishing and Logistics Departments havecontributed to the reduction in the consumption of ArcelorMittal Stainless Brazils product packing. From2006 until the end of 2009, the volume of woodconsumption, one of the main raw materials used insteel coil packing process, has decreased 45%, from16 cubic meters/1000 tons to 8.9 cubic meters/1000tons. That could be achieved due to the use of specialised trucks fitted with coiler to transport part of

the production. That measure provides for a paybackestimated to be approximately R$ 2.1 million per year.

In addition to wood, load transportation byspecialised vehicles decreases the consumption of other two consumables used in the packages paperand metal strap increases the safety on roadsand guarantees the delivery of products withoutdamages.

Reduction of package consumption

Transportation of products by specialised vehiclesreduces the volume of CO 2 released to the atmosphere

The control of dark smoke engages 160 trucks per year

MaterialVCI paper and othersWoodMetal strap

Reduced volume with the use of specialised vehicles (2009)30 tons

400 cubic meters60 tons


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Through ArcelorMittal Acesita Foundation, the Companyis responsible for the management of 2,504 hectares of green areas distributed around the urban area of Timteo.Among them, is Oiks Environment Educational Centre, aremaining area of the Atlantic Forest with 989 hectares,located near Rio Doce State Park.

In July 2009, during school vacation, one of the mainenvironment educational activities carried out in thecentre called Playing, Doing and Learning at Oiks , wasattended by 10 thousand people. Whereas during theEnvironment Week, 2,760 students attended 28 lectureswith related themes.

Fire prevention

One of the environmental protection activities of greatest impact developed in Timteo is the Forest FirePrevention and Control Plan, prepared by the Companyin partnership with the State Forest Institute/Rio DoceState Park, Environmental Military Police, Military FireFighting Brigade of Minas Gerais State, among other 35partners in the community.

Between 2007 and 2009, the number of wild fire intown decreased 83.4%, thanks to the actions by theNeighbourhood Network responsible the vigilance sharedbetween the Company and the community.

The efforts to protect and recover green areas includedfight against ants, mowing, crowning, area maintenance,in addition to the planting of 15.8 thousand seedlings.Other 12.5 thousand seedlings of fruit species and nativeones were donated to the community in order to kindleplanting habits.

The fencing of more than three kilometres of protectedarea has also promoted the reforestation whenpreventing the access of pets and discouraging invasions.For the activities developed for the environment,ArcelorMittal Stainless Brazil received, in 009, an awardof Environmental Management/Responsibility, grantedby the non-governmental organisation called PlanetGuardian.

Biodiversity

protection

Oiks was visited by thousands of children in 2009

45

Burnt Areas

350 ha

0

76 ha 100 ha

38 ha

57.88 ha

1.22 ha

Town area

Companys area

2007 2008 2009


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Glossary

22


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Absenteeism Rata: an index of absence at work.

ArcelorMittal University: educational executive programme developed to give support to leadershipdevelopment strategy in ArcelorMittal on corporate level.

Austenitic stainless steels: products of which composition presents chrome levels between 16 and 26%, nickelequal to or lower than 35%, and manganese equal to or lower than 15%. They can have contents of molybdenum,copper, silicon, aluminium, titanium and niobium, when resistance to oxidation is required. They have highmechanical resistance as well as resistance to corrosion at high temperatures.

Bioreductant: a terminology that defines charcoal role as power fuel and iron reductant in steelmaking operations.The charcoal from planted forests is a natural renewable resource: a ton of pig iron produced from this raw materialprevents the emission of three tons of CO 2 as compared to the same volume produced with metallurgic coke.

Compliance: a terminology that means to act according to a rule, request or command. It is adopted by the mainorganisations in the world and this programme has the aim to avoid potential deviations as regards business handling.

Corporate Governance: a system through which the society if governed and monitored, involving decision makingand relations with stakeholders, administrative council, board or directors, independent audit and fiscal council.

Customer Scorecard: in-house evaluation of customer service based on a scoring system.V Day: a day dedicated to volunteer work. In Brazil, it always takes place on the first Saturday of December.The participants carry out solidarity actions involving non-governmental organisations, privates companies andgovernments.

Dark Smoke : also known as soot, it is the result of incomplete fuel burning. It is basically composed by carbon andsmall particles.

EBITDA: short term for Earnings Before Interests, Taxes, Depreciation and Amortization. It is one of the most usedindicators by organisations to check their financial health.

Effluent Treatment Station: an effluent water recovery and depolutting unit indented to the recycling of water tobe reused.

Ferritic stainless steels: without nickel in its composition, this steel grade presents chrome contents rangingbetween 11 and 30%. Some of them can have contents of molybdenum, silicon, aluminium, titanium, niobium,sulphur and selenium in other to acquire certain characteristics. Resistance to corrosion under tension and tooxidation at high temperatures, low heat expansion and good drawability are some of their characteristics.

Frequency Rate: it is the number of accidents per million of hours of exposure to risk during a certain period.

Gigajoule (GJ) : a measuring unit of heat energy.

Global Reporting Initiative (GRI): a non-governmental organisation, of which mission is to develop and

communicate global guidelines for the preparation of sustainability reports.

Great Place to Work: an international organisation that studies the characteristics of the corporate environmentand develops mood surveys.

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Profit and Result Share (PLR): a managerial policy through which an organisation distributes among itsemployees a previously defined part of its profits achieved. The value is calculated from the net results.

Project Design Document (PDD): detailed description of carbon credit project, including aspects such asmethodology, monitoring, validation and public query. It is submitted to evaluation by an Assigned Operational

Entity (EOD).

Quality Control Circles (QCC): a group comprised by employees that, voluntarily, develop projects to improveworking process quality. At ArcelorMittal Stainless Brazil, the QCC groups are also involved in social responsibilityworks.

Severity Rate: it is a number that represents the quantity of days registered on lost-time accidents per million of man-hours of exposure to risk.

Slag: a by-product from the transformation of iron ore into metal through the melting of iron impurities together

with addition of fluxes and coke ashes.

Total Preventive Maintenance (TPM) : a maintenance programme of industrial equipment based onmulticapacitation of the employers. They are prepared to not only operate equipment, but also make repairs ordiagnosis eminent defects.

Voluntary Resignation Incentive Programme (PDV) : an initiative to motivate volunteer resignation by theemployees. The Company offers economical advantages in exchange of the employee resignation.

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informationsources

Paulo Magalhes

David VeyssetAngelo ZaniniMarcelo MarinzekSandra AndradeFlvio RafaelMiguel MajdalaniRoberto NardocciRonaldo ClaretPaulo DiscacciatiRoberto Manella

Arlena MontesanoRenato AlvesRosemary GuimaresCludia IacopiniJuliana UrbanClnio GuimaresFrederico Ayres LimaMrcia ManataClnio SantanaRodrigo Villela

Ilder Camargo da SilvaJos Anisio Dias CabralMany Maria MoreiraMirna OliveiraSelma MartinsLcia FonsecaEduardo BarbosaJoo BorroHelder GomesThiago Barbosa

Anfilfio SallesOdilon Machado NetoPedro Ges MonteiroAntnio Cerize

Theme NamesCorporate governance

Companyprofile

Highlights

Economical and operationalperformance

Social performance

Environmental performance

MastheadArcelorMittal Stainless Brazil Annual Report (2009)Co-ordination: Soraya Trre (ArcelorMittal Stainless Brazil Corporate Communications Department)Text and editing: BH Press Comunicao | Desktop publishing: AVI Design | Cover picture: Daniel MansurTranslation: Wordshop Tradues Tcnicas | Photographs: Daniel Mansur and Edmar Silva | Date of the PreviousReport: 2008 | Report publishing rate: annually

e-mail for informations: inox. [email protected]


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GRIIndicators

Report profile and GRI summaryIn addition to own indicators, the present Report followed the guidelines for sustainability reports set out by Global Reporting

Initiative (GRI). It is considered by the Company as Level C Report.

Optional

Mandatory

2009according to

C C+ B B+ A A+

Self declared

Checked by third

parties

Checked by GRI

With independent

assurance statement

With independent

assurance statement

With independent

assurance statement

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1.1) Declaration of the function holderwith greater decision making power in theorganisation about the sustainability importanceto the organisation1.2) Description of the main impacts, risks andopportunities

04-05

4-6; 15- 21; 23-26;28-45

Strategy and analysis

Organisational profile

2.1) Name of the organisation2.2) Main brands, products and/or services2.3) Operational structure of the organisation2.4) Location of the organisation headquarters2.5) Countries in which the organisation operates2.6) Property type and legal nature2.7) Markets assisted2.8) Organisation size2.9) Main changes during the period covered bythe report related to size structure or equity2.10) Awards received

0106-0906-090607-090607-09; 15-16; 25-2604 -09, 24-254-5; 15-16

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Report parameters

3.1 Period covered by the report3.2) Date of the most recent previous report3.3) Report issuing cycle

505050

Indicator Does notcomply

Complies Partlycomplies

Notapplicable

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GRIIndicators

EC8) Development and impact of investments in infrastructure and publicservicesEC9) Identification and description of indirect economical impacts

35-37

Environmental performance indicators

EN1) Materials usedEN2) Materials used from recycling processEN3) Direct energy consumptionEN4) Indirect energy consumptionEN5) Energy saved due to improvementsEN6) Initiatives to provide products and

services with low energy consumptionEN7) Initiatives to reduce indirect energyconsumptionEN8) Total volume of water collected persourceEN9) Hydric sources significantly affectedEN10) Percentage and total volume of recycled and reused waterEN11) Location and size of the area owned,leased or administrated within the protectedareas or adjacent to them, and high biodiversityrate areas outside the protected areasEN 12) Description of significant impacts tobiodiversities of activitiesEN 13) HabitatsEN 14) Strategies, measures in force andfuture plans for managing impacts tobiodiversitiesEN15) Number of species on IUCN Red ListEN16) Total emissions of greenhouse effectgasesEN17) Other relevant indirect emissions of greenhouse effect gases

EN18) Initiative to reduce greenhouse effectgas emissionsEN19) Emissions of destructive substancesonto ozone layerEN20) NOx, SOx and other atmosphericemissionsEN21) Total water disposalEN22) Total waste weightEN23) SpillagesEN24) Weight of transported wastes,considered hazardous according to BasileiaConventionEN25) Identification, size, protection status andbiodiversity rate of related water volumes andhabitats significantly affected by water disposaland drainage made by the reporting organisation

404039394040

40

41

4141

45

45

4545

42

42,44

41434242



Notapplicable

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EN26) Initiatives to mitigate the environmentalimpacts of productsEN27) Percentage of products and its packagerecoveredEN28) Monetary value of significant fines and

total number of non-monetary sanctionsEN29) Impact from product transportationsEN30) Investiments

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4439

Social performance indicators

LA1) Total of workersLA2) Total number and employeerotating rateLA3) Benefits offered to full timeemployees that are not offered totemporary employeesLA4) Percentage of employees coveredby collective agreement negotiationsLA5) Minimum period to notify inadvance operational changesLA6) Percentage of employeesrepresented by official committees of health and safetyLA7) Rates of injuries, occupationaldiseases, lost days, absenteeism anddeaths related to workLA8) Programmes involving education,training, counselling, prevention and risk

controlLA9) Themes related to health and safetycovered by formal agreements withlabour unionsLA10) Average of training hours per year,employeeLA11) Programmes for competencemanagement and continuous learning thatsupport employment continuity of theworkers and manage end of career activitiesLA12) Percentage of employees that

regularly receive performanceLA13) Composition of the groupsresponsible for corporate governance andlist of employees per category, accordingto genre, age range, minoritiesLA14) Ratio of base wage between menand women, per functional categoryHR1) Percentage and total number of significant investment contracts thatinclude clauses related to human rightsHR2) Percentage of critical contractedcompanies and suppliers that weresubmitted to evaluations related to humanrights and measures takenHR3) Total training hours for employees inpolicies and procedures related to aspectsof human rights relevant to operations

28

28

32

32

31

32

30

30



Notapplicable

PageGRIIndicators


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HR4) Total number of cases of discriminationHR5) Operations identified in which the

right to exercise freedom of associationand collective negotiation, may be atsignificant risk and the measures taken tosupport this rightHR6) Operations identified as significantrisk of occurring children workHR7) Operations identified as significantrisk of occurrence of forced work oranalogous to slaveryHR8) Percentage of security personnelsubmitted to training on the policies orprocedures of the organisation related tohuman rights aspects.HR9) Total

RSE - Reporte de Sustentabilidad de Arcelor Mittal Brasil 2010

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