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Highlights of 07/2013

Created: 4/8/2013
Author: -ov-
Category: 07/2013

U. S. Steel Kosice remains part of the U. S. Steel Group

During 2012 United States Steel Corporation received serious expressions of interest in U. S. Steel Kosice. United States Steel Corporation continuously evaluates how capital is allocated across the corporation and strives to deploy it in a way that maximizes returns to its shareholders. The process of U. S. Steel Kosice evaluation has come to an end and U. S. Steel Corporation has renewed its commitment to its European activities and the Kosice plant. U. S. Steel Kosice will remain part of the U. S. Steel Group and will pursue the successful development of ongoing activities in Europe. Yesterday, March 26, 2013 U. S. Steel and U. S. Steel Kosice signed the Memorandum of Understanding (MOU) with the Slovak Republic. In this issue of the company paper we publish a short summary:

Incentives provided by the Slovak Republic:
USSK pays about EUR 53 million per year in electricity fees and tariffs that are used in part to fund subsidies for renewable energy sources such as solar panel and wind farms. We use blast furnace and steel shop waste gases to generate steam for heat, electricity and other energy needs in a highly efficient and environmentally friendly manner. The MOU says that after we modernize some of our boilers, USSK would be entitled to an annual support payment (currently estimated at 14.8 million Euros) for produced electricity by highly efficient combined production from metallurgical waste gases.
The sections in the MOU about getting funds to help us finance best available techniques (BAT) environmental projects provide that the Slovak Government will consult with USSK eligibility of USSK BAT projects for obtaining EU funds that can be used to finance these projects. USSK expects to spend about 300 million Euros for capital BAT projects within the next three years in order to comply with these EU-mandated environmental requirements. (Our biggest problems in meeting these requirements are the short time we have to do it and the fact that we have to use equipment and methods dictated by the EU.) These funds would come from the EU (not the State treasury) and from some of the revenues the Slovak Republic will get from selling CO2 emission credits. The EU directive about emission trading provides that part of the money the member states get is to be used for to fund carbon reduction projects and some money may also be used to aid industries, such as ours, that have a disadvantage compared with competitors from outside the EU where companies do not have to worry about CO2 emissions. This is why the MOU speaks about compensation of electricity costs for sectors exposed to significant risk of carbon leakage. Our factory is a big user of electricity and Slovak industrial electricity prices are among the highest in the continental EU.
We currently pay fees to disposing wastes at our own landfill, but the MOU provides that those fees will remain fixed for a while and the Slovak Government will consult with us about any future increases. You have read about the troubles Zeleznicna spolocnost Cargo Slovakia, a.s. (Cargo) is having and the fact that we have been using another company to bring iron ore to our plant. There are two things that caused this. First, our traditional raw material suppliers are demanding higher and higher prices so we are addressing this by using some iron ore from North America. Second, another transportation company offered us better prices to bring ore from the seaport to our plant. Just as the Slovak Government has a responsibility to support Cargo to keep employment, we have a duty to you and our investors to keep our costs as low as possible. We have agreed to continue to speak with the government about how we transport our raw materials.

Assurances from U. S. Steel and USSK:
As one might expect the MOU contains items which USSK has committed to the Government. These are intended to provide assurance that we are serious and committed to our operations here. Our commitment about employment reflects both our desire and our practice to use natural attrition to reduce the size of our workforce and avoid massive layoffs where possible.
The other assurances from our side express the parties' wishes for the highest form of cooperation.

We believe this MOU exemplifies the cooperation government and industry should have, and think negotiating it have given us a better understanding of each other. It also gives us optimism for the future-one we will conquer together.


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