analysts presentation steel noram oct 2006

Foseco Steel NorAmBusiness Review

October 10, 2006

2 Foseco NorAm Business Review

Agenda

• Introductions Lee Plutshack• Foseco NorAm Steel – Overview Mike Fish• The North American Market Bill Jennings• Foseco NorAm’s Focus Bill Jennings• Products and Applications Albert Dainton• Summary Lee Plutshack

NorAm OverviewM. Fish

October 10, 2006

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Who are we?

Foseco is a leading supplier of high technology products and value-added services to the steel industry.

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NorAm Manufacturing & Laboratory Facilities

• Conneaut - Ohio– Afax granular & powder mould flux production– Turbostop flow control system production– Secondary steel making (SSM) degasser snorkel production– Afax & Foscast quality control labs

• Saybrook - Ohio– Deltek – Carbon bonded ceramics production

• Cleveland – R&D– Afax recipe development laboratory– Foscast refractory development laboratory– Turbostop water model laboratory– Deltek mould model laboratory – mathematical and water modeling

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Mittal Steel

AK Steel

US Steel

Nucor Steel

NorAm Customer Base

Stelco Steel

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Steel Making Process

Years of experience focused on the casting deck.

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The Casting Deck

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A History of Innovation

• Profax/Kalorex Hot Tops - early 60s - Ingots• Garnex Tundish Liners – 1970’s• Afax Granules in North America – 1980’s• Turbostop -1990’s• Integrated Process Improvement - 2000’s

– Unique product portfolio linking the variables in the continuouscasting process.

Foseco has been introducing new technology to the steel industry for over 40 years

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Ingot Hot Tops

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Garnex Tundish Lining System

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Organized to Improve Customer Performance

Service Techs

Direct Sales

VP Sales

R&D/Eng Support

Direct Mktg.

VP Marketing

Cell Mgrs.

Operations Dir.

Finance & Cust. Service

Finance/Commercial

Chief Executive

Application Engineers

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Solid Customer Relationships

• Years developing relationships in plant & head office.• Worked with our key customers through good & bad times• Steel Groups R&D work with us in our facilities.• Operators understand the value we bring to the table and

support us with purchasing.

NorAm Steel MarketB. Jennings

October 10, 2006

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NorAm Steel Market

• 109 million Tonnes Shipped in 2005– Canada: 14 million tonnes– U.S.: 95 million tonnes

• 55 steel companies with approximately 135 facilities• 9.6% of the world steel production• Largest Markets: Construction and Automotive

– Other Key Markets• Machinery• Containers• Pipe/energy

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Global Steel Production

0

50

100

150

200

250

300

350

400

China Europe NORAM C.I.S. Japan S. Amer India

Prod

uctio

n (M

ilion

Ton

nes)

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NorAm Production

70

80

90

100

110

120

130

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05

Mill

ion

Tonn

es

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NorAm Steel Imports

0

5

10

15

20

25

30

35

'06 '07 '08 '09 '00 '01 '02 '03 '04 '05

Tonn

es

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Consolidation of Industry

LTV BethlehemInland SidbecLukens GeorgetownWierton Dofasco

Arcelor/Mittal

USXNational Steel

USS

Nucor Auburn Birmingham SeattleTrico

Nucor

Gerdau AmeristeelMRM AtlanticCo-Steel North StarAmeristeel Cambridge

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Consolidating Steel Industry

Pre ConsolidationTop Three

Other68%

Nucor14%

USS10%

Beth8%

Post ConsolidationTop Three

Nucor18%

USS16%

Mittal25%

Other41%

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Impact of Consolidation• Steel Companies are stronger financially

– Manage supply with demand – Domestic & Global– Higher steel prices– Less cyclical production and pricing– New labour agreements

• Best Practice Approach– Utilization of best technologies– Global perspective– Value is important

• Value = Customer $ in yield, productivity, quality, etc. – “Foseco”• Centralize Purchasing

– Greater purchasing influence– Fewer suppliers– Price rationalization/down initiatives

• Reduced R& D. – Greatly reduced localized R&D capability.– More reliant on supply chain - “Foseco”

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Consolidation – An Opportunity for Foseco

• Financially strong market• Less cyclical market• Demand for innovative technology• Value is key• Market requires development resources

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Customers are strong and will Survive!!

• Consolidation provided financial stability• Global focus• Global customers – Automotive transplants• Low man-hours per ton• Raw material stability

– Iron ore, scrap

• Energy efficient• Technology leaders• New production facilities being built

Foseco NorAm FocusB. Jennings

October 10, 2006

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Targeted Sectors

• Slab • Thin Slab• Special Bar Quality (SBQ)

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Targeted Sectors – Why?

• Customers who appreciate – Value– Technology– Supply chain

• Financial stability– Strong steel markets– Value added steels– Premium price steel producers.

• Similar targeting approach as Foseco

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Foseco’s Target - Flow Control on the Casting Deck

Why?

• Critical steel processes require innovative cost effective solutions

• Individually unique casting parameters demand customized solutions

• Application Expertise• Years of Experience in steel

containment, flow and solidification

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Why we succeed!

Customised products • Defining the customer’s needs and customizing solutions.

Multifunctional account management

teams • Managing the business at the account level

working with the customer

Engineering expertise • Robotic & automatic application systems . Water modeling services for Turbostop & Deltek

Technical support • Global experience and resource base

Highly trained field sales and marketing

team Understanding the process.

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NorAm Sales History

2000 2001 2002 2003 2004 2005 2006

SAL

ES

$

Products and ApplicationsA. Dainton

October 10, 2006

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Foseco’s Core Business

The Steelmaking Process

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Continuous Casting Process

TUNDISH

LADLE

MOLD

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Product Split

CBC10%

Tundish17%

Other3%

Afax40% Turbostop

18%

SSM12%

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Where Afax products are used

AfaxMold Powder

AfaxTundish Flux

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Mold Fluxes NorAm Market

Stollberg55%

Metallurgica10%

Foseco27%

Others 8%

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AFAX - Continuous Casting Fluxes

• High cost of entry– Heavy investment in plant, quality

control and people• Highly technical product

– Each plant has different casting conditions

– Usually 4-5 different grades• High risk

– Last and most critical consumable in the hot end process

• Highly sustainable– Multiple formulations – Changing requirements– Regular re-engineering of product

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Low High

Low

Hig

h

Tech Sales Input

Offe

r Diff

eren

tiatio

n

Tundish Flux

“Integrated” Strategic Positioning

Med

Med

Afax Product Positioning

Mold Powder

Basic TD Covers

Engineered Mold

Solutions

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1986 1989 1992 1995 1998 2001 2004

Afax Sales DevelopmentSA

LES

$

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Where Turbostop is used

TURBOSTOPSYSTEM

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Tundish Flow Systems NorAm Market

Foseco41%

CCPI22%

Vesuvius20%

Others 18%

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Turbostop - Tundish Flow Systems

Key features• Highly technical product

– Each steel plant has different casting conditions

– Usually 4-5 different grades• High risk

– Steelmaking process re-engineered to custom design

• Highly sustainable– Multiple formulations – Changing requirements– Regular re-engineering of product

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Low High

Low

Hig

h

Tech Sales Input

Offe

r Diff

eren

tiatio

n“Integrated” Strategic Positioning

Med

Med

Turbostop Product Positioning

Custom DesignedTurbostop

Traditional Methods

GenericShapes

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Turbostop Sales

0123456789

1994 1997 2000 2003 06 Proj.

SAL

ES

$

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Where Deltek products are used

Deltek Ladle Shroud

DeltekStopper Rod

DeltekSES

Deltek SEN

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CBC Flow Control Systems NorAm Market

Vesuvius70%

Japanese11%

Foseco5%

Others 14%

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Deltek Flow Control Systems

• High cost of entry– Heavy investment in plant, quality

control and people• High risk

– Product issues result in high cost to steel plant

• Highly technical product– Each plant has different casting

conditions– Each customer has 3-5 shapes unique

to his plant– Requires custom design and modeling

of process• Highly sustainable

– Multiple formulations – Changing requirements– Regular re-engineering of product

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Low High

Low

Hig

h

Tech Sales Input

Offe

r Diff

eren

tiatio

n

Low endcommodity products

“Integrated” Strategic Positioning

Med

Med

Deltek Product Positioning

Custom Designed Products

Engineered Pouring

Solutions

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Deltek Sales

0

1

2

3

4

5

6

2001 2003 2005

SAL

ES

$

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Foseco Product Synergies

Deltek Ladle Shroud

DeltekStopper Rod

DeltekSES

Deltek SEN

AfaxMold Powder

AfaxTundish Flux

TURBOSTOPSYSTEM

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Casting Deck Synergy

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The Foseco Advantage

• Foseco is the only supplier that is equipped to provide integrated caster flow control and flux solutions

• All three product areas interact and have a significant effect on the quality and yield in the steel plant

• We have significant expertise in this area of the plant including equipment and software control

• Thus we can leverage and exploit the synergy

Summary Strategic OverviewL. Plutshack

October 10, 2006

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Success - Clear Direction and Focused Approach

• Foseco business model can be applied in Steel• Steel has successfully repositioned itself to changing industry

requirements• Steel has an experienced team• Product lines of strategic interest

– CBCs are an important part of Steel’s future and we are very optimistic about our future success

– Turbostop and Mould Flux are also very interesting opportunities• Very successful where focused

– No. 2 to Vesuvius in Carbon Bonded Ceramics in Europe– No. 2 to Stollberg in Mould Flux in North America– Globalization of Turbostop

• Focus resource on value-added opportunity• Compete on technology & service• Exploit the synergies of our unique product portfolio• Steel profitability will improve