ArcelorMittal South Africa Annual Report 2009 Operational review and locations continued Long Carbon Steel Products The Long Carbon Steel Products segment produces a range of long products at the integrated steel works at Newcastle Works and the electric arc furnace at Vereeniging Works. These products include bar, billets, blooms, hot- nished and cold-drawn seamless tubes, window and fencing pro les, rod and light, medium and heavy sections. The biggest market exists in the building and construction industry, which accounted for about half of the sales during the year. Other signi cant markets are the mining, automotive, agricultural, engineering, manufacturing and petrochemical industries. The segment’s combined annual production output capacity is about 2.3 million tonnes liquid steel, with Vereeniging Works capable of producing 0.4 million tonnes and Newcastle Works 1.9 million tonnes. ArcelorMittal South Africa is committed to meeting domestic sales first but is also a strong competitor in the global market, thanks to its ability to provide high- quality products at competitive prices. Markets Domestic Local shipments of long steel products in 2009 declined by 36% as several private sector investment projects were cancelled. Residential building was subdued due to risk-averse lending policies by commercial banks, while non- residential building activity virtually ground to a halt during 2009. As a result of the depressed market conditions in South Africa, the business focused attention on the export market. Thus only 61% of total long steel product sales were sold on the domestic market as opposed to 92% in 2008. Total sales to the African continent amounted to 91% of total shipments, similar to the percentages in 2007 and 2008. International Export sales of long steel products in 2009 were 4.5 times higher than in the previous year as ArcelorMittal South Africa shifted output from the depressed local market. Shipments outside the African region, mainly to Asia, amounted to only 9% of total long steel product sales, compared with 5% in 2008. The average net realised export prices for long steel products plunged by 51% in 2009. Operational results for the year ended 31 December 2009 2008 Revenue (Rm) 8 531      12 950 Net operating income (Rm) 315 3 672 Liquid steel production (’000 t) 1 879        1 690 Sales volumes (’000 t) 1 615        1 677 Domestic 993 1 540 Export 622 137 Domestic sales (%) 61 92 Capital expenditure (Rm) 271 541 Average low-carbon wire-rod export price USD/t(c&f) 510 909 Number of employees 2 708        3 008 Total billet cash cost Rand per tonne 3 460        3 822 Total billet cash cost USD per tonne 410 463 Net operating income – Long Steel Products (Rm) 2009 2008 2007 2006 2005 315 3 672 2 652 2 111 2 109