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Arrium Sustainability Report 2015

Contents Glossary Print

Contents


Arrium Mining Consumablessupplies resource companies with a range of key mining consumables, including grinding media and rail wheels. Through its Moly‑Cop brand, it is the largest supplier of grinding media in the world with leading market positions in North America, South America and Australasia.

Arrium Miningincludes the Company’s export iron ore business and a wholly‑owned port at Whyalla, both in South Australia. The business was restructured during the financial year to focus on its lower cost Middleback Ranges operation. Export sales of hematite iron ore for the year were 12.5 million tonnes. In addition, Arrium Mining also supplies iron ore to the Company’s integrated steelworks at Whyalla.

Arrium Steelincludes both the Steel and Recycling businesses. The Steel business is Australia’s only manufacturer of steel long products with steel‑making capacity of approximately 2.5 million tonnes per annum. It is also Australia’s leading steel distributor and reinforcing steel supplier. The Recycling business has operations focused on the southern and eastern coasts of Australia, as well as non‑ferrous operations in Asia.

Arrium Limited is an international diversified mining and materials company with three business segments:

Arrium Sustainability Report 2015 / Page 1


2014

2015

Milestones 2015 financial year

January/February March/April May June

– Announced re-design of Arrium Mining

– 1H15 results announcement

– “Swear by Safety” campaign launched in Whyalla

– First ores railed from Iron Knob

– Completion of sale of Wire Ropes to Bekaert

– Celebrated golden jubilee of Whyalla Steelworks

– Mr Douglas Ritchie joined Arrium Board

– Successfully refinanced ~A$200 million of FY17 maturing debt facilities for four-year period

– Celebrated 100th anniversary of steelmaking and steel related activities in Newcastle

– Whyalla reheat furnace upgrade completed

– Announced Strategic Review and further restructuring of Mining business

– Moly-Cop Kamloops, Canada expansion commissioned

July August September/October November

– Jim White Scholarship launched

– 2014 Safety Excellence Awards

– Commenced construction of Moly-Cop La Joya, Peru facility

– Mr Jerry Maycock joined Arrium Board

– FY14 results announcement

– Raised ~$750 million from fully underwritten capital raising

– 2014 Annual General Meeting

– Mr Peter Smedley retired as Chairman

– Mr Jerry Maycock appointed Chairman



Where we do businessIn addition to our Australian operations, Arrium operates 13 key facilities overseas, with the majority of these Mining Consumables and Recycling sites in North America, South America and Asia.

Hong Kong

Bangkok

China

Cilegon

Indonesia

PhilippinesManila

Malaysia

Thailand

Mexico

Peru

Chile

Canada

USA

AsiaMount Isa x

Mt Gambier x

Whyalla x Port Adelaide

Adelaide

Emerald x

Sunshine Coast x

Ipswich xToowoomba x

Lismore xTamworth x

Dubbo x

Orange xChipping Norton x

Wetherill Park

Shepparton x

Albury xBendigo x

Ballarat x x Somerton

MelbourneGeelong

Devonport

Hobart

x

x

Tasmania

x

x

x

x

x

xx

x

Wagga Wagga

x

x

x

x Darwin

x Broome

x Port Hedlandx Karratha

x Geraldton

x Moora x Kalgoorliex Merredin

x NorthhamPerth x

Mandurah xBunbury x x

x Wagin x EsperanceAlbany

x Mildurax

x

xx

x

x

xx

HexhamNewcastleGosford

SydneyWollongong

x

Cairns

Townsville

Mackay

x Rockhampton

GladstoneBundaberg

BrisbaneGold Coast

Coffs HarbourPort Macquarie

Canberra

Launceston

Australia

Kamloops

Kansas City

Edmonton

El Salto

Lima

Arequipa

Mejillones

Santiago

Talcahuano

North and South America

Key Iron Ore Mine Sites Key Mining Consumables Sites

x Key Steel Sites Key Recycling Sites



Introduction by Managing Director and Chief Executive Officer

I am pleased to introduce Arrium’s Sustainability Report for the financial year ended 30 June 2015.

Recently I reported that this was a very challenging year for the Company due to external factors, including a significant and sharp fall in iron ore prices. We have, and we continue to respond to these challenges with speed while maintaining our commitment to conducting our business to global environmental, social and commercial standards. This remains integral to our continued growth and development as a business – it is our platform for providing value to our wide range of stakeholders.

We are committed to our two core values of Safety and Customer, and we have strengthened our commitment to diversity and inclusion. It is no coincidence that our core values are also two of Arrium’s five sustainability drivers – the others being Economic, Community and Our People. Our Sustainability Report presents achievements and challenges for each of these drivers while also demonstrating progress in our drive for continuous improvement in Sustainability.

This is reflected in our decision to move to the next level in sustainability reporting through adoption of the Global Reporting Initiative G4 reporting guidelines. Our report includes many noteworthy achievements in the year, with the following few that I would like to highlight:

– Supporting the communities in which we operate, such as through the appointment of a local indigenous business, Walga Mining, to provide services at our Iron Knob mine site;

– Genuine progress in Arrium’s quest for diversity, including promotion of the role of women through the “Women at Arrium” program; and

– Translation of Arrium’s commitment to World Class Safety into initiatives such as Whyalla’s award-winning “Swear by Safety” campaign.

I hope that you find this year’s Sustainability Report informative and I encourage you to provide feedback through the online feedback facility.

Andrew Roberts Managing Director and CEO Arrium Limited



ScorecardSustainability Drivers

Planned Initiatives in FY15

Outcomes in FY15


Safety Arrium continues to work to achieve “Goal Zero”, a workplace free from injuries, incidents and illness.

The Lost Time Injury Frequency Rate (LTIFR) was 1.2, an 8% reduction on the previous year and a new record low. The Medical Treatment Injury Frequency Rate (MTIFR) increased slightly by 0.1 to 5.4 for the year.

Arrium continues to work to achieve “Goal Zero”, a workplace free from injuries, incidents and illness.

Release of updated and new Codes of Practice, including “Crane Integrity and Safe Access”.

The new Code of Practice was released in July 2015. Introduction of Recordable Injury Frequency Rate as an additional safety lag indicator.

Focus on prevention of falls and molten material safety for Arrium Steel.

High Potential Incidents in the areas of Fall Prevention and Molten Materials were reduced by 10% and 38% respectively in FY15 compared to FY14.

Reduction in the number of “Zero Barrier” High Potential Incidents that represent incidents with high potential risk through the commencement of deployment of Arrium Code of Practice Engagement Training.

Arrium will continue to promote and reward employees and contractors for their safety excellence.

The annual Arrium Safety Excellence Awards were held in July. In 2015 a record 175 nominations were received and 28 finalists recognised at the Arrium Safety Excellence awards. A record seven finalists were from outside Australia.

Senior Leadership Team to develop core elements of the plan to implement “World Class Safety” performance within the business. Focusing on leadership, employee engagement and clear standards and expectations.

During FY15, a further two groups of senior leaders visited World Class facilities in the United States. A “World Class Safety” Framework has also been developed. This framework has identified six themes of work to improve safety leadership, engagement and operational discipline.

Continue the development of senior leaders through opportunities to experience World Class facilities and progress the deployment of the World Class Safety Framework.

Development of a new Risk Management Framework document to provide more context for leaders deploying risk management systems within the business.

People Communicate the Arrium diversity framework globally, implementing programs that help Arrium better harness the benefits of workplace diversity.

The Arrium diversity framework has been adopted globally with businesses running programs and initiatives focused on diversity.

Ensure that employees have clarity about the business context and their role in delivering the required outcomes.

Continued investment in building the skills of our leadership community to actively identify and leverage diversity and ensure there is an inclusive environment where all stakeholders feel valued.

Arrium has worked with external specialists including Symmetra to build skills in inclusion. This included workshops looking at unconscious bias and creating a respectful workplace.

Continue to build leaders’ engagement and inclusion skills to ensure we fully leverage the skills and capabilities of all our employees. Implement the leadership learnings from “World Class Safety”.

Commence the “Women at Arrium” program in North America and South America.

“Women at Arrium” sessions have been hosted in Chile and Peru.

Continue to expect leaders to implement initiatives and programs which actively raise awareness and deliver better diversity outcomes for Arrium.



Sustainability Drivers


Outcomes in FY15


People continued

Implement revised diversity training (incorporating harassment and anti-bullying content) across selected businesses for all employees.

A comprehensive online training program has been developed and is currently being piloted ahead of global roll-out.

Implement eLink, an integrated HRIS which provides employees, leaders and HR with better information to manage talent, career planning and employee engagement.

Continued engagement in our regional centres with community stakeholders.

Arrium teams have continued to build relationships and add value in the communities in which they operate.

Customer and Market

Promote improvements to the Green Star Design and As Built Tool, and how OneSteel product can be best used to deliver more sustainable outcomes as measured by the tool. Promotion will be through printed material, material in electronic format distributed through website and by email, and seminars.

Produced a Guidance Note titled “Green Star – Design and As Built” outlining the changes from the legacy Green Star tools to the new 2014 As Built tool.

This material was distributed directly to enquiries received, via the OneSteel Communique, available for download on our www.BuildwithStandards.com website and presentations. During the past year over 120 presentations were made to Builders, Engineers and Architects.

OneSteel will continue to promote the Green Star tool and how OneSteel product can be best used to deliver more sustainable outcomes as measured by the tool.

Develop an options paper and business model recommendations for delivery of Responsiblesteel, a steel certification system.

An options paper and business model recommendations were developed. Global parties Arcelor Mittal, Mahindra-Sanyo and World Wildlife Fund joined the project and supported the direction proposed by the steering committee of the Steel Stewardship Forum.

OneSteel remains an active member of the Steel Stewardship Forum but is not currently engaged in further development of the Responsiblesteel business model.

Commence Phase 3 of the Responsiblesteel project, ie. delivery of an operational certification system.

Phase 3 of Responsiblesteel had not commenced in FY15.

Promote the changes to the standards on ecolabels, environmental product declarations (EPDs) and sustainable design, with the emphasis that compliant materials reduce waste. Promotion will be through printed material, material in electronic format distributed through website and by email and national seminars series.

During the past financial year work has begun to produce EPDs for a range of OneSteel products.

The OneSteel Communique, an email sent to over 3,800 customers and other interested people, keeps readers informed with case studies and building information related to steel framing. The July 2015 edition featured the new rating tool and provided a download for the guidance note “Green Star – Design and As Built”.

Continue the work in collecting the EPD data and ultimately have third party certification of the data. EPDs will be made available for sustainability practitioners to use in 2016.

Promote EPDs for use in the Green Star tool, the IS tool, and generally as a measure of environmental sustainability.

Continue to promote software and its benefits for minimising steel sizes and thus reducing material usage.

Continued to promote CheckSteel and CompSoft with a combined total of approximately 2,600 registrants in FY15. Working with Standards Australia to produce a new Composite Structures Standard to improve the efficiency of Composite Design and ultimately lead to further material savings.

Continue to promote software and its benefits for minimising steel sizes and thus reducing material usage.Develop a new software package to implement the new Composite Structures Standard to realise the potential material savings available.

Continue liaison with the New Zealand Green Building Council (NZGBC) to influence them to adopt the latest changes made by the Green Building Council of Australia (GBCA) to the “Design and As Built” rating tool.

OneSteel made two submissions to the NZGBC through the New Zealand Steel Sustainability Council regarding the 2015 draft Green Star tool. The submissions directly led to the replacement of credits for recycled content of steel with Ecolabels in the tool and the introduction of points for Environmental Product Declarations.

Scorecard Continued


http://www.BuildwithStandards.com




Outcomes in FY15


Customer and Market continued

Determine market demand and resources required to generate Environmental Product Declarations (EPDs) for the suite of OneSteel manufactured steel products.

Market analysis undertaken and decision made to progress with creation of EPDs for the suite of OneSteel manufactured steel products. Project Sydney planned and launched and data collection stage initiated.

Complete project to create and publish two EPDs, one for structural products (including rail) and one for reinforcing products. EPDs to be compliant with EN 15804 and externally verified.

OneSteel has provided the Infrastructure Sustainability Council of Australia with a resource for their Material working group to help review the material part of the IS tool. Our representative provided expert advice in both engineering design and steel as a construction material.

OneSteel’s representative will continue to serve in this working group until the revised tool is released for use.

Environment OneSteel Whyalla Steelworks will continue to work towards minimising its use of Murray River water through an active water efficiency program. This will include: – Diverting blowdown water from the Power House to be reused as process water; – Automation of the freshwater input into the Quench Basin; and – Assessment of extended use of Caster Dam recycled water to offset Murray River water.

Projects completed: – Upgrade of Blast Furnace water pump seals; – Automation of fresh water input into Quench Basin at Cokemaking; – Use of demineralisation plant blowdown water in coke ovens quench pond; and – Scoping of extended use of caster dam water for implementation in FY16.

Projects planned for FY16: – Increase use of recycled water as demineralisation plant feed at Steelmaking; – Convert Steel Products Reheat Furnace cooling system to potable water; and – Identification of further water efficiency projects.

Arrium Mining is implementing a program to reduce the amount of Murray River water consumed by the Pelletising Plant through better management of water and water infrastructure, as well as further improvements to tailings water recovery.

Improved water intensity compared to an average of the last three years due to: – Improved chemistry monitoring to mitigate/reduce corrosion and scaling; – Optimisation of processes to reduce water loss and increase water reuse; – Improved water mapping, leak surveying, metering and tracking; and – Full water balance model of the magnetite stream.

Increased reuse of mining processing tailings water to displace Murray River water and further improve water intensity.

Continue active participation in the Middleback Alliance (of Landholders) (MBA) to control pest plants and animals. Targeted rehabilitation works.

Efforts of MBA, including active participation by Arrium, resulted in pest animal control including foxes, cats and 1,654 goats removed from the region. Targeted rehabilitation works completed.

Continue rehabilitation works and predator and pest herbivore control to enable the recovery of vegetation and fauna populations on completed waste rock dumps and on land that Arrium owns or has a responsibility to manage.

Closure of open areas, extension of unsealed road upgrade, Cokemaking door seal improvements, embedding of BOS fume control practice, and improvements to dust suppression spray systems on screening plants.

Closure of an additional 10,000m2 of open areas, upgrade of 3km of unsealed roads, accelerated Cokemaking door seal program, improved BOS fume control practices in place, dust suppression system upgrade on fixed plant planned for October 2015.

Unsealed roads dust suppression chemical expansion, Mining fixed plant dust suppression upgrade implementation, dust control network pilot in mining area, BOS precipitator upgrade work on ESP 1 and 2.

Further deployment of the Energy Audit Tool across Arrium sites will continue during FY15.

Energy Audit tool deployed across additional businesses during FY15, along with audits being updated for businesses which had previously carried them out. Piloted children’s drawing competition to assist in building the 2015 Arrium Energy, Environment and Sustainability Calendar.

Deploy children’s drawing competition across greater number of domestic and international Arrium businesses, for use in developing 2016 Arrium Energy, Environment and Sustainability Calendar.

Further evaluation of the business case for charcoal use and trials at the Sydney Steel Mill. Final reporting of progress achieved through this initiative since 2006.

Evaluation undertaken which demonstrated inadequate business case for continuation of the project. Final report generated forming a valuable resource should a similar project be undertaken in future.

Scorecard Continued





Outcomes in FY15


Community Continue to build relationships with universities to collaboratively develop solutions to improve Arrium operations and expose students to the opportunities our business can provide.

Arrium continued to sponsor PhD, Masters and undergraduate students at UNSW. Arrium has similar partnership arrangements with the University of Newcastle and the University of South Australia and in FY15 new support was made available through the inaugural Jim White Scholarship.

Continue to build relationships with universities to collaboratively develop solutions to improve Arrium operations and expose students to the opportunities our business can provide.

Continued improvement of the workplace giving program and continued communication and engagement with staff to raise staff awareness for the program and our charity partners.

Arrium and OneSteel staff have implemented a quarterly program to promote Arrium’s charity partners and build a stronger bond between our staff and the charity including staff volunteering within the community.

Continued improvement of the workplace giving program and continued communication and engagement with staff to raise staff awareness for the program and our charity partners.

Execute major operating contract with Indigenous mining company Walga Mining and Services for crushing and screening, material handling and train loading services at Iron Knob.

Walga Mining was awarded the contract to provide services at the Iron Knob mine site. This will directly employ between 30 and 40 people.

Ongoing support for Walga Mining and Services.

Work with the Antakirinja Matu-Yankunytjatjara Aboriginal Corporation (AMYAC) in the Coober Pedy region to appoint a Business Development Manager (BDM) and Aboriginal Liaison Officer (ALO) and implement their economic development plan. This is directly funded by Arrium. Sponsorship of cultural programs identified with the AMYAC people.

Arrium continued to support its commitment for funding for a BDM. This role was appointed in March 2015. The ALO role is due to be appointed prior to December 2015. The cultural programs are yet to be established and Arrium will continue with its commitment to support these programs when they are established.

Continuing support for the BDM role, an Administrative Training Role, and cultural programs.

Sponsorship of Coober Pedy football and netball teams to participate in the annual Indigenous sporting competition in Adelaide.

Sponsorship was provided to send netball and football teams to the Indigenous sporting carnival held in Adelaide.

Economic Export sales 12.5 Mt in line with lowered target for FY15. Significant cost reductions to lower targeted breakeven costs.

Further evaluation of the business case for charcoal use and trials at the Sydney Steel Mill. Final reporting of progress achieved through this initiative since 2006.

Evaluation undertaken which demonstrated inadequate business case for continuation of the project. Final report generated forming a valuable resource should a similar project be undertaken in future.

Scorecard Continued



This report is Arrium’s sixth stand-alone annual sustainability report. Each report has been aligned with the Global Reporting Initiative (GRI) framework for sustainability reporting and this report is the first to utilise the G4 version of that framework. The report outlines our performance on sustainability topics that are material to Arrium’s operations for FY15, presented together with year-on-year data trends. The report has been aligned with the GRI’s ‘In-Accordance core’ reporting requirements and a GRI Content Index is included. External assurance has not been sought for this report. The Arrium 2015 Annual Report also contains information relevant to the GRI reporting requirements.

Defining report contentThe GRI’s “Principles for Defining Report Content” (Materiality, Stakeholder Inclusiveness, Sustainability Context and Completeness) have been applied in this report.

Arrium’s activities have been represented within the broader context of sustainability, that is, the short-term, medium-term and long-term impacts and influence on the environment and society at a local and global level. This information is arranged according to our sustainability drivers: Safety; People; Customer and Market; Environment; Community; and Economics.

Boundary and scopeThis report covers Arrium’s global operations with some minor exceptions where noted.

The scope of reporting has not changed from previous years except for adjustment to G4 requirements.

Materiality assessment process1. Representative topics from existing sources

(such as standard GRI disclosures, previous reports and existing stakeholder input) were identified and collated.

2. Representative topics were rationalised (to remove duplication), adjusted to an appropriate level of detail and, in some cases, reworded to make their meaning clearer.

3. Key internal stakeholders who held an advanced understanding of the position of external stakeholders on these topics then ranked them based on materiality.

4. Further consultation allowed some re-grouping and final ranking to produce a “short list” of the most material topics, and formed the basis for sustainability reporting.

5. Additional direct validation with external stakeholders is on-going.

This process identified the most material topics as being:

> Business and sustainability strategy

> Environmental impacts and benefits

> Safety performance

> Employee benefits and conditions

> Local community benefits and impacts

> Economic benefits and impacts

> Market presence

> Customer satisfaction

> Climate change

> Governance

> Supply chain impacts and benefits

> Product benefits and impacts

> Workforce diversity

About this Report



Stakeholder Group Stakeholders Interests and Concerns Engagement

Customers Steel manufacturers and fabricators; mining companies; commercial, infrastructure and residential builders; wholesale and retail customers.

Total product offer, value, quality, price, reliability of supply and delivery.

Regular formal and informal communication with marketing staff. Personal visits by marketing and operations staff. Site visits to customers’ plants and customers’ representatives encouraged to visit Arrium sites. Various technical training and support offerings.

Employees Employees. A wide variety of interests and concerns. Regular communication with staff through presentations and discussions, through the intranet, email alerts, hard copy newsletters and noticeboard items. Twice-yearly performance reviews for staff and some wages employees.

Governments Local, state and national governments and government agencies.

Regulatory compliance, land use, access permits, licences, closure provisions and plans, product stewardship, environmental performance, community relations, socio-economic benefits.

Regular formal and informal communications with external relations, operational senior management and staff through site visits, meetings, events and reporting (including Annual Reports and Sustainability Reports).

Industry Associations Associations of the steel (structural and reinforcing) and mining industries.

Representation of industry interests. Representatives on boards and committees; engagement on specific projects.

Stakeholder EngagementArrium proactively engages with its stakeholders as a matter of standard business practice. Most of this engagement was not undertaken specifically for the preparation of this report; however, the outcomes of engagement strongly informed the material topics reported.

Methods of stakeholder engagement are tailored to specific operational locations and types of stakeholders. Key operational locations (e.g. Whyalla/Middleback Ranges) maintain formal procedures for engagement. Such procedures are also maintained for stakeholder groups engaged at a corporate level, e.g. shareholders and the investment community. Key stakeholder groups, their interests and concerns, and typical methods of engagement are listed below.



Stakeholder Group Stakeholders Interests and Concerns Engagement

Investment Community Mainstream brokers, financial analysts and fund managers, sustainability and ethical investment analysts, retail investment advisers, existing and potential shareholders; both domestically and internationally.

Financial returns, growth, governance, risk management.

Annual General Meeting, Annual and Sustainability Reports, Results materials and briefings, Quarterly Reports, ASX releases, Company website, direct phone contact with investor relations, presentation at industry conferences, briefings and site visits.

Local Communities Individuals and groups local to our operations, including pastoralists, traditional landowners, local Indigenous groups, development groups, local businesses.

Employment, business development, infrastructure, land access, cultural heritage, sponsorship and donations, environmental performance and impacts, transparency.

Location-specific community relations personnel, community meetings, formal and informal communication.

Schools and Universities

Local and state schools and universities, teachers and students.

Interaction with the mining and manufacturing industries, potential career pathways within the industries, sponsorship, scholarships and donations. Research collaboration.

Site visits, vacation and traineeship employment, scholarships.

Suppliers Local and international supplier businesses.

Supply agreements, reliable payment processes, social and environmental requirements.

Regular meetings with commercial and operational staff.

Stakeholder Engagement Continued



The Occupational Health, Safety and Environment CommitteeThis committee assists the Board to fulfil its OHS&E roles and obligations by providing the Board with additional resources to monitor and review OHS&E issues such as the effectiveness of the OHS&E governance structure, policies, management systems, performance and compliance.

The Audit and Compliance CommitteeThis committee monitors and reports to the Board on the framework, adequacy and security of internal control, accounting and management information systems.

The Operational Risk CommitteeThis committee ensures that appropriate monitoring, review and audit coverage of operational and business risks is undertaken. It may also initiate investigations or reviews for specific critical operational or business risks.

The Human Resources CommitteeThe duties of this committee include reviewing processes relating to the identification and development of high-potential future leaders, reviewing policies and processes in relation to workforce diversity, and ensuring adequate succession planning is in place for senior executives.

Operational ControlOperational control on sustainability matters is maintained by the Chief Executives and Lead Teams of the Arrium Business Units. In some cases these matters are specific to a single business unit, but where they span multiple business units then the OHSE Council will play a role. The OHSE Council consists of all members of the Arrium Lead Team.

Sustainability Governance

The Arrium Board is the most senior governance body in the Company. The Board operates a number of committees which deal with a variety of issues, including aspects of sustainability. These committees are:



Safety




SafetyArrium is committed to achieving the highest performance in workplace health and safety, believing that all injuries, occupational illnesses, and incidents are preventable. “We will not compromise on safety” is one of the Company’s two core values of the organisation and, as a result, a focus on the health and safety of employees, contractors, customers and visitors underpins each of Arrium’s activities. At Arrium, workplace health and safety is everyone’s responsibility.

Our goal is to establish a workplace free from injuries, incidents and illness. Arrium has six Safety Principles which outline the philosophy guiding Arrium’s approach:

Arrium Safety Principles

All injuries can be prevented

Working safely is a condition of employment

Employee involvement is essential

Management is accountable for safety

All operating exposures can be safeguarded

Training employees to work safely is essential

The role of management is to provide direction, set the safety standards and drive improvement within the business to encourage all employees, contractors and visitors in working towards the goal of ZERO incidents, injuries and occupational illnesses.

Safety Continued



Safety performanceArrium’s Lost Time Injury Frequency Rate (LTIFR) for FY15 was 1.2, which is an 8% improvement on the previous year. The Medical Treatment Injury Frequency Rate (MTIFR) for FY15 was 5.4. This is slightly higher than the rate of 5.3 recorded the previous year.

In an effort to better understand safety performance there are a number of other indicators, both leading and lagging, that are recorded. The most recent indicator to be added is the Recordable Injury Frequency Rate. This has been recorded since December 2013 and has displayed a drop of 9% to the end of FY15.

Another relatively new indicator is the Significant Near-Miss Frequency Rate (SNMFR), which has been recorded since FY12. Recent performance against this metric is shown in the graph below.

World Class SafetyArrium’s commitment to be world class in safety has seen 45 of our senior leaders engaged in a personal and collective development experience which includes the opportunity to experience safety excellence at DuPont in the United States as well as learning from leadership thought-leaders at Harvard University. The benchmarking with DuPont identified the strength of Arrium’s safety principles and systems, and opportunities for improvement in the area of personal leadership and situational awareness. The senior leaders involved have in turn shared the approaches, behaviours and skills they have been exposed to with their own teams, with a culture of visable and authentic leadership now establishing across the organisation.

One example of the impact of this work has been the development and implementation of the “Swear by Safety” campaign by our Mining and Steel businesses at Whyalla. This initiative has recently received international recognition, and also received the highest award at the recent Arrium Safety Excellence Awards (see case study below).

Self‑insurance and workers’ compensationArrium has been granted self-insurance status for workers’ compensation in all eligible Australian states. Arrium’s continued safety performance and compliance with OHS systems and practices is a key component to maintaining self-insurance status. If Arrium fails to maintain adequate occupational health and safety systems and practices, Arrium may lose its self-insurance status, which may have a material adverse effect on the financial performance of Arrium. This is considered to be an Arrium-wide material business risk.In FY15 Arrium continued to experience a reduction in the cost of workers’ compensation claims across Australian businesses. Payments on claims reduced by $2.4 million during the year and there was a $1.2 million reduction in self insured workers’ compensation provisions over the year. While there was a slight reduction in the number of claims received during the year, the number of open claims reduced by 18%. This was driven by the resolution of longer-term claims and effective injury management practices. The Company maintained self-insurance status in the relevant jurisdictions.

LTIFR* MTIFR *

2.0

1.5

1.0

0.5

0

8

6

4

2

0

10

11 12 13 14 15 11 12 13 14 15

SNMFR

40

30

20

10

0

50

12 13 14 15

* The FY11 figures have been restated to include the Moly-Cop Group businesses’ safety performance as if they were part of Arrium from 1 July 2010.

Safety Continued


Robert Fenwick (L) and Richard Hallett at the Arium Safety Excellence Awards 2015.


Arrium Safety Excellence AwardsThe annual Arrium Safety Excellence Awards are an opportunity to recognise and reward those employees, contractors and suppliers who made an outstanding contribution towards our goal of injury prevention and the reduction of incidents. These Awards also provide a platform to encourage the sharing of best practice across the organisation.

In 2015, the Awards received a record total of 175 nominations from across Arrium from which 28 finalists were selected across seven categories. All finalists were recognised with an award (Merit, Highly Commended or Excellence) and received a cash prize which was donated to a charity of the recipient’s choice. In total, $15,800 was donated to various charities as a result of the 2015 Safety Excellence Awards.

During the year a number of our people and businesses were also recognised externally for their safety performance. These included: our AusTube Mills business which was awarded the National Endeavour Award for “Zero” (an educational campaign based upon the Arrium Codes of Practice), and the Hunter Manufacturing Safety Excellence Award; AltaSteel was awarded the Strathcona Park and District Chamber of Commerce Occupational Health and Safety award, and two safety initiatives from Whyalla; and “Whyalla Rail Handling” and “Engineering Forklift Exclusion in the Workshop” both received awards at the Australian Steel Institute National Health and Safety Excellence Awards.

Jim Wensley won Individual safety awards at both the Australian Steel Institute Awards and the Workcover NSW SafeWork Awards. Craig Dahlin won the “Best Individual Contribution” award at the WorkSafe SA Awards. The Newcastle Rod Mill was also recognised at the Hunter Manufacturing Awards through receiving the prize for Excellence in Safety for its campaign “Take 2 for Injury Prevention”. Of particular note was the Whyalla “Swear by Safety” campaign which was one of six recipients of a Global Award for Excellence in a Health and Safety Program as awarded by the World Steel Association.

Safety Continued


Arrium Safety Excellence Awards


Employee Front Line Leader

Leader Contractor/Supplier

Work Team Workplace Initiative

Department/Site

Greg Wilcox

Moly-Cop Waratah

Robert Fenwick

REMS Newcastle

Darren Newbegin

ATM Acacia Ridge

Alfredo Bustamante Moly-Cop Peru

Transpacific Industries

Whyalla

Moly-Cop Peru Logistics Team

Swear By Safety

Arrium Mining and Steel Whyalla

Grinding Media Moly-Cop Waratah

Greg Wilcox Robert Fenwick Alfredo Bustamante (L) and Darren Newbegin

Darren Quinn (L) and Chris Coathupe

Angela Cornejo Daniela Dean Chris Sharman (L), Dwayne Fleming, Karen Robinson, Richard Hallett, Graham O’Neill and Rick Dunn

Anthony Bryant

Austube Mills Newcastle

Mark Unlinder

Moly-Cop Canada

Richard Hallett Moly-Cop Waratah

Daniel Montero

Moly-Cop Chile

BIS Industries Manufacturing

Whyalla

Arrium Electrical Safety Network

Engineering and Reliability

Hand Injury Reduction Team

Moly-Cop Waratah

Living Safely with Electricity

Engineering and Reliability

REMS Workshop Newcastle

Renzo Jaramillo

Moly-Cop Peru

Michael Densen

Sydney Steel Mill

Jackie Cotton

Midalia Steel

Sergio Rolon

Moly-Cop Mexico

SIS Security Mayfield and

Waratah

Harsco Metals and Minerals

Whyalla

SSM Melt Shop

Maintenance Team

Sydney Steel Mill

Yard Safety ARC Sunshine

Replacement of Sledge Hammers

Moly-Cop Peru

Site Operations Leadership Group ATN Acacia Ridge

Midalia Steel Western Australia

Excellence Award

Highly Commended

Merit Award

Safety Continued



“Swear by Safety”With Safety being an Arrium core value it is important that all employees possess a personal commitment to safety – believing rather than simply complying. To help bring about this mindset the Arrium Mining and OneSteel Whyalla teams launched a community movement known as “Swear by Safety”. This movement has encouraged the entire community to make safe choices and start thinking about why safety is important in everything that they do – not just at work.

The campaign started with detailed research into current thinking, attitudes and behaviour across the Whyalla community. The results were used to develop promotional materials that would reach the entire community, as well as resources for use within Arrium.

This included television and radio ads, posters and print advertising. To maximise local ownership and impact, the casting for this material consisted entirely of local Whyalla residents, only some of whom were Arrium employees.

The aim of this campaign is to inspire employees and residents to take personal responsibility for safety by creating a desire to change current thinking and behaviours. The campaign was launched in early 2015 with the release of the advertising, promotion at numerous community events and roll-out within the Arrium sites.

“Swear by Safety” Campaign.

Recipients of an Arrium Safety Excellence Award for the Whyalla

“Swear by Safety” campaign.

Case Study

Safety Continued


Incidents down


“Living Safely with Electricity”In FY14 there were 26 electric shocks recorded at Arrium – roughly one every two weeks. Analysis of these incidents found that 50% were due to portable appliances, including extension leads and power boards, and 85% happened to people who didn’t work with electricity. In response the Arrium Electrical Safety Network (AESN) developed a campaign to improve awareness and understanding and eventually eliminate electric shocks from Arrium.

This campaign was called Living Safely with Electricity and was particularly aimed at non-electricians.

The campaign included production of a booklet and two videos. The videos had two distinctive objectives. Firstly an emotive video to make the audience aware of the risks, and secondly an educational video to provide advice on how to be safe around electricity. For added effect the videos were made using employees and their families. Since completion, the videos and booklets have been seen by thousands of employees and hundreds of school children and are available in six languages and on YouTube.

Pleasingly, in FY15 electric shock incidents for all Arrium workers were reduced by 38% from the previous year.

Case Study

Safety Continued


Suzanne McKell

Transhipping Manager, Arrium Mining

Whyalla Port, South Australia, Australia

Suzanne oversees the transhipping operations in Whyalla Port, liaising with shore operations, marketing and the transhipper to ensure that all vessels are safely loaded and meet the customer requirements. In FY14, a total of 73 vessels were loaded with iron ore in Whyalla Port.

People





At Arrium, we know business success comes from empowering and valuing our people. Arrium directly employs around 8,350 people across 15 countries and it is these women and men who are focused on delivering value to our customers, our shareholders and the communities in which we operate. Across diverse businesses, regions and jobs, our people thrive on challenge and opportunity and work together to develop and build on Arrium’s reputation around the world. We respect our people and are committed to their growth.

We are a company with two Core Values:

Safety and Customerand these values are reflected in everything we do.

Our approach to people managementWe strive to attract and develop capable people and afford them a high performing and motivating workplace. We value leaders who bring out the best in their teams. Our leaders are responsible for appointing, developing, motivating and retaining high performing employees who actively demonstrate our core values. We invest in our managers to help them become more effective leaders.

Our global Human Resources (HR) function supports our leaders to attract, retain and develop talent. Our mix of functional specialists, HR business partners and HR shared services allows us to deliver Arrium-wide talent programs while supporting the specific talent and change support needs across our diverse business portfolio.

People

People Continued


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Where we workAlmost 7,000 Arrium employees are based in Australia, with 1,100 across North America and South America, approximately 250 in Asia and a small number in Europe and Africa. The majority of our workforce are directly employed, although some operations (for example, our South Australian mining operations and our Mining Consumable business in Peru) partner with labour hire and contractor organisations whose people work with us on our sites.

Benefitting from diversityWe believe that there is strength in diversity, and what sets us apart as individuals makes us stronger as a team. It’s about making sure we have different and differing voices across all parts of the business to make us the best we can be. As Andrew Roberts, our Managing Director and CEO says, “A diverse and inclusive environment that is dynamic, global and broad-minded will underpin our drive to be a world class organisation.” Our diversity focus includes three key areas: diversity of thinking; gender diversity; and cultural diversity.

This year, we have continued to actively promote all three areas of diversity in our global businesses. Our Managing Director and CEO hosts a comprehensive annual talent review that specifically looks at diversity, and acts as a sponsor for diversity initiatives across the Group. Diversity plans are in place at both an Arrium and Divisional level. Current diversity initiatives include:

– Women at Arrium, a program that engages current and future female leaders in both Australia and the Americas (see case study below);

– Male Champions of Change, a group of senior male leaders who are passionate about gender equality and have been invited to collectively lead through action and advocacy to advance diversity and inclusion within and across our organisation;

– Arrium Global Development Program an exchange program for finance professionals between Australia and the Americas. The objective of this program is to better balance expatriation ensuring a flow into Australia but more importantly to build global mindsets across our organisation;

– Building a Respectful Workplace, an innovative blended learning program that explores diversity, bias, discrimination, bullying and inclusion;

– Developing employee value propositions and sourcing strategies to target more diverse talent pools; and

– Training for senior leaders in unconscious bias and inclusion.

People Continued



Women at ArriumThe Women at Arrium program aims to provide talented women from all parts of Arrium an opportunity to work on their personal development, build a network of peers and learn about the broader business.

Two groups of women from around Australia have participated, and in March the third Women at Arrium program was launched for employees across the Americas. 14 women from our businesses in Canada, Peru, Chile and Mexico came together in Lima for the first of three workshops, which was simultaneously translated into Spanish and English.

Our Managing Director and CEO, Andrew Roberts, participated in a Q&A session which gave participants the opportunity to hear directly from him and ask questions.

General Manager HR Talent, Remuneration and Diversity, Sarah Livissianis, facilitated the workshop and said the program is an important platform within our diversity agenda, providing the participants with great opportunities and exposure.

“It’s great to work with such outstanding women from such diverse operations and backgrounds,” she said. “The feedback we’ve received is that they have already benefitted not only from what they learnt, but also by being exposed to the other senior and inspirational women who participated.”

Participant Maria Fernanda Lara, Import and Export Coordinator Moly-Cop, Mexico, said the highlight was meeting other women from across Arrium. “To have gotten to know them and their cultures that are so different but at the same time hold so many similarities. They all have challenges in their work life and at the same time are very fulfilled in what they do and feel proud in what they have accomplished. To identify with them in this way was really the best part of this experience, and that makes me feel motivated.”

Case Study

People Continued



Developing our peopleOur people development efforts are focused on ensuring we build and sustain the capabilities critical to our success across our varied industries and markets. We also invest in ensuring our employees have the skills to work safely as well as growing our leaders to create an environment where people can be their best. Our approach to development covers learning through experience, learning from others and structured learning courses and programs.

In 2015 Arrium is investing in a fit-for-purpose human capital management solution to support employees and their leaders in their learning, career development and succession management. The new system will also afford increased transparency and sharing across our global business.

Arrium Insight affords senior leaders the opportunity to explore strengths and development needs in the context of their career aspirations and provides them exposure across the breadth of our global businesses while building their leadership skills. Over the past five years, over 70 senior leaders have participated in Arrium Insight and its predecessor the Accelerated Development Program for Senior Managers. Pleasingly, eight of our current executives are past participants from this program.

Male Female

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People Continued



Arrium also runs a number of cross-business networks to build technical and commercial capability and facilitate sharing of best-practice. These networks including the +MAS and best practice forums cover a range of critical areas such as steelmaking, rolling, commercial, product development and innovation, asset management and safety. These networks are further enhanced through Arrium’s involvement in various global industry forums and technical exchanges with several world-leading manufacturers.

Our businesses and regions also provide a range of learning initiatives for employees of all levels. These include programs such as Leading People to Safety, Regional Manager Development, Coaching the Arrium Way and Value Based Selling, as well as mentoring, study support, exposure to senior leaders, stretch projects and secondments.

We also take a very targeted approach to blended learning. This year we have invested in and piloted online learning materials to provide additional training for our regionally-dispersed workforce. We are planning to expand the roll-out of this material over the coming year.

Talent attraction and retentionIn the last year we have invested in developing a unique employment brand to diversify our external talent pool. Insights from our people around the world about what differentiates Arrium and our business divisions was used to redevelop our employment brand and inform our sourcing strategies. Our recruitment materials and candidate experiences better reflect our culture and the growth opportunities we can offer, seeing us reach a broader, more diverse candidate pool in the external market.

Arrium operates a number of localised talent pipelines across its Australian and international businesses. These include apprenticeships for developing trade-qualified employees along with cadet and graduate programs, predominantly for professional technical staff. These talent pipelines are continually resized to take account of projected business needs and labour market forecasts.

At the end of FY15, 5.5% of the Australian workforce had commenced with Arrium in the preceding 12 months. 17% of those new employees were female. This is significantly more than the 11.1% female proportion of the Australian permanent workforce. Of all new starters in FY15 the highest percentage (18%) were in the age range of 30-34 years. 15.9% of the Australian workforce employed at the start of FY15 had ceased employment by the end of that year. Of those employees leaving in that year 5.4% did so voluntarily and 10.5% did so involuntarily. For further details refer to the table below.

Employee Turnover (Australia Only)Male Female Total

New employees (as % of total employees at end of FY15) 4.5 0.9 5.5

Leaving employees (voluntary – as % of total employees at the start of FY15) 4.6 0.8 5.4

Leaving employees (involuntary – as % of total employees at the start of FY15) 9.5 1.0 10.5

Leaving employees (total – as % of total employees at the start of FY15) 14.1 1.8 15.9

People Continued



Employee engagementOur leaders regularly engage their people in the broader context of our business, including thorough updates on financial and safety performance, video interviews with senior leaders, conferences and regular business and global newsletters.

Managing changeWe have processes in place to proactively manage change around the business, with significant focus on employee impact and welfare. Across several years of significant change across all our businesses, we are proud of our efforts to support affected employees including retaining people in positions in other parts of the business.

Managing performanceAcross Arrium, we know the performance of our people is vital, so we work hard to make sure everyone knows the role they play in our success. Formal and informal processes are used to align individual efforts to business priorities, and establish clear performance expectations; as well as provide feedback on performance and development needs.

RewardArrium’s remuneration and reward policies are designed to ensure we are competitive in the various labour markets in which we operate. Reward structures are designed to both support delivery of business objectives and reflect contemporary remuneration practice. Staff salaries are set and regularly reviewed against similar roles in the labour market.

In light of the challenges we have faced as a business, there were no increases to remuneration for salaried staff and no payments under the Arrium Short Term Incentive Plan in the 2015 review, except for a small proportion of employees subject to specific contractual or statutory arrangements. Our salaries remain market competitive.

56% of our Australian-based employees are engaged under one of around 40 registered Enterprise Agreements (EAs). In recognition of competitive pressures and a slowing Australian labour market, EAs negotiated over the past year provide for substantially lower wages growth than those in recent years. The majority of negotiations over the past 12 months have been settled without protected industrial action.

People Continued



Working togetherArrium encourages a healthy work-life balance for employees and offers a range of flexible work options. These include part-time employment, job sharing, remote working, non-standard hours, paid maternity benefits, career breaks, return to work programs, transition to retirement arrangements and the opportunity to purchase additional annual leave. Currently, 1.5% of our permanent workforce are engaged on a part-time basis. Less than 10% of Arrium’s Australian workforce are engaged as temporary or casual employees, or through labour hire contractors.

Employee relationsArrium takes an open and positive approach to employee relations.

Arrium maintains a wide range of policies dealing with various employee rights and obligations such as workplace behaviour, discrimination, whistleblowing and bullying. Employees have the opportunity to have matters raised and dealt with by their managers and are also afforded the opportunity to seek the independence of the HR function to resolve concerns.

While the majority of Arrium’s workforce is not unionised, the majority of employees within our Australian based manufacturing operations elect to be members of a union. Unions are respected as bargaining agents in accordance with Australian industrial law and also represent employees’ interests in questions over the applications of enterprise agreements. Over the last financial year, no time has been lost in our Australian business due to illegal industrial disputation.

People Continued



Learning Spanish and learning EnglishIt’s believed that more than half of the world’s population speaks at least two languages; but as anyone who has tried to learn a second language as an adult knows, it’s a challenging experience.

Which makes it all the more impressive that every morning in our Mining Consumables plant in Guadalajara, Mexico, around 15 people gather for an hour of English language studies. These classes have now been running for three years, and Moly-Cop Mexico’s General Manager Roberto Zaragoza says the dedication of the students is outstanding.

“Half the class is in the employees’ own time since they arrive to work half an hour early, but the benefits are very clear, when they have to communicate with Australia, USA or Canada, or when they have an English-speaking visitor.”

Production Manager, Australian Joe Ellison, who himself studies Spanish three times a week, has noticed a real improvement. “Many of the guys here had only a few words of English when I arrived two years ago, but now we can have technical conversations,” Joe said. “A lot of the technology, equipment and assistance here comes from America or other English speakers so the ability to speak some English helps them on the job and as part of their personal development.”

In Australia, 15 Arrium people recently completed a beginner’s Spanish course, held at our office in St Leonards, North Sydney. Two classes were also run at Moly-Cop’s Waratah plant. Steel’s Market Development Officer, Ashleigh Gay, said it was a worthwhile challenge. “Being part of a global company is exciting but sometimes hard to relate to working in Steel. The course helped me build some context around the cultural and language differences within our diverse global operations,” Ashleigh said.

Case Study

People Continued



Customer and Market




We are committed to meeting our promise to customers and dedicated to servicing their requirements today and in the future. “Meeting our promise to Customers” is a core value that is actively embedded throughout Arrium.

Arrium relies on various key customer and supplier relationships, and the loss or impairment of any of these relationships could have a material adverse effect on Arrium’s operations, financial condition and prospects. As such, a dependence on key customer and supplier relationships is seen as a Company-wide material business risk and Arrium has implemented the necessary steps to ensure that this risk is appropriately managed.

Similarly, Arrium maintains an internal risk management process and also follows quality assurance procedures in relation to the manufacture of its products and materials. For example, Arrium’s steel mills are accredited to internationally recognised standard ISO9001. However, due to the nature of its operations, it is possible that claims against Arrium could arise from defects in materials or products manufactured and/or supplied by Arrium. This is also recognised as a Company-wide material business risk.

Outstanding recent examples of Arrium meeting its promise can be seen in an innovative commercial building project in Brisbane and the latest state-of-the-art Moly-Cop facility being constructed in Peru. These are just two of the diverse Arrium customer case studies presented over the next few pages.

Customer & Market Continued




Moly‑Cop’s “jewel in the crown” takes shape in Peru In Spanish, “La Joya” translates to “The Jewel” and Moly-Cop’s latest grinding media facility at La Joya, Peru will certainly be the jewel in the crown of Moly-Cop’s international manufacturing facilities when it is fully commissioned in 2016.

Moly-Cop has operated a grinding media facility in Arequipa, Peru since 1981 with an initial capacity of 10,000 metric tonnes per year. For the past 34 years this operation has gradually increased its grinding media production capacity to 60,000 metric tonnes per year as a consequence of increasing demand in the Peruvian mining market for grinding balls. However, the further growth in demand has resulted in Moly-Cop management making the decision to construct a new grinding media facility 48 kilometres from Arequipa in the town of La Joya.

The location of the site is important as La Joya is strategically located close to major southern mining projects such as Freeport’s Cerro Verde mine, the Cuajone and Toquepala operations of SCC, Glencore’s Antapaccay, Hudbay’s Constancia and MMG’s Las Bambas projects. Moly-Cop also operates a plant in Lima that services the central and northern grinding media markets of Peru.

This greenfield project is being constructed on a 148,000m² site located in the La Joya district. Civil works commenced in October 2014, and building construction in May 2015. The facility is expected to be completed in mid-2016 and will have the capacity to manufacture approximately 175,000 metric tonnes of grinding media per year. The project will also have flexibility for future market growth with space allocated for additional production capacity.

Due to its strategic location, the facility will have a short and responsive supply chain and in-market presence. This will make it an extremely important supplier of grinding media to customers in southern Peru. According to Moly-Cop Country Manager for Peru, Javier Castro, “Moly-Cop has an international supply network of nine grinding media facilities located in key mining regions around the world. The La Joya project will be a state-of-the-art grinding media facility that will provide us with the capability to meet forecast growth for grinding media in southern Peru. Also, once completed, the facility will be a major employer in the region, both directly and indirectly.”

Case Study



Moly‑Cop Tools a popular choice for 20 yearsOver the last 20 years, Moly-Cop Tools has become a widely accepted resource within the mineral processing industry.

Moly-Cop Tools is a set of 63 easy-to-use EXCEL spreadsheets designed to help process engineers characterise and evaluate the operating efficiency of any given grinding circuit, following standardised methodologies and widely accepted evaluation criteria.

Moly-Cop Tools incorporates a full set of digital simulators for conventional and semiautogenous grinding applications with the corresponding mass balance and parameter estimation routines; plus complementary spreadsheets regarding Bond’s Law calculations, grinding media “algebra” and other useful utility functions.

The third version of this resource, known as Moly-Cop Tools© 3.0, is offered on an “open-access” basis, meaning that it is free-of-charge with no restrictions on copying and sharing. Its popularity is due in part to the quality of the mathematical models incorporated into the tool and its powerful model calibration capability. Moly-Cop provides complimentary training in Moly-Cop Tools to customers, potential customers and other interested people.

Case Study

Moly-Cop Tools Course in Belo Horizonte, Brazil




Arrium responds to changing market by adding magnetite to export blendArrium Mining’s efforts to increase its magnetite concentrate production is assisting the Company as it responds to ongoing low iron ore pricing.

The closure of the Southern Iron operations resulted in the removal of Peculiar Knob material from export products. The recent Magnetite Optimisation Project resulted in the creation of an additional 600,000 tonnes of magnetite concentrate per year. This is now being introduced as another option for blending with hematite product as part of the export blend.

This iniative also delivers environmental benefits. The magnetite ore is sent as a slurry concentrate from the Concentrator at the South Middleback Ranges operations, through to the filter plant at the Whyalla Steelworks, and then as a damp filter cake to the inner harbour for export. Being damp, this material is generally not a source of dust.

First iron ore railed from Iron Knob this centuryIron Knob, which is renowned as being the birthplace of the Australian steel industry, was originally mined up until the late 1990s. Arrium Mining recommenced activity at Iron Knob in 2013 and initially ore was transported to Whyalla by road-train. In March 2015 a significant milestone was achieved when the rail line was commissioned and the first ores were railed to Whyalla.

The commencement of railing ore from Iron Knob to Whyalla was significant because it minimises impact on the local community by reducing potential interactions between light and heavy vehicles. It also contributes to the success of the business given the current low price for iron ore.

A further positive arising from this milestone was the involvement of Indigenous mining company Walga Mining. The 100% aboriginal-owned company provides crushing and screening, material handling, and train-loading activities at Iron Knob, and directly employs 30-40 people.

Case Study




480 Queen Street – the first of its kind for 40 yearsIn 2014, OneSteel Metalcentre (OMC) secured an order from Pacific Industrial Company (PIC) for the supply of steel and logistics for a new 34-level office tower being constructed at 480 Queen Street in the Brisbane Central Business District. This building is one of very few that has been constructed in Queensland using a steel frame design, and the first to be constructed in Brisbane for over 40 years.

PIC, which is based Perth, had the technical expertise and experience needed for the project but lacked a partner in Brisbane and a way to overcome the prohibitive distance from the west coast to the east coast of Australia. This is where Arrium provided significant competitive advantage.

Due to OMC’s strong relationship with this customer they could make an offer that included processing, fabrication, steel supply, storage and delivery. Specifically, OMC was able to offer the use of the Arrium Steel rail freight network providers to back-load fabricated product from Perth at a competitive rate. This enabled PIC to utilise its substantial Perth-based fabrication capability for about 1,500 tonnes of the total 4,500 tonnes required.

OMC also offered the use of an OMC site close to the project for light fabrication and storage, and an office location in Brisbane for the PIC Project Management team. This allowed for faster responses and better delivery and production performance. Finally, OMC could provide a supply and logistics offer that included delivery of fabricated sections, decking, large bore pipe and other material from various suppliers.

The role of OMC and the Arrium Steel Freight and Logistics Team was crucial to PIC securing this work and this project is a great example of meeting a new and challenging customer promise.

Case Study

480 Queen Street Project in Brisbane




The Arrium OSCAsThe Arrium OSCAs, or “Outstanding Service to Customer Awards”, are designed to reinforce “Customer” as a core value across Arrium.

The OSCAs identify, recognise and reward employees and work teams who achieve an improved business outcome through the delivery of an enhanced customer experience. The criteria against which nominations are assessed is as follows:

Creating a new customer promise

Consistent customer service at an

exceptional level

Proactively mitigating risk

Creating permanent behaviour change within Arrium

Development of a competitive

advantage or best practice outcome

In 2014, there were 82 nominations for the award categories of Work Team, Individual and People’s Choice. Nominations are open to all employees globally.

Team Award Individual Award People’s Choice Award

OneSteel Metalcentre, and Steel Freight and Logistics

Luke Walker, Moly-Cop, Kansas City

Chris Comyns, OneSteel Rod Bar Wire

Sydney Steel Mill

For working together to develop a partnership with Pacific Industrial Company for the

480 Queen Street project

For work with key Moly-Cop customer Freeport McMoran

For work in developing Customer Principles, rebranding the Sydney Steel Mill site, and putting

Customer at the heart of the business

Mike Pfabe (L), Marco Mosole and Frank Van Der Weyer Luke Walker Chris Comyns

Moly-Cop Ropes RAPTEK TeamGrant Millard

Moly-Cop Ropes

OneSteel Metalcentre, Rod Bar Wire and Austubemills for the Meriton 80 Arthur Street project

David Bell OneSteel Rod Bar Wire

OneSteel Recycling IT for Non-Ferrous Touch KiosksChris Comyns

OneSteel Rod Bar Wire

Finalists

2014 Winners of the Arrium OSCAs


Winners


Suzanne McKell





Environment




Arrium is committed to pursuing a high standard of environmental management throughout its operations. Arrium strives for continual improvement in environmental performance, the efficient use of resources, and the minimisation or prevention of pollution.

The following section details our performance in environmental areas as the organisation seeks to use energy, fresh water and other resources more efficiently.

Environmental regulation and performanceThe Arrium Group’s operations are subject to various environmental regulations at national, state and local levels. Where this regulation is particular and significant, compliance is assured through Environmental Management Systems to the ISO 14001 standard. Compliance with this regulation was generally achieved in FY15 and there were no monetary penalties issued.

Environmental management systemsArrium seeks to comply with applicable environmental laws, regulations and mandatory standards. Where these do not exist, we apply appropriate internal standards that reflect Arrium’s commitment to preventing or minimising adverse environmental impacts resulting from its operations, products and services.

Environmental Management Systems (EMS) are a key tool in maintaining environmental compliance and managing environmental risk. The following is a list of Arrium’s major facilities that are externally certified to Environmental Management System standard ISO 14001.

Environment

Environment Continued



Environmental management system ISO 14001 certificationAustralia North America and South America

Ardrossan Dolomite Quarry AltaSteel – Edmonton, CanadaAustube Mills – Acacia Ridge Moly-Cop – Kamloops, CanadaAustube Mills - Newcastle Moly-Cop – Lima, PeruOneSteel Traklok Moly-Cop – Arequipa, PeruGeelong Wire Mill Moly-Cop – Mejillones, ChileLaverton Steel Mill Moly-Cop – Santiago, ChileArrium Mining – Middleback Ranges Moly-Cop – Talcahuano, ChileNewcastle Rod MillNewcastle Wire MillSydney Steel Mill Indonesia

Moly-Cop – Waratah Steel Mill Moly-Cop – CilegonWhyalla Steelworks

Certification is not held for Arrium sites where they represent low environmental risk and a customised “fit-for-purpose” EMS is more appropriate.




Total global energy consumption for Arrium in FY15 was 41.28 petajoules. The majority of this energy was consumed at Arrium’s steelmaking facilities at Whyalla, Sydney, Waratah and Laverton in Australia and Edmonton in Canada.

Whyalla Steelworks is Arrium’s largest energy consuming facility although it currently generates more than 35% of its own energy through the reuse of waste gases (see table below). There are a range of energy efficiency improvements in progress to increase this percentage.

Whyalla Steelworks Electricity

Purchased electricity from the grid 209,095 MWh

Self-generated electricity 127,147 MWh

On-sold electricity 17,119 MWh

Export back to grid 16 MWh

Net site electricity consumption 364,108 MWh

Electricity for the Southern Iron operations was generated by on-site diesel generators. This represented 4,337 MWh for all self-generation units above 0.5 MW capacity. Southern Iron was mothballed in FY15.

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Greenhouse gas emissionsApproximately 85% of Arrium’s global greenhouse gas emissions derive from the steelmaking and hot roll/forging operations in Whyalla in South Australia, Sydney and Waratah in New South Wales, Laverton in Victoria and Edmonton in Alberta, Canada.

FY15 Direct, Indirect And Total Greenhouse Gas Emissionsmillion tonnes CO2 -e

Scope 1

Scope 2 Total

Whyalla Steelworks 2.39 0.14 2.53Electric arc furnaces (Sydney, Laverton, Waratah) 0.20 0.73 0.94Arrium Mining 0.18 0.09 0.27Remainder of Arrium Australian operations 0.08 0.21 0.29Total Arrium Australian operations 2.85 1.18 4.03AltaSteel EAF Edmonton, Canada 0.08 0.20 0.28Remainder of non-Australian operations 0.06 0.06 0.13Total Arrium non-Australian operations 0.14 0.26 0.41Total Arrium greenhouse gas emissions 3.00 1.44 4.43

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Indirect electricity – 32.4%

Use of carbonates – 3.6%

Natural gas – 10.6%

Other – 5.3%

Steelmaking industrial process – 48.0%

Greenhouse Gas Emissions by Type




Data disclosure and methodologyArrium discloses energy and greenhouse gas data under various global, national and regional schemes. At a global level, Arrium provides energy and greenhouse data to the Carbon Disclosure Project (www.cdproject.net). At an Australian national level, Arrium submits annually a detailed National Greenhouse and Energy Reporting Scheme (NGERS) Report to the Australian Government. Arrium is also a Climate Action Member of the worldsteel CO2 data collection program. Within Australia, Arrium also reports annually on a wide range of pollutants to the National Pollutant Inventory.

The methodologies used for the calculation of total energy and greenhouse gas inventory for Australian sites are those of the NGERS. The methodologies for non-Australian sites are based on NGERS with some modifications.

Energy and greenhouse gas reduction activityDuring FY15, further identification, assessment and implementation of energy reduction opportunities was undertaken across Arrium’s major energy-consuming businesses. Seven energy reduction projects were implemented during FY15, resulting in an additional saving of 0.6 PJ/year. Three of these projects are presented below as case studies.



http://www.cdproject.net


The Reheat Furnace rebuild team.

Reheat Furnace rebuild delivers significant energy efficienciesThe Rolling Mill at the Whyalla Steelworks incorporates a reheating furnace used to heat up steel blooms prior to rolling into various shapes though the mill. The furnace can operate at rates up to 200 tonnes per hour and is required to heat the steel blooms up to 1,350oC to make the steel pliable enough for shaping though the mill process. To heat steel at this rate, and to this temperature, requires a significant amount of energy.

The furnace was commissioned in 1975 and has been running continuously for 40 years. The only significant modification to the furnace was its conversion from oil to coke ovens gas in the 1980s. Due to its age and high temperature use, the furnace was in need of a significant rebuild; and this occurred in FY15.

This included reshaping the furnace to achieve better heat transfer to the steel blooms. Modern low-emission burners were installed to provide better combustion and improved burner efficiency. The heat exchanger was replaced with a new design, and a new modern variable speed drive combustion air fan was installed to run at reduced power consumption. New doors were installed to reduce air leakage; as was new refractory to reduce heat loss.

The furnace fuel supply was changed from coke ovens gas to natural gas. Although natural gas is not necessarily a better burning gas than coke ovens gas, it is of a much more consistent quality. A modern combustion control system and burner management system were also installed to improve the overall safety of the plant.

These changes are expected to result in gas savings of 620,000 GJ p.a., along with a saving in electricity of 2,000 MWh p.a. Combined, this will create a significant reduction in carbon emissions of 33,000 t CO2-e p.a.

Case Study




Laverton Steel Mill fume system damperA project was initiated at the Laverton Steel Mill to improve the efficiency of the 2.1MW fan on the fume extraction system. This was achieved by installing an actuator on the existing fan damper, which was then programmed to restrict airflow to the fan during prolonged production delays and on down days. The damper restriction has reduced energy consumption by the fan by 500kW, which amounts to an estimated saving of 640MWh per year.

Waratah furnace insulation upgradeThe Rotary Hearth Furnace at the Waratah Steel Mill heats steel “cheeses” which are then formed into rail wheels in subsequent forging and rolling operations. Thermal imagery taken of the furnace revealed that a large amount of heat was being lost through the furnace roof due to poor insulation properties. The furnace was first installed in 1964 and the original insulation thickness was still in current operation. An extra thermal layer was installed to the roof to minimise heat losses, and this has resulted in a reduction of 3,500 GJ of natural gas consumption per year.

Case Study




In FY15, townswater use by Arrium globally was approximately 8,620 million litres, of which 93% was used at the five main manufacturing and ore processing sites. The largest use of townswater within Arrium occurs at the Whyalla Steelworks and the ore processing operations within the South Middleback Ranges.

In FY15, townswater use at the Whyalla Steelworks and Middleback Ranges mines was 6,519 million litres. This represents an increase of 3% on the previous year, due to increased production of processed magnetite product. This increase occurred despite a 7% improvement (reduction) in water intensity at the mines and steelworks in the same period.

The Whyalla Steelworks and Arrium Mining Whyalla continue to work towards minimising their use of Murray River water through an active water efficiency program, ongoing use of desalinated water, use of recycled Municipal Water Treatment Plant water, reuse of process and tailings water, and use of seawater for cooling.

50

40

30

20

10

0

Greenhouse Gas Intensity

Whyalla Steelworks Sydney Steel MillLaverton Steel Mill

Waratah Steel Mill Edmonton Steel Mill

11 1312 14 15

2.5

2.0

1.5

1.0

0.5

0

t C

O2-e

/t c

rud

e st

eel

Total Energy Use *

11 1312 14 15

Net

ene

rgy

use

in P

J

50

40

30

20

10

0

Whyalla Steelworks Sydney Steel Mill Laverton Steel Mill Waratah Steel Mill

Edmonton Steel Mill Arrium Mining All other energy use

Mill

ion

Litr

es

7,000

5,000

6,000

4,000

3,000

2,000

1,000

11 1312 14

0

15

Townswater Consumption

Whyalla Steelworks and Arrium Mining

Sydney Steel Mill Laverton Steel Mill

Waratah Steel Mill Edmonton Steel Mill

VERSION 2

* Includes crude steel production and other activities (e.g. rolling and forging). Electricity use accounts for self-generated electricity at Whyalla Steelworks. Arrium Mining energy use included as ‘All Other Energy Use’ unless specified.

Towns‑Water Consumption

Water




Optimised flow control for Blast Furnace water pump sealsOne of the many water efficiency projects that contributed to the 11% improvement in water intensity at the Whyalla Steelworks was the optimisation of flow control for the Blast Furnace water pump seals. The four Blast Furnace salt water booster pumps have mechanical seals that require flushing with fresh water to ensure longevity. Fresh water from the Murray River is used for that flushing.

The flow rate of the fresh water for flushing the mechanical seals was measured and found to be around 25 litres per minute (L/min). In fact, the seal only requires a rate of around 8 L/min for adequate flushing, but with the existing control valves it was not possible to limit the water flow to a consistent 8 L/min.

In order to reduce the amount of flow into the seals, flow control valves were fitted to the system. These valves limit the flow rate to 8 L/min regardless of fluctuations in supply pressure. This simple change, which cost around $1,000, is now saving more than 63,000 kL of Murray River water per year. That is equivalent to 25 Olympic swimming pools! This, and other water efficiency improvements, now means that the original water use improvement target for the Blast Furnace area has been met and a new target is being considered.

Automation of fresh water inputs into the Quench BasinAt the Whyalla Steelworks, process water inputs to the Coke Ovens Quench Basin are sourced from various locations around the Iron Making department and topped up with water from the Murray River. When the Quench Basin is full, excess water can overflow to the tailings system and be wasted. Previously, Murray River water input was controlled by a manual valve which was not responsive to water levels in the Quench Basin. This valve was then automated so that it only opens when the Quench Basin is at a certain level, thus eliminating the possibility of inputting Murray water when the basin is full and overflowing. This simple change has reduced water usage for the Quench Basin by 43% from 5,300 kL/month to 3,000 kL/month.

Case Study




Steel is 100% recyclable and recycling utilises the embodied energy within scrap. Arrium trades ferrous scrap and also uses it as an input in the manufacture of steel in both the BOS and EAF processes. During FY15, Arrium used approximately 1.78 million tonnes of scrap steel, including internal site scrap, in steel production. This recycled scrap generated approximately 65% of Arrium’s global steelmake for the year.

Collected scrap that is not used by Arrium for steel manufacture is sold. Arrium uses scrap steel at both its integrated steelmaking facility at Whyalla and the four electric arc furnace (EAF) steelmaking facilities at Newcastle, Sydney and Laverton in Australia and Edmonton in Canada. Typically, Whyalla Steelworks uses approximately 17-25% scrap feed whereas the EAF facilities use 90-100% scrap feed.

There are three general classes of scrap. Most scrap used at EAF sites is post-consumer scrap. This scrap is derived from items such as discarded cars, whitegoods and other consumer items, but also includes structural steel and cladding from demolished buildings. The next class is post-industrial scrap. This is scrap from other industrial manufacturers and includes turnings, cast iron and steel off-cuts. Finally, there is internal mill scrap which is derived from the steel manufacturing process at the same site and includes off-cuts and off-spec product. The proportional contribution of each of these sources at Arrium’s steel manufacturing sites for FY15 is shown in the following table.

Site % Post-Consumer

Scrap

% Post- Industrial

Scrap

% Internal Mill Scrap

Total Scrap

EAF Steelmaking Sydney Steel Mill 91.8% 1.2% 7.0% 100%Laverton Steel Mill 92.4% 0.0% 7.6% 100%Waratah Steel Mill 81.5% 0.3% 18.2% 100%AltaSteel 81.6% 5.1% 13.3% 100%Integrated Steelmaking Whyalla Steelworks 3.0% 0.0% 15.2% 18.4%Weighted Average for EAF Steelmake 100%Weighted Average for total Arrium Steelmake 64.6%

As part of its commitment to sustainability, Arrium continues to participate as a member of the Australian Council of Recycling (ACOR), the national peak industry body for the recycling industry. ACOR advocates for the sustainable management of materials across the economy through improved resource recovery and recycling. Arrium (as OneSteel Recycling) is a Platinum Corporate Member of ACOR and is represented on the ACOR National Board. Arrium will continue to play an active role in ACOR’s efforts to promote improved economic and environmental outcomes through sustainable materials management.

Recycling, Materials, By‑Products and Waste




Apart from scrap steel, various other materials are required to manufacture steel. Key manufacturing input materials consumed, and output wastes generated, are shown in the following tables.

Material Unit FY15 Usage

Magnetite iron ore (as pellets) kt 1,565

Hematite iron ore (as lump) kt 198

Scrap steel (purchased) kt 1,413

Scrap steel (internal) kt 371

Metallurgical coal kt 941

Coke and anthracite products (purchased) kt 30

Limestone and dolomite (unburnt, purchased) kt 389

Natural gas, LPG, diesel and petrol TJ 12,515

Townswater ML 8,620

Arrium endeavours to maximise the efficiency of resource use across all operations, and this includes minimising waste wherever possible. Wastes are recycled or treated; and where this is not possible, delivered to landfill. In general, waste paper, cardboard, timber and metals are recycled where viable and services available. Key waste streams from Arrium operations are provided in the following table.

As part of steel recycling operations, Arrium in Australia produced 202,923 tonnes of waste “floc” in FY15. Floc is non-metallic residual waste, generated by shredding metal products, such as cars and white goods. Floc is mostly composed of mixed plastics, but also includes glass, soil and other contaminants. Research and development work continues into the alternative uses of floc.

General industrial garbage generated mainly consists of miscellaneous non-hazardous waste items including a significant amount of packaging and shipping materials such as wood pallets and crates. Various programs exist across Arrium to segregate and better manage various waste streams including paper and cardboard, wood, green waste, E-waste (batteries, printer cartridges etc) and PVC.

By-Product or Waste typeFY15

Tonnage Destination

Blast furnace slag 260,469 On-site mounds and other uses

BOS slag 216,332 On-site mounds

EAF and LF slag 156,238 Sold for reuse, mostly as road base

Millscale 38,754 Sold for reuse

EAF dust 25,516 Mostly 3rd party zinc recovery

BOS precipitator and secondary fume dust

20,890 On-site landfill

General refuse 5,349 Municipal or on-site landfill

Blast furnace scrubber underflow

2,887 Tailings dam

Blast furnace flue dust 2,165 On-site landfill




The protection of biodiversity is a key consideration in the planning, development and operation of Arrium’s mining, processing and manufacturing operations. Each mining development has an approved Program for Environmental Protection and Rehabilitation (PEPR) in place. A PEPR identifies all relevant environmental, social and economic impacts that may result from the proposed activities and how each of the identified impacts will be managed or avoided. The PEPR also sets out an integrated approach to managing all the stages in the life-cycle of the mine, including its closure and completion through rehabilitation.

Significant expansion in mine rehabilitation adds to biodiversityIn the reporting period, 218ha was disturbed due to mining activity in the Middleback Ranges and Iron Knob areas near Whyalla. During the same year approximately 6ha was rehabilitated, whilst rehabilitation is planned for a further 82ha in FY16. This means that planned rehabilitation in FY16 will be the same as the sum of all rehabilitation undertaken in all years up to the end of FY15.

This significant expansion calls for a variety of techniques to match the challenging conditions. Maintaining unconsolidated soil cover on slopes is an example of these challenges. Different final cover establishment techniques, such as “seed boxing”, are being trialled with good early results. Seed boxing refers to a technique in which repeated depressions are created in the soil surface of a rehabilitated area. This captures rainwater and so minimises runoff and erosion and maximises infiltration, and provides localised areas in which seeds are more likely to germinate and establish.

Flora and fauna surveys are used to assess the success of rehabilitation activities. These show that good early coloniser vegetation cover has established on completed surfaces. It is anticipated that locally native perennial vegetation cover will establish in time. The return of such vegetation supports the return of local fauna.

Biodiversity

Seed boxing of topsoil on the rehabilitated waste rock dump at Iron Chieftain, SMR.

Ningaui (Ninggaui yvonneae), adult marsupial carnivores, found during January fauna monitoring.




Supporting the biodiversity of Spencer GulfThe operations of Arrium Mining, and the OneSteel Steelworks at Whyalla, have always been closely linked to Spencer Gulf. Not only is the Gulf the route by which iron ore is exported by Arrium, but also how important inputs such as coal, alloys, limestone and dolomite are delivered to Whyalla. The Whyalla Steelworks and Arrium Mining also discharge treated effluents into False Bay, which is part of the Gulf, and each day millions of litres of seawater are extracted and returned for cooling water, or extracted for conversion to freshwater in the desalination plant. Clearly the Gulf is integral to Arrium’s operations.

Spencer Gulf was recently described as:

“…a unique ecosystem, an inverse estuary on a temperate coast of an arid, ancient and weathered continent. The Gulf is both highly productive and uniquely fragile where a complex interplay of ecological and biophysical processes has resulted in an environment with an incredible diversity of flora and fauna. In short, Spencer Gulf is an environment that is as beautiful as it is rare, and one which deserves a special place in our hearts and minds.” (Professor Anthony Cheshire 2014)

This is an environment clearly worth protecting and Arrium has, for many years, undertaken activities to monitor and improve the health of the Gulf close to its operations. For example, recent investigations into seagrass in the upper Spencer Gulf have shown a significant expansion in the health and extent of previously impacted seagrass adjacent to the steelworks discharge point.

Arrium is also proud to have recently provided sponsorship for a book focused on the natural history of the Gulf which was published and launched by the Royal Society of South Australia.

In addition, Arrium contributed funding and input to a Phase 1 scoping study of the Spencer Gulf Ecosystem and Development Initiative. The aim of this initiative is to work towards providing stakeholders and Gulf users across industry, government and community with access to independent and credible information about Spencer Gulf and opportunities to develop it without compromising its environment. This was achieved by creating an independent and credible decision support system that enabled evidence-based assessment of development options with consideration of social and economic benefits and cumulative environmental implications.



Suzanne McKell




Community





Arrium recognises that achieving positive sustainable relationships within the communities in which we operate is imperative to doing business. At Arrium, we have fostered a responsible approach to demonstrating social responsibility by promoting values and initiatives, such as investment and engagement, that show respect for the people and communities associated with our business.

There are a number of key initiatives and consultation-based programs that have been formed or further strengthened to reflect key issues that affect our local communities. In addition, Arrium and its employees pride themselves on physically and/or financially supporting regional and local activities through providing education and training, donations and sponsorships through to charity fundraising events, all of which require personal commitment and the dedication of individuals.

To monitor the ongoing impact of Arrium’s operations, we invest, inform, consult and develop relationships with local communities to work towards mutually beneficial outcomes and to continually earn our social licence to operate.

Community financial supportArrium and our employees provide community financial support through two key mechanisms: Arrium’s workplace giving program “OneCommunity” and other community investments outside this program.

OneCommunityArrium’s OneCommunity Workplace Giving Program supports 12 charities and is the primary mechanism through which Arrium and its employees contribute to charities in Australia. The program was established to provide employees with an easily accessible way to donate to a range of charities. Arrium matches employee contributions up to $250,000 per annum. The current charities supported through OneCommunity are Alzheimer’s Australia, The Cancer Council, CARE Australia, Guide Dogs, Hunter Medical Research Institute, Landcare Australia, Lifeline, Royal Flying Doctor Service, the RSPCA, The Smith Family, The Salvation Army and the Westpac Rescue Helicopter Service. Arrium and its employees assisted these charities by donating approximately $223,000 in FY15.

Community

Community Continued



Other community supportIn FY15, the value of financial donations and other support in addition to the OneCommunity program was approximately $927,000. This included support through community fundraising events, training, sponsorships, scholarship programs and other donations in all countries in which Arrium has operations. The Company wishes to thank all employees who have participated for their support.

This support includes ongoing support of students through various schemes. Arrium continues to provide $75,000 per year to the University of NSW for research, and supports six students each year with a scholarship of $18,000 (two each in their second, third and fourth years of study). A further university student, of Adelaide University, was the recipient of the inaugural Jim White Scholarship. In FY14, over $40,000 was contributed by Arrium sites in North America and South America as direct scholarships and to school-aged children.

Stronger relationships with Indigenous communities in South AustraliaSupporting the communities in which we operate is an important principle at Arrium, and at our Mining operations in Whyalla, South Australia, we maintain strong relationships with the local Indigenous communities and traditional owners of the land. A local Indigenous business, Walga Mining, was recently awarded the contract to provide services at the Iron Knob mine site. This will directly employ between 30 and 40 people.

According to Walga Mining Executive Director, Elliott McNamara, this is a major milestone for the Company which aims to be a profitable, 100% Aboriginal-owned company that is a benchmark and role model for other Indigenous groups.

“There has been a significant amount of work in recent years to help give our Company a start in business, so we truly value and appreciate the support Arrium Mining has provided in enabling us to achieve this milestone,” he said.

“We are keen to demonstrate the capability of the local Aboriginal community in the mining industry, so this contract presents us with the perfect opportunity to achieve this.” Mining Chief Executive, Matthew Reed, said that this contract was a significant step forward in a relationship that has been developing for many years.

Community Continued



“The Iron Knob region is rich in indigenous heritage sites, so we would like to acknowledge the support of the Barngarla people to date in supporting the recommencement of mining in the area,” Matt said.

“We will continue to work closely with the Barngarla people now full mining is underway, including through our work with Walga Mining, to further develop our mutually-beneficial relationship for the long term.”

Moly‑Cop Chile assists local community after floodsThe worst floods in over 80 years struck northern Chile in March 2015, impacting over 30,000 people and leaving 2,700 survivors homeless in the regions of Antofagasta, Atacama and Coquimbo. Unusually heavy thunderstorms brought torrential rainfall to northern Chile’s Atacama Desert, flooding one of the driest regions in the world. Flash floods swept down valleys, cutting off villages, destroying structures, and carrying vehicles for miles. The reported cost of the damage caused by the flooding and mudslides was $1.5 billion.

Some Moly-Cop employees had family or friends in areas directly affected by the flooding.

Given the extensive damage in the region, Moly-Cop Chile decided to help the communities in the area of Tierra Amarilla, Atacama, where Moly-Cop Chile has a logistics facility. This included a delegation of Moly-Cop employees delivering 5,000 bottles of water to victims in that region.

“Moly-Cop has always maintained a constant concern for communities in which we operate. This is a sensitive and difficult time for northern localities and we were compelled to provide our support and help as fast as we could,” said Hector Toro, Commercial Manager Moly-Cop Chile.

Community Continued


The Scrap for Mac community fundraising initiative will take place

from 21st of September to 25th of October 2015.

Scrap for Mac encourages our customers to bring their scrap metal

to one of our Recycling Centres and donate a portion of the load

to the Peter MacCallum Cancer Foundation. In 2014 we were able

to raise over $32,300 thanks to the generosity of our customers

and employees.

Peter Mac is Australia’s only public hospital solely dedicated to

cancer and is the home of Australia’s largest cancer research

group.

If you have scrap metal lying around, bring it into us and you will

be helping a great cause!

In 2014 OneSteel entered a team into the Ride to Conquer

Cancer and raised over $47,800 for the Peter MacCallum Cancer

Foundation. This year OneSteel will again be entering a team

into the event.

The Ride to Conquer Cancer is a great opportunity to cap off the

Scrap for Mac program, with OneSteel employees challenging

themselves over two days on a 200 km course, riding alongside

their colleagues for a great cause. Each participant has

committed to raising $2500 for

Peter Mac.

If you would like assist, ask us how

you can sponsor one of our riders!

For further details head to

www.conquercancer.org.au

Brooklyn 750 Old Geelong Road

Dandenong

21-23 Elliot Road

Somerton 70 Cliffords Road

Ballarat

5-7 Coronet Street, Wendouree

Bendigo 6 Baldock Court, Eaglehawk

Phone: 13 METAL [email protected]


The OneSteel Recycling Team

OneSteel Recycling in Victoria raises money for cancer research and treatmentIn 2014, OneSteel Recycling in Victoria was involved in two important fund raising activities to support the Peter Mac Cancer Foundation. The Foundation supports the Peter MacCallum Cancer Centre – Australia’s only public hospital soley dedicated to cancer, and Australia’s largest cancer research group.

The first of these activites was a new campaign called “Scrap for Mac” in which the value of all scrap donations over a six-week period was donated to the foundation. The second activity was the involvement of a team from OneSteel Recycling in the ‘Ride to Conquer Cancer’. A team of nine Recycling employees joined this ride after each having committed to raising money for the Peter Mac Foundation. In total these activities raised more than $80,000 for cancer treatment and research.

Community Continued


Arrium’s approach to Economic performance is presented in the Arrium Annual Report 2015. This report should be referred to for detailed information. The GRI Index provides guidance on the location of various GRI requirements in the Annual Report. The following tables present key information that can also be found in the Annual Report and elsewhere in this Sustainability Report.


Economic




Arrium Underlying Financial Ratios – Year ended 30 June1

Financial Ratios

FY15 FY14 Change

$m $m %

Sales Revenue 6,086 7,007 (13%)Other Revenue/Income 94 126 (25%)Total Income 6,180 7,133 (13%)Gross Profit 376 1,180 (68%)

EBITDA 351 864 (59%)

Depreciation, amortisation and impairment (345) (367) (6%)

EBIT 6 497 (99%)Finance costs (91) (118) (23%)(Loss)/Profit before tax (85) 379 (122%)Tax benefit/(expense) 79 (82) (196%)(Loss)/Profit after tax (6) 297 (102%)Non-controlling interests (1) (1) 0.0%Net (loss)/profit after tax (7) 296 (102%)

Total assets 6,241 8,002 (22%)Total liabilities 3,686 4,271 (14%)Total equity 2,555 3,731 (32%)Net debt 1,750 1,708 2%Funds employed 4,305 5,439 (21%)

Number of shares on issue (millions) 2,937 1,366 115%

Operating cash flow 49 746 (93%)Free cash flow (376) 311 (221%)

FY15 FY14 Change

$m $m %

Capital and investment expenditure 424 435 (3%)

Return on equity % (PAT/average total equity) (0.2%) 8.1% (8.3pp)

Return on funds employed % (EBIT/average funds employed) 0.1% 8.9% (8.8pp)

Sales margin % 0.1% 7.1% (7.0pp)Gross profit margin % 6.2% 16.8% (10.6pp)Earnings per share (cents)2 (0.1) 20.5 (100%)Dividends per share (cents) – 9.0 (9.0c)Dividend payout ratio (dividend/NPAT) – 41.4% (41.4pp)

Leverage Ratio (net debt/EBITDA, 12m rolling basis) 5.0 2.0 150%

Gearing (%) (net debt/net debt + equity) 40.7% 31.4% 9.3pp

Interest cover (times EBITDA, 12m rolling basis) 3.9 7.4 (3.5 times)

Net tangible assets per share ($) 0.27 1.29 (79%)

Employees 8,662 9,269 (7%)Sales per employee ($000s) 703 756 (7%)

Iron ore tonnes sold (Mt) 12.48 12.47 0%Raw steel production (Mt) 2.43 2.36 3%Steel tonnes despatched (Mt) 3.29 3.2 3%

1 Unless otherwise stated, financial measures in this table are underlying results and are non-statutory financial measures, which have not been audited or reviewed as part of KPMG’s audit report on the full year financial report. However, KPMG has undertaken a set of procedures to agree the financial information in the Operating and Financial Review to underlying information supplied by the Company. The Directors believe that using these non-statutory financial measures appropriately represents the financial performance of the Group’s total operations including continuing and discontinued operations. All balance sheet items are based on statutory financial information. Details of the reconciliation of non-statutory to statutory results can be found on page 39 of the 2015 Arrium Limited Annual Report. This information should be read in conjunction with other 2015 Full Year Financial Materials released to the ASX on 19 August 2015.

2 June 2014 earnings per share has been restated as a result of the Placement and Entitlement Offers in September and October 2014.

Economic Continued



Unit FY15 FY14

People and Safety

LTIFR MHW 1.2 1.3

MTIFR MHW 5.4 5.3

Average Age Yrs 44 43

% Female % 11.4 11.4

Number of Employees n 8,662 9,269

Workers’ Compensation Provision $M 24.2 26.1

Customer and Market

Raw Steel Production Mt 2.43 2.36

Steel Tonnes Dispatched Mt 3.29 3.20

Iron Ore Tonnes Sold Mt 12.48 12.47

Recycled Metal (ferrous and non-ferrous) Mt 1.40 1.44

Environment

Energy Use PJ 41.28 41.46

Greenhouse Gas Emissions MT 4.43 4.35

Water Use ML 8,620 8,335

Key Sustainability Data

Unit FY15 FY14

Community

Community Investment $M 0.9 0.7

Key site statistics

Energy intensity

Whyalla GJ/t 26.03 26.39

Sydney GJ/t 4.23 4.70

Laverton GJ/t 4.93 4.64

Waratah GJ/t 8.78 8.86

Edmonton GJ/t 4.31 4.50

Greenhouse gas intensity

Whyalla CO2/t 2.38 2.33

Sydney CO2/t 0.67 0.72

Laverton CO2/t 0.94 0.93

Waratah CO2/t 1.08 1.12

Edmonton CO2/t 1.05 1.04

Economic Continued



GRI Index

Key: SR = 2015 Sustainability Report, AR = 2015 Annual Report

General Standard Disclosure ReferenceStrategy and AnalysisG4-1 Statement from the most senior decision-maker about the relevance of

sustainability to the organisationSR: Introduction by Managing Director and Chief Executive Officer AR: Chairman’s Review and Managing Director’s Review

Organisational ProfileG4-3 Name of the organisation Arrium LimitedG4-4 Primary brands, products and services SR: Page 1G4-5 Location of headquarters Sydney, AustraliaG4-6 Countries located SR: Where we do businessG4-7 Nature of ownership and legal form AR: Page 112G4-8 Markets served SR: Customer and MarketG4-9 Scale of organisation SR: People, EconomicG4-10 Employee profile SR: People G4-11 % of employees covered by collective bargaining agreements SR: People, Employee RelationsG4-12 Supply chain SR: Customer and MarketG4-13 Significant changes in the reporting period AR: Segment OverviewG4-14 Precautionary approach AR: Risk ManagementG4-15 Commitments to externally developed economic, environmental and social

charters, principles or other initiativesSR: Data Disclosure and Methodology

G4-16 Memberships and committees SR: Stakeholder EngagementIdentified Material Aspects and BoundariesG4-17 Entities included in reporting AR: Page 112G4-18 Process for defining the report content and aspect boundaries, and

implementation of the reporting principles for defining report contentSR: About this Report

G4-19 Material aspects SR: About this ReportG4-22 Restatements from previous reporting periods Noted as applicable within AR and SRG4-23 Significant changes from previous reporting periods in Scope and

Aspect boundariesNo significant changes

General Standard Disclosures



Stakeholder EngagementG4-24 Stakeholder groups engaged by Arrium SR: Stakeholder EngagementG4-25 Basis for identification and selection of stakeholders SR: Stakeholder EngagementG4-26 Approach to stakeholder engagement SR: Stakeholder EngagementG4-27 Key topics and concerns raised through stakeholder engagement, and responses Throughout the Sustainability ReportG4-28 Reporting period 1 July 2014 to 30 June 2015 (FY15)G4-29 Previous report November 2014, covering FY14G4-30 Reporting cycle AnnualG4-31 Contact details [email protected]

Arrium Limited Level 40, 259 George Street Sydney NSW 2000 Australia +61 2 9239 6666

G4-32 “In-accordance” option SR is “In accordance core”G4-33 Policy and practice in seeking external assurance SR: About this Report

AR is audited by an independent auditor (KPMG)GovernanceG4-34 Governance structure and committees SR: Sustainability GovernanceEthics and IntegrityG4-56 Values, principles and standards Throughout the Sustainability Report

General Standard Disclosures Continued

GRI Index Continued


mailto:sustainabilityreport%40arrium.com?subject=Arrium%20Sustainability%20Report


Specific Standard Disclosure ReferenceCategory – EconomicEconomic PerformanceG4-DMA Disclosure on management approach AR: Strategic Framework and Segments sectionsG4-EC1 Direct economic value generated and distributed SR: Economic, AR: variousG4-EC3 Coverage of Arrium’s defined benefit plan obligations AR: Page 115Category – EnvironmentalMaterialsG4-DMA Disclosure on management approach SR: Recycling, Materials, By-Products and WasteG4-EN1 Materials used by weight or volume SR: Recycling, Materials, By-Products and WasteG4-EN2 Percentage of materials used that are recycled input materials SR: Recycling, Materials, By-Products and WasteEnergyG4-DMA Disclosure on management approach SR: EnergyG4-EN3 Energy consumption within the organisation SR: EnergyG4-EN4 Energy consumption outside the organisation SR: EnergyG4-EN5 Energy intensity SR: EnergyG4-EN6 Reduction of energy consumption SR: EnergyG4-EN7 Reductions in energy requirements of products and services SR: EnergyWaterG4-DMA Disclosure on management approach SR: WaterG4-EN8 Total water withdrawal by source SR: WaterG4-EN9 Water sources significantly affected by withdrawal of water SR: WaterG4-EN10 Percentage and total volume of water recycled and reused SR: Water

Specific Standard Disclosures

GRI Index Continued



BiodiversityG4-DMA Disclosure on management approach SR: BiodiversityG4-EN11 Operational sites owned, leased, managed in, or adjacent to, protected areas and

areas of high biodiversity value outside protected areasSR: Biodiversity

G4-EN12 Description of significant impacts of activities, products and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas

SR: Biodiversity

G4-EN13 Habitats protected or restored SR: BiodiversityMM1 Amount of land disturbed or rehabilitated SR: BiodiversityMM2 Sites requiring biodiversity management plans and number with plans in place SR: BiodiversityEmissionsG4-DMA Disclosure on management approach SR: EnvironmentG4-EN15 Direct greenhouse gas emissions (Scope 1) SR: Greenhouse Gas EmissionsG4-EN16 Energy indirect greenhouse gas emissions (Scope 1) SR: Greenhouse Gas EmissionsG4-EN18 Greenhouse gas emissions intensity SR: Greenhouse Gas EmissionsG4-EN19 Reduction of greenhouse gas emissions SR: EnvironmentG4-EN20 Emissions of ozone-depleting substances SR: Data Disclosure and MethodologyG4-EN21 NOx, SOx, and other significant air emissions SR: Data Disclosure and MethodologyEffluents and WasteG4-DMA Disclosure on management approach SR: Recycling, Materials, By-Products and WasteG4-EN23 Total weight of waste by type and disposal method SR: Recycling, Materials, By-Products and WasteG4-EN24 Total number and volume of significant spills SR: Environmental Regulation and PerformanceComplianceG4-DMA Disclosure on management approach SR: Environmental Regulation and PerformanceG4-EN29 Monetary value of significant fines and total number of non-monetary sanctions

for non-compliance with environmental laws and regulationsSR: Environmental Regulation and Performance

Specific Standard Disclosures Continued

GRI Index Continued



Category – SocialEmploymentG4-DMA Disclosure on management approach SR: PeopleG4-LA1 Total number and rates of new employee hires and employee turnover

by age group, gender, and regionSR: People

Labour/Management RelationsG4-DMA Disclosure on management approach SR: PeopleG4-LA4 Minimum notice periods regarding operational changes, including whether these

are specified in collective agreementsSR: People

MM4 Number of strikes and lock-outs exceeding one week’s duration, by country SR: PeopleOccupational Health and SafetyG4-DMA Disclosure on management approach SR: SafetyG4-LA6 Type of injury and rates of injury, occupational diseases, lost days, absenteeism,

and total number of work-related fatalities, by region and genderSR: Safety

Diversity and Equal OpportunityG4-DMA Disclosure on management approach SR: PeopleG4-LA12 Composition of governance bodies and breakdown of employees per employee

category according to gender, age group, minority group membership, and other indicators of diversity

SR: People AR: Page 50

Other sector-specific disclosuresMM6 Significant disputes relating to land use, customary rights of local communities

and Indigenous peopleNil

MM7 Use of grievence mechanisms to resolve significant disputes Not applicable (see MM6)MM8 Artisinal and small-scale mining occuring at or adjacent to the site NilMM9 Sites where resettlement took place Nil

Specific Standard Disclosures Continued

GRI Index Continued



GlossaryBillet Section of cast steel approximately 127mm to 175mm square and 12 metres long which is used to produce rod and bar

Blast furnace Used for converting iron ore into pig iron

Boundary Refers to scope of the report

CO2 Carbon dioxide

Coke Carbonised coal used in blast furnaces

Electric Arc Furnace (EAF) Converts scrap steel into molten steel

Employee initiated turnover rate

Number of employees who voluntarily leave OneSteel

Grade Refers to composition and physical properties of steel

Green Star An environmental rating system that evaluates the environmental design and construction of buildings

Hematite Type of iron ore used mostly for export (Fe2O3)

Integrated steelworks An integrated steelworks uses blast furnace and basic oxygen steelmaking technology to manufacture steel from iron ore

Loss Time Injury Frequency Rate (LTIFR)

A statistical measure of safety performance. A lost time injury is an injury which is attributable to a workplace incident and which results in at least one full shift of work being lost at some time (not necessarily immediately) after the shift during which the injury occurred. Lost time injury frequency rate is the number of lost time injuries per million hours worked and is calculated as follows: lost time injury frequency rate equals number of lost time injuries per reporting period times one million, divided by hours worked per reporting period.

Magnetite Type of iron ore used for pellet processing (Fe3O4)

MPa Grade Unit of pressure/stress

Medical Treatment Injury Frequency Rate (MTIFR)

A medical treatment injury is an injury which is attributable to a workplace incident, requires medical treatment (including restricted work) and results in less than a full shift of work being lost. Injuries which result in at least one full shift of work being lost are classified as lost time injuries. The medical treatment injury frequency rate is the number of medical treatment injuries per million hours worked and is calculated as follows: medical treatment injury frequency rate equals number of medical treatment injuries per reporting period times one million, divided by hours worked per reporting period.

Ore Mineral bearing rock

Pellet Plant The pellet plant takes iron ore and produces hard balls of iron ore that can be fed into the blast furnace

Post-consumer scrap Scrap arising from end-of-life consumer items

Post-industrial scrap Scrap arising from industrial/manufacturing processes, other than those on-site

Raw steel Raw steel is produced at the Whyalla Steelworks and the EAF Steelworks and is cast in the form of billet, bloom and slab steel



Rod and Bar Rod and bar is a semi-finished product that can be used for further value-added products such as wire, reinforcing steel, grinding media, posts, etc.

Scope 1 Direct emissions generated. Emissions that are the release of greenhouse gases into the atmosphere as a direct result of an activity, or series of activities (including ancillary activities), that constitute the facility.

Scope 2 Indirect emissions generated. Emissions that are the release of greenhouse gases into the atmosphere as a direct result of one or more activities that generate electricity, heating, cooling or steam that is consumed by the facility but do not form part of the facility.

Scrap Post-consumer and post-industrial steel waste

Structural steel Large steel sections used for frames for buildings, factories, bridges and other infrastructure

Total scrap Combination of internal returns, post-consumer and post-industrial scrap

Townswater Water withdrawn from a climate-sensitive source that provides water to regional and urban populations

Glossary Continued



ASI Australian Steel Institute

ATEN Arrium Technical Energy Network

CEO Chief Executive Officer

CSIRO Commonwealth Scientific Industrial Research Organisation

EBA Enterprise Bargaining Agreement

ECG Environment Consultation Group

EEO Energy Efficiency Opportunities

EMS Environmental Management System

FY Financial Year

GBCA Green Building Council of Australia

GRI Global Reporting Initiative

ktCO2-e/yr Kilotonnes of Carbon Dioxide Emissions per Year

KWh Kilowatt hour

LCA Life Cycle Analysis

LCI Life Cycle Inventory

MRRT Mineral Resource Rent Tax

NGERS National Greenhouse and Energy Reporting Scheme

OHS&E Occupational Health, Safety and Environment

PJ Petajoules

PPM Performance Planning and Management

R&D Research and Development

SMR South Middleback Ranges

SRIA Steel Reinforcement Institute of Australia

SSF Steel Stewardship Forum

TJ/yr Terajoules per year

UNSW University of New South Wales

WHS Workplace Health and Safety

WSA WorldSteel Association

Abbreviations



Arrium Limited

Level 40, 259 George Street Telephone: +61 2 9239 6666

Sydney NSW 2000 Australia Fax : +61 2 9251 3045

[email protected]

www.arrium2015.sustainability-report.net.au

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