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A/Group Management Report and Management Report on Salzgitter AG I. Business and Organization

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I. Business and Organization

1. Group Structure and Operations

With a crude steel capacity of almost 9 million tons, around 25,500 employees and external sales totaling

10 billion in 2012, the Salzgitter Group ranks among Europes leading steel technology and plant engi-

neering corporations. It comprises more than 200 subsidiaries and affiliated companies all over the

world. Headed by Salzgitter AG as the holding company, the Group is divided into the five divisions of

Steel, Trading, Tubes, Services and Technology. The share of Salzgitter AG is listed on the MDAX index of

Deutsche Brse AG.

Global presence

Steel Division Tubes Division Trading Division Technology Division

A/Group Management Report and Management Report on Salzgitter AGI. Business and Organization 29

Our core competences reside in the production of rolled steel and tubes products, as well as their pro-

cessing and trading in these products. We also operate a successful business in special machinery and

plant engineering.

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Steel and Technology

Steel stripPlateSectionsEngineeringLogistic servicesInjection molding machinesPipeline tubesPrecision tubesSeamless steel tubesStockholding tradingInternational tradingBeverage fi lling facilities

Since the start of the financial year 2012, all major companies of the Salzgitter Group have been com-

bined under Salzgitter Klckner-Werke GmbH (SKWG), an interim holding. This structure allows us to

carry out centralized and unrestricted financial management for the Group, among other tasks. As the

management holding, Salzgitter AG manages SKWG via the interim holding Salzgitter Mannes-

mann GmbH (SMG), along with all associated companies. The Executive Board of Salzgitter AG is com-

posed of the same persons as the Executive Board of SMG and the Management Board of SKWG. The

management and control of the Group are therefore carried out by the executive bodies responsible for

Salzgitter AG (Executive Board, Supervisory Board). The specific responsibilities associated with the en-

trepreneurial management of the divisions have been combined under the respective organization units

and subsidiaries within the holding.

Legal factors of influence

As the Groups industrial production is mainly located in Germany, both production and the associated

business are subject to the legal provisions prevailing in this country, which specifically includes German

tax rules and regulations as well as legislation on environmental protection under German and EU law.

The structure of the Salzgitter Group is shown in the chart on the next page.

30 A / Group Management Report and Management Report on Salzgitter AG I. Business and Organization

Divisions

Salzgitter AG

Salzgitter Mannesmann/Salzgitter Klckner-Werke

Salzgitter Stahl

Steel

Salzgitter Flachstahl

Peiner Trger

Ilsenburger Grobblech

Salzgitter Europlatinen

Salzgitter Bauelemente

HSP Hoesch Spundwand und Profil

Salzgitter Mannesmann Handel

Trading

Salzgitter Mannesmann Stahlhandel

Salzgitter Mannesmann International

Salzgitter Mannesmann Staalhandel (Netherlands)

Salzgitter Mannesmann Stahlhandel (Poland)

Salzgitter Mannesmann Stahlhandel (Czech Republic)

Salzgitter Mannesmann Aclkereskedelmi (Hungary)

Salzgitter Mannesmann International (USA)

Salzgitter Mannesmann International (Canada)

Stahl-Center Baunatal

Hvelmann & Lueg

Universal Eisen und Stahl

Stahl-Metall-Service Gesellschaft fr Bandverarbeitung

Mannesmannrhren-Werke

Tubes

Salzgitter Mannesmann Przisrohr

Salzgitter Mannesmann Prcision Etirage (France)

Salzgitter Mannesmann Precisin (Mexico)

Salzgitter Mannesmann Precisie (Netherlands)

Europipe 50 %

Salzgitter Mannesmann Grobblech

Salzgitter Mannesmann Grorohr

Salzgitter Mannesmann Line Pipe

Salzgitter Mannesmann Precision

Salzgitter Mannesmann Rohr Sachsen

Salzgitter Mannesmann Stainless Tubes

Httenwerke Krupp Mannesmann

Borusan Mannesmann Boru (Turkey)

30 %

23 %

A / Group Management Report and Management Report on Salzgitter AG I. Business and Organization

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Technology

KHS

Klckner PET-Technologie

Klckner DESMA Elastomertechnik

KHS Corpoplast

KHS Plasmax

Klckner DESMA Schuhmaschinen

RSE Grundbesitz und Beteiligung

Services

DEUMU Deutsche Erz- und Metall-Union

SZST Salzgitter Service und Technik

Verkehrsbetriebe Peine-Salzgitter

Hansaport 51 %

Salzgitter Mannesmann Forschung

Salzgitter Mannesmann Personalservice

Glckauf Immobilien

Salzgitter Hydroforming

Salzgitter Automotive Engineering

Salzgitter Information und Telekommunikation

Gesis Gesellschaft fr Informations systeme

Telcat Multicom

Telcat Kommunikations technik

Schematic diagram as of November 2012

Parent company

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The five divisions are composed of independent companies which operate with a high degree of discre-

tionary scope, carrying out their market-, location- and product-related activities under their own

responsibility.

With its branded and special steels, the Steel Division is particularly representative of our Groups core

competence. The divisions companies produce a wide range of steel products (flat steel and sections,

plates, sheet piling, components for roofing and cladding and tailored blanks) for constantly evolving

new areas at the locations of Salzgitter, Peine, Ilsenburg and Dortmund. Especially with regard to flat

steel products, the product portfolio is geared to premium steel grades and qualities for use in sophisti-

cated application scenarios. The German automobile industry is, for instance, a major customer sector

whose service and quality requirements are very demanding. Thanks to intensive research and develop-

ment and our strong customer orientation, we are in a position to develop future market potential for

our creative and innovative products.

As result of a multi-year investment program in 2012, our integrated steel works in the Salzgitter and

Peine mini mill are now able to smelt around 7 million tons of crude steel a year. The three large rolled

steel mills of Salzgitter, Peine and Ilsenburg rank among the most modern of their type thanks to their

highly sophisticated and complex facilities and process technology. The division works in close coopera-

tion with our trading organization that is not only our most important sales channel but also operates in

the sourcing of semi-finished products on a case-by-case basis.

The Trading Division comprises a tight European sales network as well as trading companies and agen-

cies worldwide. This combination underpins the successful market presence of the Salzgitter Group with

area-wide, extensive coverage which supports the optimal sale of its products and services. In this way,

we ensure that we reach major customers as well as smaller and medium-size customers alike.

The following companies have been assigned to the Trading Division: the Salzgitter Mannesmann-Handel

Group (SMHD Group) that operates under Salzgitter Mannesmann Handel GmbH (SMHD), the plate spe-

cialist Universal Eisen und Stahl GmbH (UES), the steel service center Hvelmann & Lueg GmbH (HLG),

Stahl-Metall-Service Gesellschaft fr Bandbearbeitung mbH (SMS), taken over in the fourth quarter of

2011, as well as parts of the Kovac Stahl operations, acquired in the second quarter of 2012 and integrat-

ed into Salzgitter Mannesmann Stahlhandel Austria (SMSA). SMS will be joining the group of consolidated

companies as from the financial year 2013.

The SMHD Group comprises three companies which operate in the German stockholding steel trade from

fifteen sales locations, eleven of which are in warehouses. Seven companies engage in steel trading in

European countries, with an additional four active agencies. International trading is mainly handled by

nine independent companies and four locations abroad managed as representative offices.

The plate specialist UES conducts its trading and processing activities mainly in Germany, while also

maintaining representative offices in other European countries and in the US. The steel service centers

HLG and SMS, with their customized flat steel products, round off the range offered by the Trading

Division.

A/Group Management Report and Management Report on Salzgitter AGI. Business and Organization 33

The companies and holdings of the Tubes Division, headed by Mannesmannrhren-Werke GmbH (MRW),

provide their customers with a comprehensive portfolio of steel tubes on three continents. The scope of

products comprises in particular longitudinally and spiral-welded large-diameter pipes, HFI (high-

frequency inductive) welded pipes, seamless and welded precision