SIGNIFICANT ENVIRONMENTAL IMPROVEMENTS IN 2003

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1 Environmental Review 2003

2 Outokumpu in brief The target of Outokumpu is to be the leading metals and technology Group that creates real value added for both its customers and shareholders. Our main strength is extensive expertise in metals and metals processing. We operate according to our values and ensure that our operations are in compliance with regulations and do not cause harm in the fields of environment, occupational health and safety. In addition to our values, we have common policies and principles that guide our practices. Site-specific guidelines are more detailed. At the end of 2003 our zinc and copper mining and smelting operations were transferred to new Boliden and we became an owner of that company with a 49-percent holding. Our operations are now based on three areas of expertise: stainless steel, copper products and technology, which were organized into three strategic entities as of January 2004: Stainless, Copper and Technology. In 2003, the Group s net sales amounted to 5.9 billion euros. The Group employs some 19,000 people in more than 40 countries. Scope of the review This review covers the Stainless, Copper and Technology business areas. The review also covers the mining and smelting operations that were part of Outokumpu in 2003 (the Tara zinc mine in Ireland, zinc plants in Kokkola, Finland and in Odda, Norway, a copper smelter in Harjavalta, Finland, and copper refinery in Pori, Finland).

3 Main products Stainless steel has many unique properties that are vital for attaining sustainable development. Stainless products inherent properties guarantee that metals are not released into the environment. Moreover, stainless steel is recyclable, durable and hygienic. Thanks to its properties stainless steel can be used in various applications. The main products of Stainless business area are cold and hot rolled stainless steel coils. Other products include precision strip, hot rolled plate, long products, and tubes and fittings. Copper has superior properties in heat transfer, electrical conductivity and signal transmission. By utilizing these properties in copper products, it is possible to reach high energy-efficiency and achieve reduced energy consumption. The main products of Copper business area are air-conditioning tubes, heat transfer coils and components used in air-conditioning applications, radiator strips, sanitary tubes, roofing and architectural products, copper strips and connectors, superconducting wires, alloy wires, and welding electrodes. Outokumpu s technology development is carried out with attention paid to both the environment and end users. Environmental solutions are built into processes, saving energy as well as materials. Outokumpu offers Best Available Technology (BAT) in copper, zinc, nickel and ferrochrome production. The main products of Technology business area are total customer solutions, which improve productivity in the mining and metallurgical industries. Our 2003 production of stainless steel was 2,022,000 tonnes. Ferrochrome production amounted to 250,000 tonnes. A total of 1.1 million tonnes of ore was excavated at the Kemi mine. Outokumpu s main production facilities are located in Finland, Sweden, the United Kingdom and the United States. A total of 420,000 tonnes of copper products were manufactured in 15 countries. Technology s net sales were 402 million euros. The production amounts of the facilities transferred to new Boliden were: 126,000 tonnes of copper cathodes, 407,000 tonnes of zinc and 2.5 million tonnes of zinc ore excavated. SIGNIFICANT ENVIRONMENTAL IMPROVEMENTS IN 2003 Outokumpu s sites improve their operations continuously. Personnel initiative is important in this work. When improving operations, environmental aspects are taken into consideration. The most significant activities in 2003 were: At the Sheffield stainless steel plant in the UK, the combustion system of one furnace was improved achieving over 80 percent reduction in nitrogen oxides (NO x ) in one furnace, while energy efficiency remained unchanged. The work was partly funded by an Energy Efficiency Best Practice Programme in the UK. A Group-wide team was formed in 2003 to enchance the development of construction materials out of slags. The most significant research project is going on at the Tornio stainless steel plant, where the manufacturing process of stainless steel is modified making it possible to produce mineral-based building products simultaneously. These by-products are used, for example, as construction and insulation materials. The production of the by-products has positive environmental effects: it reduces the amount of waste created as well as replaces large amounts of primary raw materials needed to produce similar products. In Sweden, preparation of an action plan for the Degerfors steel plant closure was begun together with the authorities. The plan covers future reclamation of buildings and soil, among other aspects. The work continues in 2004.

4 Outokumpu and the environment EEnvironmental investments and costs nvironmental investments amounted to approximately 14 million euros. The Tornio site represented three million of the total. Operating costs for environmental protection amounted to some 50 million euros. As outlined in the 2003 objectives, the key investments were related to improvements in cooling water recycling and effluent water treatment. The Odda zinc plant finalized a recovery and recycling system for surface water, and modernized the effluent treatment plant. Cooling water recycling systems were improved in Avesta and Torshälla, Sweden and in Pori, Finland. Effluent water treatment was upgraded in Degerfors, Sweden. The main investments in air protection took place in Sweden: new off-gas filtering equipment to a continuous casting unit in Avesta, and actions taken in Kloster to decrease NO x emissions. Harjavalta began constructing foundations for a new landfill area, and Kokkola commissioned new filtering equipment for sulfur concentrate. Energy-efficiency projects were implemented at a number of sites including Torshälla and Fagersta in Sweden. Non-compliances and accidents There were no significant non-compliances in A few minor breaches of permit conditions were registered according to local practice at the stainless steel and copper products sites. A temporary non-compliance was recorded at the Harjavalta smelter in the spring during the annual maintenance when acidic washing water from the smelter s waste heat boiler and electrostatic precipitator was led to the waste treatment plant, which did not have sufficient capacity to precipitate out the metals. Despite the new off-gas treatment plant in Pori the emission limit value was exceeded marginally. Environmental liabilities In the US, the PGT groundwater case that was opened nearly 20 years ago is still pending. In the Netherlands, intermittent non-compliances at the Zutphen brass strip plant in were up for a hearing in a local court in December. The court ordered the payment of a fine totaling 80,000 euros. Outokumpu has appealed the grounds for the fine. After the non-compliance occurred, all corrective and preventive measures have been carried out appropriately. Outokumpu is not a party in significant judicial or administrative proceedings concerning environmental issues, nor is it aware of any environmental risks that would have a material impact on the Group s financial status.

5 Implementation of targets The goals set for 2003 were best achieved in the area of energy-efficiency through continued participation in national energy-saving programs. No significant improvements were achieved in water treatment. The goal of minimizing incidental discharges was achieved well, with the exception of the Harjavalta smelter case mentioned earlier. The planned soil risk assessment of sites during was started. The new environmental data collection and reporting system was operational at the beginning of During 2003, the stainless steel plants in Malmö, Avesta and Fagersta in Sweden, the Wildwood plant in the US, as well as the Västerås copper products plant in Sweden certified their environmental systems. At the end of 2003, altogether 27 sites had a certified environmental management system in place. The goal of copper disharges of less than three kilograms per day at the Pori copper products plant was not realized. The discharge was 5.2 kg per day. The main reasons were a delay in a roofing investment in a raw materials storage area and malfunctions of filter equipment at the rolling mill. At the Kokkola zinc plant, the goals of a 10-percent decrease in metal discharges and a 20- percent decrease in zinc discharges were not realized. The discharges remained at the previous year s levels, although emissions to air at Kokkola decreased by 50 percent. Targets for following years Outokumpu s Group-wide goal is certification of the environmental management systems of all production sites by the end of The new environmental data collection and reporting system is scheduled to be fully operational by the end of In addition, the Global Reporting Initiative principles will be examined. Sites have also set their own targets in addition to Group-level targets. Improvements in energy-efficiency. For example, Avesta has set itself the goal to decrease energy consumption per produced steel tonnes by four percent. Improvements in water treatment. For example, Wildwood s goal is to have a new waste-water treatment plant fully operational by the end of Improved efficiency in materials use. For example, Avesta aims to reduce its oil and grease use by 40 percent from the 2002 levels. Decreases in the amount of wastes at a number of sites including Kemi and Västerås. Decreases in air emissions. For example, Tornio aims to decrease dust emissions by up to 40 percent by closing the openings in the ceiling of one smelter. Certification of the environmental management systems in Sheffield, UK, Zhongshan, China, and Pietarsaari, Finland.

6 Important environmental issues concerning Outokumpu Emission trading The Outokumpu sites encompassed in the EU s emission trading directive are the stainless steel production plants in Tornio, Avesta, Degerfors and Sheffield. These sites might expect additional costs if they need to purchase emission allowances from the market. The effects of emission trading will eventually cover all sites in Europe because of possible changes in electricity price. A rise in the price of electricity will most likely have a greater impact. Waste interpretation The stainless steel manufacturing process involves many material flows. These are difficult to define and are often classified as waste by the environmental authorities. Recycled steel, used as a raw material for steel production, is also classified as waste. Part of these materials could be utilized as various products, actually decreasing the amount of waste created. If the material so utilized were to be classified as waste, there could be negative impacts: Negative impact on corporate image. Need for additional permits for utilizing waste. Difficulties in cross-border trade. Excellent products could end up in landfills. Outokumpu s aim is to decrease the amount of waste and to utilize the material fractions that emerge in production processes as much as possible. To achieve this it is essential that the products are not classified as waste, which would unnecessarily hinder their utilization. Corporate social responsibility Outokumpu cooperates with various authorities and organizations in the development of its environmental and safety practices. In 2003 the main issues were waste and landfill statutes, climate change and water legislation. Development work on group-wide social responsibility reporting continues in Additional information on environmental issues is available at

7 The key charts EMISSION CHARTS The information for 2003 includes the zinc mining and smelting and copper smelting and refining operations that were transferred to new Boliden at the end of Information on Outokumpu Stainless is now reported for the first time in its entirety. Accordingly the 2003 emission and discharges charts are not comparable with previous years. PARTICLE EMISSIONS TO AIR SULFUR DIOXIDE EMISSIONS METAL DISCHARGES TO WATER (copper, nickel, zinc, molybdenum, chromium, lead, arsenic) tonnes tonnes tonnes HEALTH AND SAFETY Two fatal accidents occurred in 2003: one at the Pori copper products plant in January and the other at the stainless steel melting shop in Tornio. These cases are still under investigation. The goal of the occupational safety activities carried out across the Outokumpu Group has been to halve the frequency of accidents compared to the average of the previous five years. Six sites reached this target in The program continues. In addition, Outokumpu organizes an annual group-wide occupational safety seminar and grants an Outokumpu Occupational Safety Award. The recipient of the 2003 award was the Odda zinc plant. ACCIDENT RATE SICK LEAVE DAYS (accidents per million hours (per million hours worked, worked, employees and contractors) employees and contractors) Tähän tulevat taulukot: Tapaturmatiheys Sairauspoissaolot

8 Libris, Finland. July Outokumpu is a dynamic metals and technology group. Focusing on our core competences, that is, extensive knowledge of metals and metals processing, we aim to be leaders in all of our key businesses: stainless steel, copper and technology. Customers in a wide range of industries use our metals, metal products, technology and services worldwide. Corporate Communications, P.O. Box 140, FI Espoo, Finland. Tel , Fax corporate.comms@outokumpu.com