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SUSTAINABILITYREPORT

YEARS 2011- 2012

FERALPI GROUPSUSTAINABILITY

REPORT

YEARS 2011- 2012

FERALPI GROUPSUSTAINABILITY REPORT

Message from the President .................................p. 6Corporate Boards ......................................................p. 9Methodological note ..................................................p. 10Group highlights .........................................................p. 15

SECTION ONETHE GLOBAL AND THE LOCAL SCENARIO

1. Identity, mission and strategy ..........................p. 162. Structure of the Group .......................................p. 183. Corporate governance .........................................p. 204. The Group’s role in the reference market ..................................................p. 22

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CONT

ENTS

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SECTION FIVEENVIRONMENTAL RESPONSIBILITY

Independent auditors’ report ..........................................p. 122Statement GRI ......................................................................p. 126Content Index .......................................................................p. 128Glossary ................................................................................p. 154Colophon ...............................................................................p. 156

1. Production process ................................................. p. 902. The production plants and their location ........... p. 93 2.1. The Lonato del Garda plant ......................... p. 93 2.2. The Calvisano plant ........................................ p. 98 2.3. The Riesa plant ............................................... p. 99 2.4. The Ecoeternit controlled landfill ................ p. 100 2.5. Faeco landfill .................................................... p. 102 2.6. Other plants with minor environmental impact ..................................... p. 1033. Environmental performance indicators .............. p. 104 3.1. Input materials ................................................ p. 104 3.2. Energy consumption and saving ................. p. 106 3.3. Waste production and treatment ............... p. 109 3.4. Use of water and liquid emissions .............. p. 113 3.5. Atmospheric emissions ................................. p. 116 3.6. Noise emissions .............................................. p. 120

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CONT

ENTSSECTION TWO

SOCIAL RESPONSIBILITY COMMITMENTS AND GUIDELINES

1.4. Health and safety .................................................p. 52 1.5. Professional training ..........................................p. 54 1.6. Gender equality ...................................................p. 58 1.7. Safeguarding protected categories ..............p. 61 1.8. Protection of workers’ rights and relations with the trade unions .........................................p. 62 1.9. Opinion of employees at the Italian plant ...........................................................p. 622. Shareholders .................................................................p. 663. Customers ......................................................................p. 66 3.1. Product range ......................................................p. 67 3.2. Quality objectives ................................................p. 734. Suppliers ........................................................................p. 74 4.1. Suppliers and quality .........................................p. 76 4.2. Scrap suppliers ....................................................p. 77 4.3. Energy suppliers ..................................................p. 79 4.4. Subcontractors working at the plant ............p. 79 4.5. Relations with suppliers ......................................p 805. Public Administration ..................................................p. 80 5.1. European Union ....................................................p. 82 5.2. Nation states ........................................................p. 82 5.3. Public monitoring authorities ...........................p. 826. Local reference communities ...................................p. 82 6.1. Support of local communities .........................p. 83 6.2. The third edition of the Riesa residents opinion survey .......................................................p. 88

1. Employees .......................................................................p. 44 1.1. Remuneration of human resources ..............p. 48 1.2. Welfare support provisions ..............................p. 51 1.3. Work organisation and work environment quality ...........................................p. 51

1. The Group’s CSR policy .......................................... p. 262. The Feralpi Group’s stakeholders ........................ p. 27 3. Stakeholder dialogue .............................................. p. 284. Stakeholder involvement targets and programmesr .................................................... p. 30 4.1. Activities in favour of youngsters ................. p. 30 4.2. Focus on the community ................................ p. 32 4.3. Promoting corporate culture ......................... p. 33 4.4. Events ................................................................. p. 33

SECTION FOURSOCIAL RESPONSIBILITY

1. Creation of added value at Group level .....................p. 342. Distribution of added value at Group level ............p. 353. Investments in the environment and safety .........p. 374. Research and development .......................................p. 41

SECTION THREEECONOMIC RESPONSIBILITY

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The world we knew prior to the crisis may have vanished for ever, but it has given us all the chance to build a new one in which dialogue, trust and transparency can become the cornerstones of a new vision of responsibility. This calls for a clear cultural leap forward, away from the models of the “old” world, courageously seizing any opportunities that present themselves along the way. This principle applies to everyone, both individuals and businesses, and that includes the Feralpi Group. We have realised that for us, pursuing or even anticipating change means doing even better what we already do well, which is making steel. We can do this with the support of our highly qualified workforce – what makes all the difference for the Group – but we want to do it in harmony with the environment in which we operate and the local community. The sustainable development to which we continuously aspire, the measures we have put in place and the results we have achieved, all of which are reported herein, are tangible evidence of the transparency with which we operate and the effectiveness of our ongoing dialogue with all our stakeholders. The fifth edition of the Sustainability Report I am pleased to present here bears witness to the Group’s pro-active approach to overcoming the crisis by operating all the “gears” that can change the current economic situation. We do this by equipping ourselves with the best technologies available, opening up to new markets, enhancing professional skills and keeping to our commitments, the ultimate aim being to achieve the highest possible standard of product quality and safety. This edition of the Sustainability Report covers the numerous aspects that have brought us satisfaction with what we do. It details our efforts to renew plant and equipment, which combine high productivity levels and excellent safety standards and make our Group an advanced benchmark at an international level. We also present the main findings of the fourth corporate climate survey, which covers international operations for the first time, and therefore includes all employees working at our

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plants in Germany. The third survey was conducted to assess the opinions of the residents of Riesa, in Saxony, Germany. Our efforts have been recognised outside the Group as well. In Italy, we received the Sodalitas Social Award for corporate sustainability in the category “personal enhancement and work protection”, promoted by the Sodalitas Foundation, and recognition from Confindustria as part of the 9th Young Enterprise national award. In Germany, jointly with the Riesa utility company SWR, we won the Saxony environmental award in the category “environmentally-friendly technologies and production processes”. Each of these awards is the result of a lengthy process that started well before the economic crisis hit the iron and steel industry. Today we are paying the penalty for the intrinsic weaknesses of the national economy, which has not spared domestic manufacturing, including the production of steel. Yet, despite everything, steel production must continue to be the backbone of Italian industry. It is a vital role, yet also a complex one, since the steel industry has to maintain its competitiveness, while supporting jobs in the entire supply chain both upstream and downstream (e.g. in mechanical engineering and the construction industry). Despite focusing increasingly on international markets, Feralpi has not forgotten its past and its roots – we started out here, and still operate here. And we are not going to change: people and the environment have always been and will continue to be the areas where we want to develop our Group most, and promote sustainable growth to the advantage of future generations.

MESSAGE FROMTHE PRESIDENT

The economic turmoil that continues to affect the western world – Italy in particular – risks dragging us from a consumer crisis to a social crisis. It is in this stormy scenario that factors such as sharing, a joint approach and the ability to adapt to change with research and development acquire strength and, more importantly, stand out as fundamental mainstays for counteracting difficulties and building a future.

An enterprise, around which economic, social and environmental issues revolve, cannot be exempt from responsibility. This is why Feralpi, after starting out on the road to Corporate Social Responsibility (CSR) in 2004, has with this Sustainability Report reached a new milestone on a journey that appeared somewhat uncharted, yet has now become much more clearly defined.


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Corporate Boards of Feralpi Holding

Board of Directors

Chairman Giuseppe Pasini

Vice-Chairman Cesare Pasini

Executive Director Giovanni Pasini

Board members: Maria Giulia Pasini Marco Leali Andrea Tolettini Alessandra Tolettini Guido Corbetta

Board of Auditors

Chairman Giancarlo Russo Corvace

Statutory auditors Alberto Soardi Stefano Guerreschi

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SUSTAINABILITY REPORT

8

CORPORATE BOARDS OF FERALPI HOLDING

11

and Hungary, Csepel). They have less economic influence on the Group as a whole, the numbers of employees do not produce significant social effects and cold rolling processes have a less significant environmental impact. For these reasons, the analysis of these companies is included in this Report covering the Group as a whole. Compared to previous editions of the Sustainability Report, more details are given here for Feralpi Praha SRO, based in Kralupy, near Prague in the Czech Republic, and Feralpi Hungaria KFT, based in Csepel, near Budapest in Hungary, especially

in the Environment section. Two sections are dedicated to the activies of the two local units that handle waste disposal, Faeco S.p.A in Bedizzole and Ecoeternit S.r.l. in Montichiari, both in the province of Brescia. Although both companies were only partially operational during the two years covered by this Report and they account for a small proportion of the operations of the Group as a whole, the type of work done is of particular importance for the purpose of this Report.

METHODOLOGICAL NOTEThe Feralpi Group’s Sustainability Report is published every two years, and this edition covers the 2011 and 2012 financial years.The Group’s previous Sustainability Report can be consulted in the Sustainability section of the website www.feralpigroup.com.

With regard to economic and social performance, the boundary of the report coincides with the Feralpi Group’s Consolidated Financial Statements as at 31 December 2012, and includes acquisition of the company Orsogril through Feralpi’s subsidiary Nuova Defim. The consolidation criteria apply to all the subsidiaries, but not the associated companies. With regard to environmental performance, specific

reference is made to the largest production units: Feralpi Siderurgica S.p.A. in Lonato del Garda (Brescia), Acciaierie di Calvisano in Viadana di Calvisano (Brescia) and ESF GmbH in Riesa (Saxony). All three plants produce steel billets using electric-arc furnace (EAF) technology. Feralpi Siderurgica S.p.A. and ESF GmbH also handle subsequent hot rolling processes. The other production units are located in Italy (Pomezia, Rome; Alzate Brianza, Como; Anzano del Parco, Como; the Czech Republic, Kralupy


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It shows how this Report highlights the various topics based on two important criteria: economic, social and environmental impacts and influence on the stakeholders’ decisions.

This Sustainability Report has been drawn up in accordance with the G3.1 Sustainability Reporting guidelines established by the Global Reporting Initiative (GRI) and published in 2011.To the indicators in the G3.1 guidelines have been added those set out in the GRI Mining and Metals Sector Supplement, version G3.0, the one available on the date of commencement of the work. The systematic framework of the GRI indicators applied to the Group is presented in a table at the end of this Report. The indicators and information based on GRI guidelines given in this Report allow a self-declared application level A+.The limited assurance conducted by Reconta Ernst & Young S.p.A. enabled a + sign to be added to level A. The final check was conducted by the GRI, which confirmed that the Feralpi Group’s declared “GRI-checked” application level was A.The layout of the financial statements and the tables showing the make-up and distribution of the added value generated by the Group are based on the recommendations and schemes proposed by the Social Report Study Group (SRSG).

The contents of this Report are the result of involvement of the main company departments and external stakeholders. Therefore the data sources, which are handled using different information systems, comprise numerous internal documents, surveys conducted by the Group and other sources indicated from time to time herein. The sources of tables and graphs are indicated, unless their contents come from internal sources or data processing. All the information flows used in drawing up this Report were monitored and verified by the CSR Manager. The economic data and financial information are taken from the Feralpi Group’s Consolidated Financial Statements for the year ending 31 December 2012.Reporting is by production site and by country to make it easier for the main stakeholders and local reference communities to consult and interpret the data. For this reason, facts and figures concerning environmental impacts are presented systematically at a production plant level, allowing a more detailed comparative analysis. The information contained in this Sustainability Report is presented more analytically in the sub-holding company Feralpi Stahl’s Sustainability Report, which was also prepared in accordance with version G3.1 of the GRI Guidelines and the related Mining and Metals Sector Supplement, version G3.0.


2 The survey was carried out by asking individuals to compile a questionnaire drawn up by KPMG at a training course on CSR and social reporting, followed by a group discussion on 13.10.2011 at the training centre in Lonato, and a series of internal meetings held in 2013.

Below is an explanation of the names used in this Report: a) Feralpi Group, or Group – the Group as a

whole, which comprises the companies included in the consolidated financial statements of the parent company Feralpi Holding;

b) Feralpi Siderurgica – all the operations taking place at the plant in Lonato del Garda;

c) Acciaierie di Calvisano – all the operations taking place at the plant in Calvisano;

d) Feralpi Stahl – all the operations taking place at the plant in Riesa and those in the Czech Republic and Hungary, for which ESF GmbH acts as the Group’s sub-holding company for activities abroad.

The term “materiality” designates the topics and indicators that reflect the significant economic, social and environmental impacts which the Company deems have influenced in the past or may have a major influence on the stakeholders’ opinions and decisions. The topics reported on are defined by Feralpi as “material”. The choice of topics was based on both internal and external factors, including the Group’s mission and strategy, the expectations and concerns expressed by the main stakeholders in opinion surveys based on scientific criteria1, and social expectations in a broad sense.The diagram below shows the findings of a survey of the Group’s top management and second level executives2.

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METHODOLOGICAL NOTE

LOW Report

ing priority

HIGH

Significant to

pics

Influ

ence

on

stak

ehol

ders

’ opi

nion

s an

d de

cisio

ns

Financial, social and environmental impacts

Environment

Safety

Corporate giving

Sponsorships

R&S

Human rights

Training

Product sustainability and quality

Corporate welfare

Fig. 1 – Application of the materiality criterion in the Feralpi Sustainability Report

1 this Report is mainly based on the results of the corporate climate surveys conducted periodically by researchers from Milan University’s Department of Social and Political Sciences and involving the Group’s entire workforce, and on a sample survey conducted in September 2013 for Feralpi Stahl by Berlin-based INWT Statistics on the population residing in Riesa..

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GROUP HIGHLIGHTS

31.12.2011 31.12.2012 % change

Shareholders’ equity €,000 357,714 377,855 +5.6

Profit/loss for the year €,000 5,975 21,162 + 254.2

Production value €,000 1,132,676 1,135,047 0.2

Steel billets produced per year t,000 2,090.7 2,189.5 + 4.7

Net global added value €,000 88,091 101,576 + 15.3

Investments:

- technology €,000 51,931 36,855 - 29.0

- H&S and environment €,000 10,834 11,085 + 2.3

- R&D €,000 2,886 3,009 + 4.3

Employees as at 31.12 number 1,298 1324 + 1.2

Training hours 32,396 20,172 - 37.7


Structure of the Report

This Report is divided into five sections.• Section one provides a profile of the Group and

describes the international scenario in the steel business, the Group’s identity and core business, and its mission, strategy and governance structure.

• Section two presents the model of Corporate Social Responsibility adopted by the Group, and the main lines of commitment and intervention identified and developed for each stakeholder.

• Section three covers economic responsibility, presents and analyses the production and distribution of value added and the Group’s investment plans.

• Section four covers social responsibility and analyses interrelations with each of the stakeholders identified and presented systematically in section one. It also presents data on worker health & safety matters.

• Section five presents environmental impact data for the Group’s main factories, which include the consumption of raw materials, energy, water and the production of waste. It also illustrates the initiatives implemented, the measures taken and the results achieved at each plant with regard to energy saving, material recycling, the reduction and control of emissions and the safe treatment of process waste.

Like the previous edition, this Sustainability Report is subject to external assurance by an independent auditor. It is published in English and Italian, and can be consulted in the Sustainability section of the website www.feralpigroup.com.

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METHODOLOGICAL NOTE

Additional information and further details of the topics dealt with here can be obtained by sending an e-mail to [email protected], the Group’s CSR manager, for the edition referring to the Feralpi Group, or to [email protected] for the edition referring to Feralpi Stahl.

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SECTION ONE THE GLOBAL AND THE LOCAL SCENARIO


In 1992 Feralpi acquired an international structure when a new steel mill was built in Riesa, Germany. When Feralpi Holding was established in 2004, Feralpi became an industrial group with production facilities in four European countries (Italy, Germany, the Czech Republic and Hungary) and an affiliated company in Romania. The Group gradually diversified its downstream production with more recent acquisitions involved in the secondary processing of iron and steel products for the building industry, and later branched out into the areas of environment, energy and finance. The Feralpi Group operates in a sector characterized structurally by a strong cyclical trend, and periods of market crisis have always been overcome thanks to its financial solidity, which is based on a policy of systematic allocation to provisions, reinvestment of profits and constant technological innovation, which has always focused on productivity, safety and environmental protection.

Feralpi’s strategy hinges on the optimal use and continuous improvement of electric-arc furnace technology, which has a series of advantages over other steel production technologies, namely relatively low investment costs, flexible systems and operations, minimisation of handling operations, focus on cutting energy costs and reduced environmental impact.The importance Feralpi places on applied research, in partnership with public and private entities, allows progressive process innovation in view of increasing productivity and saving energy. In addition to continuous improvement in technology, corporate strategy focuses on enhancing personnel motivation and qualification, diversifying the range of quality products, and taking customer requirements into due account.

Feralpi’s environmental policy complies with the Rio de Janeiro Declaration on the environment and development (UN Conference, 3-14 June 1992) and is based on the extensive application of the precautionary principle expressed in Article 15, according to which: “Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.”

Feralpi has always remained faithful to the corporate motto expressed nearly half a century ago by the founder, Carlo Nicola Pasini.Working and growing through respect for man and the environment means:- creating something that can help improve living

conditions;- guaranteeing wellbeing for an increasing

number of families;- promoting understanding and harmony between

individuals, technology and nature.

Feralpi’s mission:• to help promote the many uses of steel in daily

life;• to renew Italy’s great steel manufacturing

tradition, combining it with sustainable development and respect for the environment;

• to focus more on international markets and seize all the opportunities offered.

SECTION ONE

1.1. Identity, mission and strategyThe Feralpi Group was set up in 1968, when a group of businessmen headed by Carlo Nicola Pasini decided to build in Lonato a steel mill with an electric arc furnace, followed two years later by a rolling mill for medium-large rod. Their early success led to the construction of a second steel mill, in Calvisano, in 1973, and adoption of continuous casting for billets. Following the founder’s sudden death, his wife and sons, along with the other partners, took over the running of the business, which continued to adopt a strategy of constant investments and technological excellence.


THE GLOBAL ANDTHE LOCAL SCENARIO

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The Group is structured with two main lines of business3. a) Steel business, coordinated by Feralpi Siderurgica S.p.A., which acts as a sub-holding company for the entire line of business, which is divided in turn into the Italian pole (Feralpi Siderurgica S.p.A., located in Lonato del Garda - Brescia, Acciaierie di Calvisano S.p.A., based in Calvisano - Brescia, Nuova Defim S.p.A., based in Alzate Brianza - Como, Dieffe S.r.l., based in Pomezia - Rome, and Investimenti Sebino S.r.l.) and the German pole, which comprises all the companies located abroad and coming under Feralpi Stahl (ESF Elbe-Stahlwerke Feralpi GmbH, based in Riesa, Saxony, with its subsidiaries EDF Elbe-

3 Only the subsidiaries are quoted here. For full details of the affiliates, please refer to the reports accompanying the consolidated financial statements as at 31.12.2011 and 31.12.2012.

Drahtwerke Feralpi GmbH, and Feralpi Stahlhandel GmbH, which in turn controls Feralpi Praha S.R.O., based in the Czech Republic, and Feralpi Hungaria K.F.T., Hungary).b) Ecology, environment and diversified holdings, comprising the parent company FER-PAR S.r.l. and the subsidiaries Faeco Ambiente S.r.l., which specializes in research and innovation in the field of waste treatment, recycling and reuse, and Ecoeternit S.r.l. – controlled by Due I, Investimenti Industriali S.p.A. – which is involved in waste collection, transportation, reclamation and treatment, including the inertisation, sterilisation, separation and recycling of all categories of waste, including hazardous and toxic waste.

1.2. Structure of the GroupFor full details of the structure of the Group, the subsidiaries and affiliated companies, as well as divestments and acquisitions in 2011-2012, please refer to the reports accompanying the consolidated financial statements for these two years.

All the Group’s holdings are owned directly or indirectly by Feralpi Holding S.p.A., which has its head office at 15 Via Aurelio Saffi, Brescia, and administrative offices at 11 Via Carlo Nicola Pasini , Lonato del Garda, Brescia.

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Risks and opportunities arising from business activities (D1.2).Since the Group mainly operates in the steel manufacturing industry and is also involved in environmental and ecological issues, it must necessarily identify and control risks of an economic, financial and commercial nature, which are typical of business activities in general and are detailed in the business report (pursuant to art. 2428, subsection 2, point 6-bis, of the Italian Civil Code), in addition to operating risks associated with occupational health & safety and the environment inside and outside its production sites, the handling of a large amount of waste, and risks linked to changes in the regulations, uncertainty in interpretation and the methods of application issued by the supervisory bodies. For example, the product sites that have steel melting equipment have offgas, extraction and removal systems as well as areas where the extracted dust is stored. These systems are classified as at risk of major accident according to Italian Legislative Decree no. 334/99, as amended, due to the concentrations of zinc oxide and lead compounds present in the dust. Risks and opportunities also include the possible consequences of climate change on the Group. Although the possible financial implications of climate change on corporate operations have not been estimated in quantitative terms, the management is aware of these implications and takes them into account when establishing the Group’s strategies. Corporate costs can be affected by environmental decisions made in international agreements and conventions between States, such as the Kyoto Protocol, or the European Union’s Emission Trading Scheme (EU ETS), which regulates the trading of CO2 emission allowances. Feralpi products have a minimum environmental impact as they are entirely recyclable, but its high-energy-consuming production processes cause a significant indirect environmental impact, which helps fuel climate change. As explained in Section Five, subsection 3.5, Feralpi adopts the best technologies available, conducts research on energy saving and recycles process waste. This enables it to exploit better than its direct rivals any opportunities that present themselves in this technologically mature sector, but there is still plenty of room for improvement in terms of consumption, productivity, quality and safety.

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Corporate governance structure

General principles of the Code of ConductPUBLIC

ADMINISTRATION

Transparency

TruthfulnessTransparency

Diligenceand Proficiency

Collaboration Collaboration

Environmental protection and sustainable development

COMMUNITY

CUSTOMERSSUPPLIERS

SHAREHOLDERSPERSONNEL AND COLLABORATORS

HONESTYRESPECT

TRUST AND LOYALTYFAIRNESS

Auditing FirmBoard of Auditors

Supervisory Body

Board of Directors

General Assembly of Shareholders

Code of ConductItalian legislative decree no. 231/2001, on the administrative liability of legal entities, lays down the rules for the Feralpi Group’s organisational model and requires the adoption of a Code of Conduct. The first version of Feralpi’s Code of Conduct was approved by the parent company’s board of directors in 2007 and subsequently adopted by all the companies in the Group. The Code of Conduct sets out guidelines for corporate social responsibility and is the main tool for defining, disseminating and safeguarding business ethics within the company and in its relations with all its stakeholders. The Code of Conduct sets out the general principles on which the daily work of the members of the organisation at all levels must be based and establishes rules of behaviour consistent with them and referring specifically to each stakeholder. Over and beyond compliance with the law, the adoption of ethical principles determines correct behaviour in business dealings and the voluntary adoption of rules of conduct that Feralpi follows in its relations with the stakeholders, who are expected to adopt the same values. The Supervisory Body, which consists of independent professionals appointed by the Board of Directors, has the task of ensuring that corporate decisions and individual behaviours comply with the Code of Conduct.

1.3. Corporate governanceThe Group’s governance structure is based on cascade control of the operating companies by Feralpi Holding, which coordinates them and provides common services. The holding company’s controlling body (one-tier model or unitary board system) is the Board of Directors, which is elected by the general assembly of shareholders and comprises eight directors, from among whom is elected a chairman with operational powers, a vice-chairman and an executive director.

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As explained in the section on shareholders, the board is the historical expression of Feralpi’s family control, so the company positions are held by representatives of the main shareholders, who also have managerial functions. The Board of Auditors is made up of three members, who are assisted by a secretary. Fees paid to top and middle managers include incentives linked to the business results and the achievement of specific targets.

Feralpi Siderurgica SpA

Mittel SpA

Feralpi Holding SpA

Finanziaria di Valle Camonica SpA

FER-PAR Srl

Due I. SpA Agroittica SpA

Ecoeternit Srl

ECO-TRADING Srl

Comeca SpA

Faeco Ambiente Srl

Beta SpA

ESF GmbH

Immobiliare Feralpi Srl

Investimenti Sebino Srl

Media Steel Srl

Nuova DE.FI.M. SpAOrsogril

Dieffe Srl

FAR Energia Srl Omega Srl

EDF GmbH

Feralpi Stahlhandel GmbH

Feralpi Logistik GmbH

Feralpi Hungaria KFT

Feralpi Praha SRO Feralpi Recycling SRO

Acciaierie di Calvisano SpA

KEY

Control InterestIron and steel production

Cold processing and derivatives

Metal structural work

Trading

Waste disposal

Environment

Fish-farming

Finance

Capital investment management

Other

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SECTION ONE THE GLOBAL AND THE LOCAL SCENARIO800

700

600

500

400

300

200

100

02007 2008 2009 2010 2011 2012

CHINA

EU

JAPAN

USA

INDIA

Production of raw steel by the main manufacturing countries (million tonnes)

Source: World Steel Association 2013http://www.worldsteel.org/

Feralpi tackled the crisis by investing in cutting-edge technology able to guarantee quality, low environmental impact and safety, and contain costs per unit of product.

Within the European Union, Italy enjoyed a higher recovery in production during 2011, but suffered a

slightly steeper downturn the following year.

Most of the drop in sales in Italy was offset by an expansion in exports to non-EU countries, mainly Algeria, where the Group benefited from growing demand for products of certified quality.

Based on Federacciai data

105

100

95

90

85

80

75

70

65

602007 2008 2009 2010 2011 2012

96.9100

94.794.4

62.966.5

90.2

82.8

81.6

91.287.9

86.0

81.2

90.7

85.1

67.3 GermanyItalyEU

Total steel production index for Italy, Germany and the EU (2007 = 100)

Three Supervisory Bodies (SBs) were operating within the Group at the end of 2012: two collegiate supervisory bodies, consisting of three members from Feralpi Holding and Feralpi Siderurgica, respectively, and a monocratic supervisory body for Acciaierie di Calvisano.Each collegiate SB consists of a company employee acting as an internal auditor and two independent members, one of whom is appointed chairman. The chairman of Feralpi Holding’s SB is a person in possession of specific legal expertise allowing constant updating to comply with changes in the law, which also applies to the Group’s subsidiaries

since Feralpi Holding’s functions are transversal. The chairman of Feralpi Siderurgica’s SBs possesses specific competences in connection with environmental protection and occupational health & safety. Acciaierie di Calvisano’s SB has a single independent member with expertise in the areas of occupational health & safety, legislation and the environment. SB members hold office for three years, and when their mandate expires they fall from office on the date on which the new SB is formed. During 2011-2012, the SBs received no claims or reported breaches of the law or the principles enshrined in the Code of Conduct.

1.4. The Group’s role in the reference marketsThe use of steel is becoming more and more widespread throughout the world and global production has started to grow at a faster rate than in the last three decades of the 20th century. The 2009 global crisis only caused a brief temporary interruption in this positive trend, which saw a 16.4% global increase in the apparent per capita use of steel in the past six years (source: World Steel Association 2013).

During 2011-2012 the SBs operated with continuity and made recommendations and suggestions to their respective Boards of Directors. There were no reports of actions or conduct entailing breach of the corporate Code of Conduct. The SBs of Feralpi Holding and Feralpi Siderurgica held five meetings in both 2011 and 2012, all duly recorded in the minutes, as well as informal meetings and audits by the various members. The SB of Acciaierie di Calvisano performed 9 audits in 2011 and 11 in 2012, all duly recorded in the minutes.

This general trend, however, conceals a profound structural imbalance in steel industry: most raw steel production has moved to the East and the crisis accelerated this change. Steel production in the West, and in Europe in particular, has progressively decreased and is destined to lose its central role.

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Certifications The Feralpi Group is committed to the constant renewal of its certifications and extension of their range. Work continued after the closing date of the Report in view of obtaining SustSteel certification for Feralpi Siderurgica in Lonato and ESF in Riesa. ESF also has obtained EMAS certification.

Tab. 2 – Awards in 2011-2012Company Type of award Awarding entity Date

Feralpi Stahl Award for “Environmentally-friendly technologies and production processes”

Ministry of the Environment and Agriculture, Saxony

July 2013

Acciaierie di CalvisanoSodalitas Social Award for Corporate Social Responsibility as part of the “Towards zero accidents” project

Sodalitas Foundation, Milan May 2013

Feralpi Group

“Young Enterprise” award for its commitment in favour of new generations, with the Professional Apprenticeship scheme and the Comenius Regio programme

Confindustria November 2013

Tab. 1 – System and product certifications obtained by group members in Italy and abroadCompany Type of certification ExpiryEDF GmbH DIN En ISO 9001:2008-12 13.12.2015

UNI EN ISO 14001:2009 12.07.2015DIN EN ISO 50001:2001 12.07.2015EMAS III certification 12.07.2015

Feralpi Stahlhandel GmbH DIN EN ISO 14001:2009 12.07.2015DIN EN ISO 50001:2011 12.07.2015EMAS III certification 12.07.2015

Feralpi Logistik GmbH DIN EN ISO 14001:2009 12.07.2015DIN EN ISO 50001:2011 12.07.2015EMAS III certification 12.07.2015

Feralpi Praha Sro DIN EN ISO 9001:2008-12 07.03.2014Feralpi Hungaria Kft DIN EN ISO 9001:2008-12 31.12.2015

After the closing date, the trend in demand was extremely variable due to continuing uncertainty on the domestic market and a lack of signs of recovery, although the government’s decision to pay the public administration’s debts with private suppliers will undoubtedly reduce many businesses’ risk of insolvency. Demand from abroad shows better prospects thanks to a moderate economic recovery in Central Europe, driven by Germany and by the development in some North African countries, which are increasingly drawn in quality products.

Tab. 1 – System and product certifications obtained by group members in Italy and abroadCompany Type of certification ExpiryFeralpi Siderurgica S.p.A. UNI EN ISO 9001:2008 31.03.2015

UNI EN ISO 14001:2004 31.03.2014IGQ validation of environmental certification of the minimum content of recycled steel

30.09.2014

IGQ validation of compliance with ISO 14001:2004 31.03.2014CARES certification, Quality Management System 31.12.2013ICMQ ECO Gold 0024 certification Not specifiedOHSAS 18001 certification 30.06.2014Environmental Product Declaration 28.02.2014

Acciaierie di Calvisano S.p.A. UNI EN ISO 9001:2008 30.09.2015CARES certification, Quality Management System 31.12.2013UNI EN ISO 14001:2004 30.09.2015

Nuova Defim S.p.A. UNI EN ISO 9001:2000 28.02.2015ESF GmbH DIN EN ISO 9001:2008-12 13.12.2015

UNI EN ISO 14001:2009 12.07.2015DIN EN ISO 50001:2011 12.07.2015DIN EN ISO 9001: 2008 für Bereich Schredder 28.01.2015EMAS III certification 12.07.2015

Steel billet production by the Group (Feralpi Siderurgica S.p.A., Acciaierie di Calvisano S.p.A.and ESF GmbH – thousand tonnes)

2800260024002200200018001600140012001000

1718.4

2090.7

2189.5

1788.0

2008 2009 2010 2011 2012

2588.9

2726



Over the last decade, Feralpi’s commitment to CSR has evolved considerably. Year by year the Group has been able to identify signals from society as well as from the market, interpret the requirements of the stakeholders involved and meet their most pressing needs. This is why the Group today presents itself as a business system that takes into due account the various social, cultural and environmental problems in its variegated area of reference. Feralpi has been able to improve by concentrating on evolving in three directions: ethics, respect for the environment and the promotion of culture. On the basis of these choices, the founder’s motto “Working and growing through respect for man and the environment” was reconfirmed in 2011-2012 in the same five areas that were previously involved in CSR activities: occupational health and safety, training, industrial innovation, economic transparency and the adoption of an advanced system of corporate governance. Feralpi’s commitment also focuses on other aspects. For instance, the CSR policy has been extended to the supply chain to allow Feralpi to monitor the suppliers’ behaviour systematically and rule out any behaviour not complying with Feralpi’s ethical principles. Feralpi’s commitment towards its internal stakeholders also covers activities linked to the integration and cohesion of all the companies in the Group: the system of intragroup communication has been improved to make it easier to exchange information and allow reciprocal involvement. The focus on internal communication – meaning data exchange between production sites and also dialogue with the workforce – has led to an

overall improvement in trust and confidence on the part of workers at all levels. Thanks to this more open approach, the company can count on better prepared workers who are directly involved in far-reaching new developments, such as the introduction of specialised production processes or interest in other countries and markets.

2. The Feralpi Group’s stakeholdersThe term stakeholder refers to all parties having a legitimate interest in the Group’s activities. In the case of Feralpi, it is useful to distinguish between internal stakeholders (employees and shareholders) and external ones, which in turn are subdivided into stakeholders belonging to Feralpi’s industrial activity value chain (suppliers upstream and customers downstream of the production process) and stakeholders representing society in general (public administration at various levels, local communities where the Group’s facilities are located, the countries in which it operates, the European Union, and international regulatory bodies). Feralpi is involved in the process of sharing its culture and values with its stakeholders. This conviction is based on years of effort to create well-established links with a growing number of subjects in the local community, and increase its outreach in economic and social terms. Feralpi’s awareness of social responsibility has increased over time, together with its operations and markets, and the expectations of its stakeholders.

SECTION TWO


SOCIAL RESPONSIBILITY COMMITMENTS ANDGUIDELINES

1. The Group’s CSR policyThe Group’s concept of social responsibility is premised on the recognition of its stakeholders, namely all parties having a legitimate interest in the companies’ activities. Feralpi’s stakeholder approach is based on recognising their specific characteristics, requirements and problems at a local level. This requires the ability to listen to and dialogue with each group of stakeholders.

2928

SECTION TWO SOCIAL RESPONSIBILITY COMMITMENTS AND GUIDELINES


The Feralpi Group’s membership of various associations is an important opportunity for dialoguing with all the stakeholders (SO5).By collaborating actively with different associations, Feralpi can pursue its goals in terms of representing business interests, promoting technological innovation and establishing standards for the industry, conducting applied research and pursuing the shared values of social responsibility.- Representation of business interests: the Italian companies in the Group belong to Confindustria, the Italian industrialists confederation, through Federacciai (Italian steel makers association), Federmeccanica (TU federation), and territorial associations (AIB – Brescia Industrial Association and the Como Industrial Union) in the areas where the factories are located. The German subsidiaries are members of Wirtschaftsvereinigung Stahl (the German steel manufacturers association, equivalent of Federacciai), Industrieverein Sachsen Chemnitz (the Saxony industrial association) and Vereinigtes Wirtschaftsforum Riesa (local business association), all of which help their members develop public policies. Feralpi Stahl also belongs to the Deutscher Ausschuss für Stahlbeton e.V., Berlin, the committee for establishing German industrial standards (DIN) in view of improving and promoting building products. Feralpi Holding belongs to AIdAF, the Italian association of family-owned businesses, which defends and promotes family tradition in Italian enterprises.- Technical associations: Feralpi collaborates permanently with Riconversider, Federacciai’s consulting firm, which specializes in business organisation, technological innovation and the management of loans under European and national legislation, and with Unsider, the Italian steel standardisation body, which promotes awareness of international standards. Feralpi Holding has joined other companies in setting up the CSR Foundation, the national study centre for the control and management of business risks, the purpose of which is to promote a culture of safety. - Research: Feralpi Siderurgica is a member of the Italian Metallurgy Association, which is active in promoting the science and technology of materials and their applications, Sismic, the technical association for promoting seismic steel for reinforced concrete, and UNI, the Italian National Standards Institute, which studies voluntary technical standards in all areas of activity. Acciaierie di Calvisano belongs to ECHA, the European Chemicals Agency, which updates monitoring and control standards and promotes the safe use of chemicals, and where any manufacturer can register any hazardous substances produced, and the Reach Ferrous Slag Consortium, which deals with the registration, assessment, authorisation and restriction of chemical substances in relation to their hazardousness and the risks involved. ESF is a member of FEhS-Institut Duisburg, the building materials institute, BDSV Bundesvereinigung Deutscher Stahlrecycling – und Entsorgungsunternehmen e.V., the German union of steel disposal companies, and ESN Entsorgergemeinschaft der Deutschen Stahl – und NE-Metall-Recycling-Wirtschaft e.V. ESF is also a member of Bereit der Wirtschaft Berlin, the Berlin economics committee, and Sächsischer Hafen-und Verkehrsverein e.V. Dresden, the Saxony harbour and traffic association. - Social responsibility: Feralpi Siderurgica belongs to ARGIS, the Italian research association for corporate social governance, set up to promote the exchange of good practices in profit-making and non-profit organisations.Feralpi Holding is a partner of ISVI, the institute for business values, which promotes socially-oriented business development, and a member of the Sodalitas Foundation, the leading Italian association promoting the principles and practices of corporate social responsibility.

3. Stakeholder dialogue Since Feralpi considers stakeholder dialogue of fundamental importance, it has launched a series of initiatives directed at each category of stakeholders. Important examples are publication of the two-yearly Sustainability Report directed at all the stakeholders, the organisation of open days (providing general information for local residents and more scientific and technical information for specialists), the opportunity to consult the local authorities, constant involvement in industrial and cultural associations, and the maintenance of certifications. Feralpi does not merely consider certifications the result of complying with administrative formalities, but rather a tangible answer to the various commitments undertaken with its stakeholders on such matters as safety, environmental protection, safeguarding human rights, quality and transparency. Feralpi has since long established a constructive relationship with public entities, and the same with the political world, which Feralpi approaches with respect and a spirit of cooperation, but in absolute autonomy. The same impartial and respectful attitude is maintained with all the other stakeholders, between whom no distinction is made, except based on merit. The Group’s commitment to continuous improvement is guaranteed by an open approach to different points of view, both internally – such as employees, who are regularly asked to take part in corporate climate surveys – and externally, by means of opinion surveys involving local residents, and screening the skills of its suppliers and collaborators in general.

Part of the civil society, with which Feralpi is used to dialogue and collaborate through various initiatives, is represented by social and cultural associations, especially the non-profit ones.

The Feralpi Group as a whole and all the member companies belong to numerous technical, economic and social associations, enabling them to develop appropriate solutions to common problems.

3130



Feralpi’s commitment to youngsters was rewarded with an invitation to illustrate its good practices on 24 November 2011 at “Job&Orienta”, a conference-exhibition on vocational guidance held in Verona. Vocational guidance is fundamental in helping young people decide what job to do, and from February to April 2012 Feralpi staged a series of meetings with ITIS (state technical institute) branches in Lonato, Brescia and Vobarno. The meetings were held in collaboration with ARGIS, the corporate governance research association. The series, evocatively entitled “The desire for knowledge. What the crisis cannot touch”, was attended by over 300 students, who were invited to a final meeting held on 19 May 2012 at Feralpi’s plant in Lonato del Garda, where the main speaker was the economist Giulio Sapelli.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

SiderurgicaLonato

Nuova Defim Orsogril

Acciaieriedi Calvisano

Holding Feralpi Riesa Total

19.1

11.1

3.6

12.0

56.8

3.8

26.7

49.9

6.7

30.9

45.5

0.0

50.8

1.4

24.6

57.0

8.3

18.8

4.4

20.310.9

6.7 11.6

55.1

5.7

8.7

12.7 10.015.8 11.1

Quite good

Very good

Don’t know

Not very good

Poor

Source: 2013 corporate climate survey

Fig. 2 - Employees’ opinions about Feralpi’s youth policiesQuestion: How do you rate Feralpi’s attitude towards its young employees?

4. Stakeholder involvement, targets and programmesIn addition to developing a culture of social responsibility, Feralpi has gradually extended the range of action of associated activities. This has led to an increase in programmes targeting stakeholders and better geared towards meeting the needs of a society that places increasing importance on what goes on within companies and hence can have a positive or negative impact on the social environment in which the Group operates. In order to outline what was done in 2011-2012, we have divided activities into the following general objectives. The issues addressed and the targets set are often intertwined or cover numerous areas, so you are invited to consider the categories not as separate entities, but rather as different expressions of the same mission that often intersect.

4.1. Activities in favour of youngstersIn the two-year period considered here, considerable emphasis was again placed on the category of young people. Feralpi was involved in numerous activities, both at its own premises and in schools and other places where youngsters meet. For example, Feralpi opened its doors to young members of UCID, the Christian Union of Business Executives on 5 February 2011 and continued the Comenius Regio programme launched in 2010, hosting all the technical meetings attended by teachers and scholarship holders.

The two-year Comenius Regio project, which ended on 22 May 2012, brought together two EU regions, Lombardy and Saxony, which worked together to achieve useful targets within the European Union. The Professional Apprenticeship scheme ended in September 2011, when the final exams were held and those who passed were employed by the Group.

Comenius Regio is a project awarded to

Feralpi, which obtained EU funding as part of

the Lifelong Learning Programme, the natural

continuation of the Professional Apprenticeship

scheme launched in 2007 as part of

Feralpi’s commitment in support of the young

generations.

3332



bring the community closer to the world of steel production. Two examples are Fèr, stories of iron, work and art, a performance narrating the story of a steel worker (4-7 October 2012) and an open day to mark the 20th anniversary of Feralpi Stahl (25 September 2012), which, though held in Germany, was attended by a large Italian delegation. These targeted events are in addition to the Group’s traditional internal and external means of communication, such as the website www.feralpigroup.it, which provides up-to-date news about the Group, and the twice-yearly house horgan Verde Feralpi. Considered the well established two-way relation with the mass media, Feralpi always keeps them updated on the main activities, so also the public opinion is informed.

4.3. Promoting corporate culture The importance Feralpi places on its stakeholders calls for a strong commitment to promoting corporate culture. To help circulate ideas and its corporate vision, Feralpi has taken part in numerous events that illustrate its good practices. Two good examples were the meeting entitled “If 1000 euros sounds a lot” held at Brescia University on 14 December 2012 and the convention “Human resources management for a sustainable organisation” on 20 March 2012, in collaboration with the Sodalitas foundation and the Milan Polytechnic Business School. Another activity in which Feralpi contributed its experience was research conducted by ISPELS (the national institute of occupational safety and prevention) and Brescia University’s Department of Industrial Hygiene entitled “Work-related stress”, a subject that Feralpi has worked on at length with its employees to ascertain the existence of any problems. Corporate culture means transparency in disclosing the results achieved, which is why Feralpi felt it necessary to inform all the stakeholders when Feralpi Siderurgica S.p.A. achieved OHSAS 18001 certification. The results of the corporate climate survey among employees were duly reported as well.

4.4. EventsDuring the two-year period covered herein Feralpi took part in numerous events, the main ones being the “Made in Steel” trade fair, and the “European Steel Day” in Brussels, which Feralpi attended to inform the public of its achievement of the EPD (Environmental Product Declaration) in July 2012.

4.2. Focus on the community Another important category of stakeholders that Feralpi focuses on is the local community in general. Feralpi stages various events having the common purpose of establishing relations based on transparency and strengthening links with the local community. To mark the inauguration of the new furnace and the new photovoltaic system, Feralpi opened its doors on 25 February 2011 to a vast public, who attended an event entitled “Sustainability and innovation, a competitive advantage for the community”.

Being well aware that letting people know what you do and how you do it is the best way to earn their trust, Feralpi organised various visits, including ones for the Centenaro Rotary Club (14 June 2011). Other events were held at Feralpi to promote awareness of its technological know-how among a more specialist

public. These visits, which focused on training and sharing best practices, targeted, for example, the members of AIM, the Italian metallurgy association, with courses entitled Smelting machine (26 May 2011) and How to run a metallurgical business in accordance with safety and environmental requirements (20 October 2011), and Air Liquide engineers (6 December 2011). Each “classroom” meeting was followed by a visit to the production bays to see the actual production processes at work.The community in general was also involved in more popular events, such as the twinning of Lonato del Garda and Riesa, the town in which the Group’s German holding company is based. The celebrations commenced on 21 May 2012 and ended with a series of side events, such as Lonato’s participation in the “Riesa und die Welt” Saxony music festival on 25 September 2012. Numerous interesting cultural events were held to

3534

SECTION THREE ECONOMIC RESPONSIBILITY


Tab. 3 – Production of consolidated added value for the Group (EC1)(€,000) 2010 2011 2012A) Production value 833,506 1,132,675 1,135,0471. Revenues from sales and services – revenue adjustment 821,999 1,122,384 1,102,8242. Variation in inventory of work-in-progress, unfinished and finished products (and goods) 8,646 6,708 26,459

3. Increase in fixed assets for internal works 596 759 2,1274. Other operating income 2,265 2,824 3,637

B) Intermediate operating costs 743,391 1,009,238 1,019,6476. Consumption of raw materials (scrap) 476,607 688,806 696,1597. Energy 78,813 107,420 105,5498. Consumable materials and supplies 116,177 123,106 122,4249. Costs for services 67,764 86,877 91,25510. Hire, purchase and leasing charges 2,043 1,675 2,19211. Provisions for liabilities and charges 775 0 12312. Other provisions 108 0 1,20613. Other operating expenses 1,104 1,354 739GROSS CHARACTERISTIC ADDED VALUE 90,115 123,438 115,400C) Accessory and extraordinary items14. +/- balance of accessory management - 759 - 1,579 - 98 Financial income 665 1,228 915 Adjustments to financial assets - 1,424 - 2,807 - 1,01315. +/- balance of extraordinary items 3,604 531 20,602 Extraordinary income 5,369 1,216 26,196 - Extraordinary charges - 1,765 - 685 - 5,594GROSS GLOBAL ADDED VALUE 92,960 122,390 135,904Amortisation and depreciation for the year 34,915 34,299 34,328NET GLOBAL ADDED VALUE 58,045 88,091 101,576

2. Distribution of added value atGroup levelAdded value is distributed among the main stakeholders, based on the concept of factor

remuneration, and other subjects who benefit from it either by law (e.g. central and local public authorities) or by corporate resolution (e.g. donations to the local community).

SECTION THREE

1. Creation of added value at Group levelIn social reporting practices, added value produced during the period considered is the most significant economic parameter since it refers to the wealth produced by the enterprise, calculated as the difference between gross revenues and production expenses. The determination of added value, by means of a scalar reclassification of the items in the income statement, acts as a link between the financial statement and the social report. The figures show that added value gradually increased before the economic crisis came about, though to a lesser extent than in 2008, which was an exceptional year.

ECONOMICRESPONSIBILITY


3736



The largest portion of added value is increasingly allocated to employee wages and salaries. 18% of the wealth produced in 2012 went to the public administration, down on the previous year in both percentage and absolute terms. During the year, Feralpi resumed making traditional provisions to increase corporate assets and cover investments guaranteeing a competitive market edge. Despite the ongoing crisis, contributions in favour of local communities remained at the same levels as prior to the global economic downturn.

Fig. 4 • Changes in the distribution of added value

3. Investments in the environment and safetyScheduled investments were made during 2011-2012 in order to improve production plant efficiency. Full details are provided in the reports accompanying the financial statements for these two years. Here we present the impacts of the main investments on environment and safety, as well as energy saving. A list of investments aiming to control and reduce environmental impact, save energy and safeguard the health of the workers is also provided. Investments are divided by type.

Tab. 5 – Investments (€,000)Type of investment 2010 2011 2012Technology 32,672 51,931 36,855Environment and safety 10,077 10,834 11,085Research & development 2,441 2,886 3,009Training 624 420 577Total 45,814 66,071 51,526

60,000

50,000

40,000

30,000

20,000

10,000

0

-10,000

50,5

99

18,3

82

5,932

677

8,47

8

1,52

67,530

1,680

-5,0

41 7,250

23,3

85

50,0

25

20,81

2

44,8

39

Employees Public Administration

Credit capital Local community Company Risk capital

11,6

48

0 0 0

2010 2011 2012

Tab. 4 – Distribution of the Group’s consolidated added value (EC1 bis)(€,000) 2010 2011 2012A) Personnel 44,839 50,025 50,599- wages and salaries 42,276 46,824 47,434- severance pay 1,944 2,030 2,026- other costs 619 1,171 1,139B) Public administration 11,648 20,812 18,382- taxes - 477 7,646 5,142- social security contributions 12,125 13,166 13,240C) Credit capital 5,932 8,478 7,530- financial charges 5,932 8,478 7,530D) Risk capital 0 0 0- distributed profit/loss 0 0 0E) Local communities 677 1,526 1,680- charity donations 31 115 227- sponsoring of sports/recreational activities 646 1,411 1,453F) Core business - 5,051 7,250 23,385- allocation to provisions 0 1,275 2,223- non-distributed profit/loss - 5,051 5,975 21,162NET GLOBAL ADDED VALUE 58,045 88,091 101,576

Fig. 3 – Percentage distribution of 2012 added value for each stakeholder

23%

1,7%

18,1%

7,4%49,8%

EMPLOYEES

PUBLIC ADMINISTRATION

CREDIT CAPITAL

RISK CAPITAL

LOCAL COMMUNITY

COMPANY

0,0

3938



Acciaierie di Calvisano S.p.A.Accierie di Calvisano made a series of investments

in 2011-2012 to increase safety and reduce its environmental impact.

List of main interventions:- revamping the offgas cooling system in order

to reduce wear in the cooled pipes, reduce dust deposits in the pipes and improve environmental quality in the smelting furnace area, by automatically discharging the dust into the new internal chamber;

- revamping the ferroalloy conveyors in order to cut material losses and reduce environmental impact;

- revamping the smelting furnace power centre, thereby optimising both safety and energy efficiency;

- replacing the asbestos roofing of the scrap shed;- installing various catwalks to improve plant access;- creating a new black slag yard in order to improve

slag handling, optimise slag particle size and reduce disposal costs. The slag yard was created to allow the reutilisation of rainwater and the wastewater used to quench the slag. The slag dumping area was roofed to make the operation safer;

- starting up the SVC (dynamic compensation system) to reduce smelting furnace energy consumption by reducing mains voltage fluctuation and allow the furnace to operate more smoothly.


Feralpi Siderurgica S.p.A.The roof-top photovoltaic system went into operation in 2011 and generated 662.6 MWh the following year. This gave an overall reduction in emissions of around 270 tonnes of CO2, calculated in comparison with purchasing electricity from the national grid. The radio-activity measuring systems were upgraded. Feralpi also launched a study for modelling plant noise propagation and one on separating wastewater from process water.

Other investments were made to continue work on improving the slag processing area, completing the process of covering the steel mill with sound-absorbing panels, improving the bridge crane runways and continuing work on segregating the rolling mills for enhanced safety.

The new 6.2-metre diameter smelting furnace became fully operational in 2011, increasing tapping capacity and improving the thermal efficiency of the system. The smelting furnace was designed and built using the best safety technologies available, giving a system that leads the way at an international level. Numerous ancillary devices and new technological equipment were provided in view of improving the overall safety conditions. The main ones are: • a new system for mounting electrodes from a

cabin;• a new furnace-loading crane;• an automatic system for cleaning the furnace

slag door;• a new furnace control console;

• a new smelting furnace automation system;• new black slag containers;• new smelting furnace charging buckets.

In 2012 the sixth continuous casting line went into operation. The dual purpose of this investment was to achieve a considerable reduction in steel mill stoppages generated by the casting bay and to reduce the consumption of energy required to maintain the temperature of the molten steel prior to casting. The casting area and control room were completely reorganised in order to achieve a system complying with the new health and safety guidelines and again to be at the forefront internationally. Numerous ancillary devices and new technological equipment were provided in view of improving the overall safety conditions. The main ones are: • a new continuous casting control console;• a new continuous casting automation system;• new tundishes and a new tundish carriage; • a new system for emptying tundishes leaving

the production cycle;• new heating burners; • new cutting machine oxygen and methane gas

ramps.

Other investments were made to continue work on improving the slag processing area, removing and replacing the asbestos roofing, and performing extraordinary maintenance on the steel mill offgas uptake and removal system.

38

4140



4. Research and developmentDuring the two-year period analysed, numerous important research and development projects were launched or continued by the various companies in the Group. The main projects, divided by company, are detailed below. In 2011 Feralpi Siderurgica S.p.A. launched a three-year project called Constox to study oxidation control in the rolling mill heating furnace processes, which use innovative combustion methods and alternative fuels. This project is co-funded by the European Union (RFCS). Another research project was launched in 2011 in collaboration with the Materials Development Centre to monitor the heating furnace of rolling mill 1 at Feralpi Siderurgica S.p.A. in view of optimising energy, environmental and material quality parameters.

In 2012 Feralpi Siderurgica S.p.A. promoted a project to identify methods for analysing and sampling ferrous scrap for melting. The project involves RAMET (consortium for environmental research for metallurgy), Brescia University’s Department of Mechanical Engineering and the Brescia branch of

ARPA (regional agency for environmental protection). Activities continued under the Target Fluff – Industry 2015 programme concerning the search for solutions to recover material and energy from car fluff. The main proponent of this project is the FIAT Research Centre. The other participants are the Recycling and Services Centre in Leini (Turin) and the Scrap Centre in Cisterna di Latina. The programme is funded under Ministerial Decree no. 87/2008 (regulation for setting up a system of aid in favour of research, development and innovation). These activities have led to the preliminary design of a system with which to test further recycling of non-ferrous and other metals from car fluff and in view of generating a portion of waste destined for energy recovery. Acciaierie di Calvisano S.p.A. conducted a project in 2012 on the offgas and activated carbon system in order to improve the efficiency and reliability of the offgas removal system. The Power Quality project, developed in collaboration with the Milan Polytechnic, is dedicated to studying input and output mains disturbance at the plant in view of improving the electrical performance of the furnace during the smelting process. The white slag project concerns the design and construction of an innovative machine for feeding white slag into the electric arc furnace. The aim is twofold, to reuse an output of the production process that would otherwise have to be disposed of in a landfill, and to reduce the use of raw materials in production. The subsidiary ESF Elbe-Feralpi GmbH also conducted important research and development activities in 2011-12.The H-REII Demo (Heat Recovery in Energy Intensive Industry) project is co-funded by the European

The European Commission’s Research Fund for Coal and Steel (RFCS) programme promotes and finances projects aiming to identify new and better applications of steel, save resources and improve working conditions in the coal and steel sectors. The RFCS provides about €55 million each year to co-fund the best projects proposed by universities, research centres and businesses.

ESF Elbe – Stahlwerke Feralpi GmbHIn 2011 acoustic insulation was installed to reduce noise impact on the workforce and the local residents. In 2012 a project was launched to produce steam by exploiting the heat of the primary offgas pipes, using a high-efficiency heat exchanger. The maximum amount of steam produced will be 30 t/h. Some of the steam will be used to produce electricity using a turbine and some will be sold for industrial applications and district heating. This investment has led to a considerable increase in energy saving.

Planned interventions for improving occupational health and safety in the various departments of the plant continued during the year and further measures were taken to reduce acoustic emissions.

4342



Commission’s LIFE+ programme. It involves ESF and Comeca S.p.A., a Feralpi associate, and is coordinated by Turboden. The aim is to develop the steel industry’s first prototype, fully integrated in an offgas extraction system, for recovering heat from

the electric arc furnace (EAF) using ORC (Organic Rankine Cycle) technology. The project has led to a significant reduction in overall energy consumption and an improvement in the performance of the offgas treatment system.

As part of Feralpi’s Target Fluff project, ESF is conducting research on the heat treatment of car fluff, concentrating on the use of microwave technology. The experiment uses a laboratory-scale system for testing microwave pyrolysis heat treatment. This treatment generates three fractions: a gas fraction, one of high-calorific-value condensed oils, and a fraction containing ferrous and non-ferrous metals. Under the project, the second fraction is analysed in view of use as a fuel.

Methods of recovering the metals from the third fraction are also being studied. ESF has started testing an innovative combination of process engineering at a high-power steel mill with an adjacent rolling mill in view of reducing environmental pollution. This project is supported by the German Federal Ministry of the Environment, the purpose being to achieve substantial energy saving by integrating and optimising the steel mill and rolling processes.

Diagram of the system for producing steam using offgas from the smelting furnace

4544

SECTION FOUR SOCIAL RESPONSIBILITY


The findings of the fourth edition of the corporate climate survey show that employees have confidence in the corporate strategies, which guarantee

them financial security, stable employment and professional growth.

Tab. 6 – Workforce by type of contract and location (LA1)Contract type 2011 2012

Italy Germany Hungary Czech Rep. Total Italy Germany Hungary Czech

Rep. Total

Open-ended 608 544 37 50 1,239 590 569 27 50 1,236Fixed-term 2 9 2 5 18 21 10 1 4 36Apprenticeship 0 41 0 0 41 0 52 0 0 52Total 610 594 39 55 1,298 611 631 28 54 1,324

At the end of 2012 the number of employees was back in the black compared to the previous year.

1,450

1,400

1,350

1,300

1,250

1,200

1,150

1,100

1,4181,408

1,230

1,3241,314 1,298

1,324

1,263

2008200720062005 2009 2010 2011 2012

Fig. 5 – Feralpi Group’s year-end workforce (LA1)

Following a period of staff decrease due to the crisis that broke out in Autumn 2008, which interrupted a long-term growth trend, the number of employees started to increase again in 2012, returning to the 2007 level.

Unlike the figures published in the report to the 2012 financial statements, Figure 5 shows the number of employees at the end of the year, rather than the annual average, in order to make the figures comparable with the breakdowns by category shown in the following tables.

SECTION FOURSOCIAL RESPONSIBILITY

1. EmployeesFeralpi has always believed that its employees are the most important stakeholders. This Group considers human resources a priority asset and recognizes their capability and motivation as the main lever for successfully tackling long periods of market stagnation. Only well-prepared and highly motivated people can control and develop the cutting-edge technologies that Feralpi continues to provide with support from a stable shareholder base that is convinced of the Group’s strength.


4746



Tab. 10 – Year-end workforce distribution by country

2010 2011 2012Italy 641 610 611Germany 575 594 631Hungary 44 39 28Czech Rep. 54 55 54Group total 1,314 1,298 1,324

Most employees reside close to the plants (EC7). The 2009 corporate climate survey showed that only 7.6% of employees in Italy reside in provinces other than the one where the plant is located. In Germany 91.5% of employees live within a 20-km range of the Riesa plant (2006 figure). In Hungary and the Czech Republic, too, employees are recruited locally and most of them live near the factory where they work. Most executives are recruited from a wider than local area, which includes the towns where university training for managerial careers is available. Career development for some of the executives also entails travelling between the Group’s plants in various countries.

The Feralpi Group is traditionally characterised by a low turnover rate for employees, who tend to remain with the company until they reach retirement age. Due to the unfavourable economic situation, which led to a slight reduction in the workforce in 2009, there were more people leaving the company than joining it. Hirings and overall turnover increased in 2011 and 2012 because older personnel were made redundant and replaced with youngsters with new skills who had completed professional training courses.

Tab. 11 – Employee turnover (LA2)Inward: 2010 2011 2012Permanent hirings 30 46 52Fixed-term hirings 12 30 86Total 42 76 128Outward:Resignations 42 35 38Retirements 16 31 15Deaths 1 4 3Firings 73 7 13Functional incapacity 0 10 2Total 132 87 71Turnover rate* 13.2 11.2 16.9*(inward+outward/total workforce)

Tab. 9 – Workforce distribution by position and plant location (LA1)2011 2012

Position: Italy Germany Hungary Czech Rep. Total Italy Germany Hungary Czech

Rep. Total

Executives 12 7 2 1 22 12 6 2 1 21Office workers and middle managers* 154 103 7 11 275 157 105 6 11 279Factory workers 444 443 30 43 960 442 468 20 42 972Apprentices 0 41 0 0 41 0 52 0 0 52Total 610 594 39 55 1,298 611 631 28 54 1,324

*includes foremen at the German plants.

As at 31 December 2012, there were 21 executive positions4, 12 of which covered by Italians, 6 by Germans and 3 by people of other nationalities (LA1).

Fig. 6 – Employee by nationality (%)Employee nationality reflects the production sites’ location in four European countries, with a slight prevalence of German employees over Italian ones – thanks mainly to a more favourable economic situation abroad and despite the increased number of employees at Nuova Defim S.p.A. in Italy – and lower proportions of Hungarian and Czech employees. A very small proportion is accounted for by immigrants from other countries. At the end of 2012, the total number of nationalities working for the Group was 22, representing four continents.

Tab. 7 - Workforce distribution by age bracket and plant location (LA13)2011 2012

Age bracket Italy Germany Hungary Czech Rep. Total Italy Germany Hungary Czech

Rep. Total

< 30 80 113 3 8 204 66 126 3 7 20230-50 354 311 21 31 717 344 307 13 30 694>50 176 170 15 16 377 201 198 12 17 428Total 610 594 39 55 1,298 611 631 28 54 1,324

Tab. 8 - Workforce distribution by qualification and plant location 2011 2012

Qualification Italy Germany Hungary Czech Rep. Total Italy Germany Hungary Czech

Rep. Total

Degree 30 32 3 4 69 32 37 2 4 75A-levels 175 51 4 5 235 180 58 3 5 246O-levels 356 511 10 46 923 349 536 9 45 939Professional schooling 49 0 22 0 71 50 0 14 0 64Total 610 594 39 55 1,298 611 631 28 54 1,324

4 With regard to the division of personnel by qualification, the term “executive” in the strict sense only applies to Italy. For the plants abroad, this position corresponds to that of senior manager.

46.3

4.12.6 1.3 2.9

42.8

ITALIANS

GERMANS

CZECHS

HUNGARIANS

ROMANIANS

OTHER NATIONALITIES

The vast majority of contracts are stillopen-ended ones. Fixed-term contracts only account for 2.9% of the total.

Note. Workforce distribution by qualification is the result of a corporate estimate.

4948



Tab. 13 – Employees subject to the incentive rating system (production bonus)

(Group figures) 2010 2011 2012Number of employees 1,174 1,204 1,242% of total workforce 89.3 92.7 93.8

The employees of the Group enjoy a series of benefits (LA3), with no distinction between permanent and fixed-term employees, or between full-time and part-time workers. These benefits differ partially according to the collective labour agreements in force in the various countries in

which the Group operates.Feralpi provides a canteen service at all the larger plants, for which employees pay less than 50% of the cost. The quality of the service is monitored constantly by a joint committee including worker representatives. The two-year corporate climate survey enables each worker to express a personal opinion on the canteen service. In addition to compulsory accident insurance, Feralpi has taken out a policy with a group of insurance companies to provide all employees with further coverage against accident, invalidity and death.

1.1. Remuneration of human resourcesDuring the period the Group spent €50.6m on personnel wages and salaries, equivalent to 40.8% of added value. Feralpi pays considerably more than the minimum wage established in the National Collective Labour Agreement in force in Italy. This difference in the employees’ favour is mainly the combined result of the supplementary corporate contract, indemnities and the system of incentives. The percentage differences between male and female workers are attributed exclusively to the different combination of the above three elements since Feralpi complies fully with the law prohibiting different treatment according to gender, nationality or other worker characteristics.The variable incentive system is based on four main contract elements: 1. performance bonus for all employees in the production units; 2. extra performance bonus for heads of department and persons holding positions of responsibility; 3. performance bonus for Feralpi Holding’s employees; 4. variable incentive bonus for executives. The Feralpi Proficiency System, which covers personnel operating in Italy, is also used in calculating individual remuneration. It is based on analytical criteria for rating the proficiency

required for each figure/role and the proficiency of each individual. The rating parameters are: 1. personal ability and experience; 2. technical and methodological skills, and scientific and humanistic knowledge; 3. degree of involvement in corporate strategies and targets; 4. sharing of corporate culture and values. In the reporting period, only employees at the newly-acquired company Nuova Defim-Orsogril, and the subsidiaries Feralpi Praha and Feralpi Hungaria are not subject to the proficiency rating system.Thanks to the variable pay system, which is over and above the contract minimums established for each category, workers who were hired in 2012(4th level) were paid 21% more than established in the National Collective Bargaining Agreement for the industry. It is not possible to calculate the difference for new hirings in Germany since a contract minimum wage is not envisaged. Wages and salaries are in line with the union rate, however (EC5).

Tab. 12 – Leaving personnel by country and age group (LA2)Country 2011 2012Age group: < 30 30-50 > 50 Total < 30 30-50 >50 TotalItaly 5 16 11 32 5 10 11 26Germany 8 10 20 38 8 5 12 25Hungary 1 7 4 12 0 8 8 16Czech Rep. 0 1 4 5 2 1 1 4Total 14 34 39 87 15 24 32 71

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Table 14 summarises compulsory and voluntary pension and insurance payments under the welfare system in Italy and Germany.

Tab. 14 - Corporate contributions to pension and insurance schemes (EC3)2010 2011 2012

Compulsory public pensions1 10,677,978 8,708,202 8,992,490Compulsory private pensions2 292,863 74,962 93,888Voluntary private pensions3 19,184Compulsory public insurance4 1,557,178 1,157,265 1,085,366Voluntary private insurance5 370,885Total 12,918,089 9,940,429 10,171,744

Notes: 1Includes INPS, Rentenversicherung and Previndai.; 2Includes the Cometa contract fund; 3Supplementary corporate pension contributions in Germany; 4Inail and Berufgenossenschaft. Severance pay (TFR) in Italy is invested in a series of social security forms chosen by the worker; 5Includes Fasi, supplementary pension and life insurance for industrial managers.

seven days a week, at the plants using an electric-arc furnace. Night-time and weekend work is not normally required at the plants involved in cold processing. In 2011-2012, work organisation was again influenced by the adoption of solidarity contracts and redundancy arrangements (CIG), and production was characterised by recurrent discontinuities. Suitability of employees to work non-standard hours is monitored constantly by the medical facility, and inconvenience resulting from the working hours that can interfere with the workers’ social life is compensated for by wage bonuses and corporate incentives. Collective bargaining agreements do not envisage a minimum notice period for operational changes connected with suspension of activities, tasks and shift organisation (LA5). Individual implementation times for organisational changes or switches to new tasks are agreed directly with the worker involved. Collective organisational changes, such as those occurring with the introduction of redundancy arrangements in both years covered by this report are still subject to prior union negotiations. In Riesa, management informs first the foremen of any organisational changes, and then the workers, following discussions with the Shop Committee.

1.2. Welfare support provisionsDuring the two years covered by this report, the Group again had recourse to welfare support provisions at the plants in Lonato, Calvisano, Pomezia and Riesa. In Italy they consisted of CIG (ordinary redundancy arrangements), solidarity contracts and voluntary early retirement. At the Riesa plants the application of the welfare support provisions entailed reducing the number of working hours (Kurzarbeit) but only in 2011.The unsatisfactory trend in sales at Acciaierie di Calvisano meant that in 2012 the company again had to limit production activity to the night-time and weekends. Feralpi used a combination of welfare support provisions in early 2013 as well, to accompany the closure of the DiEffe plant in Pomezia and, more importantly, respond to Acciaierie di Calvisano’s low production volumes.

1.3. Work organisation and work environment qualityThe Feralpi Group’s steel-making technology requires the work to be organised on a continuous basis. The work schedule is organised with three eight-hour shifts,

50

Feralpi provides periodic monitoring of health status – for certain factors in high-risk jobs in the production bays – the constant or periodic presence of medics or paramedics, and a doctor for urgent cases. Employees at the Feralpi plants located in the province of Brescia benefit from an agreement with the Desenzano hospital covering urgencies and the immediate issuance of X-ray and eye test results. At the Riesa plant in Germany, all work clothes are washed periodically and repaired free of charge. Feralpi also contributes to sports centre membership costs sustained by its employees and their families (subscriptions to sports centres, gyms and swimming pools). Overall remuneration also includes retirement plans – so-called deferred compensation – which vary

considerably according to the laws in force in the various countries in which the Group operates. The pension scheme is supplemented by the payment of premiums for insurance policies against illness, injury and death. Feralpi’s choices in terms of pension scheme comply with the constraints and opportunities in the various countries. The pension scheme in Italy and Germany is predominantly public, and is supplemented by private pension schemes, both collective and individual, compulsory and voluntary. Hungary only has a public system, where the employer pays 24% and the employee 8.5% of his/her salary. In the Czech Republic there is no obligation for employers to pay social security contributions.


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Injury frequency rates have decreased thanks to Feralpi’s constant focus on worker health and safety and major investments in safety measures and accident prevention, while the severity rates have risen, though they remain among the lowest at plants of a similar size in the same business category.

Tab. 16 – Overall rates of absenteeism6 (hours lost÷hours worked x 200,000) (LA7)

: 2010 2011 2012Plants in Italy 6,305 8,460 6,418Plants abroad 12,377 15,141 29,414

All the Group’s plants in the various countries comply with the regulations on the training and operation of health and safety committees. Each of the Group’s production units in Italy has designated an internal worker safety representative (WSR) in accordance with art. 47 of Legislative Decree 81/2008. WSRs are elected or designated by the workers from among the union representatives. The actual number of WSRs is proportionate to the overall number of employees at each production site, so the Lonato plant has three representatives and all the other plants have one each.In Germany, safety representatives are elected in the same way from among members of the shop committee. Safety meetings take place every three months and are attended by general management representatives. Shop committees do not exist in Hungary or the Czech Republic, so the foremen are in charge of safety and they all have to attend specific training courses.

At a Group level, therefore, health and safety committees cover 100% of personnel, and 93% of employees elect their own representatives (LA6).

Feralpi’s conception of safety training Feralpi adopts a systemic approach to safety, whereby the traditional idea of safety as an activity to be performed is replaced by the idea of prevention as a value to pursue systematically. This logic is behind all training and information initiatives as an integrated approach to occupational health and safety issues, the aim being to combine the technical and organisational elements with behavioural and managerial ones.The Towards Zero Injuries project launched at Acciaierie di Calvisano in 2012 is consistent with this approach and led to a sharp drop in injuries, from five in 2011 to only one. The project involves all employees and is based on increased individual awareness, personal involvement and a shared sense of responsibility. The safety team elects a safety tutor from among its members. This project received the Sodalitas Social Award from the Sodalitas Foundation in Milan in 2013, for the best corporate sustainability project. A total of 192 companies submitted 244 projects.

6 Absenteeism rates are calculated using the method suggested by GRI guidelines, version 3.1, where the numerator is the number of days lost for any reason, and the denominator is the total hours worked, multiplied by 200,000.

At Feralpi Praha and Feralpi Hungaria, changes and notice times are agreed on with the heads of department as there is no shop committee. With regard to the notice periods required by law in Italy, Feralpi complies with the provisions of Legislative Decree 18/2001 (25 days for mergers and acquisitions) and law no. 223/1991 (75 days to reach an agreement with the trade unions in the case of redundancies, beyond which the company can dismiss a worker but has to pay higher social security contributions). In Riesa, management informs first the foremen of any organisational changes, and then the workers, following discussions with the Shop Committee. At Feralpi Praha and Feralpi Hungaria, changes and notice times are agreed on with the heads of department as there is no shop committee. The fourth corporate climate survey took place in summer 2013 among all personnel at Feralpi’s Italian and German plants in order to ascertain their opinion of how the work is organised. The satisfaction ratings shown in figure 7 reveal a good corporate climate.

Fig. 7 – Employee satisfaction with regard to some organisational aspects

0%

20%

40%

60%

80%

100%

59,2 50,3 57,9

32,7

1,2 0,70,4

7,1

17,7 15,2 12,0

32,3

4,710,0

4,923,1

17,1 23,7 24,84,8

Work Relationship with the superior

Relationship with colleagues

1.4. Health and safetyFeralpi has always done its utmost to minimize the risk factors intrinsic in the steel industry, monitoring them and implementing better solutions, over and beyond specific legal requirements. Corporate policy to reduce the accident and injury rates has produced in recent years positive results at a Group level, especially as regards frequency, while severity rates display a less constant trend5. Accident rates in the last four years have nearly halved at the Italian plants, and the factories abroad have achieved an even better improvement. Severity rates were more or less constant in Italy; they decreased abroad in 2011 but started to rise again in 2012. No fatal accidents occurred in the period covered by this report (LA7).There were no cases of occupational disease at any of the companies in the Group, but in July 2012 Feralpi received one occupational disease claim for Feralpi Siderurgica S.p.A. in Lonato (LA8).

Tab. 15 – Injury rates: frequency (number ÷ hours worked x 200,000) and severity (days lost ÷ hours worked x 200,000) (LA7)

Injury frequency 2010 2011 2012Italy 5.09 3.20 3.98Germany 7.92 2.20 2.13Severity ratesItaly 171.75* 104.13 134.11Germany 59.15** 51.31 114.59

Note. Only injuries requiring more than three days off are considered. ** The 2010 severity index has been updated compared to the previous edition of the Report since all days lost at Siderurgica S.p.A. for the injury the occurred on 21.12.2010 and ended on 01.02.2012 were attributed to 2010 alone. ** This figure includes less than 3-day injuries, in line with the previous Report.

5 Injury frequency and severity rates are calculated using the method suggested by GRI guidelines, version 3.1, where the numerator is the number of injuries and days lost, and the denominator is the total hours worked, multiplied by 200,000.

Very satisfied Fairly satisfied

Don’t know Fairly dissatisfied Completely dissatisfied

Source: Corporate climate survey, 2013 edition

Qualification assessment

and recognition of skills

5554



The aim of this innovative project was to offer youngsters a high-specialised training as an alternative to university education, guaranteed employment at the end of the course and a wage aligned with that of the Group’s employees of the same level. The scheme saw the direct involvement of the local community. Trainees were recruited from the various technical schools in the area, and they attended both practical training and theory lessons held by university teachers.

Training activities were carried out at the Italian plants, the aim being to adapt personnel skills to the growing qualification requirements imposed by business development (LA11):

• foreign language courses (English and German), individually or in groups;

• courses for improving the technical skills of maintenance and production personnel, held at the Feralpi training centre or by specialised independent entities;

• training courses at the production units in support of the safeguard of occupational health and safety in the workplace;

• refreshment courses on product quality;• IT courses for data processing operators. The heads of department attended university master’s on specific subjects relating to the improvement of business management and industrial maintenance.

In the Riesa plants, apprenticeship, which is typical of the German dual system, plays a very important role as it provides training to meet corporate requirements and helps strengthen links with local professional schools. Feralpi collaborated with the professional institutes in Riesa and Dresden to help the apprentices obtain a qualification as an electronic technician for industry, an industrial mechanic, a machining mechanic, a steel-making mechanic, a steel-process mechanic, a machine and plant operator, or a purchasing agent. In 2011-2012, the following training courses were held: • courses on safety, lorry and lift-truck driving,

welding;• technical courses to optimise production

processes;• computer courses for office workers;• courses to learn Italian and English to improve

communication within the Group;• specific courses for the heads of department on labour law, co-management and trade union law.

Workforce training on risk prevention and control, and remedial action, continued in 2011-2012 at all the companies in the Group (LA8).Corporate supplementary agreements on health and safety (LA9) establish the committees that meet periodically with management to discuss occupational health and safety issues. The employer calls a meeting at least once a year, in accordance with art. 35 of Legislative Decree no. 81/2008 and art. 11 of Legislative Decree no. 626/2004, which is attended by the employer or its representative, the head of the prevention and protection service (HPPS), the factory doctor and the worker safety representative (WSR). The participants examine the risk assessment document and the prevention and safety measures to adopt, the suitability of the personal protection equipment, and the worker training schedule. In Germany, the chairman of the Shop Committee elected by the workers and a safety representative meet periodically with management to determine what preventive measures to put in place at the plant. The Berufgenossenschaft (accident insurance association) requires a series of systematic inspections in accordance with the applicable laws and holds annual courses for all safety personnel. At all the plants in the Group, designated employees receive specific training on first aid and fire-fighting. Each year steel mill workers undergo biological monitoring of the content of some exposure indicators in the blood and urine.

1.5. Professional trainingFeralpi considers personnel training of fundamental importance in generating, developing and maintain-ing the individual’s knowledge and skills, elements on which the competitive edge of any company is based. Training programmes aim at developing specific technical and professional skills, imposed by constant technological, managerial and normative innovation, and also creating organisational behaviour consist-ent with corporate strategy, promoting and spreading corporate culture, improving the work climate and supporting the processes of development and or-ganisational change. For Feralpi, training is the main means of reconciling organisational requirements with the employees’ characteristics and expectations. The approach is to help individuals acquire the skills that translate into development of the organisation. The promotion of individuals, corporate growth and modernisation are pursued with methods for learn-ing knowledge (knowing), skills (knowing how to do) and behaviour promoting professional performance (knowing how to be). In 2011-12 Feralpi continued to invest resources in implementing training courses for its workforce at all levels.

Results of the Professional Apprenticeship schemeThe scheme involved 60 apprentices divided into three two-year courses, at the end of which 48 “advanced technicians in steel mill management” were hired by Feralpi. They all now possess specific skills and are already accustomed to working in the various departments. During each course, the apprentices received about 7000 hours of training: 1800 in the classroom, 1800 at the training centre and 3400 on the shop floor.

5756



Tab. 18 – Training by qualification and location (LA10)Hours 2010 2011 2012Italy Total Per-capita* Total Per-capita Total Per-capitaFactory workers 11,240 20,614 46,2 7,795 17.7Office workers and middle managers 2,898 1,922 12,6 2,702 17.1Managers and executives 520 212 16,7 762 63.5Total Italy 14,658 22,748 37,3 11,259 18.4

AbroadFactory workers 6,899 10,116 20 9,082 17Office workers and middle managers 2,236 4,050 33 3,973 33Managers and executives 4 14 1 4 0Total abroad 9,139 14,180 20,6 13,059 18.3

Following the conclusion of the Professional Apprenticeship scheme, which was launched a few years ago in Italy and was based on the German dual system, investments in training dropped in 2011 but picked up again in 2012. Group’s training programmes are generally supported by state contributions as they are considered innovative and in favour of the local area. Italian state contributions for training activities in 2012 accounted for 60.7% of the total, compared to 75.2% in 2011.

Tab. 19 – Overall training costs by location (LA10)Country 2010 2011 2012Italy 619,002 190,597 329,701Abroad 160,248 134,496 196,987Total 779,250 325,093 526,688

Note. The division of training hours by qualification is an estimate. Figures for employees in Italy refer to Feralpi Holding, Feralpi Siderurgica, Acciaierie di Calvisano and Dieffe.* 2010 figures are not shown because they adopt a different criterion and are not comparable.

The Comenius Regio projectLaunched in November 2010 at the Feralpi Siderurgica plant and ITIS Cerebotani in Lonato, and continued in March 2011 at ITIS in Riesa, Saxony, the Comenius Regio project is part of the EU’s Lifelong Learning programme. The aim of the project is to conduct a comparative study of the two professional apprenticeship systems in Riesa and Lonato. The method adopted is inductive and is designed to assess the knowledge and skills required of specific professionals in shop floor activities and the role of school in training activities.This project encompassed the following activities: a study to compare skills, know-how, methods and various organisational solutions in the apprenticeship schemes implemented in Lombardy, Italy, and in Saxony, Germany; periodical workshops held to develop modules for teachers and learning modules for those studying to become a mechanical or an electronic service engineer; disclosure of the results of the study (printed and electronic, bilingual) at a final meeting and the creation of a bilingual steel production glossary to replace the old one that dated back to 1969.

Tab. 17 - Professional training in the Group (LA10)2010 2011 2012

Hours’ training 23,797 36,928 24,318No. participants 1,098 1,294 1,740Per-capita hours 21.7 28.5 18.4

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At an overall group level, female workers account for 0.53% of the workforce. In the two-year period covered, the percentage of female staff first dropped

but then partially increased towards the maximum value in 2010.

The syllabuses for the safety and environmental training courses are part of the permanent training schedule (LA11). The figures shown in the table for the German plant include compulsory safety figures. The safety programme is organised by the Berufsgenossenschaft, which holds free seminars covered by compulsory corporate contributions. Feralpi does not consider it necessary to dedicate training hours to safeguarding human rights since all the Group’s plants are located in the European Union and are subject to rigorous regulations and routine institutional inspections.The Company considers this specific aspect already included in organisational practices, the scrupulous application of in-house regulations and shared local culture. Training on safeguarding human rights is, however, an integral part of the training package for newly hired workers, which presents the Code of Conduct and explains its central role in the Group’s governance system (HR3).With regard to human rights training for security

personnel (HR8), all the Group’s plants in Italy and abroad make use of leading specialist firms that provide their own trained personnel. In 2012, at the plants in Riesa, managers and office workers have been involved in a specific training program about the appropriate behaviors aimed to control the potential corruption related to the scrap’s supply. The course was attended by 5 managers (12.5% of the category) and 8 office workers (12.5% of the total workforce) (SO3).

1.6. Gender equalityThe steel industry is traditionally characterised by a prevalence of male workers, and the Feralpi Group is no exception – female employment at the production sites is just 0.5% of the total.The situation is different at Feralpi Holding, where the tasks are mainly clerical work, and female employees accounted for over 40% of the total.

Tab. 20 – Training hours by topic and country (LA10, LA11, HR3)2011 2012

Topic Italy Germany Hungary Czech Rep. Total Italy Germany Hungary Czech Rep. TotalQuality, safety and environment 18,535 816 172 78 19,601 7,062 1,040 142 56 8,300Code of conduct 160 0 0 0 160 407 0 0 0 407Technical training 2,096 3,144 20 0 5,260 1,100 5,180 14 0 6,294Languages 620 3,744 150 0 4,514 765 3,328 121 0 4,214Computer use 104 160 0 0 264 161 320 0 0 481Internal training 406 0 0 406 550 0 0 550External training 771 1,309 265 0 2,345 1,094 607 251 0 1,952Seminars 56 0 0 56 120 0 0 120Other 0 0 0 0 0 0 0 14 0 14Total 22,748 9,173 607 78 32,606 11,259 10,475 542 56 22,332

Note. A comparison with 2010 is not possible since the figures in the previous edition of the Report were not broken down by country

6160



None of the countries in which the Group operates permits differences in pay and salaries based purely on worker gender. Actual differences in remuneration therefore depend on the position held, category, specific tasks performed, seniority and other factors linked to the recognition of individual or group merit. Production bonuses and incentives, which are awarded regardless of gender, may further influence pay differences, as do the work hours and bonuses for night and weekend shifts. In short, the differences existing between men and women are attributed to a combination of these factors and can in no way be attributed to the gender element alone (LA14).

In support of maternity and paternity, art. 32 of Legislative Decree no. 151 of 26 March 2001 grants all employees in Italy, regardless of their gender, the right, for each child up to the age of eight years, to leave for a total period not exceeding ten months, raised to eleven months if the working father exercises his right to remain at home for a continuous or interrupted period of at least three months (LA15). Based on the limits established by law, the length of parental leave is as follows:• for a working mother, a continuous or interrupted

period not exceeding six months, following the compulsory period of maternity leave;

• for a working father, a continuous or interrupted period not exceeding six months as from the birth of the child, including the day of delivery, increased to seven if he exercises his right to abstain from work for a continuous or interrupted period of at least three months;

• if there is only one parent, for a continuous or interrupted period not exceeding ten months.

Another indicator of gender equality is traditionally the retention rate following maternity leave (LA15). Recourse to maternity leave is not frequent in a group whose workforce is predominantly male, although legislation in Italy and Germany establishes that both parents may resort to it for maternity, paternity or adoption, in the presence of the conditions prescribed by law.

Tab. 24 – Hours of maternity/paternity leave by country (LA15)

2010 2011 2012Italy 3,660 0 688Germany 0 0 560Hungary 3,312 1,008 0Czech Rep. 0 0 0Group Total 6,972 1,008 1,248

As well as guaranteeing reinstatement following maternity leave, the plants in Germany allow working mothers to work part time so that they can look after their children. The Nuova Defim – Orsogril production plant employs a relatively high number of female workers and implements a policy that takes into account the specific requirements of its female employees.

1.7. Safeguarding protected categoriesIn all the countries where the Feralpi Group operates, it recognises and applies the legislation safeguarding specific groups of disable workers, in compliance with the labour safety rules. At the end of 2012, the workers suffering recognised disabilities were 39, four less than the previous year (LA13). The law in force in Hungary specifically recognises workers over 55 years of age as subjects belonging to other protected categories.

Tab. 21 - Number of employees by gender, position and country (LA13)

2011 2012Italy Females Males Females MalesManagers and executives 2 10 2 10Office workers and mid. managers 20 132 22 135Factory workers 5 441 5 437Total 27 583 29 582GermanyManagers and executives 0 7 0 6Office workers and mid. managers 28 75 30 75Factory workers 10 474 11 509Total 38 556 41 590HungaryManagers and executives 0 1 0 1Office workers and mid. managers 4 7 4 7Factory workers 0 43 0 42Total 4 51 4 50Czech RepublicManagers and executives 0 2 0 2Office workers and mid. managers 5 2 4 2Factory workers 0 30 0 20Total 5 34 4 24TOTAL GROUPManagers and executives 2 20 2 19Office workers and mid. managers 58 209 60 219Factory workers 15 988 16 1008Total 74 1224 78 1246

Tab. 22 – Outward movements by gender, position and country (LA2)

2011 2012Italy Females Males Females MalesManagers and executives 0 0 0 0Office workers and mid. managers 0 8 1 6Factory workers 0 24 0 19Total 0 32 1 25GermanyManagers and executives 0 0 0 0Office workers and mid. managers 4 32 1 18Factory workers 0 3 0 6Total 4 35 1 24HungaryManagers and executives 0 0 0 0Office workers and mid. managers 0 5 0 4Factory workers 0 0 0 0Total 0 5 0 4Czech RepublicManagers and executives 0 0 1 0Office workers and mid. managers 1 11 1 14Factory workers 0 0 0 0Total 1 11 2 14TOTAL GROUPManagers and executives 0 0 1 0Office workers and mid. managers 5 56 3 42Factory workers 0 27 0 25Total 5 83 4 67

Tab. 23 - Average wage for female employees as a % of the male employee wage at the plants with the highest incidence of female employees (LA14)

2011 2012Position Nuova Defim Feralpi Holding Nuova Defim Feralpi HoldingManagers and executives - 97.8 - 101.2Office workers and middle managers 64 76.7 61 77.1Factory workers 65 - 62 -

63


The number of households relying on a single Feralpi salary rose and the number of those who consider it difficult to find a job in the area also increased.

Fig. 8 – Has the crisis imposed any sacrificeson your family?


100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%Siderurgica

LonatoNuova Defim

OrsogrilAcciaierie

di CalvisanoHolding Feralpi Riesa Total

5.4

25,2

18.7

9.7

46.9

36.8

6.6

6.96.9

79.3

6.9

3.7

16.7

50.0

29.6

0.02.9

59.4

37.7

1.88.5

62.5

27.2

No, the situation is better than in 2009

No, none in particular Yes, but the situation is bearable

Yes, serious ones

50.7

In compliance with the laws in force in the European countries where it operates, Feralpi refrains from employing personnel below the legal age and therefore in none of its production units does it expose to the risk of accidents categories of people protected by the labour law (HR6). During the two years reported on, the Feralpi plants did not employ personnel subject to detention or restriction of personal freedom, nor did it never used any form of forced or compulsory labour (HR7).

1.8. Protection of workers’ rights and relations with the trade unionsFeralpi’s Code of Conduct safeguards employees’ individual and collective rights in general, and the Company is not aware of facts or circumstances that might limit or endanger the right to exercise freedom of association (HR5). Workers are granted full freedom of association and are organised in trade unions at all the Group’s production sites. In Italy and Germany all workers are protected by law by collective bargaining agreements. In Hungary and the Czech Republic the limited size of the businesses does not require the obligation of union representation or collective bargaining agreements. The employees covered by collective bargaining agreements currently account for 93.8% of the total (LA4). Unionised workers are concentrated in the Italian factories, where the average rate of union membership has remained stable at over 25-30% in recent years. Although the Company considers the use of strikes as an expression of the workers’ rights and physiological practice in democratic industrial relations, the absence of strikes lasting over a week

(MM4) and, above all, the fact that there were 586 hours of strike in 2011 and only 48 in 2012 are considered positive indicators of the climate of industrial relations within the Group. During the period no complaints or incidents regarding staff discrimination (HR4) or violation of indigenous people rights (HR9) were reported to Executive Management or the Supervisory Board.In Italy 333 work hours were used in 2012 for official worker assemblies (675 in 2011), in Germany 757 hours (594 in 2011).

1.9. Opinion of employees at the Italian plantsIn July 2013, the Company conducted the third edition of the corporate climate survey. The results of the survey show how the employees’ opinions on the level of satisfaction have changed since 2007 with regard to important aspects of work, such as corporate policies and services, the economic conditions of families, and selected attitudes of workers regarding the local economic and social situation. Considering the number of employees residing abroad, the 2013 edition was extended for the first time to the staff of the subsidiaries in Germany, namely ESF, EDF and Feralpi Logistik. This edition provides a comprehensive view that takes into account the international character of the Group. The survey results show for 2013 further deterioration of the consequences of the economic crisis on Feralpi workers in Italy, unlike the staff in Germany who enjoy a better local economic situation.

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Fig. 10 – Degree of employee satisfaction with the various company services

19.1

52.1

20.0

8.8 4.8 1.28.5 8.1 7.2 8.6

20.0

6.5

19.0 15.921.8 22.9

58.5

48.1

45.0

46.3

53.8 53.9

16.7

44.2

27.5 29.717.2 14.6

Canteen Bathrooms Infirmary Training Car parks Refreshmentareas

Changingrooms

very satisfied fairly satisfied fairly dissatisfied

verydissatisfied


Fig. 11 – In your opinion, has Feralpi tried to defend employment in handling the economic crisis?

Yes, the company acted well in general, considering the duration and severity of the crisis

Don’t know

No, more could have been done to save jobs

4.4

5.512.9 0.0

24.1

13.7

93.8 84.3 87.396.7

58.4

77.0

1.87.3

2.9 3.3

17.5 9.2

Siderurgica Lonato

Acciaierie diCalvisano

Nuova DefimOrsogril

Holding Feralpi Riesa

Total


Fig. 9 – Trend in for some parameters regarding family wellbeing perceived by employees in Italy.

Source: Corporate climate surveys, various editions

As in previous editions, the corporate climate survey conducted in July 2013 confirms the high level of personnel satisfaction with the various aspects of their jobs and the services offered by the company. The employees at all the production plants share a positive view of the role that Feralpi plays in safeguarding local employment.

50

45

40

35

30

25

20

15

10

5

02007 2009 2011 2013

47.5

45.0

38.3

38.5

38.4

43.4

42.0

31.8

33.1

30.3

19.1 15.0

6.9

32.233.9

43.7

Able to set aside some money

Could easily find a job

Feralpi the only source of income

Modest family conditions

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3.1. Product rangeFeralpi is renowned at a global level as a major European producer of quality steel for building construction. As the Group has developed it has gradually diversified its products and acquired other downstream production activities, allowing it now to offer a wide range of products.

• Reinforcing steel in bars and coilsThis finished product forms the core of reinforced concrete structures, since it is highly ductile, making it particularly suitable for use in buildings in seismic areas. These products are mainly sold to dealers, construction companies and profiling centres providing services for building contractors.

• Stretched coilsThis is a finished product made by cold processing hot-rolled coils. Weighing more and being more workable, it is used together with hot-rolled coils and bars to supply the profiling centres that now work in close contact with construction companies.

• Smooth wire rodThis intermediate product is converted into ribbed drawn wire in ductility class A, which is mainly usedin building construction, or into plain drawn wire, for use in agriculture and the mechanical industry.

• Ribbed wire rodThis intermediate product is used to produce structural mesh in ductility class C.

• Cold-drawn wireThis finished product goes straight into stirrup bending machines and straightening machines or is used in the

production of electrowelded mesh and lattice work.

• Electrowelded mesh, standard and to sizeThis is a finished product used in flooring and prefabricated structures.

• BilletsThis unfinished product is converted into rebar, reinforcing steel in coils, wire rod or rod merchant bar. Quality-steel billets are also used in the moulding of parts for the mechanical industry.

• Electrowelded meshThis industrial product is used in numerous applications, ranging from standard to cut-to-measure wire available raw, galvanised, Galfan-coated, copper-plated and stainless steel.

• FencesFences are made of wire and mesh using modular systems that combine an elegant design and ease of use. Products range from simple to more sophisticated ones, with different degrees of safety and visual transparency to meet various requirements.

• Electrowelded steel gratingsThese high-quality design products, which come in a wide range of panels and finishes, are used in various kinds of buildings and sports facilities.

• Services covering the disposal of non-hazardous waste and hazardous waste containing asbestos. This service provided by the subsidiary Ecoeternit S.r.l. ensures safe and controlled disposal of this category of waste in accordance with the law.

2. ShareholdersFeralpi ownership is characterised by a stable body of shareholders, represented by members of the families of businessmen who flanked the founder Carlo Nicola Pasini in the 1960s. The Group is currently run partly by the founder’s heirs and partly by people who are not family members.The owners have always pursued a long-term policy of capitalisation of the Group, a strategy that has enabled it to provide an optimal response to the industry’s typically cyclic trend. When ownership passed onto the hands of the next generation, the strategy was continued and now provides a guarantee of sound business management in times of difficulty. As at 31 December 2010, the issued share capital of Feralpi Holding was €55 million, of which €50 million fully paid up and divided into 5 million shares, each with a nominal value of €10. The remaining €5 million refers to bonds that are convertible by the end of 2013 in the proportion of two shares for each bond. The bonds are entirely held by its members. The capital is shared stably between 14 shareholders, individuals and legal entities. There were no changes in the shareholder composition in 2011-2012. The members of Feralpi Holding’s board of directors all belong to the families which, except for one independent director, have always held control. There are two female members in the board of directors of the holding company (LA13). The requirements of directors’ independence are specified in art. 4.1 of the Code of Conduct, which states: “The only non-executive directors who can be defined as independent are ones who: 1) do not have, nor have had in the previous two years, business relations with companies in the Feralpi Group; 2) do not own large enough stakes to condition the decisions; 3) do not have family ties with anyone in the above conditions.”

No dividends were distributed to shareholders in the last three financial years.

Tab. 25 – Trend in equity and consolidated profit

(€ 000,000) Equity Result Distributed

profit2010 351.85 - 5.05 02011 357.71 5.97 02012 377.85 21.16 0

3. CustomersSteel has long been linked to industrial development and its use in the various fields of human creation has contributed to the wellbeing of western countries, followed by more rapid development of the world’s new emerging economies.Despite the invention of new, increasingly sophisticated alternative materials, steel continues to be privileged in many applications thanks to the following properties: • good resistance to pressures and high

temperatures;• high resistance to atmospheric agents and corrosion;• extreme ductility, the ability to withstand deformation

without breaking, and hence versatility, giving a wide range of applications;

• can combine different degrees of resistance and ductility to provide a virtually infinite range of combinations;

• can be fully recycled an infinite number of times at the end of the product’s lifecycle;

• no environmental impact associated with use of the product.

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Tab. 26 – Sales revenue by country of destinationArea (€ 000) 2011 2012Italy 495,817 406,103Germany 309,068 334,864Other EU-countries 170,243 14 3 ,12 4Rest of the world 147,257 218,733Total 1,122,385 1,102,824

As explained in the section on environmental impact, Feralpi is fully committed to saving energy and continuously improving its production processes to reduce environmental impact per unit of product. All the finished products produced and marketed by Feralpi are made of steel, which is used in various building components. Due to its intrinsic features, steel is not intended for use in products and services calling for increased energy efficiency or based on renewable energy, because such products do not require energy once they have been incorporated in a building structure (EN6).Since all the products made by the Feralpi Group can be entirely recycled, it is difficult to come up with other ways of reducing their environmental impact even further (EN26). It is important, however, to generalise the current recycling processes to achieve 100%. In Europe today, 99% of the steel used in cars and 84% of steel in buildings is already being recycled (source: Federacciai, 2010). Since steel can be entirely recycled, Feralpi can certify 100% of its products in terms of content, origin of the raw materials used, and their safe use, disposal and environmental impact (PR3). These stated parameters, for which labelling is a legal requirement, undergo 100% conformity inspections and are verified by independent specialists. Feralpi is still involved in research to improve

the safe use of its products, especially those for end users. Swimming-pool fencing systems, for instance, use electrowelded mesh panels that cannot be climbed over and present no sharp edges. Playground fencing systems also lack sharp edges and are coated with special rust preventer. Fencing around sports facilities is guaranteed to withstand a thrust of 80 kg/m2 on the entire surface and 80 kg/m2 on the top. High-security anti-intrusion fencing systems consist of panels that are particularly strong and sturdy thanks to the reduced mesh size, cannot be cut by shears and do not provide footholds for climbing, yet they allow video-surveillance systems good visibility through the mesh. All enclosure systems comply with European safety standards. Only products for end consumers are subject to an assessment of their impact on health and safety, which is why Feralpi has adopted procedures to improve their design. These products are made by the newly-acquired subsidiary Nuova Defim, which has recently taken over Orsogril’s brand name and operations, and they accounted for less than 2% of the Group’s overall turnover in 2012, although sales are increasing at a rapid rate (PR1).In 2011-2012 Feralpi received no reports of incidents due to non-compliance with the regulations or voluntary codes concerning the effects of its products on customer health and safety throughout their lifecycle (PR2).In the same period, as in 2010, there were no cases or reports of non-compliance with the regulations on communication of product characteristics and labelling (PR4) or non-compliance with the rules on advertising, marketing communication, sponsorship and promotion (PR7).

The customers are divided into three main categories: • building contractors and precast manufacturers,

which use the product directly for the construction of houses, industrial and civil works, infrastructures and prefab structures;

• shapers, who process reinforcing steel in bar or coils for distribution to building yards;

• dealers, who buy mostly reinforcing steel in bar and electrowelded mesh for resale to small and medium users.

Fig. 12 – Production by type of product (thousand tonnes).

2189.52090.7

1718.4

1140.61053.8

806.1 815.2778.5736.3601.4610.6576.1

Steel billets Reinforcing steel in bar reinforcing steel in coils and wire rod

Cold-rolled productsand byproducts

2010 2011 2012

All Feralpi products are eco-compatible since steel, when the function for which it was initially produced ceases, returns in the form of scrap to feed the production cycle (EN27).

The advantages of reinforced concrete structures are ease of use, affordability, fire resistance and enhanced seismic safety.

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Development of LT FA cryogenic bars Feralpi Siderurgica is currently one of the only two companies in the world that make cryogenic bars, reinforcing bars used in the construction of concrete components for tanks for storing refrigerated liquefied natural gas. This particular type of cryogenic bar, which goes under the commercial name of LT FA, possesses chemical, physical and mechanical properties that enable it to withstand temperatures as low as -170°C. Feralpi’s LT FA bars comply with the European standards established by EN 14620-3, and even exceed the stated minimum temperature limit by 5°C.

EPD®, Environmental Product Declaration (MM11)In July 2012 Feralpi Siderurgica updated its EPD® Environmental Product Declaration for reinforcing steel for concrete in bars and coils (certification no. S-P-00256). This voluntary certification scheme is part of EU environmental policy and enables Feralpi to quantify in a detailed, reliable and verifiable manner the environmental performance of the lifecycle (Life Cycle Assessment - LCA) of a product. The data collected at the plant in Lonato del Garda can be used to determine the environmental impact of a product or service in terms of resource consumption, emissions into air, waste production and its lifecycle. The data collected refer to the production of steel in 2011. The study findings were analysed and classified according to performance indicators regarding: • consumption of material resources with an energy content • consumption of material resources without an energy content • consumption of water and electricity • overall direct and indirect environmental impact of polluting emissions, such as the greenhouse effect,

the formation of photochemical oxidants, acidification, eutrophication and depletion of the ozone layer caused by the emission of harmful substances. Feralpi has achieved virtually zero emissions (EN26) since certified products have an unlimited lifecycle and their inalterability is determined by all the parameters that can influence the duration of the concrete product of which they are structural constituents.

Feralpi products form part of the ferrous scrap recycling chain and, in accordance with EC regulation number 331 of 2011 – can be classified as “end of waste”. As stated in the Environmental Product Declaration, “reinforcing steel in bars and coils has an unlimited lifecycle and its inalterability is determined by all the parameters that can influence the duration of the concrete product of which it is a structural constituent”. However, Feralpi considers it will be several decades before the finished products manufactured in 2011-2012 can be recycled and reused as ferrous scrap in the EAF or for other applications (EN27).

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3.2. Quality objectivesCustomer satisfaction is a fundamental element forming the basis of Feralpi activities and takes four key factors into account: • a vast comprehensive range of products to meet

all possible needs, built using ultra-modern production processes;

• excellent quality of the products, which are accompanied by documents certifying control of the product characteristics and production cycle;

• prompt and reliable customer services;• a sales network able to assist and advise

customers with the necessary expertise in terms of product features and applications.

In accordance with the regulations, each product bears a label containing a series of details – an identification code with which the product is registered within the process, quality standard, normative references, dimensions, barcode and identification of the logos of the standard setters’ certificates. For various product categories Feralpi provides a UNI EN 10204:2005 test certificate and a qualification certificate providing details of the product’s compliance with the chemical and regulatory requirements. It also hot-marks the products to guarantee their origin (PR3).With reference to the small proportion of products for end users, such as gates made by the subsidiary Nuova Defim (following recent acquisition of the Orsogril brand name), all sold products certified under CE UNI EN 13241-1 are accompanied by an installation, use and maintenance booklet illustrating the procedures throughout the product lifecycle, right up to demolition and disposal. The booklet also contains a series of safety rules, a risk analysis and how to prevent risks (PR1).

There are two types of inspection: in-process inspections (not required by law), which concern the procedures Feralpi adopts to determine the chemical composition and development of the rolling process, and final inspections, which involve the final chemical composition, according to the legal limits, the type of rolled products and the Feralpi’s internal provisions, based on the product specifications (chemical, physical, geometrical and technological aspects). Over the years Feralpi has dealt with these aspects and their progress with increasing focus on technological innovation and the use of new machinery. This allows the preparation and use of further indicators to measure product quality.The system measures the steel production, rolling mill, by-product and shipment results against the quality requirements stated in the technical specifications. Deviations from the specifications are classified and measured, and range from minor deviations from the standard to customer complaints. An algorithm that takes into account volumes produced and deviations from the specifications expresses the quality standard, known as QI (quality index).During the two years covered by this Report, there were no cases of non-compliance with the regulations and voluntary coding on product information and labelling (PR4). Except for attendance at major international fairs - Made in Steel in Milan and the European Steel Day in Brussels, Feralpi did not commission any activities regarding communication, promotion, advertising and sponsorship of its products, since the policy adopted only included corporate sponsorship and advertising (PR6).

SusSteel projectIn 2010 the Feralpi Group – represented by Feralpi Siderurgica for Italy and ESF for Germany – launched its participation in the SusSteel project promoted by Eurofer, the European confederation of iron and steel industries.The basic idea is to identify and bring together on a European scale a group of companies making reinforcing steel in bars that are virtuous in terms of sustainability, which involves monitoring their process, product, environmental and occupational health and safety performance. Parameter monitoring is carried out by an independent party, the TÜV, while coordination is handled by ESSCPC (Eurofer Sustainability for Steel Construction Products Committee), which is assisted by leading steel manufacturers located in various European countries.

SISMIC and ECOSISMICFeralpi is one of the founding members of the Association of Manufacturers of Seismic Steels for Reinforced Concrete (SISMIC), which was set up in 2004 to promote research, development and innovation in the field of reinforcing steels and their production processes, with particular reference to problems connected with the durability, corrosion and resistance of structures in seismic areas.The members of SISMIC have adopted a quality standard for ductility parameters over the normal levels, guaranteeing: • certification of the quality management system in accordance with ISO 9001; • certification of the environmental management system in accordance with ISO 14001;• radiometric control of products throughout the production process;• a positive result in axial fatigue and oligocyclic fatigue resistance tests; • that each supply is accompanied by a UNI EN ISO 10204 - 3.1 conformity certificate.In 2010 the association created the EcoSismic trademark to promote seismic steel in terms of technical performance and sustainable properties. Manufacturers receiving the EcoSismic mark certify the absolute excellence of the quality of their products and governance policy, making the end users aware of the low environmental impact of the steel used. In June 2013 the main producers of steel for reinforced concrete belonging to SISMIC obtained Gold level ICMQ ECO voluntary certification of sustainable products.

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Once the requisites have been confirmed, Feralpi privileges long-term relations based on dependability, reciprocal trust and an exchange of expertise. Feralpi believes that in a situation of economic uncertainty, a long-term relationship with suppliers based on trust can help stabilize the contract terms and conditions, to the benefit of both parties. Most suppliers are located in the town or province where the Group has its main facilities, as it has opted for the short-supply chain and hence optimised logistics wherever possible.All suppliers are required to read the Feralpi Code of Conduct and declare formally that they will comply with the provisions contained therein. The suppliers’ personnel and any other parties involved in executing contracts are also required to undertake the same commitment.In the two years reported on, Feralpi did not systematically monitor compliance with human rights on the part of its suppliers and supply chain (HR2). The Feralpi Group mainly avails itself of suppliers operating in the areas where its facilities are located (EC6).

Tab. 28 – Purchases from local suppliers for the three main production sites as a percentage of total supplies (EC6).Productionsite

Supplierlocation 2011 2012

Lonato Brescia province 50.3 43.1Calvisano Brescia province 32.7 32.6Riesa Meißen district 20.0 20.0

Note. The figures referring to the Meißen district are estimates..

Responsible management of the supply chainThe results of a study conducted by Feralpi in collaboration with KPMG on Responsible management of the supply chain, which is now considered a major element in managing corporate risks in a context in which corporate stakeholders place increasing importance on social and environmental sustainability were published in spring 2012. This study was part of a wider project sponsored by MiSE (the Italian Ministry of Economic Development) to promote the use of sustainable development strategies among businesses and improve their levels of attractiveness and competitiveness. OECD Guidelines for Multinational Enterprises, which were published in May 2011 and set out principles and voluntary standards for responsible behaviour in internationalisation processes, are an important benchmark in supply chain management. The main aspects covered by the Guidelines include the extension of corporate responsibility to the supply chain and the introduction of the concept of due diligence, meaning “that process which, being an integral part of the decision-making and risk-management procedure, enables enterprises to identify, prevent and reduce their actual and potential negative impact on the matters dealt with in the OECD Guidelines, and to be accountable for the way in which the problem is addressed”.

In 2012 Feralpi used a systematic and more representative tool for monitoring customer satisfaction (PR5). A questionnaire was used to collect opinions on four aspects of customer relations: degree of flexibility in meeting customer demands, compliance with quality standards, punctuality of deliveries, and the quality of before- and after-sales communications and assistance. Each customer was asked to rate the four aspects on a scale of one to five, ranging from “not at all satisfied” to “extremely satisfied”. Most of the respondents answered “satisfied” or “extremely satisfied” in all cases. The questionnaire also contained a space for writing comments or making constructive suggestions. No sanctions were imposed on Feralpi in 2011-2012 for non-compliance with laws or regulations on the supply of products or services (PR9). In the same period there were no reported cases of problems or incidents due to non-compliance with the regulations or voluntary codes on advertising, communication, promotions and sponsorship (PR7). There were no claims regarding breach of customer privacy (PR8).

Tab. 27 – Percentage of claims/returns on products sold

% 2011 2012Reinforcing steel in bars

0,003 0,002

Stretched coils 0,030 0,002Wire rod 0,050 0,011Cold-drawn wire 0,000 0,136Mesh 0,009 0,006Nuova Defim mesh

0,050 1,210

Gratings -- 0,67

The number of product defects remains very low thanks to the adoption of advanced process control systems. The increase in the percentage of claims referring to mesh produced by Nuova Defim – Orsogril is due not to an actual drop in the standard of quality but rather to a different customer attitude following the company’s decision to limit itself to selling finished products and stop installing them in building yards.

4. SuppliersIn 2012 the Feralpi Group sustained €1,019.6m costs in connection with its suppliers, up 1% on the 2011 figure. Scrap suppliers accounted for nearly 70% of total business costs. Feralpi adopts stringent supplier selection and quality assessment criteria. The procedures for introducing new service companies include preliminary verification that the supplier possesses the stated technical and professional requisites and, during or after the work, verification that the supplier has duly paid all the social security contributions owed.

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4.2. Scrap suppliersThe procurement of scrap is dependent on a market that has become increasingly volatile in recent years in terms of prices and quantities. Feralpi is therefore forced to operate in a situation of uncertainty with two types of supplier: • large direct suppliers, with which Feralpi has

established a long-term relationship based on trust, partly the result of progressive selection based on reliability and compliance with the laws on the safety and quality of the raw material;

• sub-suppliers, who are generally very

fragmented, and brokers, who provide scrap from small collection centres scattered all-over the area. With this type of supplier, Feralpi is less able to develop a policy of active involvement, so their compliance with Feralpi’s Code of Conduct guarantees conformity with the principles underlying Feralpi’s relations with its suppliers. In order to combat market instability and rationalise supplies, Feralpi promoted the establishment of a sales company in 2012 to handle contacts with numerous sub-suppliers, and acquired a stake in it.

Radiometric monitoring of incoming scrapThe purpose of this procedure, which uses special radioactivity detectors, is to prevent the accidental fusion of radioactive sources and/or substances mixed in with the scrap and contamination of the products, production residues and corporate facilities. Prevention is mainly implemented by monitoring incoming materials. The purpose of monitoring residues and finished products is to limit the economic and health consequences of the fusion of contaminated material. Finished product monitoring also allows customers to be provided with quality certification. The ultimate aims are to safeguard worker health and safety, by reducing the risk of external radiation and personal contamination, and to protect the environment and the population. Records of the monitoring procedures have been made available to the Supervisory Body.

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The study consisted of the following four stages: - reconstruction of the main steps in the steel

supply chain connected with steel production using EAF technology;

- identification of the main stakeholders involved at each stage of the process;

- identification of risks and opportunities of a social/environmental nature connected with the above steps;

- determination of methods for enterprises to handle and control criticalities, and highlighting of the best practices adopted by the Feralpi Group.

Tab. 29 – Supplier conformity inspections in Italy by type of product

2010 2011 2012Slag 2,021 641 429Ferroalloys 499 591 621Unfinished products 219 99 81Coal 2 2 1Lime 243 28 24Other 3 21 5Total 2,987 1,382 1,161

Over one thousand supplier conformity inspections were carried out in each of the two years covered by this Report.

4.1. Suppliers and qualityAll suppliers are required to comply with Feralpi Quality Manual and adopt systems certified in accordance with UNI EN ISO 9001 or the equivalent. The materials used by the production cycle must be accompanied by certificates guaranteeing conformity to all the requirements of the purchase specifications and procurement procedures. In order to safeguard quality, Feralpi may conduct audits and inspections at the supplier’s premises and perform technical tests on the materials, which the supplier is required to attend.Feralpi periodically updates each supplier’s evaluation chart, which shows the type of certification, the date of issuance, the period of validity and the supplier’s degree of reliability, for each type of product.

Research and development

Value chain player(supplier, partner, etc.)

Raw materials

Recycling or storage

Production process

Workers

Customers

Transportation

Society and local community

Sale and use

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4.3. Energy suppliersThe production of steel from scrap requires the use of a lot of energy, which accounts for the largest cost item. Energy purchases accounted for 10.6% of total production costs in 2011 and 10.4% in 2012. To tackle this structural disadvantage suffered by high-energy-consuming manufacturers, Feralpi has long adopted strategies focusing on the flexible use of electricity based on the type of technology adopted. It also exploits the synergies allowed by the co-existence of several production plants and the possibilities offered by liberalisation of the market. Feralpi is a member of Teraenergia, an Italian Consortium that provides a better strategic position on the electricity market. Due to the flexibility of its own technology, Feralpi has signed up to a service whereby it agrees to be disconnected instantaneously from the mains in the event of an emergency identified by the national grid provider.

4.4. Subcontractors working at the plantIn 2011-2012, various members in the Feralpi Group had recourse to services by independent companies, mainly involved in building, maintenance and intervention work on its production plants.At the Lonato plant over 189,231 hours were worked in 2012 (175,327 in 2011), corresponding to about 120 full-time work units. At Acciaierie di Calvisano 110,609 hours were worked in 2012 (83,363 in 2011), equivalent to about 74 full-time work units. Subcontractors located in the province of Brescia accounted for 65.3% of the total. The Riesa factories had recourse to about 55 subcontractors in each year of the two years, employing around 10 people for maintenance and assembly interventions. This means that the Group’s member contribution to local employment goes well beyond direct employment and mainly favours the local market.

Suppliers collect and deliver scrap from industrial products (e.g. demolished cars and household appliances), the ferrous component of industrial demolition work and so-called workshop waste (mainly steel machining chips). The quality of the scrap that forms the main input of the production process determines both the quality of the finished product and the safety of the production process. Scrap collection contributes to environmental protection by removing unused materials and waste, which can then be recycled.Most scrap is delivered by truck. In Italy, 5.8% of scrap was transported by rail in 2011 and 4.9% in 2012.

Tab.30 – Origin of the scrap used in Feralpi plants (t)(tonnes) 2011 2012Lombardy 638,873 594,073Other regions 657,649 614,788Abroad 186,049 258,713Total locations in Italy 1,482,571 1,467,574Germany 408,775 386,843Czech Republic 215,701 225,191Poland 310,588 324,190Total locations in Germany 935,761 936,224

Method for receiving, inspecting and accepting scrap at Feralpi SiderurgicaThe acceptance of incoming raw material entails a series of inspections to ensure that it complies with the product characteristics and safety requirements. Feralpi performs checks at various levels: verification of the minimum requisites for entry into the plant; radiometric testing to prevent the entry of orphan radioactive sources; visual inspection of the raw material prior to transfer to the scrap yard. Recent changes in national and European legislation (Lombardy Regional Council Decree no. VII/10222 and EU regulation 333/2011) have introduced a series of obligations concerning incoming goods inspection prior to unloading. Material handling now follows more complex rules in order to identify non-conforming materials that have entered the plant. These formalities require the prompt recording of any non-conformities found. Feralpi has implemented the new standards, adapted its procedures and trained the operators involved.

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4.5. Relations with suppliersAs specified in the section on investments, in 2011-2012 Feralpi completed major work to upgrade the production equipment and reduce the environmental impact of its plants. In this connection, relations with the suppliers of technologically advanced equipment always entail co-design and partnership agreements, under which Feralpi engineers collaborate with the supplier engineers to establish and apply the best and most highly-advanced technical solutions. In this type of collaboration, know-how is developed to the advantage of both parties. A good example of collaboration in design is the renewal of the smelting furnace at the Lonato plant, which entailed overall redefining of the smelting area, not merely replacing a system with a more modern one. The new plant was included in reorganisation of the production and maintenance access and work areas. This renewal was made possible thanks to constant contacts between Feralpi and Tenova technicians, in a co-engineering project aiming to find specific solutions to suit Feralpi. A significant example of this kind of collaboration was the design of safety systems to ensure that access to the various parts of the steel mill was only allowed when the systems were in predetermined safety conditions. A Safety Matrix allowing the development of the entire plant control system was also drawn up jointly.This was repeated in partnership with Automazioni Industriali Capitanio and Necsi on the rolling systems, for which more evolved and innovative Safety Matrices were developed, forming the basis for segregation of the work areas and the

installation of evolved axis-controlled systems using dedicated PLC systems. Due to its innovative features, this project was presented at various safety workshops and seminars. Another example of cooperation with the smelting furnace was the installation and customisation of the EFSOP® (off-gas process control) system, which achieved significant energy saving. An example of profitable collaboration between the Calvisano plant and its suppliers was the design and development of the Static Var Compensator (SVC) jointly with ABB S.p.A. The SVC compensates for any mains voltage fluctuations, which cause harmful oscillations in the power supply to the furnace.

5. Public AdministrationIn their relations with the public administration, personnel at all levels are required to comply with the Feralpi Code of Conduct, which has recently been updated to include measures and behaviour to prevent the crimes covered by the new anti-corruption laws. More in general, in connection with the application of Legislative Decree no. 231 of 2001, Feralpi has adopted specific organisational models and control procedures to prevent crimes against the Public Administration. During the period reported on, Feralpi was unaware of any acts or allegations concerning corrupt practices involving employees or collaborators in their dealings with the Public Administration (SO2).

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commitment to professional training, as reported in the section on employees. The model of dialogue with the stakeholders adopted by the Feralpi Group considers its relations with the reference community of major importance. With an international Group like Feralpi, the issue of community relations must be tackled with specific reference to the way in which each plant interacts with the surrounding area. This is because environmental impact is always specific and involves the immediate neighbourhood, and because the requirements of the population and local authorities involve different cultural aspects and degrees of awareness. Feralpi has always recognised these characteristics and developed many different kinds of dialogue that are unified by an overall vision of the policy of social responsibility adopted by the Group. This approach therefore takes into account the various characteristics of the local area, the opinions of the resident population and the different positions of the local administrators (SO1). Feralpi is intent on improving the monitoring of the economic, social and environmental effects of its activities at a local level. As in the previous edition of the Sustainability Report, the identification of each community starts with the residential distribution of the people taking daily part in the production process at the various factories, but it also takes into account the administrative subdivision of the area, which is important in terms of creating institutional representatives with whom each factory establishes a relationship.

6.1. Support of local communitiesBelow is a summary of the aggregate parameters identifying aid to the local communities. Further details of the specific impacts of each plant are provided in the section on environmental responsibility. Information on the single initiatives is provided under Stakeholder Dialogue in section three. In 2011-2012, despite the difficult market situation, the Feralpi Group continued its traditional support of sports and charities, which mainly involves the local area, but sometimes goes beyond it.

Tab. 31 – Contributions in favour of local communities(€ ,000) 2010 2011 2012Sports sponsorship

646 1,411 1,453

Charities 31 115 227Total 677 1,526 1,680

Feralpi Siderurgica S.p.A. promotes activities of various kinds in favour of the Lonato community, some are organised directly, others in collaboration with organisations and associations, and others are merely sponsored. Feralpi receives funding requests from various sources, such as parish youth clubs, old people’s homes, community care organisations and schools, and decides which ones to accept. In the two-year period Feralpi awarded study grants to 12 deserving students.

5.1. European UnionThe European Union is an important stakeholder for a Group that operates in five European countries. This institution conditions Feralpi activities both directly, with legislative measures, and indirectly, with standards for the industry, posing constraints and providing opportunities on the international market. The influence of the European Commission mainly concerns the anti-trust laws, control of state aid, and community requirements on environmental protection, which are subsequently enacted by national laws.In 2011-2012 no company in the Feralpi Group was involved in legal action for alleged non-compliance with the rules on anti-trust, competition or monopolistic practices (SO7).

5.2. Nation statesIn 2012 the companies in the Group allocated in favour of the nation states in which they operate 18.1% of the global net added value produced at a consolidated level, equivalent to around €18.4 million. This overall figure is the sum of €13.2 million social security contributions paid and €5.2 million taxes. The figure for 2011 was 23.6%. During the period considered, the Group members enjoyed public aid for training and benefits deriving from the application of redundancy arrangements, whereby the companies were able to make up the wages and salaries of personnel that had temporarily been cut.

5.3. Public monitoring authoritiesRelations with the Public Administration cover dialogue and collaboration with the stakeholders in charge of monitoring the environmental impact of the

Group’s plants. These are the Regional Directorate for the Environment (Dresden) as regards the factories in Germany, and ARPA (Regional Agency for Environmental Protection) for the Brescia Province and the Lombardy Region, as regards the factories in Italy. These stakeholders are systematically involved in the projects and new measures undertaken by Feralpi to safeguard the local area. Based on a consolidated traditional collaboration, it can be stated that these entities consider Feralpi a serious and reliable interlocutor.

6. Local reference communitiesThe factories’ influence on the economies of the local areas goes well beyond creating wellbeing for the employees’ families and the local network of interconnected suppliers. The results of the first corporate climate survey, conducted in 2007 among the employees of Feralpi Siderurgica, enabled Feralpi to identify certain major indirect impacts of the Italian plants on the local economy, such as commercial activities supported by the consumer propensity of Feralpi office and factory workers’ families (EC9). This impact varies considerably with the size of the plant and the local community: it is highest in Lonato, where Feralpi accounts for 17% of all local jobs, non-negligible in Riesa, where employment and the generation of added value help support the economy of a town with 36,000 inhabitants, and negligible in the other smaller plants, which are mainly located in close proximity to metropolitan areas such as Budapest and Prague. Another positive indirect impact on the local area is the result of the Group’s commitment to developing its human capital, especially youngsters, via a

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meeting was held at Feralpi and was attended by representatives of the schools involved. The speakers were chosen to provide a range of experiences of profit and non-profit organisations, highlighting these two worlds should no longer be divided but rather cooperate in a mutual exchange of support and competences. An important cultural event took place in the two-year period reported on – twinning of the towns of Lonato del Garda and Riesa in Saxony, where the Group’s German plants are based. The twinning was celebrated in an official ceremony attended by the mayors of both towns and other events, during one of which Lonato musicians sponsored by Feralpi took part in the “Boulevard der Weltmusik”.Feralpi also sponsored cultural events, such as

“Fèr: stories of iron, work and art”, defined as “a theatrical performance and sensorial experience” staged at a formed factory in Via Gioberti, Brescia. Those attending were able to visit the renovated facilities and also watched a play entitled “Da le sès a le dò e da le dò a le sès” [lit. From six to two and from two to six], directed by Silvio Gandellini. Feralpi Holding decided to sponsor the FAEL Association (families and friends of blood disease sufferers against leukaemia) and the Brescia-based Diocesan Museum Foundation.Acciaierie di Calvisano S.p.A. continued activities in support of the local area, with emphasis on sports, mainly rugby (Rugby Calvisano is one of the country’s top teams), training, the community

Feralpi traditionally focuses on sports for young people. The Group sponsors FeralpiSalò, a football club in the Pro-1 League, which was set up in 2009 following the merger of the Feralpi Lonato and the Salò Valsabbia football clubs, two long-standing sports organisation in the Lake Garda area. The main aim has always been to promote local football via a programme that combines energies, skills and financial resources to set up a sports club and training for promising youngsters. Feralpi supports all the aspects involved, from sports activities (matches, training, transfers, pitch management) to more social events (club dinners, Christmas celebrations, community parties). Feralpi also supports Virtus Feralpi Lonato, where very young children can learn to keep a ball and older ones to

be loyal to their team, respect their companions and opponents, and also try to do better. Feralpi supports activities in Lonato del Garda, Salò and Vestone.The purpose of the Feralpi Cycling Group is to support and sponsor over 150 youngsters involved in this demanding sport. Feralpi has supported youngsters in their professional careers in the recently-concluded Comenius Regio project (see Section Four – 1. Employees) and the series of meetings entitled “The desire for knowledge. What the crisis cannot touch” dedicated to upper school students and organised in collaboration with ARGIS at ITIS Cerebotani in Lonato, the Perlasca technical institute in Vobarno and the Castelli institute in Brescia. The last

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In the past the Riesa plant received complaints from some of the local residents about night-time noise in the summer months. There were similar complaints in 2012. In order to safeguard the health of its employees, the company monitors noise emissions and has equipped the smelting furnace – the main source of noise – with noise barriers. Since 2007 the company has conducted an opinion survey among the residents on Feralpi Stahl’s role at a local level and their perception of the level of noise from the production plant.

Tab. 32 – Training, assistance, healthcare prevention and risk control plans (LA8)Beneficiaries Training Assistance Prevention Healthcare

Employees YES YES YES NOEmployees’ families

NO NO NO NO

Local residents

NO NO NO NO

(fairs, festivals and other social events) and the parish. The main aim is to encourage the intellectual, cultural and social development of the community as a whole and the quality of life in general. In the two years reported on, the company sponsored projects under the Training Plan of the Primary School in Viadana di Calvisano, with particular reference to technological innovation of teaching aid. The ACLI (Italian Christian Workers Association) branch received support for requalification of the railway station, where the association provides CAF assistance services and nutrition education courses, and has also set up a teaching garden for 70 children from the local school. Another important sponsored service was the “The children locomotive” at the ACLI family centre, which provided an area for children to do their homework, in collaboration with the Catholic University. Another sponsorship in favour of children was a theatre project at the Viadana primary school, which involved the Teatro Telaio association, with theatre workshops and a play entitled The traveller. The company also supported the local branch of AVIS (blood donors’ association) by paying for the prizes awarded to senior donors to mark the 45th anniversary of the foundation of the branch. The parish of Santa Maria Annunziata was also granted funds to service the boiler. On 1st October 2012 ESF GmbH celebrated twenty years since its takeover by Feralpi by opening its gates to the residents of Riesa and its main stakeholders. 650 guests enjoyed various kinds of events designed for all ages, including musical exhibitions, games, guided tours and a ceremony in which the director of the Chamber of Commerce

officially handed over the EMAS certificate. The ceremony was attended by the Minister of the Economy for Saxony, Sven Morkol, the Italian ambassador to Germany, Elio Menzione, the mayor of Riesa, Gerti Töpfer.In 2011-2012 Feralpi Stahl launched a series of initiatives in favour of the local community, they mainly targeted the new generations, with sponsorship of various local schools, ranging from kindergartens to technical institutes. Support for youngsters also concerned local sports, mainly football and cycling. The company organised a football tournament attended by teams from the various countries where the Group’s members are based, and a series of cycle races, and built a cycle and pedestrian lane on the bridge near Riesa harbour. Cultural initiatives in favour of children, young people and the elderly included local festivals and musical and theatrical events. In July 2012 the company received an occupational disease claim. In the two years covered, the company did not become aware of any other claims regarding physical disorders or diseases from employees’ families or the inhabitants living near the production sites. Since the regular employee check-ups gave negative results (see Section Four – Employees) and, based on current scientific knowledge, problems of this type are considered unlikely to occur, the company did not draw up any prevention and monitoring plans (LA8).No disputes, claims or reports of exploitation of the surrounding area or breach of the local communities’ customary rights occurred during the two years covered by this Report (MM6, MM7).

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Fig. 13 - Interviewees’ rating of Feralpi Stahl’s economic and environmental impacts on the surrounding area (rating scale from 1=very positive to 5=very negative)

Overall economic impact

overall environmental

impact

traffic pollution noise

0

0,5

1,0

1,5

2,0

2,5

1.4

2.0

1.4

2.1

1.61.4

2.3

2.2

1.31.2

2013 2011

The interviewees were also asked to assess the statement “Feralpi Stahl has done a lot in the last few years to reduce environmental impact” on a scale of 1 (I entirely agree) to 5 (I entirely disagree). Figure 13 shows a breakdown of answers given in 2013 and 2011. The average rating in 2013 was the same as in 2011 (1.7), the median value being 1 in both years. Only 1.9% of the interviewees said they entirely disagreed with the statement. The difference between the two years (0.7%) is not statistically significant. As part of the “environment” section, confidence in the company was assessed by asking the question: “Do you think Feralpi Stahl complies with the limit

values set for polluting emissions?” The result was the same as in 2011. About 4 out of 5 interviewees said they did and they trusted the statements issued by the company, the authorities and the independent examiners (79.1% yes, 11% don’t know, 9.9% no).Over half of the interviewees (55.3%) said they were aware that the company had EMAS certification. Regardless of their age bracket and standard of education, these subjects expressed a generally more positive opinion of Feralpi Stahl’s environmental impact compared to those who were not aware of this certification.

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6.2. The third edition of the Riesa residents opinion surveyIn summer 2013 the company conducted a survey on behalf of Feralpi Stahl on a statistically representative sample of the population residing in Riesa. This was the third edition of a two yearly survey to measure the local residents’ degree of knowledge and opinion of Feralpi Stahl’s role at an economic level (jobs, tax revenue, sponsorship) and an environmental level (atmospheric emissions of pollutants, traffic congestion, noise). The target population consisted of adults in households residing in the municipalities of Riesa (town), Glaubitz and Zeithain. The survey was conducted by phone during the 33rd week of 2013 by the Institut für Marktforschung in Leipzig (www.imleipzig.de).Over half of the interviewees (57.3%) knew at least one person who worked at Feralpi Stahl and 22.2%

had already visited the plant during one of the open days or another event. Those who expressed an interest in visiting the company have a significantly more positive opinion of Feralpi’s economic role in the area compared to people who said they would not visit Feralpi Stahl (1.7 vs 1.5). Interest in visiting the company tended to be higher among young people (up to 44 years of age) compared to older people (over 44) (66.7% vs 54.9%). The percentage of interviewees who declared they had logged on to the Feralpi Stahl website in the last six months was 6.4%, rising to 8.7% when considering people who normally use the Internet. The interviewees were asked to rate their opinion of the company’s environmental impacts on a scale of 1 (no impact) to 5 (high impact). As in the previous survey, the findings showed that opinions were generally in favour of the company.


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On 11 October 2012 Feralpi Siderurgica adhered to Confindustria’s Charter of Environmental Sustainability Principles, which provides guidelines for companies belonging to the confederation. The Charter ratifies the shared values and actions required for united and progressive advancement towards enhanced environmental sustainability, and sets out realistic and achievable targets for Italian businesses. The Charter contains ten principles.

1. Achievement of short, medium and long term environmental sustainability objectivesSet environmental protection as an integral part of company activity and growth process. 2. Adoption of a preventive approachAssess the impact of activities, products and services to manage environmental aspects adopting a preventive approach and promote the use of best available technologies.3. Efficient use of natural resourcesPromote the efficient use of natural resources, with emphasis on the rational management of water and energy resources. 4. Control and Reduction of environmental impactsControl and, where possible, reduce emissions into air, water and soil; achieve further reductions in waste production and more efficient waste management by privileging recovery and reuse rather than disposal; take steps to limit the effects of industrial activities on climate change; promote the protection of biodiversity and ecosystems.5. The central role of innovative technologiesInvest in research, development and innovation to develop processes, products and services which have increasingly reduced environmental impacts 6. Responsible product managementPromote responsible management of products or services throughout the entire lifecycle to improve performance and reduce environmental impact, including information to customers on product end-of-life management.

Scrap is delivered by road and rail to the plants in Lonato and Riesa, which possess the equipment required to prepare it – by cutting up and shredding – and separate the ferrous material. The Group’s three steel mills use so-called “mini-mills” electric arc furnace technology to process the molten steel in ladles.

The material is then transferred to the continuous casting plant, which makes steel billets to feed the rolling mills. At the plants in Lonato and Riesa, the continuous casting system and rolling mill are adjacent to each other, a major advantage since it means the billets can be processed while they are still hot, which saves a large amount of energy.

SECTION FIVEENVIRONMENTALRESPONSIBILITY

1. Production processThis section analyses the three main plants covered by this Report, namely the steel mills in Lonato (Brescia), Calvisano (Brescia) and Riesa (Saxony), and provides a brief description of the smaller plants, most of which handle downstream cold-rolling processes.


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SECTION FIVE ENVIRONMENTAL RESPONSIBILITY


2. The production plants and their locationFeralpi, at all its production plants, is committed to numerous environmental improvement programmes. Each production plant accounts for a variable portion of the cost based on the priority assigned to each of the programmes.

Tab. 33 – Main environmental costs sustained (€,000) (EN30)2011 2012

Lonato Calvisano Riesa Lonato Calvisano RiesaWaste treatment andenvironmental protection

6,398.0 5,660.4 7,318.7 7,551.9 6,555.9 7,693.4

Preventive measures 533.3 458.7 224.2 838.7 698.3 242.5Total 6,931.3 6,119.1 7,542.9 8,390.6 7,254.2 7,935.9

Taken all together the plants reported on here cover 131.1 hectares, which contain the production and transformation plants, the materials storage areas and other buildings required for activities at the steel mills, rolling mills and downstream processing plant. Below is an overview of the plants covered by this report and the main characteristics of their locations.

2.1. The Lonato del Garda plantThe subsidiary Feralpi Siderurgica S.p.A. is located in Faccendina about 3 kilometres from Lonato, in an industrial area occupied mainly by small businesses. The plant, which covers 52.1 hectares, borders to the north with the Milan-Venice railway line, which runs along a raised embankment, and to the south with the A4 motorway. These important infrastructures allow good access to the plant and also separate it from the nearby residential area.The transport of materials involves over 300 lorries passing along main road number 11 around 300

days a year, although some products are collected and despatched by rail via a direct link with the nearby Lonato railway station.The production plant consists of an EAF steel mill, a continuous casting machine and two rolling mills for rebar and wire rod. Despite the complete urbanisation of the surrounding area, the large amount of infrastructures and the local population density (EN14), the company considers that the constant monitoring of emissions, which are well below the legal limits, can have an indirect positive effect on the vegetable and animal species present locally. The company is unaware of any protected species present in the surrounding area, which is not classified by law among sites requiring the implementation of preventive measures and biodiversity monitoring (MM2). The closest protected areas are the Castellaro Lagusello nature reserve, which lies about 20 km away as the crow flies, Lake Frassino, about 25 km away, the Lower

7. Responsible management of the supply chainPromote environmental protection in supply chain management by involving suppliers, customers and stakeholders as primary actors in their own sustainability policy.8. Awareness and trainingPromote information, awareness and training activities to involve the organisation in implementing the company’s environmental policy.9. Transparency in relations with stakeholdersFoster relations with stakeholders based on transparency to promote a shared approach in environmental policies.10. Consistency in international activitiesAct consistently with the principles endorsed in this Charter in all the countries where the company operates.

Fig. 14 – Diagram of Feralpi’s integrated production process BUCKET PREPARATION

Unloading of scrap in the yard and preparation of buckets for charging

ferrous scrap

TAPPING IN LADLEThe entire heat (100 t) is tapped from the

ladle via an eccentric bottom tapping (EBT)

CONTINUOUS CASTINGPouring starts when the ladle is fully charged

INTERMEDIATE TUNDISHDistributes the molten steel between

6 casting lines.

OXYGEN-CUTTING STATIONUnfinished products (billets)

are cut to size

BILLET TRANSFERThe hot billets (600-900°C)are conveyed to the reheating

furnace of roll mill 1ROLLING MILL 1Billet size is reduced to get the

desired bar dimensions

EXTRACTION ROLLERS AND RECTIFIERS

The unfinished semi-solid casting is extracted and

rectified

Ladle on holdingLadle during pouring

RADIATION DETECTION PORTALSTo measure the variation in radiant energy compared to the environmental base to prevent the entry of radio contaminated scrap

ELECTRIC ARC FURNACE WITH EBTUsed for smelting ferrous scrap. Capacity ~100 t of molten steel, tapping temperature ~1600°C, pouring time 40-45 minutes.

LADLE REFININGThe molten bath is refined to correct the chemical composition. Duration 30-40 minutes.

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This plan summarises all the interventions established by management to improve the environmental performance of the production site and the organisation as a whole. The following table lists the measures Feralpi Siderurgica has decided to take in the near future.

Garda site of community interest, in the adjacent province of Verona, and the Mincio regional park, the northern perimeter of which is about 22 km from the plant (EN11). All these areas belong to the Garda Mincio catchment basin; the area where the plant is located belongs to the Chiese catchment basin. The company feels it can reasonably rule out major direct effects on the environmental equilibrium in these protected areas. Feralpi is not aware of any relevant internal or external facts connected with the indirect effects of the supply chain (EN12). The company is not therefore involved in any measures to repair damage to ecological systems or compensatory measures involving other sites (EN13). With regard to possible influence on neighbouring aquatic ecosystems (EN25), the bodies of water to be taken into consideration are Lake Garda and the river Chiese. Lake Garda is located north of the plant about 8 km away in a straight line, but is separated from it visually and otherwise by the hills where Lonato castle and the old town centre lie. The river Chiese, the applicable section of which comes under the Middle-Chiese Reclamation Consortium, runs at least 4.5 km to the west of the plant. Influence on the aquatic ecosystems can be ruled out in both cases because, as explained elsewhere, the waste water is discharged into surface waters, following purification, and then used for irrigation purposes.The company has drawn up and implements a long-term environmental management plan. All the targets illustrated in the previous editions of the Sustainability Report were achieved in 2011-2012.

In 2011-12 there were no major incidents involving the spillage of polluting or hazardous substances (EN23), and no fines or penalties were imposed on the company for failure to comply with the environmental protection regulations (EN28).Feralpi Siderurgica has also established an improvement plan for 2013-2014, in continuity with what was done earlier and with more advanced objectives.

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Tab. 34 – 2013-2015 environmental targets and plans for Feralpi Siderurgica S.p.A.Environmental aspect Aim Indicator Intervention Target Deadline

Energy consumption

Reduce electricity consumption kWh/tonne of finished productInstallation of software tools and systems to create a consumption monitoring panel Detailed monitoring of all plant

electricity consumption sept-14

Interventions to reduce the energy consumption of production processes, compressed air system, hydraulic systems and lighting

5% reduction dec-1410% reduction dec-15

Reduce methane consumption m3 of methane/tonne of finished productInterventions to allow partial hot-charging of rolling mill 2 and other measures to optimise energy efficiency

Reduction of 5 m3/tonne of consumption of rolling mill no. 2 dec-14

Reduce fuel oil consumption Litres of fuel oil/tonne of finished product Installation of fuel oil meters on in-house vehicles 5% reduction dec-14

Water consumption Reduce the use of well water m3 of water used/tonne of finished product Analysis and execution of interventions to increase the internal reuse of rain and process waters 10% reduction dec-14

20% reduction dec-15

Atmospheric emissions

Reduce greenhouse gas emissions kg of CO2/tonne of finished product Optimisation of the use of raw materials and carbon fuels 5% reduction dec-15

Reduce fugitive emissions from scrap cutting Scrap shredded operations in an area equipped with a dust extraction system Installation of a system for extracting and treating scrap cutting emissions and steel mill residues 100% of operations dec-13

Improve emissions monitoring Redundancy of measuring instruments at the Environmental Centre Installation of another emissions-measuring equipment on stack E1.4 Redundancy of measuring instru-

ments at the Environmental Centre dec-14

Waste water

Reduce the amount of waste water m3 of waste water/tonne of finished product Analysis and execution of interventions to increase the internal reuse of rain and process waters reduction 10% dec-14reduction 20% dec-15

Improve water separation % of domestic drains connected to the sewerConnection of farmhouse drains to the municipal sewer 10% of drains connected dec-14

Connection of changing-room drains to the municipal sewer 40% of drains connected dec-15

Improve water quality monitoring No. of tests/yearIntensification of the monitoring plan with more frequent internal tests, using a new portable instrument for analysing some pollutants in real time. 60 tests/year dec-14

Waste management

Reduce the amount of waste produced kg of waste/tonne of finished product Certification and management of slag as a by-product reduction 10% dec-14reduction 20% dec-15

Improve waste recovery % iron and non-ferrous metals recovered on the total amount of waste shredded. Installation of an experimental line for separating non-ferrous metals from shredded waste Installation of a new system and

test campaigns feb-14

Increase the amount of mixed packaging disposed of separately kg of recyclable waste/kg of generic waste Placement and management of bins for separate categories of waste 10% of separated packaging dec-1420% of separated packaging dec-15

Asbestos Reduce the amount of asbestos roofing at the plant m2 of residual asbestos Continuation of the asbestos removal and roof restoration plan 15,000 m2 of residual asbestos sept-1412,000 m2 of residual asbestos sept-15

RadioactivityEliminate problems during incoming scrap monitoring No. of problems/year Creation of a series of bars by the driveways to allow better positioning with respect to the portals No problems sept-14

Improve the effectiveness of in-house scrap monitoring Redundancy of measuring instruments at the Environmental Centre Installation of monitoring systems at driveways and/or scrap handling equipment Redundancy of measuring instru-

ments at the Environmental Centre mar-14

Internal traffic Reduce the risk of on-site accidents No. of accidents or near misses/year Improvement of internal road markings and signs Less than 3 events/year sept-14

Upgrading of the driveway control systems allowing a smoother flow of vehicles and fewer queues Less than 2 events/year sept-15

Visual impact Improve the appearance of plant and buildings m2 of renovated buildings

-

Demolition of all buildings and construction of new offices, classroom and changing rooms 2000 m2 of renovated buildings dec-14

Repainting of the steel mill emissions uptake and removal system Completion of painting dec-15

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2.3. The Riesa plantESF Elbe-Stahlwerke Feralpi GmbH in Riesa, which covers a total of 55.6 hectares, is located in the town’s industrial estate, which has a long-standing steel-making tradition and guarantees efficient procurement by road, rail and river. To the north of the plant is a link to the nearby river port on the Elbe; the boundary to the south is delimited by the railway. The steel mill is flanked by a rolling mill and a plant for making drawn wire and electrowelded mesh. The activities carried out at the Riesa factories included in this report are part of the sub-holding ESF Elbe-Stahlwerke Feralpi GmbH, a steel manufacturing Group operating in three countries: Germany, the Czech Republic and Hungary. The three Czech and Hungarian factories produce drawn sections and electrowelded mesh, mainly sold on the domestic markets. Unlike the previous editions of the Sustainability Report, the figures reported herein refer to all the production plants, namely Feralpi Praha SRO based in Kralupy, at about 25 km from Prague in the Czech Republic, Feralpi Hungaria KFT, based in Csepel, near Budapest, in Hungary.Close to the plant are areas considered of high biodiversity, which are affected by the factory’s activity (EN11). Four main urban areas have been designated as areas to be protected: 1) Döllnitzaue, about 218 hectares, protected since 1997, about 300 metres west of the company boundary; 2) Elbe valley and Seußlitzer hill, about 6,408 hectares protected since 2001, about 400 metres east of the boundary; 3) Döllnitz and Mutschener, which could be affected by ESF’s atmospheric emissions; 4) Elbe valley between

Schöna and Mühlberg, which could also be affected by atmospheric emissions (EN12). Since no tangible effects on these areas have been identified, The company is not therefore involved in any measures to repair damage to ecological systems or compensatory measures involving other sites (EN13). These four areas are the home to protected animal species, but the plant is not classified by law among sites requiring the implementation of preventive measures and biodiversity monitoring (MM2). During the years reported on there was no major incidence involving the spillage of polluting or hazardous substances (EN23). Since the plant uses water from the aqueduct, the cooling system is the closed-loop type, as detailed elsewhere, and the waste water is purified and undergoes periodic analyses to comply with legal requirements, the company is not considered to have a significant impact on protected bodies of water or important ones in terms of biodiversity, or on aquatic ecosystems (EN25). In 2011-2012 no fines or penalties were imposed on the company for failure to comply with the environmental protection regulations (EN28).In 2012, all Feralpi Group’s members of the international Feralpi Stahl group headed by the sub-holding ESF Elbe-Stahlwerke Feralpi GmbH obtained the EMAS registration, tangible proof of recognition of the results achieved in terms of environmental protection.


2.2. The Calvisano plantThe plant at Calvisano, in the province of Brescia, the headquarters of Acciaieria di Calvisano S.p.A., which is entirely controlled by the Feralpi Group, is located at Viadana and covers a total surface area of 16.6 hectares. The production plant consists of an EAF steel mill and a continuous casting machine. A special feature of this plant is the installation of a heat exchanger between the steel mill cooling circuit and the heating system of the adjacent fish farm of Agroittica S.p.A., an associated company belonging to the Feralpi Group. This solution provides considerable energy saving and reduced costs in running the plant, which receives heat to the advantage of the entire surrounding area. The plant is relatively close to the urban area as it is separated from Viadana Bresciana only by the Brescia-Parma railway line, which runs virtually on the flat. To the north the plant borders with Agroittica Lombarda S.p.A. and on the other sides by farming areas and another industrial estate. Calvisano lies about three kilometres away. The area where the plant is located and the neighbouring areas are not included in the areas subject to environmental protection (EN11).The features of the surrounding area do not require the adoption of initiatives aimed at reducing any negative impact on biodiversity (EN14), although the company considers that the constant monitoring of emissions, which are well below the legal limits, can have an indirect positive effect on the vegetable and animal species present locally. The company is unaware of any protected species present in the surrounding area, which is not classified by law among sites requiring the implementation of preventive measures and biodiversity monitoring (MM2).

The closest protected areas are the Castellaro Lagusello nature reserve, which lies about 22 km away as the crow flies. The company feels it can reasonably rule out direct effects on the environmental equilibrium in this protected area. The company is not aware of any relevant internal or external facts on this aspect (EN12). The company is not therefore involved in any measures to repair damage to ecological systems or compensatory measures involving other sites (EN13). With regard to possible inf luence to neighbouring aquatic ecosystems (EN25), the body of water to be taken into consideration is the river Chiese, the applicable section of which comes under the Middle-Chiese Reclamation Consortium, runs at least 2.2 km to the east of the factory. Inf luence on the aquatic ecosystems can be ruled out as the Company uses a production technology based on closed-loop cooling systems and reduced topping up. In the two years covered by this Report there was no major incidence involving the spillage of polluting or hazardous substances (EN23). On 12th August 2011 the company received a contestation by ARPA (regional Agency for environmental protection) that was resolved by paying an administrative penalty of €8,688.67 (SO8), concerning failed waterproofing of the road giving access to the slag storage area at the Calvisano plant. In the same notice, the agency acknowledged that on 4th August the company had applied for the municipal authorisations to comply with this requirement (EN28).

98

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2.4. The Ecoeternit controlled landfillEcoeternit is one of the two landfills in the Lombardy region authorised to dispose of asbestos-containing waste. It is located 6 km from Montichiari, a town with a population of 22,000 adjoining the municipalities of Castenedolo and Calcinato, in the province of Brescia. The site covers approximately 67,700 m2 and can be reached without lorries having to pass through the nearby town of Vighizzolo. The landfill was set up to meet the growing need to dispose of asbestos-containing materials, which are still widespread in Lombardy. This requirement was presented in the Regional Asbestos Plan, issued in accordance with Regional Law no. 17 of 29 September 2003, which gives priority to eliminating all asbestos in the Lombardy Region within 10 years of its application and building disposal sites dedicated to receiving the removed materials and making them safe (SO9). The landfill is operated by a team of experts with specific professional skills, who undergo regular training and carefully control each stage of the process from arrival and processing of the material to burial. The waterproofing systems and precautionary measures taken exceed legal requirements. The plant disposes of non-hazardous in addition to asbestos. Plastic materials are used to cover asbestos-containing waste and keep it stable. The overall volume of waste is 867,000 m3, of which around 59% is ACW (asbestos-containing waste), 32% non-hazardous waste and 8% plastic materials. The landfill is scheduled to operate for 7 years and 3 months, plus a further year for remediation.

Waste consisting of asbestos-concrete slabs and other items that are delivered ready packed, wrapped in resistant plastic and marked with the symbols required by law. The vehicles are unloaded and the waste is deposited using mechanical lifting operations to prevent damage to the safety packaging. The Ecoeternit landfill obtained a permit to operate in 2010 in an existing gravel quarry that had been closed down by the Brescia court due to irregularities in its exploitation. The preparatory work took place in 2011 and Ecoeternit agreed with the Montichiari town council that it would make the site safe, at a cost of around €6.1 million, and pay the town council a periodic fee based on the volume of waste handled (SO19). The company also signed an agreement to pay a fee to the Brescia provincial authority and signed to the ATE43 plan to improve the area in which the Ecoeternit and other landfills and quarries are located. The landfill opened and started to receive waste on 3 January 2012, but on the 24 October the same year it underwent evidentiary seizure and operations ceased. The site was released from seizure on 16 July 2013, and eight days later the Lombardy Regional Authority issued a ruling stating that a new protocol on the monitoring of incoming material had to be approved before deliveries of waste could be resumed. This procedure is still under way and it is hoped that business can be resumed before the end of the year. The landfill disposed of around 51,200 tonnes of asbestos slabs in 2012 (EWC code 170605*). Despite its limited operations, Ecoeternit put in place all the controls required by law, including

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the Court of Brescia ordered the company to be released from seizure.In May 2013 the Feralpi Group and the managing director of Faeco S.p.A. were cleared of charges due to expiry of the limitation period.

2.6. Other plants with minor environmental impact In addition to those presented above, the Feralpi Group encompasses other plants of smaller size and minor environmental impact, a short description of which is given below. In Italy there is the subsidiary Nuova Defim-Orsogril, which has two production sites located about 2 km away each other, in Alzate Brianza and Anzano al Parco in the Como province.These factories specialise in the cold processing of steel to make electrowelded mesh, fencing mesh of various kinds, and gratings for the building industry, where the painting process involving a limited number of items is subcontracted and may have a potential environmental impact. The absence of hot processes and the limited size of the production sites (none with more than 40 employees) mean they have a very low environmental impact. These smaller plants in fact consume less than 1% of the electricity used yearly by each of the three main steel mills. This is why this report only covers the three production plants accounting for most of the Group’s operations. Following the decision to cease production at the plant in Pomezia, Feralpi resolved to put DIEFFE S.r.l. into liquidation and shut it down. Feralpi was careful to apply all the measures required to neutralise any consequences of the loss of jobs. Since Feralpi had already used up the possibility

of recourse to solidarity contracts in 2011, it applied ordinary employment benefits (CIG) up until November 2012 and signed an agreement for the subsequent joint application of special CIG and the redundancy procedure for the following two years. This was possible because the company employed more than 15 people (MM10).

personnel health monitoring and environmental monitoring. It also took weekly air samples in locations agreed with the monitoring authorities and conducted laboratory tests to compare the parameters measured with those prior to activation of the landfill. All these various kinds of monitoring confirm that operations were carried out with the utmost correctness and respect for the environment. The results showed unequivocally that there were no changes in the environmental parameters compared to the situation prior to the commencement of disposal operations. This result is particularly significant with reference to the dispersion of asbestos fibres into the environment.

Safe disposal of asbestos cementInhaling dust containing asbestos fibres can cause asbestosis, cancer of the pleura and lung cancer. The production and processing of asbestos has been illegal in Italy since 1992, as is the case in most other countries. The safe handling of asbestos-containing material calls for specific procedures for removing it (this is done by qualified personnel wearing appropriate personal protection equipment), making it safe (encapsulation of stacked slabs in plastic) and disposing of it in a landfill. The operating procedures require the waste to be covered on the same day of delivery with an appropriate layer of soil or a double layer of sheeting. The soil used must have a plastic consistency to allow it to adapt to the shape and volume of the material being covered and provide adequate protection against the dispersion of fibres. The final capping must allow the area to be grassed over.

2.5. Faeco landfillFaeco S.p.A. mono-landfill, the operations of which have been widely reported in previous editions of the Sustainability Report, operated only partly in the two years reported on and was sold out on 31st December 2012, which is why it was decided not to consider it in social reporting. Faeco’s commitment in favour of environmental sustainability achieved important international recognition in past years in terms of innovation and transparency in the integrated management of the landfill. It was awarded ISO 9001 and ISO 14001 certification in 2001, and obtained EMAS registration in 2004, which was renewed in subsequent years. In March 2005, Faeco was cited as a benchmark in the integrated management of industrial waste at the meeting of the Sustainable Development Commission at the European Council in Strasbourg. On 3rd October 2007, in execution of the decree by the Preliminary Investigation Magistrate at the court of Naples, the Udine Ecology Force (NOE) proceeded with preventive seizure of the business and the Faeco plant, based on alleged irregularities in the management of waste at the landfill.Seizure of the landfill, which led to an immediate halt in dumping, caused the company serious damage. Ordinary and extraordinary maintenance continued during the period of seizure as well as work to maintain the efficiency of all the accessory systems. Environmental analysis and monitoring continued in compliance with legal obligations and AIA (Integrated Environmental Authorisation) requirements, in parallel with work on the percolate uptake, storage and disposal system.On 19th April 2011, upholding a petition by Feralpi,

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Note:1 Additives used are charging coal, swelling, desulphurising, deoxidising and recarburising agents. 2 Inert gases are argon and nitrogen.

3. Environmental performance indicatorsAs detailed here below, the location of the Group’s production units, the morphology of the surrounding area, the exclusively or predominantly industrial vocation of the area, the abundance of water from the surface and water table, and the use of advanced technologies allowing the continuous recycling of most the water used mean that the operations carried out at all the production sites do not have a tangible effect on the bodies of water involved (EN9).

3.1. Input materialsThe main material used in the production process is steel scrap, which can be fully recycled at the end of its useful life. Constant technological improvement and process innovation, resulting from regular investments in applied research, allow the recycling of an increasing proportion of other materials required for steel production, such as lime and refractory materials. The amount of material used felt the effect of the modest recovery in production in 2012 compared to the previous year. The volume of input materials, the recycling process, process waste and its treatment and disposal all increased accordingly and led Feralpi to step up its efforts to further reduce its environmental impact. The technological investments made are detailed in Section Three.

Scrap is the main material used in production and all of it can be used as it comes from items that have come to the end of their useful life. All the plants are authorised to use waste scrap. The percentages of input waste scrap over by-product scrap used by Feralpi Siderurgica were 22.86% in 2010, 22.28% in 2011 and 26.54% in 2012. The Group’s recycling

efforts have produced excellent results in terms of innovation, backed up by investments in research at all the plants, with emphasis on the reuse of lime and refractory materials.

Tab. 35 – Input mater ia ls at the product ion p lants (EN1) and % of recycled mater ia ls (EN2 )Input material: 2010 2011 2012

Consumed Recycled % Consumed Recycled % Consumed Recycled %Scrap t 2,018,868 2,018,722 100.0 2,407,124 2,407,100 100.0 2,523,465 2,523,465 100.0Lonato 699,875 699,875 100.0 928,941 928,917 100.0 1,046,223 1,046,223 100.0Calvisano 555,509 555,363 100.0 535,379 535,379 100.0 453,033 453,033 100.0Riesa 763,484 763,484 100.0 942,804 942,804 100.0 1,024,209 1,024,209 100.0Additives1 t 27,439 0 0.0 30,971 0 0.0 34,784 0 0.0Lonato 10,275 0 0.0 11,748 0 0.0 12,867 0 0.0Calvisano 6,669 0 0.0 5,268 0 0.0 5,153 0 0.0Riesa 10,495 0 0.0 13,955 0 0.0 16,764 0 0.0Lime t 85,601 0 0.0 104,126 0 0.0 112,232 0 0.0Lonato 30,616 0 0.0 43,476 0 0.0 50,151 0 0.0Calvisano 24,203 0 0.0 23,122 0 0.0 18,708 0 0.0Riesa 30,782 0 0.0 37,528 0 0.0 43,373 0 0.0Ferroalloys t 24,978 0 0.0 29,456 0 0.0 30,135 0 0.0Lonato 8,027 0 0.0 10,473 0 0.0 11,798 0 0.0Calvisano 7,373 0 0.0 6,721 0 0.0 5,489 0 0.0Riesa 9,578 0 0.0 12,262 0 0.0 12,848 0 0.0Refractory material t 12,295 0 0.0 17,728 0 0.0 17,519 0 0.0Lonato 4,536 0 0.0 6,573 0 0.0 7,176 0 0.0Calvisano 5,944 0 0.0 5,496 0 0.0 4,691 0 0.0Riesa 1,815 0 0.0 5,659 0 0.0 5,652 0 0.0Oxygen m3 58,122,622 0 0.0 69,194,045 0 0.0 69,881,697 0 0.0Lonato 16,343,500 0 0.0 26,511,000 0 0.0 29,719,800 0 0.0Calvisano 16,230,000 0 0.0 12,242,700 0 0.0 9,431,850 0 0.0Riesa 25,549,122 0 0.0 30,440,345 0 0.0 30,730,047 0 0.0Inert gases2 Nm3 1,568,806 0 0.0 1,909,165 0 0.0 1,929,080 0 0.0Lonato 379,647 0 0.0 582,311 0 0.0 616,797 0 0.0Calvisano 503,003 0 0.0 700,314 0 0.0 752,704 0 0.0Riesa 686,156 0 0.0 626,540 0 0.0 559,579 0 0.0

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Tab. 37 - Direct energy consumption by primary energy source (EN3)Source : 2010 2011 2012 2010 2011 2012

Quantity GJPetrol l 7,480 8,357 9,226 227 253 280

Lonato 0 0 0 0 0 0Calvisano 0 0 0 0 0 0Riesa 0 0 0 0 0 0Kralupy 7,480 8,357 9,226 227 253 280Csepel 0 0 0 0 0 0

Fuel oil 103 l 1,605 1,685 1,922 57,436 60,229 68,780Lonato 428 386 383 15,316 13,813 13,706Calvisano 36 24 46 1,288 859 1,646Riesa 1,097 1,239 1,462 39,257 44,339 52,319Kralupy 33 28 26 1,181 1,002 930Csepel 11 8 5 394 286 179

Natural gas m3 53,537,234 57,914,761 57,047,305 1,699,057 2,079,091 1,923,538Lonato 28,179,007 32,610,423 31,457,102 1,078,577 1,249,630 1,210,824Calvisano 4,468,500 4,011,647 3,132,604 171,037 153,716 120,581Riesa 20,744,256 21,210,879 22,405,754 658,340 673,148 711,069Kralupy 0 0 0 0 0 0Csepel 145,471 81,812 51,845 4,617 2,596 1,645

Total direct energy consumption 1,755,435 2,137,376 1,992,033Note: Fuel oil only refers to fuel for vehicles. The calculation of fuel oil-derived primary energy was based on the parameters shown in the 2011-2012 national standard coefficients provided by the Ministry of the Environment (fuel oil conversion factor equal to 42.621 GJ/t). The calculation of natural gas-derived primary energy was based on the data provided by the distributor.

The increase in production volumes required a corresponding increase in all the input parameters, so in order to obtain the Environmental Product Declaration Feralpi conducted an analytical study in 2012 to calculate consumptions per tonne of steel billets produced and the savings achieved in terms of material and energy as the result of plant renewal and application of innovative technology.

The use of renewed systems and innovative technologies over the past three years led to a significant reduction in most subsidiary raw materials per tonne of steel produced.

Tab. 36 – Consumption of raw materials and auxiliary materials per tonne of 12 m 140x140 billets in 2009 and 2011 in Lonato(figures expressed in kg) 2009 2011 %

changeBillets 1,000 1,000Scrap 1,170 1,170 0.0Ferroalloys 13.80 13.25 -4.0Magnesite 0.83 0.69 -16.9Lime 43 54 25.6Coal 14.75 11.20 -24.1Deoxidising agent 3.87 3.23 -16.5Electrodes 1.67 1.52 -9.0Desulphurising agent - 0.24 -

Oxygen 52 45 -13.5Nitrogen 0.72 0.65 -9.7Argon 0.40 0.35 -12.5Refractory material 9 8.207 -11

Source: Extract from the Feralpi Siderurgica S.p.A.’s research project entitled “Life Cycle Assessment (LCA) applied to the production of steel of reinforced concrete using electric arc furnaces for EPD certification”

3.2. Energy consumption and savingElectric-arc furnace technology offers clear environmental advantages with regard to the recycling of ferrous materials, but it is heavily dependent on the use of electricity. Therefore, the strategic management of electricity consumption is, more than an environmental choice, a competitive requirement in the steel industry, since the majority of production costs are linked to electricity prices. This is particularly important for the plants located in Italy, a country that is vulnerable to fluctuations in energy supplies and highly dependent on imports.

Electricity is the second production cost item, after raw materials. Feralpi is therefore committed to researching and developing new power-saving technologies, an advantage in economic and environmental terms.

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Tab. 39 – Energy consumption in MJ per tonne of 12m 140x140mm billets in 2009 and 2011 in Lonato2009 2011 % change

Billet (kg) 1,000 1,000Natural gas (MJ) 330 294 -10.9Electricity from the grid (MJ) 1,935.0 1,998.9 3.3Electricity from photovoltaic systems (MJ) - 0.9Fuel oil (1) 7.4 7.7 4.0

3.3. Waste production and treatmentIn accordance with legal requirements, Feralpi keeps up-to-date records of all types of waste identified with the EWC (European Waste Catalogue) code, showing the quantities on site, produced and sent to plants of destination for disposal, reuse, recycling and recovery. Waste is classified in two main categories, hazardous and non-hazardous. Most waste classified as hazardous is recycled and a minor portion is disposed of in accordance with the laws in force in the country where it is produced.

Feralpi has long held a Green Slag patent covering a method for treating steel mill waste to allow it to be classified as a by-product that can be marketed as an inert material.

Table 40 shows the total volume of waste produced by the Group and highlights a progressive increase of waste sent to landfill for disposal. The increase volume of white slag in 2011 and 2012 is due to removal of the stored material after deferritisation. The same consideration applies to the increased volume of dumped waste regarding the Lonato plant in 2012.

Source: Extract from the Feralpi Siderurgica S.p.A.’s research project entitled “Life Cycle Assessment (LCA) applied to the production of steel of reinforced concrete using electric arc furnaces for EPD certification”.

Tab. 38 – Indirect energy consumption by primary energy source (EN4)Electricity purchased: 2010 2011 2012 2010 2011 2012

MWh GJLonato 415,551 545,593 592,993 1,495,984 1,964,134 2,134,775Calvisano 272,086 284,948 251,060 979,510 1,025,813 903,816Riesa 434,000 512,549 576,927 1,598,323 1,845,175 2,076,937Kralupy 2,168 1,932 1,997 7,805 6,955 7,189Csepel 1,726 1,701 1,051 6,213 6,124 3,783Other types of energyHot water (Kralupy) 2,389 2,844 2,639Total indirect energy consumption 1,125,531 1,346,723 1,424,028 4,090,225 4,851,047 5,129,140

Energy from photovoltaic systems (Lonato) 0 248.6 662.6 0 895 2,385

Among energy savings achieved by conservation and improvement measures in terms of efficiency (EN5), it is worth mentioning the measures taken by EDF in Riesa, which led to three types of improvement. The first improvement consisted of supplying hot billets straight to the rolling mill, as is now done in Lonato. The other two consisted of using the thermal power produced by the compressor to heat the technical and administrative building and installing a condensing boiler in the same building. The overall energy saving in 2012 resulting from this improvement has been calculated at 30.9 GWh. The installation of roof-top solar panels at the plant in Lonato was completed in 2010 and the Hot Charge project ended in August 2012 with the receipt of white certificates. An EFSOP® probe was installed in 2012 to optimise the charge chemicals, which enabled the company to obtain further white certificates. The installation of a similar probe is also planned for the plant in Riesa.

An SVC (Static VAR Compensator) was installed in Calvisano to improve the quality of electricity supplied to the smelting furnace. The efficiency results led to an improvement in scrap yield, a reduction in the amount of waste produced and an indirect saving in energy consumption per unit of product, estimated at 1,850 MWh in 2011 and 2,229 in 2012 (EN7).

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Tab. 41 – Total amount of waste disposed of by type and destination(in tonnes) 2010 2011 2012

Recycled Disposed of Total Recycled Disposed of Total Recycled Disposed of TotalNon-hazardous waste

532,012 67,042 598,454 271,145 361,185 632,330 244,864 526,824 771,688

Lonato 168,479 31,169 199,648 143,578 32,386 175,964 160,461 102,932 263,393Calvisano 154,556 35,013 188,969 127,567 94,563 222,130 84,403 166,470 250,873Riesa 208,977 0 208,977 0 233,814 233,814 0 257,154 257,154Kralupy 0 665 665 0 211 211 0 166 166Csepel 0 195 195 0 211 211 0 102 102Hazardous waste 30,650 4,871 35,521 22.283 22.060 44.343 23.376 27.184 50.560

Lonato 11,708 880 12,588 14,049 5,185 19,234 14,721 8,262 22,983Calvisano 8,356 26 8,382 8,234 63 8,297 8,655 44 8,699Riesa 10,586 3,964 14,550 0 16,811 16,811 0 18,877 18,877Kralupy 0 0 0 0 0.48 0.48 0 0.48 0.48Csepel 0 1 1 0 1 1 0 0.31 0.31Total waste produced 634,584 676,673 822,248

Tab. 40 - Total amount of waste disposed of by type (EN22)(in tonnes) 2010 2011 2012Offgas dust 34,981 41,735 45,461Lonato 12,469 17,272 18,659Calvisano 8,348 8,226 8,653Riesa 14,164 16,237 18,149Kralupy 0 0 0Csepel 0 0 0Rubber and metal* 13,962 15,626 15,848

Lonato 2,011 2,418 2,672Calvisano 0 0 0Riesa 11,951 13,208 13,176Kralupy 0 0 0Cspel 0 0 0Rolling scale 33,085 30,829 34,807Lonato 19,518 15,151 17,886Calvisano 1,132 1,080 931Riesa 11,593 14,203 15,743Kralupy 655 195 148Cspel 187 200 99Black slag 415,461 378,388 327,822Lonato 122,951 119,355 98,855Calvisano 148,787 112,698 69,749Riesa 143,723 146,335 159,218Kralupy 0 0 0Cspel 0 0 0

Tab. 40 - Total amount of waste disposed of by type (EN22)(in tonnes) 2010 2011 2012White slag 75,701 153,772 274,198Lonato 26,171 32,328 71,617Calvisano 38,674 107,705 179,436Riesa 10,856 13,739 23,145Kralupy 0 0 0Csepel 0 0 0Fluff 37,507 17,637 49,270Lonato 25,343 0 28,805Calvisano 0 0 0Riesa 12,164 17,637 20,465Kralupy 0 0 0Csepel 0 0 0Other waste 23,887 38,686 74,840Lonato 3,773 8,674 47,882Calvisano 1,020 718 802Riesa 19,076 29,266 26,135Kralupy 10 16 18Csepel 8 12 3Total waste disposed of 634,584 676,673 822,248

* EWC 19 10 06: other fractions other than those mentioned in EWC 19 10

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In the period reported on, Feralpi continued to develop its waste recycling programmes and invest in research activities, as detailed in the specific section in this Report. The company belongs to RAMET (Metallurgy Research) consortium, which promotes studies and research to assess the impact of secondary metallurgical activities on the work environment and the outdoor environment.

3.4. Use of water and liquid emissionsThe steel-making process uses a large amount of water for cooling the plant and product at the various stages of manufacture, but the quality of the water is not important. The purpose for which the product is used means it can be returned to the environment virtually unchanged, so it has no particular impact. Some of the water used in the process is released into the atmosphere in the form of steam and a lesser amount is discharged after undergoing chemical and physical treatment, as required by law. The procurement of water at the Group’s plants depends on the hydrogeological features of the area. The water required for the Lonato plant is pumped from the water table via three wells located in an area not classified as protected or rich in underground deposits, which meet industrial requirements and those of the local farming community at the same time. After being pumped into the closed-loop cooling system, the water is continuously recycled. Less than 5% of the water is lost, mainly by evaporation into the atmosphere. It is therefore fair to say that the technical solutions adopted at the plant rule out the risk of the withdrawal of water impoverishing the neighbouring basins or the water-table (EN9).

Acciaierie di Calvisano uses water from the water table and recovers thermal energy from the water used to cool the production equipment. Via an array of heat exchangers, the heat from the industrial water is then transferred to the water used in the fry nursery at the fish farm run by the associated company Agroittica Lombarda S.p.A. Besides saving energy, this solution saves a large amount of water, to the advantage of the entire neighbourhood, most of which is farmland. During the years reported on, the plants at Lonato and Calvisano withdrew less than the maximum amount of water allowed for the three wells. The concessions were issued by the Lombardy regional authority as the result of the favourable opinion expressed by the Po Magistrate, who represents the Basin Authority. The Lonato and Calvisano town councils, which are very sensitive to the water problem involving the province of Brescia at a general level, were in favour of the companies’ requirements in terms of quantities used.

Total consumption from the water table has increased gradually over the last three years due to a rise in production levels, but it has decreased per unit of product.

Finished products do not require any particular protection during handling and transportation to their final destination. Packaging disposal or recycling is a negligible problem as it mainly consists of the metal straps used to hold the bundles of bar together. These straps are treated in the same way as ferrous scrap and can be 100% recycled. A very small proportion of finished products

obtained via cold processing is moved on wooden pallets (mainly grating and fencing made by Nuova Defim - Orsogril), which are reused as long as the wood is undamaged and then disposed of as waste in accordance with legal requirements (EN27).

Tab. 42 – Weight of waste classified as hazardous* that has been transported, imported, exported or processed and % transported abroad (EN24)

(in tonnes) Imported Exported2010 2011 2012 2010 2011 2012

Hazardous waste 0 0 0 0 3,787 6,845Lonato 0 0 0 0 2,438 3,957Calvisano 0 0 0 0 0 0Riesa 0 0 0 0 1,349 2,888Kralupy 0 0 0 0 0 0Csepel 0 0 0 0 0% on total hazardous waste produced 0 0 0 0 8.5 13.5

* For the definition of hazardous waste, refer to the Basel Convention.

Tab. 43 – Waste recycling method according to national legislationIn Italian plants In German plants

Offgas dust Recovery of zinc Recovery of zincUsed oil Sent to the oil recycling consortiumRubber and metal Recovery of non-ferrous metalsRolling scale Use in cement works and counterweight construction Use in cement worksTrimmings Recovery of ferrous metalsRubber cables and electric motors Recovery of copper Recovery of copperWooden packaging Recovery of energy Recovery of energyWood Recovery of the materialFluff Recovery of energyCutter earth Recovery of aggregatesBlack slag Recovery of aggregates and disposal in landfills Reuse for road buildingWhite slag Reuse in the production processWagon sub-base Recovery of non-ferrous metalsFilter sand Use in cement worksWashing solvents Recovery of the solvents

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Tab. 48 – Quality of the water discharged into a surface body at the Calvisano plant (EN21)

Parameter in mg/l

Limit value 2010 2011 2012

COD 160 < 10 < 5

Suspended solids 80.00 < 5.00 9.00 20.00

Totalhydrocarbons 5.00 -- < 0.50 < 1.00

Zn 0.50 -- 0.34 0.02

Cu 0.10 -- 0.01 0.05

Fe 2.00 0.10 0.18 < 0.10

Ni 2.00 -- 0.10 < 0.05

Totalsurfactants 2.00 -- < 0.2 < 0.2

Tab. 49 – Quality of the water discharged in the sewer at the Riesa plant (EN21)

Parameter in mg/l

Limit value 2010 2011 2012

COD 100 -- 35 46Suspended solids 0.5 < 0.33 0.30 0.70*

Total hydrocarbons 10.00 -- 0.32 0.40

Zn 4.00 0.05 0.10 0.30

Fe 20.00 0.14 0.20 1.40

Pb 0.50 < 0.02 < 0.02 0.02

P 5.00 -- 1.45 0.40Note: *This value is the average of the first four annual measurements. The overall value exceeds the limit because the fourth measurement, which took place in November, was temporarily influenced by maintenance interventions at the plant”

In 2011 and 2012 there was no major incident involving the spillage of liquids in the Group’s operating sites (EN23). The water discharged into surface bodies (Lonato and Calvisano) or a sewer system (all the other plants) undergoes periodic chemical and physical analysis to determine the quality and ensure that the properties do not exceed the limits prescribed by law.

The quality of the water discharged into the environment has control parameters well below the limits established by law and is improving increasingly.

Tab. 47 – Quality of the water discharged into a surface body at the Lonato plant (EN21)

Parameter in mg/l

Limit value 2010 2011 2012

COD 160 16 12.33 5.00

Suspended solids 80.00 6.00 3.33 8.83

Total hydrocarbons 5.00 0.60 0.40 0.25

Zn 0.50 0.17 0.16 0.06

Fe 2.00 0.27 0.15 0.15

Ni 2.00 0.01 0.03 0.03

Cu 0.10 0.04 0.05 0.05

Total surfactants 2.00 0.60 0.10 0.20

Tab. 45 – Volume and percentage of recycled and reused water (EN10)

Percentage of water recycled /reusedLonato 97 97 97

Calvisano 99 99 99

Riesa 98 99 99Note. The replenishment flow rate figures refer to the Lonato and Riesa plants and are an estimate for the Calvisano plant. The percentage of recycled water is calculated according to the formula: % = qt/(qt+qp)

Tab. 46 – Total water discharged by destination (EN21)

(in m3) 2010 2011 2012Discharge into the sewer

24,377 34,042 68,038

Lonato 0 0 0

Calvisano 0 0 0

Riesa 19,784 29,273 63,289

Kralupy 2,687 2,844 2,554

Csepel 1,906 1,925 2,195Discharge into a surface body

704,103 1,173,081 1,349,125

Lonato 695,003 1,164,381 1,340,825

Calvisano 9,100 8,700 8,300

Riesa 0 0 0

Kralupy 0 0 0

Csepel 0 0 0Total waste water 728,480 1,207,123 1,417,163

Tab. 44 – Water withdrawn by type of source (m3) (EN8)(m3) 2010 2011 2012Surface water 0 0 0

Total underground water

1,779,825 2,289,524 2,740,992

Lonato 1,399,665 1,904,234 2,367,262Calvisano 380,160 385,290 373,730Riesa 0 0 0Kralupy 0 0 0Csepel 0 0 0

Total aqueduct 720,804 724,613 782,085

Lonato 3,531 4,007 5,614Calvisano 0 0 0Riesa 712,680 715,837 771,722Kralupy 2,687 2,844 2,554Csepel 1,906 1,925 2,195

Total water consumption 2,500,629 3,014,137 3,523,077

Tab. 45 – Volume and percentage of recycled and reused water (EN10)

u.m. 2010 2011 2012

Total circuit flow rate (qt) m3/h

Lonato 10,000 10,000 10,000Calvisano 3,500 3,500 3,500Riesa 6,480 6,480 6,480

Replenishment flow rate (qp) m3/h

Lonato 296 300 359Calvisano 25 25 25Riesa 104 81 78

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Cutting-edge technology in offgas extraction In all the three mills, atmospheric emissions are mainly generated by the electric-arc furnace, where there is an extraction system positioned on the vault of the furnace. Emissions are extracted and channelled to a quenching tower, then pass through a vertical cyclone (primary extraction). The area of the shed containing the smelting furnace is completely separate from the other areas. It is equipped with a suction hood that extracts offgas escaping from the primary extraction area described above during the various stages of production (e.g. furnace charging). The ladle furnace is also served by a system that extracts all emissions generated during operation. A suction hood is installed on the first ladle heating station. All emissions are channelled into a single suction pipe that conveys them to a horizontal cyclone, which removes all coarse particles. The emissions then pass through an array of sleeve filters that filter out the fine components. Lastly, the filtered and cooled gases are emitted through a stack. Another sleeve filter, based on the same operating principle, is used solely to filter out emissions generated during the handling, transport and charging of ferroalloys.

Tab. 51 - Total direct and indirect greenhouse gas emissions (CO2) by weight (EN16)

(tCO2) 2010 2011 2012Direct emissions

156,941 202,061 206,005Lonato 80,602 91,422 91,895Calvisano 30,163 24,177 20,685Riesa 46,176 86,462 93,425Indirect emissions from electricity

523,372 626,155 662,152Lonato 193,231 253,701 275,742Calvisano 126,520 132,430 116,721Riesa 201,810 238,335 268,271Kralupy 1,008 898 929Csepel 803 791 489Indirect emissions from transport (EN29)

2,981 4,712 5274Lonato - 946 979Calvisano - 434 391Riesa 2,868 3,238 3,821Kralupy 84 72 70Csepel 29 22 13Total greenhouse gas emissions

683,294 832,928 873,431Note. Direct CO2 emissions from the plants in Kralupy and Csepel are not included as they are negligible compared to those of the other plants. The calculation of carbon emissions from electricity for Italy used the national mean factor provided by Terna, namely 0.402 kgCO2/kWh for 2010 and 0.407 kgCO2/kWh for 2011 and 2012. The emission factor 0.465 kg CO2/kWh (European mean) was applied for all the other plants. In order to calculate indirect CO2 from transport, an estimate was made of the fuel oil consumption of vehicles travelling to and from Feralpi in an average 10 km radius, using 2.8 km/litre as the mean consumption factor (source: http://www.mit.gov.it/mit/mop_ all.php?p_id=10640), 1,191 l/t (source DEFRA 2012) as fuel oil density and 3.173 tCO2/t fuel oil (standard national coefficient for the ETS system) as the coefficient for calculating CO2 emissions. Indirect CO2 emissions from transport for the production units abroad only comprise the consumption of fuel oil for on-site vehicles, calculated by multiplying the energy content of fuel oil by the coefficient 0.0741 t CO2/GJ.

Table 50 – Water consumption per 12m 140x140 billet in 2009 and 2011 in Lonato Type 2009 2011 % changeBillets (kg) 1,000 1,000Water from the main (m3)

0.00271 0.0021 -22.6

Water from the well (m3)

1 1 0.0

Source: Extract from the Feralpi Siderurgica S.p.A.’s research project entitled “Life Cycle Assessment (LCA) applied to the production of steel of reinforced concrete using electric arc furnaces for EPD certification”.

3.5. Atmospheric emissionsAtmospheric emissions from the steel mills and rolling mills can be divided into four types: 1. emissions from the two light material extraction lines on the main conveyor of the scrap shredder; 2. emissions from the steel mill offgas collecting and treating system; 3. emissions from the heating furnaces of the rolling mills; 4. emissions from the system that extracts dust from the storage system and adds ferroalloys to the smelting furnace. Atmospheric emissions at the Calvisano plant only concerns two of these stages as there is no scrap shredder or rolling mill.

119118



Tab. 53 – Concentration of significant atmospheric emissions

Limit values 2011 2012

Dust (mg/Nm3)Lonato 10 0.36 0.28Calvisano 10 0.57 0.47Riesa 5 < 0.2 < 0.2Dioxins (ngITEQ/Nm3)Lonato 0.5 0.02 0.04Calvisano 0.5 0.02 0.04Riesa 0.1 0.009 0.009

Zn (kg)Lonato 267,80 1.053,11 803,98Calvisano 208,90 1.063,37 755,44Riesa 440,00 519,00 928,00Hg (kg)Lonato 101,00 123,21 95,63Calvisano 47,70 111,04 24,78Riesa 23,00 45,20 51,20SOx (t)Lonato 40,50 55,61 35,30Calvisano 41,73 86,42 52,97Riesa 98,00 77,00 87,00Note. * Figures referring to the steel mills only.**The figure differs from that included in the 2010 Sustainability Report because in the previous edition there was a transcription error. *** Data not available.

Tab . 52 - Other significant atmospheric emissions regarding the steel mills by weight (EN20)

2010 2011 2012Dust (t)Lonato 1.84 4.29 3.32Calvisano 2.40 4.35 2.10Riesa 1.50 - -PM10* (t)Lonato 0.79 2.07 1.30Calvisano 0.71 3.88 1.60Riesa 14.00** 10.00 11.00NOX (t)Lonato 137.00 220.29 172.78Calvisano 37.43 40.73 31.57Riesa 83.00 99.00 90.00CO (t)Lonato 756,00 725.34 838.80Calvisano 1,170.00 781.24 865.70Riesa 1,276.00 1,964.00 1,598.00Dioxins and furanss (PCDD/F) (gITEQ)*Lonato 0.24 0.15 0.30Calvisano 0.17 0.12 0.07Riesa 0.07 0.06 0.07IPA (kg)*Lonato 0.06 0.14 0.05Calvisano - 0.74 0.21Riesa*** - - -COT (t)Lonato 34.91 35.25 49.63Calvisano 29.49 12.52 9.15Riesa*** 43.00 - -Pb (kg)Lonato 43.10 125.69 89.85Calvisano 41.50 173.31 110.21Riesa 188.00 39.70 314.00

In the two years reported on, Feralpi did not take any specific steps to reduce the amount of greenhouse gas emissions, but the energy-saving policy described in subsection 3.2 and the study scheduled in 2013-2014 will help reduce this type of emissions considerably (EN18).

Further energy-saving interventions under study.The Calvisano plant is expected to achieve further energy saving by replacing the current methane burners used to heat the ladles with new recuperative burners, which consume less gas. Lonato and Calvisano are planning to optimise the operating conditions of the compressors and distributors and the use of compressed air, the aim being to reduce the cost of electricity used to produce compressed air. Lonato is also planning to gradually replace the current lighting fixtures with new ones that use LED technology, which will, while providing the same, ensure lower consumption and longer life, and hence reduced maintenance and replacement costs. Both outdoor areas (e.g. scrap yard and parks) and indoor areas (e.g. workshops and sheds) will be involved in this improvement.

The use of ozone-depleting substances at the Calvisano and Lonato plants is limited to the cooling circuits of the office building. In 2011-2012 there were no leak of gas from the circuits and the plant did not require any addition of gas (EN19).

121120



Noise levels recorded near the Lonato plant show the limits are complied with at four of the six measuring points, the ones considered to be the more sensitive to noise produced by the company and therefore taken as a reference. The fact that the noise level was exceeded at points 5 and 6 was attributable to the nearby motorway.

Tab. 55 – Measurement of noise emissions at the Lonato plant (June 2012)Detail of positions Daytime Night-time

ReceptorsAcoustic

classDaytime

limitLeq L95

Night-time limit

Leq L95

1 III 60 46.5 38 50 45 39.52 V 70 64.5 49.5 60 57.5 46.53 III 60 53.5 45.5 50 47.5 394 V 70 51 44.5 60 49 425 II 55 60 40 45 54 48.56 III 60 63.5 61 50 - -

Tab. 56 – Measurement of noise emissions at the Calvisano plant (December 2011)Receptors Noise class Night-time limit dB

1 V 60 48.42 IV 55 46.53 V 60 47.3

Measurements of acoustic emissions taken in the two years reported on revealed, compared to the previous years, a substantial compliance with the legal limits, but they are strongly influenced by the noise generated by the motorway traffic. In 2008 Feralpi set up a series of sound barriers at the Calvisano plant, in collaboration with the town council, in view of reducing noise levels in the neighbouring residential area.A series of measures were already taken in 2009 and 2010 to reduce noise emissions at the Riesa plant. They comprise the application of sound-absorbing panels to the new power substation, roofing of the scrap yard. screening of the scrap conveyor from the shredder to the scrap yard and application of sound-proofing panels to the cooling tower.

Tab. 54 – Measurement of noise emissions at the Riesa plant (December 2011)

Input point (PI) Measurement Daytime Daytime limit

Night-timeProduct 1

Night-timeProduct 2

Night-time limit

dB (A) Noise class1 n 3 50.6 57 43.4 - 465 3 56.1 57 46.6 46.4 466 3 51.5 57 46.9 46.4 467 3 56.5 55 46.5 43.7 468 3 54.8 55 43.6 42.0 469 3 53.5 55 43.7 41.3 45

10 3 50.6 60 - - -11 3 51.0 65 - - -12 3 63.6 66 - - -

3.6. Noise emissionsNoise emissions have a different impact on the personnel and the surrounding area depending on the type of production process and the distance from nearby residential area. The main fixed sources of noise at the plants in Lonato and Riesa are: the smelting furnace, the cooling towers, the plant for extracting and removing atmospheric emissions, the car body shredder and the rolling mills. The main sources of noise at the Calvisano plant are the smelting furnace, the cooling towers, the plant for extracting and removing atmospheric emissions. The Lonato plant is subject to considerable noise from external sources adjacent to the factory, namely the A4 motorway and the railway running between Milan and Venice.

123122



INDEPENDENTAUDITORS’ REPORT

Report of the AuditorsReconta Ernst & Young S.p.A.


125124


SECTION FIVE INDEPENDENT AUDITORS’ REPORT

127126



GRI STATEMENT


129128



Profile Disclo-

sureDisclosure Level of

reporting Location of disclosure

For partially reported

disclosures, in-dicate the part not reported

Reason for omission

Explana-tion for the reason for omission

G3.1 Content Index - Mining & Metals Sector SupplementApplication Level Assured by

STANDARD DISCLOSURES PART I: Profile Disclosures1. Strategy and Analysis

1.1Statement from the most senior decision-maker of the organiza-tion.

Fully Lettera Presidentep. 6-7

1.2 Description of key impacts, risks, and opportunities. Fully p. 18

2. Organizational Profile2.1 Name of the organization. Fully p.18-19 paragraph 1.2

2.2 Primary brands, products, and/or services. Fully p. 67 paragraph 3.1

2.3

Operational structure of the orga-nization, including main divisions, operating companies, subsidiaries, and joint ventures.

Fully p. 18-19

2.4 Location of organization’s he-adquarters. Fully p. 18-19

2.5

Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.

Fully p. 18-19

2.6 Nature of ownership and legal form. Fully p. 20-21

2.7

Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries).

Fully p. 68- 69

CONTENT INDEX


131130


Profile Disclo-





Reason for omission


3.7

State any specific limitations on the scope or boundary of the report (see completeness principle for explanation of scope).

Fully p. 10-11

3.8

Basis for reporting on joint ventu-res, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations.

Fully p. 10-11

3.9

Data measurement techniques and the bases of calculations, inclu-ding assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report. Explain any decisions not to apply, or to substantially diverge from, the GRI Indicator Protocols.

Fully p. 13-14

3.10

Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g.,mergers/acquisitions, change of base years/periods, nature of business, measurement methods).

Fully p. 10-11

3.11

Significant changes from previous reporting periods in the scope, boundary, or measurement me-thods applied in the report.

Fully p. 10-11

3.12 Table identifying the location of the Standard Disclosures in the report. Fully p. 128-152

3.13Policy and current practice with re-gard to seeking external assurance for the report.

Fully p. 13

CONTENT INDEX

Profile Disclo-





Reason for omission


2.8 Scale of the reporting organization. Fully

p. 15 highlights the quantity of products is declared on p. 15 in thousand tonns,

row 7. The number of operations has been

added onp. 15 last row

2.9Significant changes during the reporting period regarding size, structure, or ownership.

Fully p. 10-11

2.10 Awards received in the reporting period. Fully p. 25

3. Report Parameters

Profile Disclo-



For partially reported disclosures, in-dicate the part not reported

Reason for omission


3.1 Reporting period (e.g., fiscal/calen-dar year) for information provided. Fully p. 10

3.2 Date of most recent previous report (if any). Fully p. 10

3.3 Reporting cycle (annual, biennial, etc.) Fully p. 10

3.4 Contact point for questions regar-ding the report or its contents. Fully p. 14

3.5 Process for defining report content. Fully

p. 12-14the list of relevant stakeholder is on

p. 27, paragraph 2

3.6

Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance.

Fully p. 10-11

SECTION FIVE

133132


Profile Disclo-





Reason for omission


4.7

Process for determining the composition, qualifications, and expertise of the members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity.

Fully p. 66

4.8

Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

Fully p. 16-17, 21

4.9

Procedures of the highest governance body for overseeing the organization’s identification and management of economic, environmental, and social perfor-mance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of con-duct, and principles.

Fully p. 20-22

4.10

Processes for evaluating the highest governance body’s own performance, particularly with re-spect to economic, environmental, and social performance.

FullyNo processes of this

kind have been imple-mented yet

4.11

Explanation of whether and how the precautionary approach or principle is addressed by the organization.

Fully p. 18

4.12

Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses.

Fully p. 91-92

Profile Disclo-





Reason for omission


4. Governance, Commitments, and Engagement

Profile Disclo-



For partially reported disclosures, in-dicate the part not reported

Reason for omission


4.1

Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizatio-nal oversight.

Fully p. 20-22

4.2Indicate whether the Chair of the highest governance body is also an executive officer.

Fully p. 20

4.3

For organizations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members.

Fully p. 66

4.4

Mechanisms for shareholders and employees to provide recommen-dations or direction to the highest governance body.

Fullyp. 21-22

personnel p. 58-65, suppliers p. 74-75

4.5

Linkage between compensation for members of the highest gover-nance body, senior managers, and executives (including departure arrangements), and the organiza-tion’s performance (including social and environmental performance).

FullyNo systematic incen-tives of this kind have been introduced yet.

4.6Processes in place for the highest governance body to ensure con-flicts of interest are avoided.

FullyNo such processes

have been implemen-ted at present.

CONTENT INDEXSECTION FIVE

135134


G3.1 DMAs Disclosure

Level of

repor-ting

Location of disclosure

For partially re-ported disclosu-res, indicate the

part not reported

Reason for

omis-sion


To be reported

in

STANDARD DISCLOSURES PART II: Disclosures on Management Approach (DMAs)DMA EC Disclosure on Management Approach EC

AspectsEconomic performance Fully p. 34-37Market presence Fully p. 66-69Indirect economic impacts Fully p. 30-37, 82-83

DMA EN Disclosure on Management Approach EN

Aspects

Materials Fully p. 90, 104Energy Fully p. 90, 106Water Fully p. 90, 113Biodiversity Fully p. 93, 99Emissions, effluents and waste Fully p. 90, 116

Products and services Fully p. 66Compliance Fully p. 90-91Transport Fully p. 117Overall Fully p. 90-91

DMA LA Disclosure on Management Approach LA

Aspects

Employment Fully p. 44Labor/management relations Fully p. 62

Occupational health and safety Fully p. 52

Training and education Fully p. 54Diversity and equal oppor-tunity Fully p. 58

Equal remuneration for women and men Fully p. 60

Profile Disclo-





Reason for omission


4.13

Memberships in associations (such as industry associations) and/or national/international advocacy or-ganizations in which the organiza-tion: * Has positions in governance bodies; * Participates in projects or committees; * Provides substantive funding beyond routine member-ship dues; or * Views membership as strategic.

Fully p. 28-29

4.14 List of stakeholder groups enga-ged by the organization. Fully

p. 26-27we have inserted a direct answer in the check list for every

stakeholder

4.15Basis for identification and selec-tion of stakeholders with whom to engage.

Fully p. 26-27

4.16

Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.

Fully p. 30-33

4.17

Key topics and concerns that have been raised through stakeholder engagement, and how the orga-nization has responded to those key topics and concerns, including through its reporting.

Fully p. 30-33


137136



Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

DMA SO Disclosure on Management Approach SO

Aspects

Corruption Fully

Code of Conduct (http://www.feralpi-

group.it/upload/codi-ce%20etico/4025_co-diceeticoferalpi_4.pdf)

Public policy Fully



Anti-competitive behavior Fully



Compliance Fully



DMA PR Disclosure on Management Approach PR

AspectsMaterials stewardship Fully p. 74-76Customer health and safety Fully p. 69-72

Product and service labelling Fully p. 72

Marketing communications FullyNo such kind of

programmes have been undertaken.

Customer privacy Fully




Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

DMA HR Disclosure on Management Approach HR

Aspects

Investment and procure-ment practices Not p. 76, 79

Non-discrimination Fully p. 58Freedom of association and collective bargaining Fully p. 62

Child labor Fully p. 62Prevention of forced and compulsory labor Fully p. 62

Security practices Fully p. 58

Indigenous rights NotNot

appli-cable

No indigenous people are

involved in Feralpi activities.

Assessment Fully p. 93-103Remediation Fully p. 103

DMA SO Disclosure on Management Approach SO

Aspects

Artisanal and small-scale mining Not

Not appli-cable

Feralpi doesn’t perform artisanal

and small-scale

mining activities.

Resettlement NotNot

appli-cable

No such a kind of ac-tions have been taken

place.Closure planningCOMM Fully p. 100-103Grievance mechanisms and procedures Fully p. 20-22

EmergencyPreparednessCOMM

Fully p. 18

Local communities Fully p. 82


139138



Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

EC6

Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation.

Fully p. 75

EC7

Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.

Fully p. 47

Indirect economic impacts

EC8

Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engage-ment.

Fully p. 37-40

EC9

Understanding and describing significant indirect economic impacts, including the extent of impacts.

Fully p. 37-40, 56-57

Environmental

Indicator Disclosure

Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

Materials

EN1 Materials used by weight or volume. Fully p. 104-105

EN2Percentage of materials used that are recycled input materials.

Fully p. 104-105

Energy

EN3 Direct energy consumption by primary energy source. Fully p. 106-109


Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

Compliance Fully



STANDARD DISCLOSURES PART III: Performance IndicatorsEconomic


Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

Economic performance

EC1

Direct economic value generated and distribu-ted, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

Fully p. 34-37

EC2

Financial implications and other risks and opportuni-ties for the organization’s activities due to climate change.

Fully p. 18

EC3Coverage of the organiza-tion’s defined benefit plan obligations.

Fully p. 49-51

EC4Significant financial assistance received from government.

Fully p. 57

Market presence

EC5

Range of ratios of standard entry level wage by gender compared to local mini-mum wage at significant locations of operation.

Par-tially p. 48

locations where women are too

few

Not mate-

rial

privacy of individual

remunera-tion


141140



Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

MM1

Amount of land (owned or leased, and managed for production activities or extractive use) disturbed or rehabilitated.

Fully p. 94, 98-99

EN13COMM

Habitats protected or restored. Fully p. 94, 98-99

EN14

Strategies, current actions, and future plans for managing impacts on biodiversity.

Fully There are not initiatives of this kind

MM2

The number and percenta-ge of total sites identified as requiring biodiversity management plans accor-ding to stated criteria, and the number (percentage) of those sites with plans in place.

Fully p. 94, 98-99

EN15

Number of IUCN Red List species and national con-servation list species with habitats in areas affected by operations, by level of extinction risk.

NotNot

availa-ble

Emissions, effluents and waste

EN16Total direct and indirect greenhouse gas emissions by weight.

Fully p. 117

EN17Other relevant indirect greenhouse gas emissions by weight.

Fully p. 118

EN18Initiatives to reduce green-house gas emissions and reductions achieved.

Fully p. 118

EN19 Emissions of ozone-deple-ting substances by weight. Fully p. 118


Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

EN4Indirect energy con-sumption by primary source.

Fully p. 108

EN5Energy saved due to conservation and efficiency improvements.

Fully p. 108

EN6

Initiatives to provide ener-gy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.

Fully p. 69

EN7Initiatives to reduce indirect energy consumption and reductions achieved.

Fully p. 108

Water

EN8 Total water withdrawal by source. Fully p. 114

EN9Water sources significantly affected by withdrawal of water.

Fully p. 104, 113

EN10Percentage and total volume of water recycled and reused.

Fully p. 114

Biodiversity

EN11

Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas.

Fully p. 94, 98-99

EN12

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

Fully p. 94, 98-99


143142



Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

EN27

Percentage of products sold and their packaging materials that are reclai-med by category.

Fully p. 112

Compliance

EN28

Monetary value of signifi-cant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations.

Fully p. 95, 98-99

Transport

EN29

Significant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce.

Fully p. 117

Overall

EN30Total environmental pro-tection expenditures and investments by type.

Fully p. 37-40, 93

Social: Labor Practices and Decent Work


Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

Employment

LA1

Total workforce by em-ployment type, employment contract, and region, broken down by gender.

Par-tially p. 45-47

gender bre-akdown by

contract types

Not availa-

ble

Data collection

to be implemen-

ted

2014

LA2

Total number and rate of new employee hires and employee turnover by age group, gender, and region.

Par-tially p. 47-48, 60 breakdown by

gender

Not availa-

ble

Data collection

to be implemen-

ted

2014


Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

EN20NOx, SOx, and other signi-ficant air emissions by type and weight.

Fully p. 118-119

EN21 Total water discharge by quality and destination. Fully p. 114-115

EN22 Total weight of waste by type and disposal method. Fully p. 110-111

MM3

Total amounts of over-burden, rock, tailings, and sludges and their associa-ted risks.

NotNot

appli-cable

Not applicable because Feralpi doesn’t perform

extractive activities.

EN23 Total number and volume of significant spills. Fully p. 95, 98, 99, 115

EN24

Weight of transported, im-ported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percen-tage of transported waste shipped internationally.

Fully p. 112

EN25

Identity, size, protected status, and biodiversity va-lue of water bodies and re-lated habitats significantly affected by the reporting organization’s discharges of water and runoff.

Fully p. 94, 98-99

Products and services

EN26

Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.

Fully p. 69-72


145144



Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

LA8

Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.

Fully p. 52-54, 86

LA9Health and safety topics covered in formal agree-ments with trade unions.

Fully p. 54

Training and education

LA10

Average hours of training per year per employee by gender, and by employee category.

Par-tially p. 56-59 Training by

gender

Not availa-

ble

Data collection

to be implemen-

ted

2014

LA11

Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

Fully p. 55, 58-59

LA12

Percentage of employees receiving regular perfor-mance and career deve-lopment reviews, by gender.

Fully No reviews of this kind are implemented

Diversity and equal opportunity

LA13

Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity.

Fully p. 46, 60, 66

Equal remuneration for women and men


Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

LA3

Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations.

Fully p. 49

LA15Return to work and reten-tion rates after parental leave, by gender.

Par-tially p. 61 breakdown by

gender

Not availa-

ble

Data collection

to be implemen-

ted

2014

Labor/management relations

LA4Percentage of employees covered by collective bar-gaining agreements.

Fully p. 62

LA5

Minimum notice period(s) regarding significant ope-rational changes, including whether it is specified in collective agreements.

Fully p. 51-53

MM4

Number of strikes and lock-outs exceeding one week’s duration, by country.

Fully p. 62

Occupational health and safety

LA6

Percentage of total work-force represented in formal joint management-worker health and safety commit-tees that help monitor and advise on occupational he-alth and safety programs.

Fully p. 53

LA7

Rates of injury, occupatio-nal diseases, lost days, and absenteeism, and number of work-related fatalities by region and by gender.

Par-tially p. 52-53 gender bre-

akdown

Not mate-

rial

Female labour

force is not exposed to risks

of manual work


147146



Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

Freedom of association and collective bargaining

HR5 COMM

Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights.

Fully p. 62

Child labor

HR6

Operations and significant suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor.

Fully

No measures have been undertaken in this

field, as the company has not identified risks

of this kind

Prevention of forced and compulsory labor

HR7

Operations and signifi-cant suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor.

Fully

No measures have been undertaken in this

field, as the company has not identified risks

of this kind

Security practices

HR8

Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to ope-rations.

Fully p. 58

Indigenous rights


Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

LA14

Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation.

Par-tially p. 60

locations where women are too

few

Not mate-

rial

privacy of individual

remunera-tion

Social: Human Rights


Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

Investment and procurement practices

HR1

Percentage and total number of significant investment agreements and contracts that include clauses incorpo-rating human rights concerns, or that have undergone human rights screening.

Fully There are not initiatives of this kind

HR2

Percentage of significant suppliers, contractors and other business partners that have undergone hu-man rights screening, and actions taken.

Fully p. 75

HR3

Total hours of employee training on policies and pro-cedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

Fully p. 58-59

Non-discrimination

HR4Total number of incidents of discrimination and corrective actions taken.

Fully p. 62


149148



Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

SO1(G 3.1)

Percentage of operations with implemented local community engagement, impact assessments, and development programs.

FullyNo operations of this

kind have been under-taken

MM6

Number and description of significant disputes rela-ting to land use, customary rights of local communities and Indigenous Peoples.

FullyThe company is not

aware of such a kind of disputes

MM7

The extent to which grievance mechanisms were used to resolve disputes relating to land use, customary rights of local communities and Indigenous Peoples, and the outcomes.

FullyNo such a kind of

mechanisms have been taken place

Artisanal and small-scale mining

MM8

Number (and percentage) or company operating sites where artisanal and small-scale mining (ASM) takes place on, or adjacent to, the site; the associated risks and the actions taken to manage and mitigate these risks.

NotNot

appli-cable

No such a kind of cases are present

Resettlement

MM9

Sites where resettlements took place, the number of households resettled in each, and how their livelihoods were affected in the process.

FullyNo such a kind of ac-tions have been taken

place

Closure planning

MM10Number and percentage of operations with closure plans.

Fully p. 99-103


Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

MM5

Total number of operations taking place in or adjacent to Indigenous Peoples’ territories, and number and percentage of opera-tions or sites where there are formal agreements with Indigenous Peoples’ communities.

NotNot

appli-cable

No indigenous people are

involved in Feralpi activities

HR9

Total number of incidents of violations involving rights of indigenous people and actions taken.

Fully p. 62

Assessment

HR10

Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments.



Remediation

HR11

Number of grievances re-lated to human rights filed, addressed and resolved through formal grievance mechanisms.

Fully

Not cases of grivan-ces of this kind have

been addressed to the company

Social: Society


Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

Local communities

SO1COMM

(MMSS)

Nature, scope, and effec-tiveness of any programs and practices that assess and manage the impacts of operations on commu-nities, including entering, operating, and exiting.




151150



Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

SO8 COMM

Monetary value of signifi-cant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.

Fully p. 98

Social: Product Responsibility

Perfor-mance

IndicatorDescription Repor-

tedCross-reference/Direct

answer

If applicable, indicate the part

not reported

Reason for

omis-sion

Explana-tion

To be reported

in

Materials Stewardship

MM11Programs and progress relating to materials stewardship.

Fully p. 70

PR1

Life cycle stages in which health and safety impacts of products and services are assessed for improve-ment, and percentage of significant products and services categories subject to such procedures.

Fully p. 69-70, 73

PR2

Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of pro-ducts and services during their life cycle, by type of outcomes.

Fully p. 70

Product and service labelling

PR3

Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.

Fully p. 73


Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

SO9

Operations with significant potential or actual negative impacts on local commu-nities.

Fully p. 100-102

SO10

Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local commu-nities.

Fully p. 100-102

Corruption

SO2

Percentage and total number of business units analyzed for risks related to corruption.

Fully p. 80

SO3

Percentage of employees trained in organization’s anti-corruption policies and procedures.

Fully p. 58

SO4 Actions taken in response to incidents of corruption. Fully

The company is not aware of any incident

of corruptionPublic policy

SO5Public policy positions and participation in public policy development and lobbying.

Fully p. 29

SO6

Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.

Fully No contributions to these stakeholders

Anti-competitive behavior

SO7

Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes.

Fully No actions of this kind occorred

Compliance


153152

SECTION FIVE



Level of

repor-ting



part not reported

Reason for

omis-sion


To be reported

in

PR4

Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes.

Fully p. 70

PR5

Practices related to custo-mer satisfaction, including results of surveys measu-ring customer satisfaction.

Fully p. 74

Marketing communications

PR6

Programs for adherence to laws, standards, and voluntary codes related to marketing communica-tions, including advertising, promotion, and spon-sorship.

FullyNo such kind of

programmes have been undertaken

PR7

Total number of incidents of non-compliance with regulations and voluntary codes concerning mar-keting communications, including advertising, pro-motion, and sponsorship by type of outcomes.

Fully p. 70-74

Customer privacy

PR8

Total number of substan-tiated complaints regar-ding breaches of customer privacy and losses of customer data.

Fully p. 74

Compliance

PR9

Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.

Fully p. 74

CONTENT INDEX

155154


MEEP Moving Electrode Electrostatic Precipitator

NOx Nitrogen oxide

PCB Polychlorobiphenyl

Lecheate Liquid generated in the waste mass in a landfill due to infiltration of rainwater waters or inside the waste

Quenching Process of cooling metal rapidly

WEEE Mandatory system for the collection and disposal of electronic equipment (Waste from Electric and Electronic Equipment)

RSU Trade Union Representatives

EMS Environmental Management System

Ladle A refractory-lined steel vessel used to take molten steel from the furnace and convey it to the continuous casting bay

SO2 Sulphur dioxide

Tapping The process of tapping steel from the melting pot

Shredder Scrap shredding and sorting plant

StakeholderA person or organisation interacting in various ways with the company’s operations, that influences performance and evaluates its economic, social and environmental impact

TAR Regional Administrative Court (in Italy)

Heat to energy recovery Combustion of waste material to generate power

Bentonitic fabric Special waterproofing fabric with inner cavities containing bentonitic clay

TFR Severance pay

UNEP United Nations Environmental Programme for promoting sustainable development with businesses and citizens

Xenobiotics Persistent organic substances that may be present and/or form in the production cycle and represent a risk factor for the workers’ health

EBT Eccentric Bottom Tapping

OHSAS 18001 Occupational Health and Safety Assessment Series

GLOSSARY

ARPA Regional Environmental Protection Agency

BAT Best Available Techniques

Biogas A gas comprised mainly of natural gas and carbon dioxide and generated from the degradation of waste by micro-organisms

Car fluff Waste obtained from the shredding of car bodies

CO2 Carbon dioxide

PPE Personal Protection Equipment

EMASEcoManagement and Audit Scheme – European Council’s Regulation no.1836/93 on the voluntary adoption by industrial businesses of a community eco-management and audit scheme

Fluff Waste derived from metal shredding

Flickers Disturbances of the mains supply

LF Ladle Furnace

Furan Harmful gas, pentatomic etherocyclic compound containing oxygen as etheroatom.

Draining geotextileOr draining geomesh, also known as draining geocomposite, when it is comprised of several layers: material (fabric or mesh) made of synthetic filaments able to drain water in contact with it more effectively than normal soil.

GRI Global Reporting Initiative

GRTN National Transmission Network Service Provider

HDPE High-Density Polyethylene

IISI International Iron and Steel Institute

IPA Aromatic polycyclic hydrocarbons

Injury rate Total number of injuries x 200,000 ÷ hours worked

Injury severity rate Total number of injuries x 200,000 ÷ hours worked

IPPC Integrated Pollution Prevention and Control.

ISO 14001 The standard covering environmental management systems issued by the International Standard Organization

157156



• Giuseppe Pasini – President Feralpi Holding and Feralpi Siderurgica • Giovanni Pasini – Delegated Director Feralpi Holding and President Acciaierie di Calvisano• Cesare Pasini – Purchasing Manager Feralpi Group and Vice-President Feralpi Holding• Isabella Manfredi – CSR Manager Feralpi Group• Antonio Cotelli – Human Resources Manager Feralpi Group• Alberto Messaggi – CFO Feralpi Group and Director Feralpi Siderurgica• Elisabetta Marconi – Administrative Manager Feralpi Holding• Alessandro Franzoni – Internal Audit Feralpi Holding• Maurizio Fusato – Plant Manager Feralpi Siderurgica• Lorenzo Angelini – Technical Manager Feralpi Group • Fiorella Mario –Sales Manager Exports Feralpi Group• Giorgio Scandoli – Sales Manager Italy Feralpi Group• Ercole Tolettini – EMS Manager Feralpi Siderurgica• Eric Filippini – R&D Manager Feralpi Group • Stefano Filippini – Energy Manager Feralpi Group • Giuliano Boschi – Environmental Management Services• Teresa Zanardi – Category Manager Feralpi Group • Mauro Soncina - Responsible for Scrap Purchasing Feralpi Group• Diego Almici – Responsible for External Companies Feralpi Group• Gionata Merici – External Companies Feralpi Group• Italo Piras – Quality Manager Feralpi Group • Maurizio Ciarlantini - HR Business Partner Feralpi Group• Andrea Zaccarini – Personnel Administration Feralpi Group • Teresa Malagnini – Personnel Administration Specialist Feralpi Group• Giancarlo Visinoni - HR Business Partner Gruppo Feralpi • Diego Bravo – Export Office Feralpi Group• Alessandra Tonolini - Training & Development Feralpi Group• Valentina Fedrigo – Communications and External Relations Office Feralpi Group• Andrea Tolettini - Responsible for Production and Maintenance Acciaierie di Calvisano• Fausto Pelizzari – PPS and EMS Manager Acciaierie di Calvisano• Andrea Sorella – Plant Manager Dieffe• Luciano Benini – Managing Director Nuova Defim

COLOPHONThis edition of the Sustainability Report was drawn up by the following taskforce:


159158

SECTION FIVE


COLOPHON

• Alessandro Gerosa – Plant Manager Nuova Defim• Tiziano Gatti – Sales Manager Italy Nuova Defim • Marco Morelli – Sales Manager Exports Nuova Defim • Marco Croci – Personnel, Health & Safety, and the Environment Nuova Defim • Donato Cappelletti – Administrative Manager Nuova Defim• Fabio Citterio – Sales Manager Italy Nuova Defim• Diego Bove – Quality Manager Nuova Defim• Emilio Verdina – Commercial Advisor• Luigi Locatelli – Environment and Health & Safety Consultant• Mauro Papa – Sole administrator, Ecoeternit• Stefano Nicolò – Managing Director Ecoeternit• Thomas Kühnast – Junior engineer environmental aspects ESF Elbe-Stahlwerke Feralpi GmbH• Frank Jürgen Schaefer – Managing Director ESF Elbe-Stahlwerke Feralpi GmbH• Wolfgang Lämbgen - CFO ESF Elbe-Stahlwerke Feralpi GmbH• Torsten Mehner – Head of Control ESF Elbe- Stahlwerke Feralpi GmbH• Henry Bartzsch - Junior Controller ESF Elbe-Stahlwerke Feralpi GmbH• Dr. Martin Lenz - HR Manager ESF Elbe-Stahlwerke Feralpi GmbH• Claudia Walter – HR Administration ESF Elbe-Stahlwerke Feralpi GmbH• Bernd Kalies – Plant Manager EDF Elbe-Drahtwerke Feralpi GmbH• Hans Jörg Kurze – Head of Technical Department ESF Elbe-Stahlwerke Feralpi GmbH• Hans-Jürgen Müller – Technical Assistant EDF Elbe-Drahtwerke Feralpi GmbH• Andrè Martin - Quality Manager ESF Elbe-Stahlwerke Feralpi GmbH• Ralf Küster - Health & Safety Manager ESF Elbe-Stahlwerke Feralpi GmbH• Mathias Schreiber – Head of Environment ESF Elbe-Stahlwerke Feralpi GmbH• Andreas Müller - Steel Mill Procurement ESF Elbe-Stahlwerke Feralpi GmbH• Ralf Schilling - Managing Director Feralpi Stahlhandel GmbH / Feralpi Logistik GmbH• Pietro Perini - Scrap Purchasing Manager ESF Elbe-Stahlwerke Feralpi GmbH• Andreas Dinger - Purchasing/Warehouses Manager ESF Elbe-Stahlwerke Feralpi GmbH• Laura Tolettini - Purchasing Manager ESF Elbe-Stahlwerke Feralpi GmbH• Frank Noack – Purchasing freight rates Feralpi Logistik GmbH• Josef Dušek – Managing Director Feralpi Praha s.r.o.• Csaba Koós – Managing Director Feralpi Hungaria Kft.

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