BLUESCOPE STEEL LIMITED — Call Transcript 2008

Oct 29, 2008

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“Beyond the short term” Conference call with BlueScope’s Managing Director & CEO Paul O’Malley, Managing Director and Chief Executive Officer 30 October 2008

THIS PRESENTATION IS NOT AND DOES NOT FORM PART OF ANY OFFER, INVITATION OR RECOMMENDATION IN RESPECT OF SECURITIES. ANY DECISION TO BUY OR SELL BLUESCOPE STEEL LIMITED SECURITIES OR OTHER PRODUCTS SHOULD BE MADE ONLY AFTER SEEKING APPROPRIATE FINANCIAL ADVICE. RELIANCE SHOULD NOT BE PLACED ON INFORMATION OR OPINIONS CONTAINED IN THIS PRESENTATION AND, SUBJECT ONLY TO ANY LEGAL OBLIGATION TO DO SO, BLUESCOPE STEEL DOES NOT ACCEPT ANY OBLIGATION TO CORRECT OR UPDATE THEM. THIS PRESENTATION DOES NOT TAKE INTO CONSIDERATION THE INVESTMENT OBJECTIVES, FINANCIAL SITUATION OR PARTICULAR NEEDS OF ANY PARTICULAR INVESTOR.

TO THE FULLEST EXTENT PERMITTED BY LAW, BLUESCOPE STEEL AND ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, ACCEPT NO RESPONSIBILITY FOR ANY INFORMATION PROVIDED IN THIS PRESENTATION, INCLUDING ANY FORWARD LOOKING INFORMATION, AND DISCLAIM ANY LIABILITY WHATSOEVER (INCLUDING FOR NEGLIGENCE) FOR ANY LOSS HOWSOEVER ARISING

BlueScope continues to pursue a strategy to maximise value and preserve financial flexibility

Corporate / Group Australia New Zealand Asia North America Coated & Australian New Zealand Coated & Hot Rolled Coated & Industrial Distribution & Pacific Building Products Building & Solutions Islands Products North America Products Products Products Asia North America Australia

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• Leading supplier of flat steel � Leading supplier of flat � Only fully integrated flat products in Australia steel solutions in steel maker in New

• � Global scale steel works Australia Zealand

• Leading domestic market share of flat products

• Largest supplier of metal coated and painted steel in � BlueScope Steel Australia Distribution

• Lysaght Rollforming

• � Port Kembla Steelworks, � BlueScope Water � Glenbrook, NZ NSW � Services Centres � Pacific Islands

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• Pre-eminent seller of � 50:50 joint venture with � Pre-eminent global designer / branded steel in Asia Cargill Inc. supplier Pre-engineered

• � Lower cost “backward � Again voted no. 1 flat buildings �

• integration” growth rolled steel supplier in No. 2 position in North strategy North America (Jacobson America and no. 1 in China �

• Survey) IMSA assets (from Feb 2008)

• Indonesian, Malaysian, Thailand and Vietnamese � Delta, Ohio operations

• Butler Buildings

• � Varco Pruden Buildings

KPI Extract: Australia/New Zealand

Blueprint Basic Key Performance Indicator

• Profit weighted share of steel market and growth

1. Increase Customer and Market Focus

• Steel penetration in building and construction

• Quality premium

• Cost per tonne

2. Improve Productivity Year on Year

• Overall Equipment Effectiveness

• Forecast accuracy

• Production planning execution

3. Optimise Return on Capital

• Return on invested capital

• Days of inventory

Rationale

Key controllable drivers of revenue

Remaining competitive with off-shore steel producers requires lowest possible cost base and full utilisation of capital assets, with maintained or improved service levels

Minimising unproductive capital adds shareholder value and frees resources for

Key Action Item

R&M & Capex	�	Significant reduction / slow down & deferral with focus on maintaining operational performance. Constrain growth capital.
Working capital	�	Relentless focus on Blueprint KPI basics of inventory, creditor and debtor days.
Labour cost	�	Reduction in overtime, casual & contractor hours.
		Ongoing business improvements.
Production scheduling	�	Manufacturing production scheduled to minimise cash
		costs.
Plant rationalisations	�	Fast tracking US manufacturing footprint rationalisation.

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50%
�
Currently expect
gearing to be
40%
within target
40%
range as at 31
December 2008
35% 32%
30% Target
Range
30%
20%
10%
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Dec 31 2007

Feb 1 2008

June 30 2008

PRE REFINANCING

POST REFINANCING

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2,000
2,000
1,800
1,800
1,600
1,600
1,400
1,400
1,200
1,200
1,000
1,000
800 800
600 600
400 400
200 200
0 0
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
AUD$M
AUD$M
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Working Cap

5 yr LNF

364 day

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“Industry Overview”

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APPARENT CRUDE STEEL CONSUMPTION (mtonnes)
+57%
1,400
1,330
24
1,300
53
55
1,200
+47%
1,100 1,074
20
33
1,000 37 428
900 847 +17% +44% Brazil
18 297
800 29 Russia
30 +115%
India
700 138 114
China
124
600
133 +3% 185 US
500 -1%
166 West’n Eur (EU15)
162 85
400 Japan
81
RoW
300 80
200 +21% 386
+24% 318
257
100
0 Year
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Rural population (thousands) Urban population (thousands) 1,500,000 1,250,000 1,000,000 750,000 500,000 250,000 0

CRUDE STEEL INTENSITY

Kg/capita

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Taiwan
1,200 ( 1 970–2006) 10 to 15
South Korea
1,000 (1970–2006) more
years of
800 strong
Japan growth in
600 China (1955–2006) China
(1970–2006) USA until steel
400
(1900–2006) intensity
curve
200
flattens
0
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
India GDP at 2000 PPP/capita
Developing Asia (1994–2005)
(1994–2005) USD/capita
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30 Composition of GDP Net Exports Inventories 24

Investment

18 12

Consumption

6

• CY 2008 could be viewed as

• “PAUSE” as opposed to a “CLIFF” � credit tightening to reduce inflation

• Olympics – material driver of economic slowdown

• Government fiscal stimulus package to kick start growth

• Government confirmed approx 8% GDP growth required just to meet growth in domestic demand.

Business Update and Outlook

1Q FY 2009 (vs 2H FY08)

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Underlying NPAT
600
511
Approx
500
430
400
305
300
(Unaudited)
200
100
0
FY08-1H FY08-2H FY09-1Q
NPAT A$ Millions
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Principal drivers:

• Higher global US$ export steel prices

• Improved earnings contribution from recent acquisitions (Distribution and IMSA)

• Stronger external Australian sales

2Q FY 2009 (vs 1Q 2009)

Result will be lower than 1Q largely due to:

• higher raw material costs (vs lower cost c/f into 1Q)

• softer export steel prices for some despatches

• reduced external export (principally slab) despatches

• commenced slab inventory build to meet customer needs during reline in 3Q and 4Q

• lower contribution from

• North Star - reduced spread and despatches

– 2H FY2009

• Lower steel spread (vs 1H09)

• BF No.5 reline and sinter plant upgrade will proceed on schedule (March – June 2009)

• Delivery of synergy benefits from FY08 acquisitions

• Challenging market conditions, particularly in USA & Asia

• Acceleration of Blueprint initiatives

• Maintain close relationships with customers

FY2010 Onwards

• Expected improvement in spread due to:

• higher steel prices and demand relative to 2H FY2009; and

• Expected lower raw material costs

• Long term cost benefit from sinter plant upgrade (less pellets/more fines) and blast furnace reline

• Continued delivery of

• Acquisition synergy benefits plus

• Blueprint initiatives

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Summary

� BlueScope is an outstanding company

� diversified business

• low cost producer

• strong brand & customer reach

• Operating today in a challenging environment

• Well positioned to be successful beyond the short term on the back of renewed growth in the developing world

• With a focus on cashflow and balance sheet strength

• And improving cost competitiveness

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“Beyond the short term” Conference call with BlueScope’s Managing Director & CEO Paul O’Malley, Managing Director and Chief Executive Officer 30 October 2008