Sumitomo Steel 20110929

• 1. Creating th Best St l k Cti the B t Steelmakerwith World Leading Capabilities World-Leading September 22, 20111

2. Note Regarding Forward-looking StatementsThis presentation includes forward-looking statements that reflect the plans and expectations of Nippon Steel Corporation andSumitomo Metal Industries, Ltd. in relation to, and the benefits resulting from, their business integration described below. To theextent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking statements.These forward-looking statements are based on the current assumptions and beliefs of the two companies in light of the informationcurrently available to them, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties andother factors may cause the actual results, performance, achievements or financial position of one or both of the two companies (orthe post-transaction group) to be materially different from any future results, performance, achievements or financial positionexpressed or implied by these forward-looking statements. The two companies undertake no obligation to publicly update anyforward lookingforward-looking statements after the date of this presentation. Investors are advised to consult any further disclosures by the twocompanies (or the post-transaction group) in their subsequent domestic filings in Japan and filings with the U.S. Securities andExchange Commission.The risks, uncertainties and other factors referred to above include, but are not limited to:(1) economic and business conditions in and outside Japan;(2) changes in steel supply, raw material costs and exchange rates;(3) changes in interest rates on loans, bonds and other indebtedness of the two companies, as well as changes in financial markets;(4) changes in the value of assets (including pension assets), such as marketable securities and investment securities;(5) changes in laws and regulations (including environmental regulations) relating to the two companies business activities;(6) rise in tariffs, imposition of import controls and other developments in the two companies main overseas markets;(7) interruptions in or restrictions on business activities due to natural disasters, accidents and other causes;(8) the two companies being unable to complete the business integration; and( )(9) difficulties in realizing the synergies and benefits of the pgy gpost-transaction group. g p2 3. Agenda1. Highlights of the Merger2. Growth Strategy3.3 Financial Strategy3 4. Best for the new company 1. Highlights of the Merger 4 5. Overview of the Integrated CompanyTrade Name Nippon Steel & Sumitomo Metal CorporationLocation of Chiyoda-ku, Tokyo, JapanHead OfficeDate of Merger October 1, 2012 (planned)(Effective date)Method of theA merger (a business holding company)Business Integration Nippon Steel to be the surviving company Nippon Steel 1 001.00 Sumitomo Metals 0.735Merger Ratio 0.735 Nippon Steel shares to be allotted for each share of Sumitomo MetalsListing ExchangesTokyo, Osaka, Nagoya, Fukuoka, and Sapporo5 6. Creating the Best Steelmaker with World-Leading CapabilitiesMaximize the potential of steel through utilization of world-leadingtechnology. Contribute to the growth of global economies and the improvement impro ement of global societ society. Globalizingthe Steel BusinessThe Best Steelmaker with World-Leading Capabilities Nippon Steel & Sumitomo Metal Corporation Utilizing theImprovingI i Worlds Leading Cost CompetitivenessTechnologies6 7. Maximizing Corporate Value Re-organize/Expand existing bases mainly in emerging countriesGlobalizing Establish /Reinforce the bases incl. integrated steelworks outside the Steel BusinessJapan Improve capabilities t offer solutions t customers I biliti to ff l titot Utilizing the Worlds Respond to increasingly sophisticated needs of customers throughLeading Technologiesgg maximization of the potential of steel by consolidating technologies.Improving Cost Generate synergies of JPY 150 billion per annumCompetitiveness in approx. 3 years after the business integrationCorpora valueateCorporateC tValueThe Best Steelmaker with World-Leading CapabilitiesNippon Steel &Sumitomo Sumitomo Metal Metals Corporation Nippon Steel 7 8. GlobalizationIntegrated Companys Scale2010 SalesArcelorNipponNippon Baosteel JFE TATAJiangsu Gerdau POSCOU.S. Sumitomo Ansteel MittalSteel &SteelSteel ShagangSumitomoSteel MetalsMetal( Source : Published Information of each company) 2010 Crude Steel Production Nippon TATAU.S. ArcelorSteel & BaosteelPOSCO Nippon JFE JiangsuAnsteelGerdau SumitomoMittal SumitomoSteel S l Shagang Sh Steel SteelMetalsMetal ( Source : World Steel Association)8 9. Roadmap to MergerSeptember 22S t b 22, 2011Execution of the Master Integration Agreement April, 2012Execution of a Merger Agreement (Planned) June, 2012 Shareholders meetings to approve the Merger Agreement (Planned) Date of Merger (Effective date)g () October 1 2012 1, (Planned)*The Business Integration is subject to, inter alia, the approval of the relevant authorities and shareholder approval at the respective shareholders meetings of Nippon Steel and Sumitomo Metals.9 10. Best for the new company 2. Growth Strategy10 11. (1) Globalizing the Steel Business 11 12. GlobalizationCapture the Growing Demands in Emerging CountriesThe Trend of Apparent Consumption of Crude Steel (Consumption in 1970 =1.0)10.0Emerging 8.0 (China, Brazil, India, ASEAN5) 6.0 4.0Global 2.0 0.0Japan, North America, Europe 197019751980 1985 19901995 2000 2005 2010 (Source: World Steel Association )12 13. Globalization Expand Local Production in Emerging Countries Continue to produce in Japan as the core base Supply high quality products in growth marketsProduce in Japan as the core baseDevelop and manufacture leading-edgeproductsJAPANASIA AMERICAs Growth MarketRe-organize / expandmanufacturing , processing, Capture local demandsand sales basesFrom Brazil and the other countriesRe-organize and Expand the Bases incl. Integrated Steelworks e.g. in ASIA / AMERICASTarget: 60 - 70 million tons of global production13 14. GlobalizationGlobal No.1 Product Line-up for Automotives(million units)Global Auto Production 10,0001008,000 80EmergingE i6,000 60 countries4,000 Japan 40Europe2,000 20North America 02000 2005 2010 2012E2015E2020E(Source: Automobile Manufacturers Associations of Each Country and Region,and Estimates by Nippon Steel and Sumitomo Metals)Strength of NSC Strength of SMIStrength of both 14 14 15. Globalization Growing Global Demand for Energy Correlation betweenEnergy consumption by region(Mtoe) # of rigs and oil demand(Mtoe) ( (units) )18,00018 000 8,0004,00016,000Oil/Gas consumption 7,000(left) 3,50014,000 China 6,000 3,00012,000 5,000 2,50010,000US 4,000 # of rigs (right) 2,000 8,000EuropeIndia3,000 1,500 6,000Middle East Japan 4,000 2,000 1,000Others 2,000 1,000 5000 19802000 2008 2015202020302035- - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(Source: OECD/IEA-2010)(Source: Baker Hughes, BPEstimates by Nippon Steel and Sumitomo Metals) 15 16. GlobalizationHigh-end Products for Energy Sector Exploration / Production x Transportation / StorageT t ti St Power-GenerationPower Generation16 17. GlobalizationGrowing Demand for Railway Infrastructure Railway market: 136 billion with approx. 3% growth p.a. Global market size (projected) in billionsBreakdown by type (annual average) in billions 160 160 136 bn 136 bn 140 140 122 bn 1112 12010 120 627 10022 100 80 804537 60 10560 40 405353 20 201300 2005-20072007-2009 Maintenance High speedTrunk road Railway vehicles Civil engineering and electricity Light rail g Urban Operation systems(Source: Ministry of Land, Infrastructure, Transport and Tourism)17 18. GlobalizationBest Quality for Growing Railway DemandDeliver the best quality rails and wheels from US/Japan production basesNippon Steel &Sumitomo M t lS it MetalStandard SteelWheels 0.24 million pieces/year (Export ratio 50%) Sole US manufacturer of forgedrailway wheels and axlesRails 0.62 million tons/yearWheels 0.3 million pieces/year (Export ratio 80%)18 19. (2) Utilizing the Worlds Leading Technologies 19 20. TechnologyMaximizing the Potential of Steel Increasing sophisticated, efficient, and quicker R&D R&D: JPY 70 billion Better solutions for customer needs Joint Researches with Customer: 450 themes Developing new technologies incl. innovative production processesImproving competitiveness by developing de facto standard technologies Leading technologies for global environmentThe highest energy efficiency and lowest CO2 emissions Developing technology to use lower-grade raw materialsTechnologies for lower gggrade iron ore20 21. TechnologyIntegration of Manufacturing and Product TechnologiesTechnology to solve customer problemsNippon SteelSumitomo Metals Up-stream Diagnose and repair technologies of coke-oven Development of new-generation technologies forProcessrestoringsteelmaking process Automotive high-strength steel sheet with Development of Steel Plate for Improving the Fatigue excellent crash energy absorption capacityStrength in Welded JointsAuto Development of high strength steel plate and Development of advanced stainless boiler tube forShipbuilding new hull structure design for large containerUltra-Supercritical coal-fired thermal power plantsEnergy ships Invention for super-high strength low-alloy steel Corrosion resistant steel for cargo oil tankoil country tubular goodsNo.1 Patents among Global Steel CompaniesNippon Steel &ppNippon SteelNi St lSumitomo Metals S it M t lSumitomo Metal Domestic patents (as of May, 2011)7,957 3,69811,655 Intl patent application publications (2006-2010)* 561 347908 R&D (FY2010, JPY bn)46.622.769.3* Intl patent application publications of competitors: JFE 329, POSCO 234, ArcelorMittal 100(Source: Japan Patent Office Database) 21 22. Technology Transforming Customer Needs into OpportunitiesTrend in body weightRegulations for CO2 emissions (Frame Format) 300(g/km) For fuel efficiency For safety For global warming China Japan250 EuropeLighter body Heavier bodyWider application USBody of functional high 200 via high tensilefor collisiontensile steelweight steelsafety150 - DP, TRIP 590980MPa- BH sheets,100 - Hot Stamp - High tensile 1500MPa440MPa 50199520052010 20152020 198519902000 (Source: JSTP)(Source: Companies research) Tighter regulations for CO2 emissionsWe will apply functional high tensile steel with nano- More demand for lighter steelg technology to balance collision safety and lighter bodytechnology22 23. (3) Improving Cost Competitiveness 23 24. CostRealization of SynergiesGenerate synergies of JPY 150 billion per annum in approx.3 years after mergerApprox. Amount ofMain measures y g SynergiesExpansion of global development1. Accelerating overseas expansion by utilizing the Companies human resources JPY 30 bn / year2. Re-organizing and reinforcing overseas manufacturing and sales bases3.3 Improving efficiency of administrative/back office functionsadministrative/back-officeetc.etcTechnology/R&D1. Realizing the benefits of advanced technology by consolidating the areas of JPY 40 bn / yeartechnology and R&Dgy2. Speeding up and increasing efficiency in R&Detc.Production/Sale1. Improving production efficiency by integrating the manufacturing process JPY 40 bn / year2.2 Improving productivity by optimal allocation of tasks among production lines etc.Procurement1. Improving efficiency in procurement and transport of raw materials JPY 40 bn / year2. Reducing costs by standardizing equipment specifications3. Unifying financing, and improving efficiency in capital managementetc. TotalJPY 150 bn / yearEndeavor to increase the above target synergy amount.In addition, continue to make .further efforts to reduce costs.24 25. CostBest Practices among Domestic SteelworksReinforce ties among domestic steelworks Steelworks in Japan Crude SteelEnergy Raw Materials Transportation Maintenance Raw Materials InventoryMaterials / EquipmentInfrastructureetc.Share the Best Practice p Hot Strip6Plate4 Seamless 4 Cold Strip 13Shapes3 Spiral 4 CGL18 Bar2UO2 EGL8Wire R d Wi Rod 4 ERW2 Site of NSC Site of SMI25 26. CostThe Worlds Highest Energy Efficiency40% of large capacity / highly advanced BF in the world is operated by Integrated CompanyBF Ranking (by Capacity)Energy Efficiencies in Steel Industry 1 Jiangsu ShagangNo.4BF 5,800 Japan 100Japan=100 Nippon Steel & Oita 1BF 5,775 2 Sumitomo Metal Oita 2BF 5,775Korea 102 The best 4 POSCOPohang 4BF 5,600 energy efficiency Germany 112 5 SeverstalNo.5BF 5,580 Nippon Steel & 120 6Kimitsu 4BF5,555 France Sumitomo Metal 7 ThyssenKrupp Schwelgern2BF5,513 UK122Caofeidian I 5,500 ShougangChina 123 8Caofeidian II5,500 JFEFukuyama 5BF 5,500 India125 Nippon Steel & 11 Nagoya 1BF 5,443 128 Sumitomo Metal Canada 12Kobe Steel Kakogawa 2BF 5,400 US 130 Nippon Steel & Kashima 1BF5,370 13 Sumitomo Metal Kashima 3BF5,370 Russia143 15HyundaiDangjin1,2BF 5,250 (Source: Research by Nippon Steel and Sumitomo Metals) (Source: RITE) 26 27. Cost Investment in Raw Materials Interests Securing access to ores and coals / mitigating price riskby acquiring stakes in quality mines and diversifying suppliers Raw Material Self Sufficiency RatioIron ore Approx. 30% CoalApprox. 20% Canada C d (FY2010/A) ProcurementElkview2.5%68 million tons Volume32 million tonsHail Creek8.0%(Total) Moranbah North 5.0% * USIMINASWarkworth 9.5%MUSA 70%* Integra6.0%NIBRASCO31.4% Bulga12.5% MBR 2.4%Foxleigh10.0%CBMM 2.5%Revuboe 23.3% BrazilMozambiqueMines with long-termAustraliaA t licontracts or investmentsIron oreCoal Robe River 14.0%Other alloyBeasley River 37.6% (planned)% Investment % 27 28. Best for the new company 3. Financial Strategy 28 29. Earned Cash goes to Good Investments and ShareholdersProfit Depreciation & A D i ti Amortizationti ti Asset Compression, etc Improvement ofRe-organize/ExpandCompetitiveness of Investment in RawImproveReturn toProduction Facilities Domestic Steel Materials Interests Financial Condition Shareholdersin Growing MarketsBusiness29 30. Creating the Best Steelmaker with World-Leading CapabilitiesMaximize the potential of steel through utilization of world-leadingtechnology. Contribute to the growth of global economies and the improvement impro ement of global societ society. Globalizingthe Steel BusinessThe Best Steelmaker with World-Leading Capabilities Nippon Steel & Sumitomo Metal Corporation Utilizing theImprovingI i Worlds Leading Cost CompetitivenessTechnologies30 31. Best for the new company 31