Board press release

• 1. 2006 financial results
  CSC's operation results in 2006: revenues NT$177,658 million, income before tax NT$47,679 million, earnings per common share NT$3.56.
• 2. Appropriation of annual net income for 2006
  CSC's distributable earnings for 2006 totaled NT$40,139 million. The Board resolved that the dividend for both preferred stocks and common stocks is NT$3.08 per share (NT$2.78 for cash dividend and NT$0.3 for stock dividend).
• 3. Suggestion for deducting half of the compensation to directors and supervisors
  The meeting adopted the suggestion to revise CSC's Articles of Incorporation that the appropriation ratio of compensation to directors and supervisors shall come down from current 0.3% to 0.15%.
• 4. Date and venue for CSC's 2007 shareholders' meeting
  Date: June 21, 2007 (Thursday) 9:00 a.m. Venue: CSC Auditorium, 1, Chung Kang Road, Siaogang District, Kaohsiung,Taiwan
• 5. Addition of No. 3 cold rolled production line
  In order to raise the proportion of production for high-grade and high value-added steel products, as well as to enhance the product competitiveness, the meeting adopted to invest NT$46,438 million to construct No. 3 cold rolled production line. The project is scheduled for completion in July 2011. Annual production will be increased by 1.1 million tons for high-grade cold rolled steel products and 400,000 tons of hot-dip galvanized steel.
  This new production line will adopt advanced technology. With 1.5 million tons of a series of upgraded cold rolled steel products, CSC will be able to timely satisfy market needs better, to effectively consume the highly competitive hot rolled steel products, and thus to bring up more profits.
• 5. Addition of No. 3 cold rolled production line
  In order to raise the proportion of production for high-grade and high value-added steel products, as well as to enhance the product competitiveness, the meeting adopted to invest NT$46,438 million to construct No. 3 cold rolled production line. The project is scheduled for completion in July 2011. Annual production will be increased by 1.1 million tons for high-grade cold rolled steel products and 400,000 tons of hot-dip galvanized steel.
  This new production line will adopt advanced technology. With 1.5 million tons of a series of upgraded cold rolled steel products, CSC will be able to timely satisfy market needs better, to effectively consume the highly competitive hot rolled steel products, and thus to bring up more profits.
• 6. No. 1 blast furnace third campaign revamping
  The third campaign of No. 1 blast furnace will have been in operation for 13.8 years by October 2010 and needs another revamping. Taking advantage of this revamp, the furnace shell and inner volume will be enlarged to increase molten iron annual production capacity from 1.97 to 2.33 million tons, so as to raise CSC's competitiveness and satisfy market needs. The project will modify blast furnace hearth shell, rebuild the lining refractory, up-stream the raw material loader, electrical and instrumentation system. The project will commence on April 1, 2007 and is scheduled for completion in June 30, 2011. Total investment is estimated at NT$6,490 million.

• 1. Participate in the joint venture for acquiring 5% share of interest in Sonoma coal development project from Q Coal Pty Ltd in Australia.
  CSC will invest about AU$ 16 million, amount to NT$400 million, to participate in the joint venture for 5% share of interest in Sonoma coal development project. It is estimated that 47 million tons of coking coal and thermal coal in total can be mined.
• 2. Investment of NT$ 6,727 million for the revamp of wire rod mill
  This project aims to meet the future market demand, increase competitiveness and upgrade wire rods. It will commence in January 2007 and is scheduled for completion in September 2010. The production ratio of high-grade wire rods will be able to increase up to 45.4% after the project completes.
• 3. Investment of NT$ 1,563 million for the addition of No. 2 billet conditioning line
  This project aims to increase the billet conditioning capacity and promote the grade of products for market need. It will commence in January 2007 and is scheduled for completion in March 2009.
• 4. Investment of NT$ 1,067 million for the remodeling of 35 hydrogen batch annealing furnaces
  High-grade hot rolled and cold rolled steel products such as high-grade electrical steel sheets, special steels (high-strength alloy steels, high-carbon and medium-carbon steels) and hot rolled pickling annealing steels are key products in the market. All such high-grade steel products need to pass through the hydrogen batch annealing process. Therefore, the existing 35 traditional HN (mixture of 93% nitrogen and 7% hydrogen) furnaces have to be remodeled into H2 (close to 100% hydrogen) annealing ones for 100% hydrogen annealing production. The project will commence in January 2007 and is scheduled for completion in January 2010.
• 5. Changes of management personnel
  • (1) Production Assistant Vice President Tong-Seng Kao was promoted to replace Mr. Chaur-Hwa Ou as Production Vice President. Mr. Ou is standby for another position (to be recommended to take the post of Chairman of Dragon Steel Corporation).
  • (2) Vice Chairman of Dragon Steel Expansion Committee Jyh-Yuh Sung was promoted to Vice President of Engineering Division.
  • (3) The above personnel arrangement will be effective on January 1, 2007.

The 11th meeting of the 12th Board of Directors of China Steel Corporation (CSC) was held on August 29, 2006 in Kaohsiung. Major items of the agenda adopted were:

• 1. Review of financial reports for the first half of 2006
  CSC's financial reports for the first half of fiscal year 2006 (from January 1 to June 30, 2006) have been audited by Deloitte & Touche (a member firm of Deloitte Touche Tohmatsu). Revenues and net income were NT$80,036 million and NT$13,860 million respectively.
• 2. Revision of CSC Organization Regulations and organization chart
  The equipment suppliers expressed weak interests to compete the bids owing to the abrupt change of steel market, the heavy loading of most equipment suppliers, and the short production capacity of down-stream contractors. At the same time, the soaring prices of raw materials cause the equipment manufacturing cost to rise. After extensive negotiation, the amount of purchasing equipment was still higher than the budget originally approved. Dragon Steel Corporation held the board meeting on May 19, 2006 to approve the revised contents after reviewing the increased budget. Major contents of the revision include:
• 3. Lease of CSC's lands to C. S. Aluminium Corporation and China Hi-ment Corporation
  Both C. S. Aluminium Corporation (CSAC, 100% owned) and China Hi-ment Corporation (CHC) are CSC's subsidiaries. CSAC is carrying out its Phase II Expansion Project for expanding its cold rolling mill and cold finishing lines, as well as extending its existing hot rolling line. To fulfill the land requirement of the expansion project, CSC will lease 26,551 square meters to CSAC. Currently a part of the said land is leased to CHC for storing water-quenched blast furnace slag. CSC will retrieve the leased land and transfer to lease it to CSAC. At the same time, CSC will lease another piece of land of 9,118 square meters at the same area to CHC as storage yard of blast furnace slag.

The 11th meeting of the 12th Board of Directors of China Steel Corporation (CSC) was held on August 29, 2006 in Kaohsiung. Major items of the agenda adopted were:

• 1. Review of financial reports for the first half of 2006
  CSC's financial reports for the first half of fiscal year 2006 (from January 1 to June 30, 2006) have been audited by Deloitte & Touche (a member firm of Deloitte Touche Tohmatsu). Revenues and net income were NT$80,036 million and NT$13,860 million respectively.
• 2. Revision of CSC Organization Regulations and organization chart
  The equipment suppliers expressed weak interests to compete the bids owing to the abrupt change of steel market, the heavy loading of most equipment suppliers, and the short production capacity of down-stream contractors. At the same time, the soaring prices of raw materials cause the equipment manufacturing cost to rise. After extensive negotiation, the amount of purchasing equipment was still higher than the budget originally approved. Dragon Steel Corporation held the board meeting on May 19, 2006 to approve the revised contents after reviewing the increased budget. Major contents of the revision include:
• 3. Lease of CSC's lands to C. S. Aluminium Corporation and China Hi-ment Corporation
  Both C. S. Aluminium Corporation (CSAC, 100% owned) and China Hi-ment Corporation (CHC) are CSC's subsidiaries. CSAC is carrying out its Phase II Expansion Project for expanding its cold rolling mill and cold finishing lines, as well as extending its existing hot rolling line. To fulfill the land requirement of the expansion project, CSC will lease 26,551 square meters to CSAC. Currently a part of the said land is leased to CHC for storing water-quenched blast furnace slag. CSC will retrieve the leased land and transfer to lease it to CSAC. At the same time, CSC will lease another piece of land of 9,118 square meters at the same area to CHC as storage yard of blast furnace slag.

The important resolutions made by the 9th meeting of the 12th board of directors of the Company (March 21, 2006) ：

• 1. CSC's operation results in fiscal year 2005 (FY 2005)
  Revenues NT$186,318 million, income before income tax NT$65,112 million, earnings per common share NT$4.83.
• 2. Appropriation of annual income for FY 2005
  The total amount of CSC's distributable earnings for FY 2005 was NT$51,058 million including net income NT$50,647 million earned in FY 2005 plus the accumulative retained earnings before FY 2005. According to CSC's Articles of Incorporation, after appropriating the annual income for legal reserve, compensation to directors and supervisors, bonus to employees and undistributed earnings, the remainder shall be appropriated for dividends of preferred stocks and common stocks. The meeting suggested that the dividend per share for both preferred stocks and common stocks shall be NT$4.1 (NT$3.75 for cash dividend and NT$0.35 for stock dividend).
• 3. Date and place for CSC's 2006 shareholders' meeting
  Date:June 15, 2006 (Thursday) a.m. 9:00 Place: CSC Auditorium, No. 1, Chung Kang Road, Hsiao Kang District, Kaohsiung
• 4. Part of management positions adjusted
  For the needs of business, the meeting adopted to adjust part of management positions, which will be effective on March 27, 2006.
  • (1) Assistant Vice President of Finance Division Mr. King-HsingChang was promoted to Vice President of Finance Division.
  • (2) Vice President of Technology Division Mr. Guo-Hwa Cheng was seconded for the full-time position as the Chairman of the Board of Gains Investment Corporation. Assistant Vice President of Commercial Division Mr. Yu-Soong Chen was promoted to replace Mr. Guo-Hwa Cheng's position as Vice President of Technology Division.
  • (3) Vice President of Corporate Planning Division Mr. Chao-Ching Chen will leave his office to act the full-time position as Chairman of the Board of C. S. Aluminium Corporation. Chairman of Dragon Steel Expansion Project Committee Mr. King-Ling Du was transferred to replace Mr. Chao-Ching Chen's position as Vice President of Corporate Planning Division.

Announcing the repurchase of the Company's own shares resolved by the Board of directors.

• 1. Date of the board of directors resolution:2005/12/20
• 2. Purpose of the share repurchase:To transfer to employees
• 3. Type of shares to be repurchased:Common Stock
• 4. Ceiling on total monetary amount of the share repurchase:NT$84,394,756 thousand
• 5. Scheduled period for the repurchase:2005/12/21~2006/02/20
• 6. Number of shares to be repurchased:200,000,000 shares
• 7. Repurchase price range:NT$16.8~NT$37.9 per share. If the market price ofthe Company Stock is below the above range, the Company will continue torepurchase shares.
• 8. Method for the repurchase:Purchase directly from centralized securities exchange market.
• 9. Ratio of the shares to be repurchased to total issued shares of the Company: 1.89%

The important resolutions made by the 2nd ad hoc meeting of the 12th board of directors of the Company (Nov 14, 2005) ：
The second ad hoc board meeting of CSC twelfth board was held on the morning of November 14, 2005 at CSC's headquarter in Kaohsiung. Major items of the agenda adopted were:

• 1. Mr. Yao-Chung Chiang was elected as the new Chairman of the Board at the meeting.
  After Mr. Wen-Yuan Lin resigned his position of Chairman of the Board recently, on November 14, 2005 CSC received a letter from the Ministry of Finance, CSC's government shareholder, designated Mr. Yao-Chung Chiang to replace Mr. Lin as the Ministry's juristic person representative, thereby relieving Mr. Lin of his position as a director and as Chairman of the Board. The eleven members of the board director elected Mr. Yao-Chung Chiang as the new Chairman of the Board and Chief Executive Officer. According to precedent, CSC engaged the former Chairman of the Board Mr. Wen-Yuan Lin as Honorary Advisor. Mr. Yao-Chung Chiang holds a master's degree in mechanical engineering from National Cheng Kung University and the same major a doctor's degree from University of Wisconsin-Madison, USA. He has previously held the following positions:
  • (1) Chairman of China Airlines. (July 2004 ~ November 2005)
  • (5) Vice Chairman of the Public Construction Commission in the Executive Yuan. (May 2000 ~ July 2004)
  • (3) Board member of Taipei Rapid Corporation. (September 1999 ~ May 2000)
  • (4) Up from Chief Engineer, Deputy Director General, and to Director General at the Department of Rapid Transit Systems in the Taipei City Government. (March 1996 ~ May 2000)
  • (5) UP from Assistant Researcher, Associate Researcher, Research Fellow, and to Director at Chung Shan Institute of Science & Technology. (In 1978 ~ February 1996)
• 2. Executive Vice President Yuan-Cheng Chen was promoted to President
  Considering Mr. Jung-Yung Chen has acted as President for 12 years, the meeting adopted to adjust management positions partly. Executive Vice President Yuan-Cheng Chen was promoted to replace Mr. Jung-Yung Chen's position as President, and Vice President of Finance Mr. Lo-Min Chung to the Executive Vice President. The personnel arrangement was immediately effective after the meeting approved.

The important resolutions made by the 7th meeting of the 12th board of directors of the Company ( Aug 29, 2005) ：

No material information should be announced under the regulation of Securities and Futures Bureau.

The important resolutions made by the 6th meeting of the 12th board of directors of the Company (June 14, 2005) ：

No material information should be announced under the regulation of Securities and Futures Bureau.

The important resolutions made by the 5th meeting of the 12th board of directors of the Company (March 17, 2005) ：

• 1. CSC's operation results in fiscal year 2004 (FY 2004) :
  revenues NT$168,270 million, income before income tax NT$65,022 million, earnings per common share NT$5.26.
• 2. Appropriation of annual income for FY 2004
  The total amount of CSC's distributable earnings for FY 2004 was NT$52,159 million including net income NT$51,617 million earned in FY 2004 plus the accumulative retained earnings before FY 2004. According to CSC's Articles of Incorporation, after appropriating the annual income for legal reserve, compensation to directors and supervisors, bonus to employees and undistributed earnings, the remainder shall be appropriated for dividends of preferred stocks and common stocks. The meeting suggested that the dividend per share for both preferred stocks and common stocks shall be NT$4.4 (NT$3.9 for cash dividend and NT$0.5 for stock dividend).
• 3. Date and place for CSC's 2005 shareholders'meeting
  • Date: June 14, 2005 (Tuesday) a.m. 9:00
    Place: CSC Auditorium, No. 1, Chung Kang Road, Hsiao Kang District, Kaohsiung
• 4. Participate in the first-time capital increase by cash injection raised by Dragon Steel Corporation (DSC) for its expansion project
  DSC is planned to raise the first-time capital increase by cash injection for its phase I, second-term expansion project. CSC will participate in such a capital increase according to its shareholding 44.7% in DSC, as well as acquire the shares in which any other shareholders will probably not participate according to CSC's status as a specific person. Total amount CSC will invest in DSC's capital increase this time will not surpass NT$ 17,500 million.
• 5. Other items adopted concerning equipment investments and revamp were : addition of No. 7 slab continuous caster for Steel Making Department, addition of coal moisture control equipment for Nos. 1 and 2 sinter plants, and revamp of electrical facilities for leveling area at plate plant.

The important resolutions made by the 4th meeting of the 12th board of directors of the Company (Dec 17, 2004) ：

The Boards' Meeting passed to invest NT$3,674 million setting the 2nd annealing and coating line, which can increase 200,000 MT high grade, non-oriental electrical sheets production per year.

The important resolutions made by the 3rd meeting of the 12th boards of directors of the Company (Aug 27, 2004) ：

Name and nature of the subject matter: Taiwan High Speed Rail Corp. convertible preferred shares, the period is 4 years. Date of occurrence of the event: 2004/08/27 Volume, unit price, and total monetary amount of the transaction: Transaction volume:161,290,000 Unit price: NT$9.3 Total transaction price: NT$1,499,997,000

The important resolutions made by the 2nd meeting of the 12th board of directors of the Company (June 25, 2004) ：

Since China Steel Corporation (CSC) elected eleven board directors and three supervisors on June 17, 2004 for the new Board of Directors, among which seven directors representing legal persons occupied over one third of original board directors have been changed, as well as the change range of pretax profit budgeted for 2004 is over 20% estimated by the following factors:
- Profit earned for 2004 up to May 31, 2004
- Upward prices announced for the third quarter
- Estimation of sales volume

Thereby pursuant to the regulations of Security and Futures Commission, Ministry of Finance, R. O. C., CSC shall revise its financial forecast 2004 accordingly.

The revision of pretax profit in CSC's financial forecast 2004 is NT$59,500 million, up from the amount of NT$42,025 million originally budgeted by NT$17,475 million, or 41.58%. (Please see attachment)
Attachment

Explanation for the revision of CSC's Financial Forecast 2004The meeting of Board of Directors on June 25, 2004 adopted the revision of CSC's financial forecast 2004. Pretax profit revised is NT$59,500 million, up from the amount of NT$42,000 million originally budgeted by NT$17,500 million, or 41%. The forecast revision is summarized in the following table, comparing the forecast before the revision:

CSC upwardly adjusted its prices of steel products for the second quarter and the third quarter respectively due to the boom of steel market this year, as well as the low prices of CSC's steel products lag behind international steel market prices, expressed CSC. CSC thereby estimated its revenues, the affect of cost due to rising prices of raw materials, as well as the figures for financial forecast 2004 based on the pretax profit from January to May 2004 and the upward prices adjusted. According to the revision of financial forecast 2004, (1) the increase of NT$31,128 million in revenues is mainly attributed to the increase of revenues in major products owing to the increase of 100 thousand metric tons in steel products sales volume and the increase of average prices of steel products compared to the financial forecast before revised; (2) the increase of NT$13,375 million in cost of revenues is mainly attributed to the rising prices of raw materials; (3) the increase of NT$649 million in operating expenses is mainly attributed to the increase of revenues; (4) the increase of NT$371 million in non-operating net income is mainly attributed to the increases of both investment income and other non-operating net income. Since the steel product prices are showing a tenderly upward trend to the end of this year, CSC has the confidence to reach the figures of revised financial forecast 2004.

The important resolutions made by the 1st meeting of the 12th board of directors of the Company (June 17, 2004) ：

Directors are:
Wen-Yuan Lin : Representing Ministry of Economic Affairs, R. O. C.
J. Y. Chen : Representing Ministry of Economic Affairs, R. O. C.
F. S. Wu : Representing Ministry of Economic Affairs, R. O. C.
Chu Chen : Representing Bureau of Labour Insurance
Y. C. Chen : Representing Chiun Yu Investment Corporation
C. I. Weng : Representing Gau Ruei Investment Corporation
I. Y. Lu : Representing Ever Wealthy Investment Corporation
C. P. Wu : Representing China Steel Labor Union
T. H. Chen : Representing Yieh Loong Enterprise Co., Ltd.
P. Y. Liang : Representing Hsing Loong Investment & Development Co., Ltd.
H. C. Chen : Representing TS Investment Development Inc.
Supervisors are:

C. C. Huang : Representing Ministry of Economic Affairs, R. O. C.
W. P. Gu : Representing Ministry of Economic Affairs, R. O. C.
Benny T. Hu : Representing Kuei Yi Industrial Corporation
Mr. Wen-Yuan Lin was elected as Chairman of the Board in the first conference of the 12th boards of directors of the Company.