Board press release

China Steel Corporation (CSC) held its board meeting on March 25, 2010. Major items of the agenda adopted were :

• 1. 2009 financial results
  CSC's operation results in 2009: revenues NT$165,409 million, income before income tax NT$20,160 million, net income 19,603 million, earnings per common share (after tax) NT$1.54.
• 2. Appropriation of annual net income for 2009
  CSC’s distributable earnings for 2009 totaled NT$19,618 million. According to CSC's Articles of Incorporation, after appropriating the annual income for legal reserve, compensation to directors and supervisors, and bonus to employees, the remainder shall be appropriated for dividends of preferred stocks and common stocks. The Board suggested that the dividend for preferred stocks is NT$1.40 per share (NT$1.07 for cash dividend and NT$0.33 for stock dividend), and for common stocks is NT$1.34 per share (NT$1.01 for cash dividend and NT$0.33 for stock dividend).
• 3. Capital increase from earnings
  For the need of long-term capital, the meeting decided to appropriate NT$4,333,819,680 fromthe distributable earnings in 2009 as a capital increase. 433,381,968 common shares with NT$10 par value will be issued in one time. The rights and obligations of new shares are the same as current common shares.
• 4. Date and venue for CSC's 2010 shareholders' meeting
  • Date: June 23, 2010 (Wednesday) 9:00 a.m.
    Venue: CSC Auditorium (1, Chung Kang Road, Siaogang District, Kaohsiung,Taiwan)
  In the 2010 stockholders' meeting, CSC's new directors of board and supervisors will be elected. Pursuant to CSC's Articles of Incorporation, election of directors shall be by adopting a candidate nomination system. Therefore, the date and place for accepting stockholders' draft resolutions and candidate nomination of directors are as follows:
  • Date: April 20-29, 2010
    Place: CSC (1, Chung Kang Road, Siaogang District, Kaohsiung, Taiwan)
• 5. CSC will offer to buy Dragon Steel Corporation's (DSC) 2,000 million common shares from DSC's private placement of cash capital increase
  DSC is wholly owned by its only stockholder, CSC. Its stage II expansion project is being carried out in two phases. The blow-in ceremony for DSC's phase 1 blast furnace was held on February 26, 2010. For subsequently carrying out the phase 2 expansion project, DSC decides to increase its capital by issuing 2,000 million registered common shares with par value NT$10 and issuing price NT$10 totaling NT$20,000 million. For the timeliness of the capital increase, DSC is planning its private placement by selling all DSC's increased common shares to CSC, the sole specific investor.

The 12th meeting of the 13th Board of Directors of China Steel Corporation (CSC) was held on December 17, 2009. Major items of the agenda adopted were:

• 1. Acquisition of 1% share of NAMISA
  CSC has reached in principle agreements with Sumitomo Metal Industries and ITOCHU Corporation for acquisition of 1% share of Nacional Minerios S.A. (NAMISA) from them, each offering 0.5%, totaled amount at JPY 8.5 billion. The execution of this transaction is still subject to the approval of all the shareholders of NAMISA and the related government authorities.
• 2. Revamp of No. 1 Steel Bar Mill
  This project aims at revamping electric equipment and raising the capacity of rolling bigger billets. The project will commence in January 2010 and is scheduled for completion in December 2012. After this project is completed, it will increase annual production capacity from 520 thousand metric tons to 535 thousand metric tons. The heavyweight bar-and-rod products will be able to reduce transportation handling costs. Besides, since the sectional area of bigger billets is enlarged, it will have quality benefits in finer grain structure, relatively fine and shallow decarburization depth, thinner oxidized scale and shallower surface crack.
• 3. Three-year-term Loan of US Dollar for Hedging the Risk of Foreign Exchange Rate of Investment in China Steel Sumikin Vietnam Joint Stock Company (CSVC)
  CSC got a short-term loan amounted US$58.548 million from bank on August 9, 2009 for its investment in CSVC. The loan has been injected into CSVC's first-term capital. In order to hedge the risk of foreign exchange rate, the board approved the resolution for a three-year-term loan of US dollar from bank, the same as above amount.

CSC held its meeting of Board of Directors in the morning of August 26, 2009. Major items of the agenda adopted were:

• 1. Review of financial reports for the first half of 2009
  Operating results for the first half of fiscal year 2009 were: revenues NT$73,277 million, loss before income tax NT$8,796 million, net loss NT$6,451 million and net loss per common share NT$0.53.
• 2. Revamp of pulverized coal injection plant at No. 1 blast furnace
  Since existing pulverized coal injection plant (PCI) at No. 1 blast furnace has operated for more than 23 years, CSC will take advantage of the duration of the third campaign revamp of No. 1 blast furnace to revamp the PCI plant. The project will commence in September 2009 and is scheduled for completion in July 2010, totaling 11 months.
• 3. Hydrogen purification project
  In order to ensure the long-term stable supply of the needed purified hydrogen for the cold rolling production line and reduce the production cost, the project will commence in September 2009 and is scheduled for completion in August 2011, totaling 24 months.
• 4. Assistance in rebuilding the disaster area of typhoon Morakot
  Since the typhoon Morakot with floodwater and mud-rock flow inflicted heavy casualties on the southern Taiwan, CSC has immediately participated in various jobs for relieving the victims of the disaster, including NT$20million of money donation under the name of the CSC Group for the urgent needs and calamity, donation of nutriment and teaching facilities, help in cleaning schools and parks in Siaogang District, carry of water to the neighboring water-shortage areas, help in quickly restoring disaster customers' production, etc. Moreover, CSC and CSC Labor Union together call for money donations from employees. The volunteers recruited by CSC Group Education Foundation and CSC Salesian Club will act as long-term student counseling for the disaster school children's schoolwork, etc.
  The jobs of rebuilding Morakot disaster area are extremely difficult. The Executive Yuan's Morakot Post-Disaster Reconstruction Commission has determined to invite private enterprises to participate in the adoption of disasters for settling down their homes and make post-Morakot reconstruction efforts in rebuilding affected industries. CSC greatly supports this government program. Today CSC's board meeting adopted a resolution for a quota of NT$500 million to participate in the program. After our government has drawn up its planning details for reconstruction program, CSC will select proper items to directly participate in the related reconstructions. CSC hopes to assist government to accelerate the completion of post-disaster reconstruction jobs by exploiting CSC Group's engineering advantages so as to fulfill CSC's social responsibility.
  Besides CSC has proactively engaged in various jobs for relieving the victims of Morakot disaster, China Ecotek Corporation (Ecotek), one of CSC's subsidiaries, has also proactively engaged in the jobs. Ecotek sent two vacuum cleaning cars with capacity of 12m3 each on August 22-23 for helping Linbian Township Office to clean the mud on the roads. The quantity of mud cleaned in the two days totaled 300 metric tons. Ecotek will continue to match the requests of Environmental Protection Bureau Kaohsiung City Government to do the mud cleaning jobs for the disaster areas. Moreover, the floodwater disaster on August 8 made the big Kaohsiung area severely lack water, especially in the north Kaohsiung area. The Chenchin Lake Water Treatment Plant built and operated by Ecotek also immediately increased to supply the water. The plant increased its daily water supply from ordinary 280,000 metric tons to 460,000 metric tons among which Ecotek distributed 290,000 metric tons to support the north Kaohsiung area the needed water. Thus, the people's livelihood water for the big Kaohsiung area has been solved.

China Steel Corporation (CSC) held its 2009 shareholders' meeting at 9:00 a.m. on June 19, 2009 in Kaohsiung. Chairman Chia-Juch Chang presided at the meeting, and President Yuan-Cheng Chen reported CSC's 2008 operations to the stockholders. Major resolution adopted in the meeting was appropriation of earnings for 2008: NT$1.73 dividend per share for both preferred stocks and common stocks (NT$0.43 for stock dividend and NT$1.3 for cash dividend).

Shortly after the shareholders' meeting, CSC held its board meeting at 1:30 p.m., where two major resolutions were made:

• 1. The 605.37 million shares of convertible preferred stocks of Taiwan High Speed Rail Corporation (THSRC), which are owned by CSC, will be converted into common stocks.
  Pursuant to the Article 33 of Stature for Encouragement of Private Participation in Transportation Infrastructure Projects, any stockholder who has owned the preferred stocks for two years is entitled to deduct his paid income tax for the declaring year from up to 20% amount of his acquired preferred stocks. However, such a deductible condition shall convert his preferred stocks into common stocks in advance.
  Since CSC has owned THSRC's 605.37 million shares of convertible preferred stocks for more than two years, CSC is entitled to deduct its 2009 income tax from up to 20% amount of its owned preferred stocks according to the above Article, provided that the above-mentioned preferred stocks are converted into common stocks.
• 2. The totaled 180 million shares of preferred stocks A and B of Dragon Steel Corporation (DSC), which are owned by CSC, will be converted into common stocks.
  Years ago when DSC was formerly named Kuei Yi Industrial Corporation, Kuei Yi happened an asset misappropriation event by a former chairman through illegal means. The court declared judicially according to the lawsuit that Kuei Yi had to be reorganized. DSC's preferred stocks have been new injected funds through precedent capital decrease and subsequent capital increase since Kuei Yi was declared to be reorganized. Since DSC completed its reorganization plan on June 25, 2003, its preferred stocks have finished their stage mission, and DSC now has become a wholly owned subsidiary of CSC. DSC's preferred stocks are then no longer necessary to exist for the sake of simplified management. Therefore, CSC's board meeting resolved to convert all of them into common stocks.

China Steel Corporation (CSC) held its board meeting on March 25, 2009. Major items of the agenda adopted were:

• 1. 2008 financial results
  CSC's operation results in 2008: revenues NT$256,358 million, income before tax NT$30,255 million, earnings per common share (after tax) NT$2.03.
• 2. Appropriation of annual net income for 2008
  CSC's distributable earnings for 2008 totaled NT$24,096 million. According to CSC's Articles of Incorporation, after appropriating the annual income for legal reserve, compensation to directors and supervisors, and bonus to employees, the remainder shall be appropriated for dividends of preferred stocks and common stocks. The Board suggested that the dividend for both preferred stocks and common stocks is NT$1.73 per share (NT$1.3 for cash dividend and NT$0.43 for stock dividend).
• 3. Capital increase from earnings
  For the need of long-term capital, the meeting decided to appropriate NT$5,369,758,750 fromthe distributable earnings as a capital increase. 536,975,875 common shares of NT$10 par value will be issued in one time. The rights and obligations of new shares are the same as current shares.
• 4. Revision of CSC's “Articles of Incorporation”
  To meet future needs of steel-related investments, the meeting suggested that constraint on CSC's investments in other companies “should not exceed CSC's paid-in capital”, as stipulated in Article 2-2 of CSC's Articles of Incorporation, be revised as “should not exceed 180% of CSC's paid-in capital”, and that non-steel-related investments should not exceed 20% of CSC's paid-in capital.
• 5. Date and venue for CSC's 2009 shareholders' meeting
  • Date: June 19, 2009 (Friday) 9:00 a.m.
    Venue: CSC Auditorium, 1, Chung Kang Road, Siaogang District, Kaohsiung, Taiwan
• 6. Issuance of corporate bonds amounted to NT$30,000 million
  In order to replenish the working capital, CSC will issue domestic straight corporate bonds totaling NT$30,000 million in 2009.

The 8th meeting of the 13th Board of Directors of China Steel Corporation (CSC) was held on December 16, 2008 at Kaohsiung. Major items of the agenda adopted were:

• 1. To subscribe for 2 billion shares of Dragon Steel Corporation in the private offering of capital increase. In order to secure the fund for hot strip mill project and Stage 2 Phase II expansion project, Dragon Steel Corporation (DSC) plans to issue 2 billion common shares with the share price of NT$10.6 to raise NT$21.2 billion. CSC, the only shareholder of DSC, currently holding 100% of Dragon Steel Corporation, will subscribe for the total amounts.
• 2. To subscribe for common shares in the capital increase of Chung Hung Steel. In order to reimburse bank loans, strengthen the financial position, and enrich operating capital, Chung Hung Steel plans to issue 400 million shares through capital increase in early 2009. Being the largest shareholder of Chung Hung Steel, CSC is going to subscribe for the issued shares with the ceiling of 360 million shares.
• 3. To setup No. 8 vacuum degasser at steelmaking plant. In order to meet the requirements of high grade steel production of its No. 3 cold rolled mill, CSC will setup No. 8 vacuum degasser at its steelmaking plant. The project will commence in January 2009 and is scheduled for completion in June 2012.

CSC held its 7th meeting of the 13th Board of Directors on August 27, 2008. Major items of the agenda adopted were:

• 1. Mr. Chia-Juch Chang was elected as the new Chairman of the Board at the meeting.
  Ministry of Economic Affairs, CSC's big shareholder, designated Mr. Chia-Juch Chang to replace Mr. Wen-Yuan 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. Chia-Juch Chang as the new Chairman of the Board.
• 2. Review of financial reports for the first half of 2008
  CSC's operating results for the first half of fiscal year 2008 were: revenues NT$124,323 million, income before income tax NT$33,172 million, net income NT$26,900 million and earnings per common share NT$2.35.
• 3. Issuance of domestic corporate bonds
  In order to increase working capital, CSC will issue its domestic corporate bonds in the fiscal year 2008. Maximum issue amount will be NT$10,000 million with issue period of 3 to 7 years.

The 6th meeting of the 13th Board of Directors of China Steel Corporation (CSC) was held at PM 1:30 on June 19, 2008 at Kaohsiung. Major items of the agenda adopted were:

• 1. Addition of an EOT crane for charging steel-making materials to basic oxygen furnace at No. 2 Steel-making plant. This project will reduce the waiting time for charging materials and help increase liquid steel production.
• 2. In order to raise regional resource utilization efficiency and reduce pollution and CO2 emission, CSC has been promoting the integration of energy resources within the Lin Hai Industrial District since 1993 by selling excess quantities of energy resources (steam, oxygen, nitrogen and argon) to neighboring plants. Since the Ta-Lin Refinery of CPC Corporation and Shang Cheng Steel Industrial Company wish to reduce their steam production or stop using steam boilers, they would like to buy steam from CSC. The meeting therefore resolved to set up additional steam pipes. This project is scheduled to complete in June 2010. When this project completes, about 35,500 tons of CO2 emission will be reduced per year in the Lin Hai Industrial District of Kaohsiung.

The 5th meeting of the 13th Board of Directors of China Steel Corporation (CSC) was held on March 19, 2008 at Kaohsiung. Major items of the agenda adopted were:

• 1. CSC's operation results in fiscal year 2007
  (FY 2007) Revenues NT$207,919 million, income before income tax NT$61,652 million, earnings per common share NT$4.49.
• 2. Appropriation of annual income for FY 2007
  The total amount of CSC's distributable earnings for FY 2007 was NT$51,408 million. The distributable earnings will be appropriated according to CSC's Articles of Incorporation. In addition to the appropriations for legal reserve, compensation to directors and supervisors and bonus to employees, the dividend per share for both preferred stocks and common stocks was suggested to be NT$3.8 (NT$3.5 for cash dividend and NT$0.3 for stock dividend).
• 3. Capital increase from earnings
  For the need of long-term development capital, the meeting decided to appropriate NT$4,845,289,730 from distributable earnings as a capital increase. 484,528,973 common shares will be issued in one time. The right and obligation of new shares are the same as current shares.
• 4. Date and venue for CSC's 2008 shareholders' meeting
  • Date: June 19, 2008 (Thursday) 9:00 a.m.
    Venue: CSC Auditorium, 1, Chung Kang Road, Siaogang District, Kaohsiung, Taiwan
• 5. Revamp of No. 1 hot strip mill
  In order to develop high-strength and high-grade steels. CSC will revamp and remold its No.1 hot strip mill. The project will commence in April 2008 and is scheduled for completion in June 2012. In addition to the improvement equipment functions, this project will be able to increase 230 thousand metric tons of hot-rolled steel products annually.
• 6. Setup of the Steel Material Logistics Center
  CSC has begun to push its “Double 2000 Project” since December 2006. It will invest NT$ 200 billion within five years to increase CSC Group's annual production up to 20 million tons. In the coming future, the salable volume of steel products will be largely increased and will cause the storage capacity of CSC's warehouse inadequate. Since the available land in CSC's plant site has been saturated, CSC needs to find a suitable place to set up a logistics center for storing its steel products. After scrupulous evaluation, CSC has selected a land of 34 acres at the Sin Yuan Ranch of Taiwan Sugar Corporation, Lujhu Township, Kaohsiung County. CSC plans to build eight warehouses－six for storing steel products and two for spare parts. The project will commence in April 2008 and is scheduled for completion in March 2011.
• 7. Addition of unit No. 10 at the oxygen plant
  The oxygen plant provides blast furnaces and basic oxygen furnaces with needed oxygen for making molten iron and liquid steel. Since Nos. 1 and 4 blast furnaces will enlarge their furnace shells and inner volumes when completing their campaign revamps in 2011 and 2013 respectively, CSC has to invest to build an additional unit No.10 at the oxygen plant with capacity of 1,500 metric tons of oxygen ( degree of purity: 99.5%) per day for sufficiently providing the blast furnaces. The project will commence in April 2008 and is scheduled for completion in July 2012.
• 8. Revamp of hot stoves 11~13 and peripheral equipments on No. 1 blast furnace
  When this project completes, No. 1 blast furnace will be able to increase the efficient and high-quality hot blast by lap parallel operation with other four additional hot stoves which has been completed since October 2006. This project will be conducive to the increase of molten iron production, the increase of pulverized coal injection volume, saving the consumption of coking coal and reducing air pollution. Other benefits include:
  • (1) to reduce the purchase of natural gas owing to the use of self-produced low-heat-value blast furnace gas, downstream production lines may use the high-heat-value coke oven gas
  • (2) to meet our commitment for reducing CO2 emission － to save energy and reduce waste. The project will commence in April 2008 and is scheduled for completion in March 2012.
• 9. Purchase of land and buildings of China Prosperity Development Corporation
  CSC is currently building a No. 3 cold rolling line for satisfying the market needs of high-grade cold-rolled products, enlarging the market share. Since the target land of China Prosperity Development Corporation is located at No. 6, Mau Da Street bearing the concave corner site of No. 3 cold rolling line, CSC purchases it for bettering the vehicles traffic, as well as for combining the land to shape a complete site and suitable area for No. 3 cold rolling line.

The 4th meeting of the 13th Board of Directors of China Steel Corporation (CSC) was held on December 20, 2007. Major items of the agenda adopted were:

• 1. Remodeling of Nos. 1 and 2 sinter plants
  This project aims to raise the blast furnace's operation rate and sinter production in order to satisfy the need of No. 1 blast furnace after its inner shell revamp and volume enlargement (its fourth revamp campaign's production is scheduled for beginning at the end of 2010). This project will commence on January 1, 2008 and is scheduled for completion on January 31, 2011, totally 37 months. Total investment amount of the project will be NT$1.367 billion. The project can reduce the energy consumption rate per ton of sinter by 5%, as well as the air pollution, particulate emission from sintering operation.
• 2. Exchange of CSC's owned Stocks in China Steel Machinery Corporation with China Ecotek Corporation's Stocks
  22,900,000 shares of China Steel Machinery Corporation's stocks owned by CSC will be exchanged with China Ecotek Corporation's stocks by the rate 1:1. After the exchange, CSC's ownership in China Steel Machinery Corporation will come down from 100% to 73.98%, while CSC's ownership in China Ecotek Corporation will rise from 36.04% to 49%. China Steel Machinery Corporation's major business is equipment manufacturing and China Ecotek Corporation in engineering and construction. Both companies' businesses and operations are complementary and the cross ownership will create more synergy.
• 3. Appointment of Accounting General Manager Chang-Rong Hsu as Accounting Officer
  Pursuant to Article 14 of Securities and Exchange Act, the financial reports shall be signed or stamped with the seal of the accounting officer. Also pursuant to Article 14-3 of the same Act, the appointment or discharge of accounting officer shall be submitted to Board of Directors for approval. Currently, the financial reports were stamped with the seal of the Vice President of Finance. Since the General Manager of Accounting is actually in charge of all accounting affairs and directly responsible for major contents of financial reports, he is approved to be the accounting officer for signing and stamping with seal on the reports.
• 4. Steel Plant Project in Vietnam
  CSC will cooperate with Sumitomo Metal Industries, Ltd. (Sumitomo Metals) to invest in this project in order to (1) grasp the opportunity of steel growth in Vietnam's market; (2) create more opportunities for CSC Group's hot rolled steel products; (3) establish a base for providing steel products in AFTA market. The plant equipments will include plate finishing line, pickling and cold rolling mill, annealing line, annealing and coating line, and hot-dip galvanizing line. Total production will be 1.7 million metric tons and scheduled for commercial operation in 2011. Total estimated investment amount of USD1.15 billion will be raised in separate years, in which 50% come from capital, 50% from long-term bank loan. CSC will invest up to USD293 million. In addition to CSC and Sumitomo Metals, other reputable enterprises in Taiwan and Japan will also be invited to participate in the venture.

The 3rd meeting of the 13th Board of Directors of China Steel Corporation (CSC) was held on August 29, 2007. Major items of the agenda adopted were:

• 1. Financial reports for the first half of 2007
  CSC's operating results for the first half of 2007 were: revenues NT$100,199 million, pretax income NT$31,850 million and basic earnings per share NT$2.39.
• 2. No. 3 blast furnace second campaign mid-term revamp
  Total investment for the project is estimated at NT$1,515 million. The project will commence on September 1, 2007 and is scheduled for completion on October 31, 2010. Total schedule will be divided into three stages: works planning, blast furnace stop-running and revamp, and tag-along jobs. The second stage for revamp will take 45 days from March 2010 to mid-April 2010.
• 3. Purchase of the land and buildings of Mao Da plant from China Hi-ment Corporation
  In order to acquire additional land to construct No. 3 cold rolled production line, CSC will buy the land and buildings of Mao Da plant from China Hi-ment Corporation, one of CSC's related parties. The land and buildings locate at No. 4 Mao Da Street, Siaogang District, Kaohsiung. Areas of the land and buildings are 65,439 square meters and 8,803 square meters respectively. Price of the land with buildings is NT$826,812,000. Additional cost for compensating China Hi-ment Corporation's move of production lines and materiel is NT$150,444,757. Both amounted NT$977,256,757.
• 4. Acquisition of 2 million treasury stocks from Yodogawa Steel Works, Ltd. in Japan
  In order to stabilize and solidify the sales business, as well as to consider the long-term investment, CSC will purchase 2 million treasury stocks from Yodogawa Steel Works, Ltd. in Japan. Amount totaled ￥1,214 million, or NT$349 million. CSC's ownership inYodogawa Steel will be 1.09%. Yodogawa Steel is the parent company of Sheng Yu Steel Co., Ltd. Both are CSC's major customers in hot rolled products. Their relationship with CSC in business is very close.

CSC held its 2nd meeting of the 13th Board of Directors on June 29, 2007. Mr. Wen-Yuan Lin was elected as the new Chairman of the Board at the meeting. Ministry of Economic Affairs, CSC's big shareholder, designated Mr. Wen-Yuan Lin to replace Mr. Yao-Chung Chiang as the Ministry's juristic person representative, thereby relieving Mr. Chiang of his position as a director and as Chairman of the Board. The eleven members of the board director elected Mr. Wen-Yuan Lin as the new Chairman of the Board and Chief Executive Officer. Following the election, the Board conventionally engaged Mr. Yao-Chung Chiang as Honorary Advisor, and Mr. Yuan-Cheng Chen as President.

CSC held its 1st meeting of the 13th Board of Directors on June 21, 2007. Mr. Yao-Chung Chiang was elected as Chairman of the Board at the meeting. The Board engaged Mr. Yuan-Cheng Chen as President.