Green Growth Strategy of POSCO

March 4th 2010

Executive Vice PresidentPark, Ki-Hong

2

Background

Vision of Green Growth

Implementation Plan1. Green Steel2. Green Business3. Green Life4. Green Partnership

I

II

III

Contents

IV Conclusion

3

POSCO at a glanceI

History of Creative Management: Ability to Create Something from Nothing

POSCO Overview (’09)

Steel Production : Top 3~4th (29.5 Mt)

Employment: 17 thousands employees

Sales : 30Bn USD (3% of GDP, ’08)

Evaluations

Davos Forum selected POSCO as ‘GlobalTop 100 company’ (’10.1)

Dow Jones Sustainability Index included POSCO as a sustainable leading company for 5 consecutive years (’09.9)

World Steel Dynamics indicated POSCOas having the world best’s competitiveness(WSD, ’07)

1980 1990 2007200019701968

≈

3000

2000

1000

Foundation

Pohang worksConstructed

Privatized

NYSE Listed

Gwangyang worksConstructed

FINEX Commercialized

83

9294

00

07

68

2009

Crude Steel Production (tons)

- Steel Industry is a core Industry forming the basis of economic growth- POSCO has lead the growth of various Korean industries such as ship-building and car-production by supplying basic raw materials.

4

Challenges facing POSCOI

Rapidly Changing Business Environment of the Steel Industry, bothDomestic and Overseas

Emerging New Paradigm of Low Carbon and Green Growth

Business Environment Low Carbon and Green Growth

Mega Competition- Mega-steel producer emergedthrough M&A

- Accelerated growth of the Chinese steel companies

War for securing raw materials- The variability of raw materials andenergy prices

- Big bargaining power of suppliers

Competitive domestic market- Lower domestic steel demand- Appearance of a new domestic steelproducer in 2010

Carbon-reduction steel production Emitting twice the amount of CO2

for every ton of steel produced

5

(WSA, APP, ’07.10)

Environmental Characteristics of the Steel IndustryI

Steel industry, one of the vulnerable industries by GHG regulation- Responsible for 3.2% of the world’s GHG emission (’06, World Resource Institute)

- With the growth of the emerging countries, the world steel production will increasecontinuously (2 bn ton by 2020) Pressure for GHG will consequently increase

Energy Intensity1973 = 100

☞ Around 80% increase in energy efficiencyfor the steel industry in 2000, since 1973

(WSA, ’08.10)

☞ Around 50% decrease in energy consumptionfor each ton of crude steel produced in 2004, compared to 1975

However, the steel industry has markedly improved its energy efficiency compared to other industries, through continuous tech. developments

6

Energy-Saving Activities at POSCOI

Invested around 1bn USD to energy recovery facilities from ’99 to ’08

[ Installation rate of energy recovery facilities among world’s major steel companies ]* Calculated by the installation ratio of 8 major energy recoveryfacilities such as CDQ (Coke DryQuenching), TRT (Top GasPressure Recovery Turbines), etc.

Saved 2.9M TOE (equivalent to 7M ton of CO2 emission) through voluntary energy reduction agreement with the government since 1999

※ Voluntary agreement : 1st (’99~’03), 2nd (’04~’08), 3rd (`09~`13)

13,346

’98

11,858

1,488

3,653

’04

11,135

2,211

4,330

’06

10,492

2,854

6,929

’08

B.A.U

Usage

: new facilities: existing facilities : Energy saving

12,716

1,549

’00

12,334

2,300

’02

[Unit: thousand TOE]

Saving

DCB POSCO97%

44%

A E

49% 51%95%

42%

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Green Growth! Not merely a challenge to overcome,

But also an opportunity to find new business opportunities

GHG Emission reduction activities of POSCOI

Amount of CO2 emission per ton of crude steel production

Calculated by WBCSD/WRI guideline Data may change based on calculation methods

※ Relative index(POSCO = 100)

D (India)C (China)B (Japan)A (Germany)POSCO

100 102 103111 111

However, POSCO still occupies around 8.3% of Korea’s nationalenergy consumption and 11% of GHG emission. The steel industry cannot be devoid of the current challenges in terms of

climate change

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• Steel process Innovation

• Development of AHSS* and ultra-light steel, etc.

• Fostering newgreen businesses of POSCO family

• Green workplace• Green people andCommunity

• Carbon off-setprogram

- 9% Reduction of CO2 emission per ton of steel production by 2020(with reference to the levels recorded in the past 3 years)

- Contribution to 14M tCO2 of social CO2 reduction by manufacturing of high-efficiency steel products and green businesses

• Cooperation for carbon Reduction Policy (steel division of APP*, world steel association)

• Green technologytransfer to SMEs

Green Steel

Vision of POSCO Green Growth II

• To invest 7bn USD to low carbon steel products and green businesses by 2018

• To supply 87 thousand jobs in the green-related sectors

Green Business Green Life Green Partnership

Global Green Growth Leader

※ AHSS: Advanced High Strength Steel, APP: Asia-Pacific Partnership on Clean Development and Climate

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Short-term(~’15) Mid-term (~’20) Long-term (~’50)

Green Steel

H2

FINEXFluidized

beds

Nuclear Reactor

Pig IronFOG, SNG

-Hydrogen replaces coal as the reducing material-Dramatic reduction of CO2 emission

[ Energy Intensity of Steel Company (POSCO as 100) ]

* APP (’09)

100 106 108119 121 124

135

포스코

-Improve energy efficiency of current processes-By heat recovery and reuse

Improvement ofEnergy Efficiency

Development of New CO2 reduction

Steel Process

Development ofHydrogen

Steelmaking+α%↓+6%↓3%↓

※ FOG: FINEX Off Gas, SNG: Synthetic Natural Gas

Enforcing Steel Competitivenessthrough development of energy-efficient and breakthrough technology

III

• CEM (Cont. CastingEndless Mill)

-Energy saving of the reheating step by connectingtwo separate processes

• POSBOP (POSCO Basic Oxygen Process)

-High energy efficientinnovative steelmakingprocess

-Develop new processesto save energy

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Green Steel

* World Average level of blast furnace (1.88 tCO2/tHM) as 100%

FINEX DEMO FINEX 1.5 Mt

106%

1st Target: 93%

Completed : 97% (’08.5)

CCS available : 55%

2nd Target: 90%

FINEX, the world first commercialized innovative steel process (’07.5), to lead the low-carbon steel making process

Iron ore finesNon-coking coal

Coal briquett

Fluidized bed

Hot compacted iron

Pig IronMelting Furnace

Next generation eco-friendly iron-making process allowing the direct use ofcheap iron ore fines and non-coking coal as feedstock without pre-treatment

High energy efficiency and air pollution reduction by use of pure oxygen- SOx 19%, NOx 10%, Dust 52% level compared to blast furnace

Plan to invest around 60M USD for the plant using FINEX gas pressure (~’15)

CO2 emission per ton of crude steel

III

FINEX

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High-strength

Steel Sheets

Energy Efficient Magnetic

Steel Sheets

LightingMaterials

• Weight reduction and improved fuel efficiency ofvehicles - Secures same strength level with thinner sheets

• 260 thousand ton CO2 reduction by 330 thousand ton of supply (’08) - 8 ton CO2 reduction per ton of sheet

• Increasing energy efficiency of transformer, electric motor and generator

• 1.7M ton CO2 reduction by 0.3M ton of supply (’08) - 5.7 ton CO2 reduction per ton of sheet

• Initiation of magnesium sheet production (’07.7~)- Production Capability : 3 thousand ton/yr※ Weight of Magnesium : 23% of Steel, 67% of aluminum

Green Steel

Contributing to Social GHG Reduction through Energy Saving Materials

III

• Titanium : airplane, vehicle weight reduction, ocean plant (’13~)

12

Completed wind power plant construction on Mt. Taegi in Gangwon province by POSCO E&C (’08.12, 40MW)

Plan to invest around 1bn USD to wind power andocean energy field (~’18)

Wind powerOcean Energy

Smart Grid One of 10 transformative technologies announcedat MEF (Major Economies Forum on Energy and climate) inCopenhagen (’09.12)

Focusing on Smart Grid especially available forenergy- intensive industries with investment of 0.4bn USD (~`18, POSCO ICT)

Green BusinessIII

Taegisan Wind power of POSCO E&C

Installed stationary fuel cell plant by POSCO POWER(’08.9)

Around 0.5bn USD will be invested on the tech. ofnext generation SOFC (Solid Oxide Fuel Cell) till 2018

Fuel Cell

Fuel cell plant of POSCO POWER

Creating New Core Business based on POSCO Subsidiaries’ Capabilities

POSCO ICT

13

Green BusinessIII

SNG Producing synthetic gas from low-quality coal - Integration with the CO2 capture tech.

Investment of ~1.2bn USD for the SNG plant with 0.5M ton/yr capacity (~’13)* SNG : Synthetic Natural Gas

Installing plants to generate electricity fromincineration of waste source

Projects using sewage sludge (Suwon and Busan)and RDF (Busan and Pohang) are in process

Waste to Energy

Creating marine forests with steel-slag (’00 ~ )- Using steel slag generated from the steel making process- With photosynthesis, marine forests absorb CO2

Making bio-fuel from seaweeds

Developing technology to extract raw materials suchas Magnesium, Lithium, etc. from the ocean (’09~ )

Ocean ResourcesOcean Bio

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Workplace

Community

Supply Chain

Communication

▣ Riding a Bike campaign

▣ Green TechnologyTransfer to SMEs (’07~)

Green Life & Partnership

Encouraging Voluntary Participation of POSCO Employees andCooperating with Relevant Organizations

▣ Making GreenOffice

▣ Publication ofCarbon Report(’10~)

▣ Operating POSCO Carbon-zero program (’09~)

- www.poscocarbonzero.com

III

▣ Participating in WorldSteel Association

▣ Steel task forceof APP(’06~)

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“Facing the paradigm of low-carbon and green growth,

POSCO endeavors to achieve competitiveness as the leading company of climate change, through development ofLow carbon steel processes and Green businesses.”

(1) Expecting around 10bn USD of sales in the green businesses andcreating 87 thousand jobs in green sectors by investing 7bn USD till 2018

(2) Reducing 9% of CO2 emission per ton of steel production by 2020(based on the average levels recorded in the past 3 years)

(3) Contributing towards 14M ton of social CO2 reduction by high-efficiencysteel products and green businesses

ConclusionIV

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Thank you!