Events of Significance

"Salzgitter AG 2015"

The "Salzgitter AG 2015" organization development project has been initiated in order to safeguard the competitive strengths of Salzgitter AG and its Group companies in an environment set to remain difficult in the medium term. Under this project, the Salzgitter Group is addressing the task of comprehensively reviewing its process and organization structure, put in place more than ten years ago and characterized by extensive decentralization, and implementing adjustments wherever necessary. The aim is to create a lean and highly effective organization, combined with stronger customer and market orientation. The specific measures to improve the process and organization structure have been formulated and are ready for implementation. The profit improvement potential of the "SZAG 2015" program, identified and underpinned by measures, amounts to more than € 200 million p.a. The program comprises both profit improvement from the ongoing development of technical processes, reduction in personnel, as well as initiatives in the areas of steel logistics, procurement and data processing, among others. For instance, a flexible, integrated maintenance concept is to be introduced at the Salzgitter site and funds invested in the construction of a coal injection plant at Salzgitter Flachstahl GmbH's blast furnace (please see the Investments section). The "Pact for the Future" (Zukunftsvertrag) has been drawn up in negotiations between the company, the Group Works Council and IG Metall as a framework and is due for formal signing in the near future. The programs already under way in individual Group companies continue to be carried out rigorously and networked with the "Salzgitter AG 2015" project.

Scrap price surcharge

Peiner Träger GmbH (PTG) has announced that, as of September 1, 2013, it intends to reintroduce a scrap price surcharge on its products. The scrap price surcharge that is based on the market price trend for steel scrap, and thereby comprises a variable component for selling prices, was discontinued at the end of 2010. PTG will be announcing the detailed modalities of the new pricing in August.

Acquisition of iron ore mining rights

A purchase and transfer agreement for the acquisition of the right to mine iron ore in Lower Saxony has been signed with Preussag Immobilien GmbH, a group company of TUI AG. The main locations of the exploratory work conducted in the 1950s on iron ore deposits include the areas of Salzgitter, Peine, along with the region between Salzgitter and Gifhorn known as the Gifhorner Graben. The mining rights granted at the time accord the exclusive right to mining iron ore in 236 mines in a mining belt far in excess of 500 km² and is the most significant iron ore deposit in Germany.
Given the conditions for mining iron ore in the global market in comparison with the cost of domestic mining and processing, the mining rights are currently not commercially viable. Consequently, there are no plans to make use of them in the foreseeable future. The exorbitant price increase for iron ore in the second half of the last decade, however, has shown that the option of using domestic iron ore in the future does not necessarily have to be entirely discounted. With the long-term future interest in mind, we have therefore secured the rights at a purchase price of one euro along with assuming obligations for safety precautions.