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ThyssenKrupp Board Appeals to Government Regarding
Emissions Trading Program

March 19, 2004 — In its meeting on March 17, 2004, the Supervisory Board of ThyssenKrupp Steel AG, steel holding company in the ThyssenKrupp Group, called upon the Federal Government to make a clear commitment to Germany as a steelmaking location. “The talking about emissions trading has gone on long enough. It’s time to stop the maneuvering and start acting,” said Supervisory Board Chairman Prof. Dr. Ekkehard Schulz. “The company and its employees finally need to have planning certainty.” The background to the Supervisory Board’s appeal is the – in the company’s view – completely unsatisfactory course of the negotiations on the allocation of CO₂ emissions rights to the German steel industry.

The Supervisory Board also noted the decision of ThyssenKrupp Stahl AG, lead company of the Carbon Steel business unit, to postpone investment decisions affecting the Duisburg steelmaking site. The company and its works councils have already expressed strong criticism on several occasions of the Federal Environment Ministry’s rigid refusal to fully recognize the process-related special features of steel production in connection with the allocation of CO₂ permits. The proposals would mean ThyssenKrupp Steel having to buy emissions certificates for a high eight-figure sum even in the first trading period from 2005 to 2007. The company believes that these costs cannot be passed on to the market, and the only alternative would be production cuts. Both would result in the loss of jobs.

“Decisions to invest in Germany’s largest steelmaking location can only be realized if we have an environmental policy framework in the long run that allows commercial success,” said Prof. Dr. Ulrich Middelmann, Executive Board Chairman of ThyssenKrupp Steel AG. The company has decided not to go ahead with planning for Blast Furnace No. 8 in Duisburg-Hamborn for the time being, he said. The blast furnace, for which the licensing process was due to begin shortly, was to have secured the supply of hot metal to the plant and to ISPAT Stahlwerke Ruhrort. It is based on state-of-the-art, environmentally friendly technology and was slated to replace the 30-year-old Blast Furnace No. 4.

ThyssenKrupp Steel is also examining the possibility of buying hot band from outside Germany. This would increase, not decrease, the net burden on the environment because ThyssenKrupp Steel’s blast furnaces are among the most modern in the world, with CO₂ emissions at the lower end of what is technically possible.

Prof. Dr. Middelmann told the Supervisory Board, “In view of the specific problems of the steel industry, for phase 1 of the emissions trading scheme, we demand the allocation of free permits according to requirements based on CO and CO₂ emissions between 2000 and 2002. For subsequent phases, process-related emissions should be recognized in the required amount with no obligation to make further reductions, which would be technically impossible.” A lower allocation of permits would distort competition within the EU, he said, because a competitor in Austria is being given more rights, allowing it to increase capacity, and companies in the Netherlands and the United Kingdom face hardly any burdens.

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