Business Plan

for

CIEC EUROPE Ltd

INTRODUCTION

• The steel industry is the nervous system of every device manufacturing by providing the basic material of basic industries many of which are operating under a just-in-time and in need of ongoing post-sales technical support and timely. These elements, that explain the 'indissoluble link between flourishing manufacturing industry of a nation and its presence in the steel industry. On the contrary, a steel apparatus in difficulty is an element of pervasive weakness of the whole manufacturing in that particular country. Steel, at the same time, is a not a secondary element in facilitating the transition to a sustainable economy, just think of the contribution of high strength steels in allowing the reduction of emissions from motor vehicles, or the link between alternative energies, such as wind power, and steel as a fundamental element of the structures that produce this form of energy, or even the bond between the steel and the construction of housing units for low energy consumption.

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WORLD MARKET

• Worldwide, demand is expanding, that expansion is likely to continue over the long term because, in the final analysis, the consumption of steel is related to population growth, growth that is expected to continue until around 2050, years in which should stabilize at around 9 billion with a corresponding steel consumption that could be included, depending on the prevalence of scenarios more or less optimistic, between 2.2 billion and 3.0 billion tons.

• The push to the industrialization of Asia has made the region with the highest levels of global production and demand for steel. China dominates world production of steel: its crude steel production amounted to 39% of the total Asia in 2000, rose to 71% in 2012 This increase in production has led to excess capacity in the domestic market Chinese and meant that the country, once a net importer, is transformed into the largest exporter of steel worldwide.

• The Chinese steel industry currently accounts for almost 50% of world steel production.

• A nod to steel in India: MITTAL STEEL and JSW (Jindal) sound the charge of global players with major Chinese groups; raw materials, energy costs and low taxation in the future will make them even stronger in Western markets. In Italy these groups are in the process of finding agreements with the Government for ILVA and LUCCHINI to detect the activity.

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EUROPEAN MARKET

• Is necessary to distinguish the origin of cyclical excess capacity from the structural. Wsa According to the OECD and the European overcapacity is currently estimated to be between 40 and 60 million tons, an entity then that coincides with the descent European steel consumption during the crisis.

• An analysis of steel consumption in Europe leads us to consider a large part of the excess capacity of the European steel industry source scenario, which could be absorbed by the re-start the economy.

• Evolution of steel production in the European Union: (Figures expressed in millions of tons): 2007 2009 2013 201 - 137-166

• SPAIN AND PORTUGAL: 422 Service Centers (of these, 64 mills)

• TURKEY: 88 Service Centers and 93 mills for a "worked" about 30 million tons. / Year

• These elements must reinforce the belief that the closure of production capacity can be a strategic mistake for the European and Italian machinery manufacturing.

• In Europe today is reacting to the crisis in no particular order and probably the European Steel Action Plan of the EU, unfortunately, is not the tool to impose coordination in the management of the steel crisis, unlike previous crises in years when there was the TREATY CECA, the most great experiment in industrial policy in Europe. The Steel the European Action Plan is now just a set of declarations of intent. Lacks a framework of tools to manage the crisis in the steel industry, a task which therefore falls on the shoulders of national governments alone.

• The difficulties that beset the world steel industry is contained in some economic parameters developed by the OECD Steel Comettee a few months ago, the reading of which parameters should also be drawn also to direct the choices that you should inspire national governments, given that is on state actors which falls the burden of implementing industrial policies concerning the iron and steel industries in the European Union. 4

ITALIAN MARKET

• One thing that emerges out of all the parameters developed by the OECD Steel Comeettee is a very important element because it has to do with the ability to finance investment and is thus closely related to the problem prince of Italian steel industry, his FUTURE OWNERSHIP of steel by integral cycle (Piombino and Taranto) is the ability of the iron and steel industries to generate CASH FLOW.

• During the period 2009-2012 65% of the steel companies have NEGATIVE CASH FLOW and therefore little capacity to finance investments or make acquisitions for a necessary AGGREGATION OF THE INDUSTRY.

• Should be stressed that the European steel industry would require a new round of investment to modernize the facilities (90% of the plants in the European Union has a life of more than twenty five years. This percentage in India is equal to only 18%) .

• We then iron and steel industries with enormous problems in generating substantial positive cash flows required to finance any entry in the capital of companies in difficulty, what are ILVA and LUCCHINI. Another fact that emerges from the analysis of that information developed by the OECD is related to the profitability of the iron and steel industries. In the period 2009 - 2012, 80% of steel companies achieved an EBITDA (Earnings before interest, tax, depreciation and amortization) less than 16%, which is considered as a minimum EBITDA to a steel company to ensure the economic survival in the medium term. The breakdown of the data highlights the close relationship between the strategy pursued by the mining and steel companies profitability.

• The iron and steel industries in the nineties and the early years of this decade have not taken the path of de-verticalization giving their assetts in mining companies today are those that have a level of profitability higher, although not satisfactory. Those which have regained the assets mining subsequently fail to achieve the results obtained from the iron and steel industries belonging to the first group due to the value assumed by the mines in the course of two thousand years later the dizzying rise in the price of iron ore consequence buoyancy assumed by the oligopolistic market. Finally there are the iron and steel industries that do not have direct access to the mines and are the most disadvantaged in terms of profitability due to buoyancy hired by oligopolistic 'mining of iron ore (the first three companies hold 70% of the market).

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follow Italian Market

• Within the latter category, primarily consisting of OECD countries, it is clear the gap in terms of EBITDA achieved between the iron and steel industries of countries that have adopted counter-cyclical policies (Japan and the United States) and the iron and steel industries of countries that have instead adopt pro-cyclical policies (European Union). Evident, therefore, that the European steel industry, and in particular the Italian one, requires first and foremost a revival in domestic demand. Today the European iron and steel industries do not have the money to adopt a different strategy for regards the vertical upstream. There is no exit from the crisis if we do not reverse the mechanism of current account adjustment of the countries that have a deficit in its balance of payments. That is, until Germany will leave the burden of adjustment falls on the shoulders of the countries now in deficit by forcing them to a deflationary policy based on 1) reduction of public deficits 2) compression of consumption and investment in order to reduce imports 3) deflation of the cost labor exported to more than 4) lowering taxes. Without macroeconomic coordination between Germany and other countries today in surplus on the current account, can not be a recovery in the steel industry.

• Continuing the analysis of the data on the profitability of the iron and steel industries shows that it is not decisive the overall size of the steel for what concerns the economies of scale but the size of individual establishments. This is a point to be borne in mind in assessing such the next business plan for an eventual downsizing of Ilva plant in Taranto production would deprive the company's cost leadership so far held on the European market.

• The full awareness of the importance of the steel industry for the competitiveness of the manufacturing sector and in general of Italian industry, the knowledge that has led the Government to enact the law 231/2012 and the first decree in early June of 2013 subsequently decree with which they are considered as sites of strategic interest to all establishments and not just Taranto Ilva, should lead us to start a serious reflection, for example about the importance of situation production of tinplate in Italy and its impact on the industry in the package of our country, and in particular in the food and canning industry. 6

follow Italian Market

• Value of total sales are approximately € 30 MLD

• Employees: approx. 36,000

• Apparent consumption: 26 mil. / Ton.

• Import from the EU: 7 mil. / Ton.

• Extra EU Import: 7 mil. / Ton.

• Production: 24 mil. / Ton. (11 Long products, Flat Products of about 10 mil. / Ton. Coils and Sheets Train 2)

• Number of Service Centers active in 2009: 298 - in 2013: 218 (of which 91 mills)

• Focus on Tin Plate: with respect to the sectors that use other products belonging to the family of flat rolled, the service centers ofthis industry may also have a smaller dimensional structure and widespread element that would make this even more urgent the necessity of the presence of a domestic producer of tin mill products for the supply by a foreign supplier is much more difficult and uneconomic because the smaller the size of the company.

• It should also be mentioned that the market Tinplate in Italy in particular has been distorted by subsidies of the EU: the farmsreceive subsidies that allow you to bring down the prices of production and therefore sales of raw materials to the food industries; throughout the chain of tomato, for example, benefits from considerable public support especially for the export product and this makes it apparent that the market is much bigger than it should be; However, I have benefited only the leading European manufacturers of Tin Plate, which are both ThyssenKrupp and ArcelorMittal Europe with an annual production of about 1.5 million metric tons, Tatasteel Europe with an annual production of about 1.2 million metric tons, the Slovak Kosice with a production annual output of just over 0.5 million metric tons.

• Today, following the successful closing of ICMI and the abandonment of production of Tinplate by Magona, ILVA is the only manufacturer of TP Italian and Cornigliano is the only plant in the country to produce TP. Unique producer in the country which is the largest market in the TP in Europe, but only manufacturer with an uncertain future.

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Business Plan development Europe : Objectives

• Create business relationships and strategic in every Country in Europe, with development aimed at the search of the Company and / or trading organizations already operating. The ability to forge relationships with facilities who know the market and will operate continuously, will then assess whether and when to open up offices owned or even, for some particular market, detect or install from scratch Service Centers operating.

• Opening a Ltd in the Principality of Monaco to serve as a leader (holding) for business negotiations and subsequent openings in the rest of Europe in dedicated offices.

• The Principality of Monaco provides in addition to a tax on net profits very interesting, infrastructure and services of the highest level; the appeal of the Principality would also allow a saving on future expenses.

• As for the logistics, the Port of Monaco is also equipped for the reception of 40-foot container and in any case it is the ideal center from Italy, France, Spain.

• In each country will tighten relations with Transporters and Customs Services able to support the next commercial action.

• Elsewhere (ex: Turkey) will have to make strategic choices similar, even for cost containment.8

markets: the auto industry in Europe

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Markets: wind energy

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Business Plan development Europe: Costs

• For example, calculating the first year (where you will have the highest incidence of travel and entertainment expenses), you can indicate approximately € xxxxxxxx in expenses necessary for the creation of the Office, including n. 2 people secretarial, maintenance costs (rent and utilities), out of pocket expenses for travel / trips and purchase of n. 1 car, salaries and expenses of employees and the creation of an appropriate internet site from which customers will be able to infer the real-time availability of storehouse, the situation of the orders and the tracking of shipments, its accounts.

• Specifically, these expenses necessary to start the activity: - € xxxxxxx for the creation Ltd and obtaining the necessary licenses; rent suitable premises at the beginning of the activity and service contracts for phones, cars and so on. - € xxxxxxxxxxxxxxx in travel expenses / representation for the search of customers; - € xxxxxxxxxxxx as remuneration of the Manager that will develop.

• The annual costs of maintaining the Ltd are estimated at approximately € xxxxxx; taxation is currently equal to 30% of net profit deducted all expenses, including the remuneration of the Director-designate, who receives remuneration but is not taxable taxation as a natural person (and in the Principality, individuals are not taxable to any taxation).

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Business Plan development Europe: Times

• The creation of a Ltd in the Principality requires a relatively long time: about 3 months is the time it takes to overcome the approval of the Ministry of Commerce.

• At the same time search for the best location and built all things necessary for the commercial action and then:

• Partner research (Trading Company / Commercial and Customer Service Centers)

• Creating website to support

• The trade action is to be assessed in about 6-8 months from the creation of the office.

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BUSINESS PLAN DEVELOPMENT EUROPE:PR and EXHIBITIONS

• In any Business Plan we can not ignore the actions of the Public Relations and Participation in Exhibitions specialist sector:

• appear to be increasingly decisive actions targeted public relations, both with the media specialist with the different associations (in Italy, for example: ASSOFERMET) or participation in the International Forum where more and more covers the global issues that are competing (for example: Lugano Commodity Forum).

• In this, as already described, the attraction capacity of the Monaco Principality make it easier even some commercial actions.

• The Trade Show Industry is well known that in addition to creating gatherings facilitate commercial presence in the country in which it takes place, with the search for partners and customers and makes "strong" the presence of a Trading Company like ours.

• Point out, for example: METALLURGICAL in Dubai, METEC in Dusseldorf or even at the level Italian, MADE IN STEEL, where we can meet equipment manufacturers and distributors throughout Europe.

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ISSUES: Logistics in Europe• 80% of global trade in terms of volume is managed through the network of seaports and

74% of goods are transported to Europe by sea.

• The importance of seaports for movement of containers in global logistics is increasing, both for the renewed growth of trade and container and for some decisive changes that are investing the same logistics.

• Large-scale investment both for port facilities for both infrastructure connected will be needed to respond to these changes, or the increase in traffic, the presence of larger and larger ships, and the demand requirements for connectivity in the inner harbor. push this investment has involved a large number of ports in Europe, no matter how small.

• The ports of Rotterdam, Antwerp and Hamburg, the three largest European level, are investing to increase its capacity and reach, in the case of Rotterdam and Antwerp, with an annual capacity of 25 million TEUs respectively in 2014 and by 2025, but interventions also affect other areas.

• For example, in the port of Danzica in Poland a new terminal will increase the capacity of the port of 3 million TEUs, and will bring approximately 500,000 square meters of port logistics. Situated in Rijeka, Croatia, interventions are planned to improve the harbor and the surrounding area with infrastructure as an intermodal terminal and a logistics complex. As for Turkey, there are a minimum of seven new terminal on the Turkish coast for an increase in capacity of 7,000,000 TEUs, and multimodal infrastructure and logistics are provided by the Strategy for the transportation and communication in 2023. 14

development of ports in Europe

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Main Hub for European land transport

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Hub evolution in 2020

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ISSUES: payment systems

• For a company to operate effectively and successfully in international markets means knowing how to handle issues relating to the negotiations, the negotiations for the sale of the collection of payments which are the main themes of international payments, documentary credits and bank guarantees international the delivery of the goods (incoterms) and export credit insurance and factoring (forfeiting).

• It must be said that more and more companies outside the EU who decide to open their branches in Europe, then acting under the Open Account, and give themselves to customers in that country a kind of trust (albeit regulated by contracts, and insurance), you can avoid, for example, the immobilisation of capital by the customer, as happens for example for the L / C that with this tool, it is seen blocked their credit line for several months (from order to delivery and beyond).

• In a Europe of 28 Countries (and 28 languages ...), non-uniform duties, the banking system is not always appropriate to the different needs of customers and suppliers, it is clear that the newly-formed company to be in if these tasks, must recruit (or have already itself), who takes care of these major issues, even more so, perhaps, or the product specialists in the sale and distribution systems in the steel industry, which can not always obvious and may appear in a logical sense (es: the trading company that buys from one country to resell to another ...).

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Steel Trading Company in Monte Carlo (2014)

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1) Monaco Resources Group(Ex CARBOFER)

2) EDALCO SAM(Mario Vullo)

3/4) TRUSTSTEEL-LEVMET(Bruno Bolfo ex DUFERCO)

5) STEELCOM

6) BLEU INOX

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2

3/4 5

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About me

• Enrico Castiglioni

mail: consultingpromotion@libero.it

Thanks to: FEDERACCIAI – EUROPEAN COMMUNITY COMITTEE –CGL –COLLIERS INTERNATIONAL

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