1. DTN Annual Symposium Benefits of regionalization – “ONE ASEAN” approach Sanjay Dayal Chief Executive - Asia

2. 2 2009 Renewing the business in ASEAN BlueScope has large investments in ASEAN for over 40 years. Business performance has been inconsistent with a loss in 2009. A new approach was embarked on after critically looking at all aspects of the business We concluded it was too fragmented, too costly and had poor market focus For the restructure to work, we needed to simplify the business and treat it as one regional business

3. 3 2009 ASEAN Business Regionalization ASEAN BUSINESS REGIONALIZATION “ONE ASEAN” Safety, leadership, culture, BSL values Cost Competitive - Support functions integration - Effective business processes - Minimise duplication Organisation Restructure - Minimal layers and empowerment - Market led - Local talent Regional Strategy - Based on market intelligence feedback - Clear business model, business direction and priorities - Identify growth opportunities

4. 4 “ONE ASEAN” drivers (Regionalization) “ONE ASEAN” emerged as fundamental business philosophy because: 1.The wider geo-political reality of the ASEAN Economic Community (AEC) meant that the business fundamentals of the countries in which we operated were growing increasingly similar 2.We wanted to establish a low cost region wide matrixed organisation structure from which the country based businesses could leverage scarce expertise – avoid duplication of resources 3.We wanted to maximise the advantages of our geographic foot print in sourcing raw materials and in the market 4.Without a “ONE ASEAN” approach, key processes and systems will tend to be duplicated and therefore higher cost

5. 5 Interdependence - To - Integrated Community Benefits of Regionalization – Supply Chain 1.Build horizontal supply chain organization to leverage assets & improve responsiveness 2.Improved cost competitiveness through regional commodity management and volume leverage 3.Regional processes NOT just localised product attributes establish the competitive advantage 4.Improved risk management and regulatory compliance

6. 6 Benefits of Regionalisation – the Market 1.Country leaders focus primarily on ‘making and selling’ – support services and expertise are leveraged regionally 2.Product costs have been reduced through leveraged sourcing 3.Consistent branding and reduced marketing costs 4.Improved sales and marketing processes through better application and utilisation of resources 5.Cross border sales – market “seeding” in Indonesia with Vietnamese product utilizing Form D process.

7. 7 Benefits of Regionalization – organisation & people 1.Fewer people needed in support services so quality is higher 2.Our flat matrix organisation structure encourages/requires greater cross country interaction – everyone is involved in the day to day business. 3.Strategy development, planning and implementation is regionally based yielding maximum leverage 4.A “ONE ASEAN” philosophy inevitably leads to leadership localisation – ex-pat involvement has been reduced significantly. 3 of our 4 countries are led by ASEAN citizens and country management teams are heavily localised.

8. 8 But the proof is in our results… ASEAN EBIT FY2007 – FY2011 A$’Mn FY11FY08FY09FY10 Bluescope ASEAN EBIT

9. 9 While ASEAN has benefitted from Free-trade, Challenges exist… Increasingly non-tariff barriers, e.g. accreditation requirement for international players in Indonesia (SNI), TISI requirement in Thailand, and Annual Duty Exemption in Malaysia Import duties and tariffs ranging from 5% to 20% persist and anti-dumping actions in the region are increasing These trends are designed to enable local industries to transition to greater competition.