Mittal Steel South Africa Limited

Interim Financial Results for the 6 months ended June 2006

introduction Davinder Chugh

3

Overview

• Half year earnings of R1 912m

• Lower average international and domestic steel prices

• Significant cost increases on major input materials

• Liquid steel production down by 5%

• Earnings per share of 429c down 41% on H1’05 but up 3% on H2’05

• Domestic despatches up 22%

• Improved safety performance

• Remain committed to capacity expansion programme

Q2’06 earnings up 80% on Q1’06

market and operations Davinder Chugh

5

Key Result Drivers

H1’06 vs H1’05

Strong local sales countered slowdown in prices

H1’06 vs H2’05

* Rolling 12 months

Labour productivity* +5%+10%

Weighted average Rand HRC price (17%)+2%

Total sales volume +7%+1%

Movement in average ZAR/US$ (2%)+3%

HRC & Billet Rand cash cost per tonne +10%+4%

Weighted average US$ HRC price (18%)+6%

6

Global Environment - Export Prices

1994100

200

300

400

500

600

700

Expo

rt p

rices

(c&

f) U

S$/t

HRC Low carbon wire rod

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Prices remained above historical trends, though off peak

2006

7

Global Environment - Market Trends

• Prices revived in 2006 and continue to increase

• World economic growth expected to remain positive at 4.9% (IMF)

• Global consolidation received new impetus with the Arcelor S.A. and MittalSteel Company N.V. merger

• Steelmakers’ input costs remain high & will continue to support prices

• Chinese economy still growing at high rate (10%)

International steel markets remain strong

8

Global Environment - Chinese Market Trends

• China a net exporter of finished steel products in H1’06• Trend likely to continue in H2’06• In 2005 China accounted for

- 31% of world steel production - Per capita consumption now 35% above world average

ExportImport

China continues its net exporter status in 2006

Mill

ion

tonn

es

Chinese import/export tonnes 1998 - 2006

0

10

20

30

40

1998 1999 2000 2001 2002 2003 2004 2005 2006(e)

Source: ISSB & Mittal Steel South Africa

9

Global Environment - Benchmark Prices

Margins remain under pressure due to increased input costs

Global input costB

ased

to 1

00

Coking coal Iron ore

0

50

100

150

200

250

300

350

Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06

10Raw materials continue to exert upward pressure on cost

+30%

+19%

Freight rates

Scrap prices

Zinc prices

+19%Iron ore fines

Commodity

Hard coking coal

(1%)

+1%

+88%

(8%)

(33%)

+114%

(5%)

Global Environment - Input Cost Trends

H1’06 vs H2’05 H1’06 vs H1’05

11

Input Cost Positioning

-

-

63%

5%*

-

-

Imported

100%

100%

25%

-

36%

-

Domestic supply

agreements

-

-

12%

95%

64%

100%

Backward integrated

1 072Coke (Metallurgical)

895Scrap

1 044Other coal & anthracite

365Coking coal (Market)

1 406Coking coal (Metallurgical)

4 513Iron ore (Lump, Fine & DRI)

Tonnes ‘000

Coal remains the biggest exposure

Pellets* 263 100%- -

Six months to June 2006

* Imported for Saldanha Steel

12

7%

14%

8%

3%

60%8%

Cost Developments

H1’05

7%

7%

9%

3%

57%

17%

H1’06

CoalIron ore Scrap/DRI Alloys/Coating Refractories Other

Raw materials constitute 43% of cash cost

13

Domestic Environment – Despatches

SA steel industry local despatches up 24% on H1’05

’000

tonn

es

FlatSource: SAISI

Long1970 1976 1982 1988 1994 2000 2006(e)

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

14

Domestic Environment – Inventory Levels

No evidence of inventory buildup

Act

ual l

evel

(’00

0t)

Inventory levelSource: SAISI

1997 1998 1999 2000 2001 2002 2003

Inventory levels outside the primary steel producers

Week’s despatches

Wee

k’s

desp

atch

es

2004 2005500

600

700

800

900

1000

1100

6

7

8

9

10

11

12

13

14

15

15

Domestic Environment – Imports

Although increasing trend, imports remain relatively low

% o

f loc

al s

ales

% of local salesSource: SAISI

1997 1998 1999 2000 2001 2002 2003Imports

’000

tonn

es

2004 20051%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

15

25

35

45

55

65

75

85

95

16

Key Performance Indicators

H1’06

Continued focus on cost and local market

H1’05 H2’05

325- US$/t 300 303

2 571Revenue per head (R’000) 2 282 2 321

1 413Employees per million tonnes produced 1 489 1 487

2 045HRC & Billet cash cost - R/t 1 859 1 972

Local sales as % of total sales 66%58% 54%

17

Liquid Steel Production Volumes

Production interruptions during Q1’06 reduced output

‘000

tonn

es

H1’05 H2’05 H1’06

1986

616

1105

3707

1837

628

1089

3554

1863

570

1100

3533

0

500

1000

1500

2000

2500

3000

3500

4000

Vanderbijlpark Saldanha Long Products Total

18

Shipment Volumes

Despite production interruptions, sales improved by 7%

1520

Vanderbijlpark Saldanha Long Products Total

’000

tonn

es 1603 1677

547 613 540

966 981 1015

30333197 3232

0

500

1000

1500

2000

2500

3000

3500

H1'05 H2'05 H1'06 H1'05 H2'05 H1'06 H1'05 H2'05 H1'06 H1'05 H2'05 H1'06

19

Mittal Steel South Africa - Geographic Sales

Focus will remain on Africa

H1’05 H2’05 H1’06

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Oceania

Europe

Asia

Americas

Total Africa

Rest of Africa

South Africa

20

Investment Programme

1 700Relines

3 000Value adding projects

1 000Maintain capability

700Environmental related projects

1 568Completed in 2005

Rm

Investment plan on track

Completed in 2006 YTD 545

2006 to 2009

21

Safety Remains our Priority

Improved safety performance

Dis

ablin

g in

jury

freq

uenc

y ra

te (D

IFR

)

Disabling injuries per million man hours worked(employees & contractors)

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

H1'04 H2'04 H1'05 H2'05 H1'06

• 21% improvement in DIFR

• 1.8m man hours without disabling injury at Vanderbijlpark

• 1.0m man hours without disabling injury at Newcastle

• Saldanha Steel ranked amongst the world’s best

finance Kobus Verster

23

Headline Earnings

H1’06H2’05Rm

Earnings up 3% on previous six months

* After tax

H1’05

302286- in US$m 5211 912 1 858Headline earnings 3 221

19 120Equity earnings* 157

2 2Income from investments 3

14776Financing cost - net intst income 66

2 202 2 813Net operating profit 4 053476 (42)Gains & losses on forex & financial instruments 287

(908)(1 001)Tax (1 326)

(26)(110)- imputed intst on non-current prov (30)

12 132 11 910Revenue 12 386

Goodwill impairment 11

24

Comparable Headline Earnings Trend

Earnings remain healthy and off recent low

Rm

2003 2004 2005 2006

657 596

352

655 669

1393

1575

1422

15781643

987871

684

1228

0

200

400

600

800

1000

1200

1400

1600

1800

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

25

Operating Profit

H1’06H1’05Rm

Lower but robust profitability

24(43)Corporate & others 9

62159Coke & Chemicals 142

2 2024 053Total 2 813

1 1812 812Flat steel 1 679

H2’05

9351 125Long steel 983

26

Cash Flow

(784)(1 501)Tax

963Investment income

837310Net cash flow

5 9694 249Net cash

(624)

153

(606)

(703)

3 305

H1’06

(1 783)Dividends

(493)Capex

(934)Change in working capital

74Net interest income

4 944Cash profits from operations

H1’05Rm

Strong cash flow

(1 466)

40

926

5 137

(1 070)

(1 074)

952

93

3 451

H2’05

27

Financial Ratios

28.622.5Net cash/equity (%)

1937Return on equity (%)*

1.31.5Revenue/invested capital (times)*

2337EBITDA margin (%)

18

H1’06

33Operating margin (%)

H1’05

Ratios still support good investment case

26.3

21

1.5

29

24

H2’05

*Annualised

28

Share Performance

Excellent share performance in both ZAR & US$

Inde

x (D

ec 2

001

= 1)

All Share (ZAR)

MLA (US$)All Share (US$)

0

400

800

1200

1600

2002 2003 2004 2005 2006

MLA (ZAR)Source: McGregor BFA

29

Dividend

• Dividend policy

- Distributing one third of headline earnings

• Dividend declared

- Interim dividend of 143 cents per share - 4 September 2006- Dividend covered 3 times by EPS of 429 cents

Rewarding shareholders

other developments Davinder Chugh

31

Competition Tribunal, SARS and Pricing Policy

Competition Tribunal• Final arguments to be heard in November 2006

• Decision probable only next year

SARS BAA dispute• Awaiting SARS response regarding arbitration

Pricing structure• New pricing structure

• Interaction with DTI continues

32

Blast Furnace D Reline

Blast furnace D reline postponed to Q1’07• Initial timeline resulted in increased risk

• Delay may improve competitive contracting

• Interim measures in place to counter risk of extension

Delay of reline should not have a material financial impact

33

Corporate Social Investment

• Mittal Steel South Africa Science and Educational Centre

• Science Unlimited exhibition

• Mittal Steel Science Olympiad

• Sport Development Fund

CSI focus is on education, housing and job creation

34

Merger with Arcelor

• Strong support for merger

- 92% acceptance by Arcelor shareholders

• Unrivalled geographic footprint

• Exposure to technologically advanced products

• Leading position in developed markets in Europe & North America

• High level of vertical integration and unmatched financial flexibility

35

Merger with Arcelor

• Annual synergies of US$1.6bn

- Marketing & trading US$570m- Purchasing US$500m - Manufacturing and process optimisation US$470m

• Combined output of 114mtpa and EBITDA of US$14.5bn

• Leading position in the most attractive markets

- 61 plants- 27 countries

• Reducing cyclicality with geographic & product diversification

Strong industry logic

outlook

37

Outlook for Q3’06

Business environment• Local demand expected to improve further

• International price trends will impact from H2’06

• Stable production environment expected

• Raw material prices continue to influence production cost

• Exchange rate will have an important influence

Earnings• Earnings expected to remain strong in Q3’06

Continuous focus on cost control

Mittal Steel South Africa Limited

Interim Financial Results for the 6 months ended June 2006