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Foundry Daily News

08. June 2007

California Steel Industries, Inc. Announces Major Expansion to Meet Market Demand

California Steel Industries, Inc. (CSI), the West Coast's largest steel manufacturer, today announced plans to increase total annual production capacity by a million tons, through addition of a second reheat furnace with state-of-the-art environmental technology.

In addition to the clean-burning natural gas-fired walking beam reheat furnace, the investment also includes associated additional improvements in cooling water treatment and in slab handling facilities, for a total capital investment of approximately $60 million.

The new furnace employs selective catalytic reduction (SCR) emission control technology and highly efficient burners, thereby significantly reducing emissions from current levels. The current reheat furnace, built in 1997, is already rated among the nation's cleanest operating reheat furnaces per ton of steel produced.

CSI now ships an average of approximately 2 million tons per year of carbon steel flat rolled sheet and pipe. It will have the capability and flexibility to produce up to 3 million tons per year with the proposed changes.

Mr. Masakazu Kurushima, President and Chief Executive Officer of CSI, said the company's expansion had been contemplated for several years but was just recently approved by the company's owners, Companhia Vale do Rio Doce (CVRD) of Brazil, the world's second largest mining company; and JFE Steel Corp. of Japan, a leading world steelmaker. He said CSI has been producing at or near its production limits in recent years, and the foreseeable growth of the Western U.S. market justifies the additional capacity.

"We are pleased that our shareholders have the confidence in us to approve this major expansion," said Mr. Kurushima. "The second reheat furnace will allow us greater flexibility to serve our customers. It also provides greater security for our operations, and it will allow us to explore growth opportunities and new products which we did not choose to pursue when we were already at full capacity with one furnace.

"Of course, we are also pleased to be able to incorporate the best environmental technology available today. We are proud of our safety and environmental record at CSI and this only enhances our performance in these areas."

The proposed additional reheat furnace already has received a Conditional Use Permit from San Bernardino County. CSI is working with the South Coast Air Quality Management District and other regulatory agencies to complete the permitting process to build and operate the new facility. Technical specifications are being finalized in discussions with equipment suppliers, and production from the new facility could come on line in approximately 24 months.

CSI employs about 1,000 at its facilities located approximately 40 miles east of Los Angeles. The company has been operating continuously since 1984, when it purchased the rolling mill facilities of the former Kaiser Steel Corp. CSI does not produce raw steel, but rather purchases slab (semi-finished steel), which it then converts into sheet and pipe products. Current sheet offerings include hot rolled, pickled and oiled, cold rolled and galvanized. CSI customers are from the service center, construction, manufacturing and energy service industries. Electric resistance welded pipe is used primarily for transmission of oil and gas.

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Actual outcomes and results may differ materially from what is expressed herein. In evaluating any forward-looking statements, please carefully consider factors that could cause actual results to differ materially from the expectations of the company or its management. For a more detailed discussion of these factors, please see the company's most recent filings with the Securities and Exchange Commission. In particular, we direct your attention to our most recent Form 10-K, in particular Item 1 with respect to the general discussion of factors affecting our business, Item 7 with respect to "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 7A with respect to "Quantitative and Qualitative Disclosures about Market Risk". The company undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

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