ArcelorMittal South Africa 2007 Annual Report Page 12 ArcelorMittal South Africa has risen to a number of challenges in 2007. Our experience gained in dealing with each of these, both at the plant as well as in the marketplace, is strengthening our ability to emerge as the leading steel producer in sub-Saharan Africa. Renewed plants, great products and enduring business partnerships continue to create value for our shareholders. Chairman and Chief Executive's report Creating opportunities every day Overview Dear shareholder By any number of measures, ArcelorMittal South Africa endured a difficult year in 2007, a year in which a variety of operational and environmental challenges tested the company significantly. Not all these challenges are yet completely behind us; however, as we look back on the year, we can be tremendously proud of our entire team, from our new leadership team to every worker involved in maintaining, repairing or renewing our various operational plants around the country. Every hurdle cleared strengthens the company’s ability to meet its strategic goals and we are confident that this report will show that ArcelorMittal South Africa: •  offers industry leading value creation for our shareholders; •  has achieved significant improvement in operational capabilities; •   is absolutely focused on building a culture of performance through employee development; and •   is a responsible corporate citizen. This report focuses primarily on operational issues; however there are a number of important issues, including the Competition Tribunal’s finding on excessive pricing and the Environmental Management Inspectorate’s (EMI) closure of the Vaal disposal site which were widely reported on in the media. Our stakeholders need clarity on the rationale for the company’s actions and the principles which guide its responsible stewardship of these issues. Tackling the most material issues During the year under review, the three most material issues for the company were its environmental impact, the pricing of its products and the costs and reliability of production inputs: Environmental exposure Following an audit by the Environmental Management Inspectorate (EMI) in October 2007 at Vereeniging Works, the company was found to be disposing hazardous waste at a site without a permit, causing possible pollution to the surface and groundwater in the area. As it was impossible to comply immediately, the site was closed down and we had to make immediate alternative arrangements for the disposal of waste products. While we are well advanced with our R1 billion environmental mitigation programme, this event has exposed weaknesses in our management of the programme, as well as in our dealings with the relevant authorities. The environmental section of our Sustainability Report describes our exposure in more detail, as well as the plans we have in place to improve our performance. Excessive pricing During 2007, the Competition Tribunal found that ArcelorMittal South Africa was charging excessive prices on its flat products and imposed a fine of R692 million on the company. The company has also been found guilty of restrictive trade conditions. An appeal hearing is expected in the latter part of 2008 and we remain confident of our case. As we discuss in the chapter on managing our impact in the marketplace in our Sustainability Report, we contend that our pricing policy is fair and that the export rebates we offer to companies exporting