Danieli & C Officine Meccaniche S p A : Year 2023

DANIELI YEAR 2023

Danieli Year 2023

Results from Innovation, Reliability and Partnership

CONTENTS

• LETTER
  TO THE STAKEHOLDERS

10 VISION AND STRATEGY

26 DANIELI GROUP STRUCTURE

29 REPORT OF THE BOARD OF DIRECTORS

58 DANIELI PLANTMAKING

60 DANIELI LEADING TEAM

ANNEX THE DANIELI COMPETITIVE

GREEN METAL

70 DANIELI RESEARCH AND DEVELOPMENT

72 DANIELI ENGINEERING AND DESIGN

74 DANIELI AUTOMATION

76 DANIELI PRODUCTION CENTERS WORLDWIDE

82 DANIELI TURNKEY

84 ADVISORY SERVICES

86 DANIELI SERVICE

AND CUSTOMER SUPPORT

90 MAIN EVENTS OF THE YEAR ORDERS AND STARTUPS

122 ABS STEELMAKING

142 DANIELI HISTORY AND MILESTONES

Danieli & C. Officine Meccaniche S.p.A. Headquarters in Buttrio (Udine) Italy Share Capital: euro 81,304,566 fully paid.

The data in this publication refers to the period 01.07.2022 / 30.06.2023

Letter

to the Stakeholders

Dear Shareholders, Customers and Colleagues		Gianpietro Benedetti
		CHAIRMAN OF THE BOARD OF DIRECTORS

Results for the fiscal year 2022 / 2023:

(millions of euro)

2022 / 2023

2023 / 2024

Group Results

Group Forecast

4,102

4,000 / 4,300

Revenue

424

400 / 430

EBITDA

Order book

6,200

6,000 / 6,500

MARKET FORECAST

The year 2022 and the first six months of 2023 were exceptionally good for steelmakers in Europe and particularly in the USA.

For Danieli fiscal year 2023-24 (July 2023 - June 2024), a decrease in steel demand is expected, which is a recurring phenomenon after boom periods. Likely exceptions to this may be India and the SEA and MENA regions where, on the contrary, steel consumption is expected to increase. Additionally, the worldwide nonferrous metals sector is expanding, mainly due to the need for food packaging, electrical vehicles, and aerospace industries.

DANIELI / PLANTMAKING

The steel market trend in the last two to three years resulted in positive balance sheets for the steelmaking industry. Hence, there has been an increase in investments aimed at improving product competitiveness and quality, and to reduce carbon emissions.

As a consequence, our plantmaking order backlog is satisfactory both in terms of quantity and quality (gross operating margin). Moreover, the innovative technologies included in Danieli

MIDA minimills -such as the Digimelter, which is progressively replacing the existing traditional EAF technology, and the direct casting-rolling for flat (QSP-DUE) and long (QLP) products- have growing success on the international market, so much so that our competitors have abandoned their own technologies to copy ours.

The success of MIDA, QSP-DUE and QLP plants is tied to the competitiveness of their total cost per ton: CapEx + OpEx + CO2tax.

With the Energiron direct reduction process technology, we have had and will have excellent opportunities for projects aimed at replacing existing coal-based blast furnaces. These opportunities are more numerous in Europe, rather than in the USA, where fewer blast furnaces are operating.

On the contrary, in India and China, where not enough gas is available, coal-based blast furnaces continue to be installed, although utilizing innovative technologies that allow reducing

CO2emissions.

Regarding innovation, we will continue making the necessary investments to pursue the digitalization of the steelmaking plants.

In conclusion, the order backlog is satisfactory, not only because of the positive steel market trend of the last two-three years, but also thanks to the innovative technologies that Danieli has in its portfolio.

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The revolutionary Danieli MIDA

Hybrid minimill for competitive Green Steel production individual technologies

THAT make the difference

Letter to the Stakeholders

Q3 PLATFORM

THE DANIELI DIGITAL PLANT SOLUTION

FOR OPEX OPTIMIZATION AND QUALITY IMPROVEMENT

DANIELI MIDA

HYBRID MINIMILL

HYBRID BY DESIGN

WITH Q-ONE

AND Q-JENIUS

Hybrid feeding:

at least 15% energy by renewable sources produced at the site

Scrap-to-melt

and continuous scrap charge

On-site DRI production

with hot-DRI charge at 600 °C

Digimelter®

digital melting unit featuring Q-One® power feeder

Q-Jenius

for Hybrid management

Octocaster®/

Dysencaster®

Danieli Universal Direct Rolling for long and flat products*

*Energy and CO2 saving (no billet/slab reheating)

ABS / STEELMAKING

The upcycle of the steel market has contributed to the achievement of positive financial results also for ABS, producing specialty long products.

In any case, ABS has continued promoting the products from the new Quality WireRod mill (QWR) on the European market, and those of the new high-quality,ore-grinding balls production plant worldwide, with a consequent improvement of profitability in the long term.

This year a new investment plan worth 650 million euro has been launched, targeting a production capacity of 2.3 million tpy. Moreover, other investments will be made in upstream and downstream facilities, i.e. in the businesses that collect raw materials (scrap) and in downstream service centers.

Projects aimed at further CO2 emissions reduction, which have

already achieved virtuous levels, as well as circular economy projects, are still underway.

We are preparing for the market downturn that will characterize the next two years or so, even if we feel that it will have fewer consequences on the specialty steel sector.

GROUP VISION

The priority of innovation aiming at reducing OpEx and

achieving net-zero carbon emissions to maintain front-runner positions both in the plantmaking and in the steelmaking segments is confirmed.

• Based on these considerations, the targets for the 2023-24 financial year are:
  Revenue 4,000 / 4,300 M Euro, EBITDA 400 / 430 M Euro, Order Book 6,000 / 6,500 M Euro.

SOCIAL ASPECTS AND EDUCATION / EMPLOYMENT

Danieli's social commitment to support the local community continues:

• The Educational Hub Zerotredici is well-established and

appreciated by students and families, both for the high quality of education and for its focus on soft skills and teamwork.

• The MITS (Malignani High Technical Institute) of Udine, Italy, has obtained excellent results in preparing its students, thus establishing itself as one of the top national, higher technical institutes. The goal is to enroll 600 students within two

years.

The new facility for the MITS is currently under construction in Udine, with an investment of approximately 25 million euro, to which should be added the cost of the planned first-class laboratories. We are targeting to be ready for the 2024-25 school year.

• Danieli, which is one of the sponsors of the Italian paralympic swimming team, welcomed with great satisfaction the success of the Italian team that ranked first in the 2023 Para Swimming World Championships in Manchester.

We wish to thank our shareholders who have allowed us to invest 85-90% of our profits back into the company. This is perceived as an expression of the shareholders' trust and esteem for the Danieli Team, which we intend to honor to the best of our abilities.

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Letter to the Stakeholders

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It is a trust which, in any case, has been repaid by the fact that the acquisition of Danieli shares has been confirmed to be a good, long-term investment.

On behalf of the Board of Directors and of the shareholders, special thanks go to the Danieli Group Team who, with passion and professionalism, are strongly committed to achieving the agreed objectives for our company's continuing improvement, and to honor the motto "Danieli, the reliable and innovative partner to be a step ahead in CapEx and OpEx", for the satisfaction of our business partners. And last, but not least, we express thanks for their efforts in bringing about the cultural change that today's technological and social trends call for, which is essential to maintaining market shares and competitiveness in a highly challenging global economy with constantly evolving quality requirements.

Danieli vision on plant digitalization. Featuring artificial intelligence,

and based on a common data platform, it ensures the most competitive plant operation.

ROBOTICS

SENSORS

CAMERAS

PLANT

DATA

Q3-PLATFORM

IOT INTERNET

OF THINGS

BIG DATA

VIRTUAL REALITY

• AUGMENTED REALITY

MACHINE LEARNING

• ARTIFICIAL INTELLIGENCE

G N

COMPETITIVE

CAPEX

AND OPEX

MEANS

DANIELI

GREEN METAL TECHNOLOGY

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The Danieli Mida Hybrid Minimill

MIDA QSP-DUE for flat products

MIDA QLP-DUE for long products

Scrap shredding					Lateral and top
and cleaning; smart				continuous
handling (automated
charging system
scrap yard).			(ECS)

SCRAP

SCRAP

ENDLESS SCRAP

ROUTE

MANAGEMENT

CHARGE

50 kWh/ton

30 kWh/ton

saving

saving

THE REVOLUTIONARY

DANIELI MIDA

HYBRID MINIMILL

11% lower electrode consumption; Zero power grid disturbances.

DANIELI DIGIMELTER®: THE EVOLUTION OF THE EAF

30 kWh/ton saving

Q3 ADVANCED SOLUTIONS FOR INTELLIGENT PLANTS Additional overall plant optimization thanks to digital solutions

20 kWh/ton savings.

QSP-DUE® DANIELI UNIVERSAL DIRECT ROLLING FOR FLAT PRODUCTS

Up to 260 kWh/ton saving.

DYSENCASTER®

Q-HEAT FLAT

WIDE RANGE

UP TO 6.5 M/MIN

INDUCTION-

OF QUALITY

CASTING SPEED

TEMPERATURE

HOT-ROLLED

CONTROL

STRIP

Danieli Universal Direct Rolling.

Three rolling modes: coil-to-coil,semi-endless, and endless for no steel-grade production limits.

COMPLEMENTARYSERVICES

DRI

ROUTE

C02reduction:

800 kgCO2/tls DR+DDM route vs.

1800 kgCO2/tls BF+BOF.

	DR+DDM		DRI
PRODUCTION		HOT CHARGE
	100 kWh/ton
ROUTE
				saving

DRI

PRODUCTION

USING

HYDROGEN

324 kgCO2/tls using up to 70% hydrogen instead of 100% natural gas (without compromising DRI quality).

HYBRID

VIA Q-JENIUS

50 kWh/ton saving

Use of alternative power sources at site to Q-One® via patented Q-Jenius DC link and Q3-Jenius energy management.

QLP-DUE® DANIELI UNIVERSAL DIRECT ROLLING FOR LONG PRODUCTS

Note: energy savings expressed in kWh/ton

(1 kWh/ton = 3.6 MJ/ton).

OCTOCASTER®	Q-HEAT LONG	BARS,
	UP TO 10 M/MIN		INDUCTION-			WIREROD,
CASTING SPEED
			TEMPERATURE	MERCHANT
				CONTROL	SECTIONS

Up to 330 kWh/ton saving.

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Vision and Strategy

Vision is our commitment to the understanding of complex issues and critical developments that are affecting our customers, causing continuous and rapid market changes.

In the following pages, the Executive Board Members of the Danieli Group, of the Danieli Plantmaking Division and of the ABS Steelmaking Division present their views and perspectives on the company and the market, and how they view the future

Danieli Group

Danieli Plantmaking

ABS Steelmaking

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Danieli Group Executive Board

Vision and Strategy

Danieli Group Executive Board Vision and Strategy

GIANPIETRO BENEDETTI

Group Operative Chairman

Our 2023/2024 vision and the related guidelines for the Group plantmaking and steelmaking, and community development, are presented here in a summary form.

Danieli Plantmaking

Our ambition to maintain a worldwide front-runner position in the design and construction of steelmaking and nonferrous metal -aluminum, copper, and magnesium- plants is confirmed.

This ambition is backed by the design of innovative, high-tech plants producing at a very competitive CapEx + OpEx + CO2 tax cost per ton.

Of course, in addition to innovation, competitiveness is also sustained by the quality of our plants and service to the customer.

The worldwide success that the MIDA- QLP and QSP-DUE direct casting-rolling plants as well as the Digimelter furnace equipped with Q-One power feeding system is the result of the massive investments in innovation made over the

years.

In the medium term, in addition to the MIDA-QLP and QSP-DUE technologies, we will continue investing in the digitalization of steelmaking plants. Digitalization means Digital Twins, the use of machine learning, and looking ahead, quantum technology as well.

For the company management, we

launched the "Lean and Fast" project to reduce the impact that an overly structured organization has on the flexibility, speed, and quality of the managers' decisions and actions.

ABS Steelmaking

At ABS we will invest approximately 650 million euro to be able to produce 2.3 Mtpy of quality steel. This follows the entry into production of the QWR

4.0 mill and of the new, high-qualityore-grinding ball production plant. Furthermore, we foresee the acquisition of scrap-collection companies and investment in service centers, to improve downstream services in Northern Italy, and in Central and Northern Europe.

Family, school, society

Investments in schools and education will continue.

The activity of the Educational Hub Zerotredici is well-established, to the satisfaction of both students and families. Besides its "learning by doing" approach, it is proving for pupils to be much more engaging than expected.

The expansion of activities of Danieli Academy will continue, as well as the numerous collaboration projects with universities.

The construction of a new, modern facility of the MITS Academy Higher Technical Institute is ongoing and will be completed by Autumn 2024. It should be therefore ready for use for the 2024- 25 school year. The school will be also equipped with high-tech laboratories.

Social investments to preserve at the best the historical and/or cultural heritage

of our region remain at the center of Danieli's commitment.

Carla

Camilla

Rolando

Alessandro

Antonello

Stefano

Giacomo

Gianpietro

Anna

de Colle

Benedetti

Brussi

Mordeglia

Scolari

Mareschi

Benedetti

Mareschi

Paolone

Danieli

Danieli

CAMILLA BENEDETTI

the emissions of the steelmaking plants

We know well the goals and difficulties

Group Vice Chairwoman

installed at ABS.

we will have to face and are ready to work

and ABS Chairwoman

Above all, the Group offers steel

hard to achieve such results.

producers innovative plants and highly

ALESSANDRO BRUSSI

Today Danieli's social role has expanded

Group Vice Chairman - CFO

technological solutions to decarbonize

by interacting with an ever-increasing

, also

production by eliminating CO

number of Stakeholders to be involved in

2

Danieli has been listed on the Milan

reducing the economic burdens

foreseen

initiatives, to support the community.

Stock Exchange since 1986 and since that

by the emission taxation mechanisms,

We protect our employees with training

date it has always operated with positive

accompanying them towards a net-to-zero

and safety, and reward them based on

results, respecting the commitment to

production in line with their sustainability

equity, meritocracy, and commitment.

targets.

guarantee our Shareholders a good return

The goal is to return to investors a

on their investments, and in any case

Our medium-term target is to achieve a

dividend that repays their investments

maintaining a solid financial situation to

stable turnover of 5 billion euros for the

and to satisfy Danieli customers who ask

allow for growth and good visibility for the

Group, with profitability of at least 500

for product innovation. Our plants ensure

future.

million euros, while maintaining a solid

production efficiency and respect for the

The fight against climate change and

net-cash position and greater business

environment, with a strong commitment

the zeroing of greenhouse gas emissions

diversification and performance stability,

to quality and punctuality by using an

represents a fundamental task for our

to guarantee continuity and growth of

efficient, ethical and sustainable supply

Group, which aims to increasingly reduce

company results.

chain.

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Danieli Executive Board

Vision and Strategy

Danieli Executive Board Vision and Strategy

GIACOMO MARESCHI DANIELI

Danieli Chief Executive Officer

ROLANDO PAOLONE

Danieli Chief Executive Officer

and Group Chief Technology Officer

One of the most important and exciting

events for our company is the presentation of the vision for the coming financial year.

We have decided to continue investing in research and innovation to cover the entire metal-making market, offering a widespread and on-time service, with the aim of consolidating our leadership in the plantmaking sector.

We can proudly affirm that we have achieved -or are about to achieve- what we had planned. These goals have been accomplished through the investments we have made, and the strategies adopted, along with a rigorous discipline, the competitiveness we have demonstrated along the way, and the indispensable value of meritocracy that permeates our organization.

As a technology provider, Danieli is among the major players in its target market. The company is structurally and financially sound, and for years, it has consistently created value for the stakeholders.

We are proud of our mechanics,

automation, technological processes, as well as market coverage. The awareness of doing well nourishes the belief that we can, and shall always, improve to remain first in class.

With this in mind, we approach the

2024 vision by focusing on production sustainability,

Artificial Intelligence and spirit of partnership.

Production sustainability

The plants we design represent the best- available technology on the market and at the same time ensure a reduction in pollutant emissions worldwide, thus improving the environmental impact. Sustainability means to provide competitive plants at the optimal CapEx and OpEx, which requires low energy consumption and thus minimal emissions. Our patented technologies allow the use of renewable energies, are hydrogen-ready, tailored to our customers' needs, and support sustainability.

Furthermore, on our side, the use of renewable energies in our plants is mandatory and current to maintain competitiveness and trust with our

customers.

Artificial Intelligence

In this scenario, process improvements supported by progressive use of Artificial Intelligence will enable our customers to reduce production costs, optimize workflows, increase product quality, generating more value.

Artificial Intelligence is definitely part of our 230M-Euro investment in research and development, and this will lead to smarter and smarter plants, heading towards autonomously driven factories in

• medium-term.

This will help us to compete in a market that, according to macroeconomic data is expected to be in a downturn phase, proving our innate ability to turn threats into opportunities.

And for us, investments are also intangible.

Spirit of partnership

A priority at Danieli is given to the relationship with the customer, who must be considered as a true partner.

This means transitioning definitively from a supplier-customer relationship to a partnership one, allowing us to cultivate win-win relationships and seize

opportunities that strengthen Danieli leadership.

The prerequisite for achieving the

goals of the next financial year is the

understanding and sharing of our vision, the engagement process being key to the final product.

With the support of Human Resources and corporate Academy, we will continue to enhance talents at Danieli companies worldwide.

With a motivated management and an enthusiastic senior team that share and pursue the company vision, and supports improvement plans, also the next financial year will be full of satisfaction and achievements, embracing sustainability, advanced digital technologies, and partnership.

MICHELE MARINUTTI

Management Control,

Information Technology

ANDREA DEANA

Finance and Administration

Be fast, be lean, be simple, be ambitious, be competitive, and be a team: these are the key factors of our daily agenda.

High volatility, uncertainty and complexity shape the markets where we operate, alter economic and political balances, and influence the investment choices of our clients.

Our departments need to invest in

people - transforming them into "business partners" of Sales, Business Units and Operations, as well as provide critical analysis supported by data, statistics and "what if" scenarios. This will allow the group management to take better decisions, lead the company towards new challenges, ensuring growth and prosperity.

Our goal is to turn reporting into added-value information, ensuring transparency and credibility for the

Zhang

Mattia

Giacomo

Marco

Stefano

Andrea

Antonello

Michele

Guido

Nico

Paolo

Chang

Rinaldis

Mareschi

Di Giacomo

Stafisso

Deana

Mordeglia

Marinutti

Carnelutti

Bleijendaal

Menta

Danieli

Rolando

Antonio

Paolone

Vallan

company's stakeholders. This means

PAOLO MENTA

support our decision making.

dynamic sizing of direct/indirect company

Competitiveness, tendering,

We push our limits further by acquiring

functions consistent with the current and

macro-planning

new knowledge - keeping an open-minded

prospective workload, along with constant

approach so that we remain ahead of the

and detailed monitoring of order backlogs,

The Tendering and Costing Department

global competition.

structure costs, extra costs, and cash flow.

works to enhance Danieli's market

New technological solutions and high-

The constant evolution of the IT tools

competitiveness, to achieve the best

quality manufacturing processes,

remains fundamental. Among many

quality and CapEx for every plant

combined with the best procurement

projects, the first implementation of the

supplied.

expertise are just some of the key points

We identify the best scenarios combining

new ERP deserves to be mentioned: it

that support our daily work of setting the

went live this financial year at one of

Danieli Workshop products with

project time and cost targets.

our subsidiaries, and it has shown us

procurement opportunities, and we make

many opportunities for improvement

sure that every project will fit into the

and efficiency. Now, with the start of

overall workload, within cost and time

MARCO DI GIACOMO

targets.

the global phase, we will extend it to the

Global Procurement and Logistics

entire group. This project will represent a

The ability to recognize the best

further step towards a fast, lean and data-

available benchmarks and macrotrends is

We are a global team driving continuous

therefore crucial, and we are helped by

driven company.

improvement with a reliable supply chain,

digitalization, with forecasting models that

to support competitiveness and business

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Danieli Executive Board Vision and Strategy

performance, and to find customer satisfaction.

We add value by seeking an optimal balance of costs and quality, by managing demand, and by supporting actions for greater competitiveness and innovation. Strategic purchasing and logistics partners help us to identify who to work with, and who can also help the company to be competitive and innovative.

We promote digitization and artificial intelligence systems that allow indexes and trends to be easily monitored. We contribute to sustainability for corporate social responsibility by operating ethically and transparently.

MATTIA RINALDIS

Global Manufacturing

"Doing" is our fundamental belief and

mission, and through tangible actions, we forge our path to excellence. Strategically located around the world, our factories are supported by continuous investments in cutting-edge technologies, for maximum productivity and market competitiveness.

We are a global team with valuable know-how that enables us to continually refine our products, gaining a deep understanding of them, laying the groundwork for innovation, competitiveness and support for our customers in every production step, ensuring a fast and reliable return of

investment.

Our people grow their competence in a dynamic and international environment in which excellence and merit are systematically rewarded. Uncompromising and consistent quality is our commitment. Every product that leaves our facilities bears the seal of our dedication to excellence. This commitment to quality extends to every stage, from ideation to production and beyond.

Uncompromising and consistent quality is our commitment. All products produced at our worldwide facilities show our dedication to excellence.

GUIDO CARNELUTTI,

ANTONIO VALLAN

Customer Service

An increasingly advanced Service model responds to customer requirements and supports of core products. This approach is enhancing the range of assistance that Danieli Service can offer and guarantee to the market, being able to generate synergies and provide added value to customers. The implementation of "intelligence" on the products will deliver smart solutions to monitor product service life based on performances, helping customers to improve equipment efficiency and sustainability through customized digital maintenance packages (Service +), for OpEx and CapEx optimization.

With these new approaches and consolidation of our traditional duties, such as guaranteeing quality, punctuality and skilled resources, we will improve connection with customers.

Among our increasingly advanced services are automated order management; PaaS -Product as a Service with digital twins and services to monitor and predict activities, improve performances,

and extend warranties; dedicated

production cells for lean and intelligent manufacturing within Danieli workshops and worldwide service centers; machine refurbishments and always-ready"D-Swap equipment", to serve customers in both planned and unplanned stoppages.

Warehouses for high-rotation parts,

specific customer-centered stocks, and demand-driven management, ensure quick deliveries worldwide at the right

time and cost, and consignment stock for consumables and equipment. This allows customers to avoid costly procurement and ensure rapid and continuous availability, guaranteeing production continuity with just one click.

Additionally, we are investing in

innovative materials/coatings to guarantee better performances and longer lifetimes for our products and consumables.

Danieli Service Worldwide is expanding, consolidating local support to all customers and is ready to take on new challenges to achieve their satisfaction.

ANTONELLO MORDEGLIA

Danieli Automation Group

and Digi&Met 4.0

The global market is undergoing

profound transformations, which we have anticipated through extensive research and groundbreaking technological advancements. We have remained steadfast in our commitment to energy efficiency, intelligent automation, and robotics, achieving significant milestones. Our Q-One technology, covered by several patents globally, is the cornerstone of our innovation, in evidence thanks to the digital furnaces now in service for multiple customers, including Tokyo Steel, Shin Kansai Steel, Liberty Steel, Algoma Steel, Nucor Steel, Commercial Metals Company, and many others. These ventures have demonstrated remarkable results for energy savings, electrode optimization, and refractory management. The advantage offered by this groundbreaking product is its ability to enhance productivity by managing the current frequency during the melting process.

Danieli stands as the global pioneer in the digitization of electric arc furnaces, a distinction that underscores our technological leadership.

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