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News Release

January 4, 2011
JFE Steel Corporation

2011 New Year’s Message

Eiji Hayashida President and CEO, JFE Steel Corporation
Eiji Hayashida
President and CEO,
JFE Steel Corporation

2011 New Year Message to all Group Employees

Pursuit of true globalization in final year of medium-term plan

Happy New Year and warmest greetings at the start of another year!

In 2010, the Japanese economy continued to recover led by exports, but the upswing began to level off when government subsidies for eco-friendly car purchases ended and the yen started appreciating in the second half. The yen's sharp strengthening in this sluggish environment further accelerated structural changes, such as the shifting of manufacturing overseas. We are concerned about the effects of this trend, which could be significant. Moreover, due to a shift to quarterly pricing of raw materials contracts, we were obliged to ask customers to accept revisions in our product pricing system.

Despite such developments, JFE Steel continued to strengthen itself for future growth. In line with our third medium-term business plan's envisioned goal of a non-consolidated crude steel production system with a 33-million-ton capacity, we completed the revamping and blowing-in of our Kurashiki No.3 blast furnace and expanded capacity at our Fukuyama steelmaking facility. We will realize our capacity goal once the Fukuyama No.3 blast furnace is revamped. Meanwhile, we further expanded our sales department and concluded additional alliance agreements, mainly in Asia, for strengthened sales.

Overseas, we advanced measures to capture demand in Asia and elsewhere, aiming to capitalize on growth opportunities for our long-term sustainability. In India, we forged a strategic collaboration agreement with JSW Steel, which included acquiring a stake in the company. In Thailand, we decided to go ahead with construction of a continuous galvanizing line.

In response to several unfortunate problems that occurred in our production systems last year, which we take very seriously, we reevaluated Group-wide risks, potential trouble points and suitable countermeasures. Going forward, we will continue to make safe, stable operations a top priority.

Earnings in fiscal 2010 are expected to be stronger than in the previous year. I sincerely appreciate the cooperation and efforts of our employees, Group companies and business partners toward this end.

The economic environment surrounding JFE Steel, however, is becoming increasingly uncertain. Export-driven emerging economies will continue to enjoy high growth, whereas developed economies will encounter backlashes in economic policy and problems with national finances. The effects of the yen's persistent strength must be watched closely.

Under these circumstances, in 2011 the JFE Steel Group will move closer to true globalization as it completes the final year of its third medium-term business plan.

Three key issues

The first key issue in 2011 is the achievement of our 33-million-ton production system. We will realize this goal on a non-consolidated basis once we revamp our Fukuyama No.3 blast furnace, so we need to concentrate on completing this work as scheduled. We also intend to correct certain problems encountered with the production system last year, which will help stabilize the system and lead to stronger competitiveness in the form of more consistent quality and lower costs. In addition, the system will be linked more closely than before with our sales system. I call on everyone involved with sales to pursue exports aggressively, but also to strengthen relationships with existing domestic customers.

The second key issue is to achieve tangible results in the continued development of our global markets. Now is the time to begin solidifying efforts to secure more overseas business. This includes completing second-phase construction and then launching our cold rolling mill and No.2 continuous galvanizing line at Guangzhou JFE Steel Sheet in China, as well as inaugurating various projects with our partner JSW Steel in India. We also must take long strides toward our all-important goal of 30% self-sufficiency in raw materials. To achieve these goals, a number of you will have more opportunities to go overseas or meet international visitors. To make the most of such situations, please communicate actively with your counterparts and try to learn as much as possible.

The third key issue is for us to take the remaining steps before we leap into the future. Our sustained growth depends on us surpassing our rivals to maintain top competitiveness. We must continually focus on developing products and processes from the perspective of what needs will be in 10 years from now. I call on everyone involved with R&D, production and sales to make sure we evolve in step with our customers.

The cultivation of human resources also is crucial for our future growth. Group-wide, we must make human resources a high-priority issue, foster personnel with global capabilities and pass down skills to the next generation of employees.

Another issue of importance in 2011 will be the preparation of our fourth medium-term business plan. I encourage all employees to join the discussion of what our business environment and landscape will be like in ten years' time, and then help us build a solid plan.

Zero accidents through unified effort

Although our safety record has steadily improved since 2007, the range of improvement has shrunk. To overcome this barrier for an even safer and more healthful work environment, I propose that we demonstrate our utmost priority on safety in three ways: firstly, emphasize communication; secondly, stop operations whenever safety is compromised; and thirdly, swiftly allocate necessary staff and investment to secure safety. I ask everyone in each department of each company to apply these methods to resolve all safety issues. Let's achieve our zero-accident target this year!

Confront challenges through labor-management cooperation

To our union employees, the business environment surrounding us is severe and uncertain. We need to act faster and more flexibly than ever before in view of the global challenges we face. I seek your understanding and cooperation as we meet these challenges face on.

Tackling aggressive goals with enthusiasm

Lastly, as you go about your daily jobs, I urge you to meet all challenges by setting aggressive goals and then working to achieve them with tenacity and enthusiasm. In my experience, people who face challenges resolutely usually achieve their goals.

Very best wishes for a rewarding, healthful and happy 2011 to all of you and your families!