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Published on Wednesday, 19 August 2009

Interest in Billet Plant and Expected Group Result

Interest in Billet Plant and Expected Group Result

A.C.N. 063 656 333
A.B.N. 64 063 656 333

19 August 2009
Company Announcements Office
ASX Limited
Exchange Plaza
2 The Esplanade

Dear Sirs

Acquisition of Interest in Billet Plant

The Company wishes to announce that its wholly owned rolling mill operation in Vietnam, SSESTEEL Ltd, has acquired a 20.5 % interest in Dinh Vu Steel Stock Company (“DVSSC”) for a cash consideration of A$3.4 million.

The billet plant, which utilizes an electric arc furnace to produce steel billets from scrap, is located in Dinh Vu Industrial Zone, Hai An District, Haiphong and commenced operations in March 2006. It has a design capacity of 200,000 tons per annum and produced 133,000 tons in 2007 and 150,000 tons in 2008.

This strategic acquisition will assist the VII Group’s rolling mill operations secure stable supply for part of their billet requirements with less pricing and foreign exchange risks than with importing billets. The purchase consideration will be funded internally by SSESTEEL Ltd.

Expected Group Result

In the six months to 30 June 2009, the unaudited Group operating profit attributable to members was A$12.9 million on revenues of A$184 million. This represents a 64% increase on the Group operating profit attributable to members for the half year ended 30 June 2008 (Operating profit A$7.9 million on revenues of A$215 million)

Average exchange rates for period ended 30 June 2009 were US$0.7176/A$ and VND18,118/US$ (30 June 2008: US$0.9342/A$ and VND16,112/US$)

The results are substantially attributable to the improved profitability of the Vinausteel and SSESTEEL operations. It is noted that, although the results for this period were higher than those of the prior year, there is significant uncertainty regarding the trading conditions and performance of the Vietnam operations for the remainder of 2009.

Yours faithfully,

Managing Director
(Vietnam Operations)
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