NOTE 3 – INVESTMENTS IN JOINT VENTURES:

The Corporation has interests in three joint ventures:

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Shanxi Åkers TISCO Roll Co., Ltd. (“ATR”) – a cast roll joint venture in China for which the Corporation accounts using the consolidated method of accounting. ATR principally manufactures and sells cast mill rolls for the hot strip mill, steckel mill and medium plate mill.

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Masteel Gongchang Roll Co., Ltd. (“MG”) – a forged roll joint venture in China for which, effective in 2017, the Corporation accounts using the cost method of accounting. MG principally manufactures and sells forged backup mill rolls for hot and cold strip mills.

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Jiangsu Gongchang Roll Co., Ltd (“Gongchang”) – a cast roll joint venture in China for which the Corporation accounts using the cost method of accounting. Gongchang principally manufactures and sells cast mill rolls for hot and cold strip mills, medium/heavy section mills and plate mills.

ATR

In 2007, Åkers AB entered into an agreement with Taiyuan Iron & Steel Co., Ltd. (“TISCO”) to form ATR, with Åkers AB owning 59.88% and TISCO owning 40.12%. Since Åkers AB is the majority shareholder, has voting rights proportional to its ownership interest and exercises control over TISCO, Åkers AB is considered the primary beneficiary and, accordingly, accounts for its investment in ATR on the consolidated method of accounting.

In 2007, a subsidiary of UES entered into an agreement with Maanshan Iron & Steel Company Limited (Maanshan) to form Union Electric Steel MG Roll Co., Ltd (“UES-MG”), with UES owning 49% and Maanshan owning 51%. Both companies contributed cash for their respective interests (which equated to $14,700 for UES). In November 2016, in connection with an equity restructuring of UES-MG, UES transferred 16% of its equity interest to Gongchang for $2,400, payable in installments over the next three years. As of December 31, 2017, UES received payments of $1,500. As part of the equity restructuring, the joint venture company was renamed Masteel Gongchang Roll Co., Ltd. (“MG”). The Corporation no longer participates in the management or daily operation of MG and has not guaranteed any of the obligations of the joint venture; accordingly, its maximum exposure of loss is limited to its remaining investment, which is recorded at cost, or approximately $835, at December 31, 2017. Dividends may be declared by the Board of Directors of the joint venture after allocation of after-tax profits to various “funds” equal to the minimum amount required under Chinese laws. No dividends were declared or received in 2017, 2016 or 2015.

Gongchang

The Corporation has a 24% interest in Gongchang which is recorded at cost, or $1,340. The Corporation does not participate in the management or daily operation of Gongchang, has not guaranteed any of its obligations and has no ongoing responsibilities to it. Dividends may be declared by the Board of Directors of the joint venture after allocation of after-tax profits to various “funds” equal to the minimum amount required under Chinese law. Approximately $395 of dividends were declared and received in 2016. No dividends were declared or received in 2017 or 2015.