Befesa S A : Informe ESG 2023

ESG Report 2023

REDUCE RECYCLE RECOVER REINTRODUCE

01 ESG at Befesa	02 Focus topics	Environmental	Social	Governance	Ratings and	07 Outlook	08 About this report
03 performance 2023	04 performance 2023	05 performance 2023	06 initiatives

Befesa has been a vital player in the circular economy for almost four decades. Befesa's recycling services reduce the environmental impact of industrial waste by recovering valuable materials and reintroducing them, which also helps reduce the cost of primary production.

ESG at Befesa	2	4.7	Human Resources Management	49
1.1	Befesa at a glance	3	4.8	Recruitment	50
1.2	Letter from Chairman and CEO	7	4.9	Compensation and wellbeing	51
1.3	ESG highlights 2023	9	4.10	Training and development	54
1.4	ESG strategy	10	4.11	Labour relations	56
1.5	Stakeholder engagement	12	4.12	Local communities	57
1.6	ESG targets	13	4.13	Social priorities and targets	60
1.7	EU taxonomy	15	Governance
Focus topics	17	61
performance 2023
2.1	Double Materiality Analysis	18	5.1	Corporate governance at Befesa	62
2.2	Befesa's Climate Action Plan	22	5.2	ESG Governance	62
2.3	Sustainable use of water	25	5.3	Corporate behaviour	63
Environmental		5.4	Compliance	66
27	5.5	Lobbying	66
performance 2023	5.6	Taxes	67
3.1	Key performance indicators	28	5.7	IT security and cybersecurity	68
3.2	Waste management	29	5.8	Governance priorities and targets	69
3.3	Energy	31	Ratings and initiatives	70
3.4	Greenhouse gas emissions	32
3.5	Water	33	6.1	ESG Ratings	71
3.6	Transport & Logistics	34	6.2	United Nations Initiatives	72
3.7	Environmental operations	35	Outlook	73
3.8	Environmental investments	36
3.9	Environmental priorities and targets	37	7.1	Outlook	74
Social performance 2023	38	7.2	Targets	75
About this report	76
4.1	Key Performance Indicators	39
4.2	People at Befesa	40	8.1	Scope of the report	77
4.3	Communication and	41	8.2	Assurance	78
4.4	Human Resources Digitalisation	8.3	GRI index	79
Health and safety	42	8.4	Disclaimer	84
4.5	Diversity, Equity and Inclusion	45	8.5	Contact	85
4.6	Human rights	48

Befesa ESG Report 2023 1

01 ESG at Befesa	02 Focus topics	Environmental	Social	Governance	Ratings and	07 Outlook	08 About this report
03 performance 2023	04 performance 2023	05 performance 2023	06 initiatives
Section name continued

01

ESG

at Befesa

1.1 Befesa at a glance	3
1.2 Letter from Chairman and CEO	7
1.3 ESG highlights 2023	9
1.4 ESG strategy	10
1.5 Stakeholder engagement	12
1.6 ESG targets	13
1.7 EU taxonomy	15

Befesa ESG Report 2023 2

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03 performance 2023	04 performance 2023	05 performance 2023	06 initiatives

1.1 Befesa at a glance

Since 1987, Befesa has provided sustainable solutions to customers in the steel and aluminium industries. Befesa is the global leader in providing regulated critical environmental recycling services to these industries with 24 facilities in eight countries across Europe, Asia and North America.

By recycling waste from these sectors Befesa supports the circular economy, recovering valuable materials and reintroducing them into production processes. This reduces environmental impacts and also the cost of primary production.

Befesa has two business units - Steel Dust Recycling Services and Aluminium Salt Slags Recycling Services - handling 1.9 million tonnes of industrial residues and hazardous waste each year. This directly contributes to the circular economy by preventing landfill of hazardous waste and recovering around

1.7 million tonnes of valuable new materials from them. These new materials are reintroduced to the economy and help reduce consumption of natural resources.

Clients

EAF Steel and Secondary

Aluminium industries

Clients		Collection
Zinc smelters		Steel dust,
and Secondary		Salt slags
aluminium	Circular	and Spent Pot
producers	Lining (SPL)
	economy

Markets	Recycling
Waelz oxide (WOX),	services
Zinc, Aluminium
concentrate
and Salt

Befesa ESG Report 2023 3

01 ESG at Befesa	02 Focus topics	Environmental
03 performance 2023

1.1 Befesa at a glance continued

A highly regulated and critical service model

Befesa provides a critical service that supports two highly-regulated industries and is the subject of many environmental regulations itself.

A strong regulatory environment is beneficial for Befesa. The introduction of more stringent environmental regulations, along with increasing focus on sustainability and circularity, remain strong growth drivers for Befesa since 1987.

Befesa has been able to capture the opportunities these market and operational conditions create with a business model that helps protect the environment at the same time as delivering profitable growth.

These factors will continue to support Befesa's growth as new geographies adopt tighter environmental regulations and Befesa's services become ever more critical to operators in the steel and aluminium industries.

€58m	€117m
NET PROFIT	OPERATING CASH FLOW

Social	Governance	Ratings and	07 Outlook	08 About this report
04 performance 2023	05 performance 2023	06 initiatives

	Clients			Clients
	steel industry			aluminium industry
Clients		Collection	Clients	Aluminium	Collection
consumers	Steel Dust	of steel	secondary	of salt
of zinc	dust	aluminium	Salt Slags	slags and
Recycling
concentrates		producers	Recycling	Spent Pot
(smelters)	Services			Services	Lining
					(SPL)

WOX sold to	Steel dust	Use of aluminium	Salt slags and
zinc smelters	recycling	concentrates and	SPL recycling
	services	payment for salt	services

24		1,790		€1,181m		€182m
RECYCLING PLANTS			EMPLOYEES		REVENUE IN 2023		ADJUSTED EBITDA IN 2023
18	6		1,574	216		€786m	€399m		€134m	€48m

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1.1 Befesa at a glance continued

Markets & sites					14
			16 13 4	1	2022
			19	2
11		15 3 24	23
18	12	21			17	6
10	9				5	7
					8
Steel dust					Aluminium salt slags
recycling plants					recycling plants

1,894 kt

ANNUALLY INSTALLED CAPACITY TO RECYCLE STEEL DUST (CRUDE AND STAINLESS)3

Installed capacity by plant

		Duisburg	Germany	Crude steel dust	87 kt
1
		Freiberg	Germany	Crude steel dust	194 kt
2
		Asúa - Erandio	Spain	Crude steel dust	160 kt
3
		Fouquières-lès-Lens¹	France	Crude steel dust	55 kt
4
		Iskenderun2	Turkey	Crude steel dust	110 kt
5
		Gyeongju	South Korea	Crude steel dust	220 kt
6
		Changzhou	China	Crude steel dust	110 kt
7
		Xuchang	China	Crude steel dust	110 kt
8
		Barnwell, SC	US	Crude steel dust	163 kt
9
		Rockwood, TN	US	Crude steel dust	145 kt
10
		Calumet, IL	US	Crude steel dust	135 kt
11
		Palmerton, PA	US	Crude steel dust	177 kt
12
		Gravelines	France	Stainless-steel dust	110 kt
13
		Landskrona	Sweden	Stainless-steel dust	64 kt
14
		Sondika/Amorebieta	Spain	Oxide	16 kt
15
		Gravelines	France	WOX washing	100 kt
16
		Pohang	South Korea	WOX washing	60 kt
17
		Rutherford County, NC	US	Zinc refining	141 kt
18

470 kt

ANNUALLY INSTALLED CAPACITY TO RECYCLE SALT SLAGS AND SPL

205 kt

ANNUALLY INSTALLED CAPACITY TO PRODUCE SECONDARY ALUMINIUM

Installed capacity by plant

	Lünen	Germany	Salt slags & SPL	170 kt
19
	Hanover	Germany	Salt slags & SPL	130 kt
20
	Valladolid	Spain	Salt slags & SPL	170 kt
21
	Bernburg	Germany	Secondary aluminium	75 kt
22
	Les Franqueses del Vallès	Spain	Secondary aluminium	66 kt
23
	Erandio	Spain	Secondary aluminium	64 kt
24

Map Key

Crude steel dust recycling

Stainless-steel dust recycling

Oxide

Salt slags & SPL recycling

Secondary aluminium production

WOX washing

Both

1. 50/50 joint venture with Recylex; 55 kt installed capacity corresponds to Befesa. On 21 June Befesa announced the acquisition of the remaining 50% of Recytech
2. Befesa owns, either directly or indirectly, 53.60% of the Turkish operations; therefore, 110 kt installed capacity is fully consolidated
3. Total annually installed capacity does not include the capacity of the oxide, WOX washing and zinc-refining plants

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03 performance 2023	04 performance 2023	05 performance 2023	06 initiatives

Section1.1 Befesnameat acontinuedglance continued

Business model

EAF steelmakers/	HAZARDOUS WASTE	BEFESA RECYCLING	OUTPUTS	FINAL USAGE
recyclers	AND RESIDUES		606 kt	Zinc smelters
scrap recyclers)	1,195 kt
(mini-mills,			IRON OXIDE	eg. steel galvanisation
	STEEL DUST		412 kt	Filler materials
			WOX PRODUCED	e.g. cement, roads

Service fee c. 10-20%	Sale of zinc in WOX
c. 80-90%

Aluminium	HAZARDOUS WASTE	BEFESA RECYCLING	OUTPUTS
producers/	AND RESIDUES		314 kt
recyclers	361 kt
			ALU OXIDE & OTHERS
	SALT SLAGS & SPL		124 kt + 33 kt
			MELTING SALT / ALU CONCENTRATE

Service fee c. 40%	Sale of alu salt & conc.
c. 60%

FINAL USAGE

Aluminium recyclers Filler materials

e.g. ceramics, cement, rockwool

Befesa ESG Report 2023 6

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1.2 Letter from Chairman and

CEO

Javier Molina

Executive Chair

DEAR SHAREHOLDERS,

We are very pleased to present Befesa's ESG Report for 2023, which provides our performance for the year and reflects our ongoing commitment to integrating Environmental, Social, and Governance (ESG) principles into every corner of our operations.

In our rapidly changing world, it is imperative that we not only strive for economic success, but also ensure that our activities promote environmental stewardship, social responsibility, and robust governance.

Asier Zarraonandia

Chief Executive Officer

The Befesa Annual Report 2023 was published in March 2024 and, as you might know, 2023 was another challenging year for Befesa. We faced a combination of adverse external factors on the commodity side of the business as well as a difficult situation in China.

Befesa is a pure circular economy player, and in terms of our environmental achievements we achieved a new record in the history of Befesa - recycling 1.9 million tonnes of residues to recover 1.7 million tonnes of new materials which were reintroduced into the market. This huge and growing quantity is the centre of our business model and reflects our significant contribution to the circular economy.

ENVIRONMENTAL STEWARDSHIP

Climate change remains one of the most significant challenges of our time. At Befesa, we are committed to reducing our environmental footprint through investing in sustainable practices and innovative solutions. This year, we have made considerable progress in lowering our carbon emissions, improving energy efficiency, and enhancing our waste management processes. In 2023, total emissions decreased by 3% while total waste recycled increased by 2%, which means that Scope 1 and 2 greenhouse gas intensity has decreased by 5% vs 2022, and 2% vs the baseline of 2021.

Our business strategy is fully aligned with our ESG strategy and is rooted in an increased contribution to the circular economy. Our target is to recycle more than 2.4 million tonnes of residues by 2025 and recover more than 1.8 million tonnes of new materials. We will deliver on these targets by fully utilising the existing capacity in our plants and by deploying our business model in new markets and geographies.

SOCIAL RESPONSIBILITY

Our people are our greatest asset. We are committed to fostering an inclusive and diverse workplace where everyone feels valued and empowered. This year, we have launched several initiatives to support employee well-being, professional development, and diversity, equity, and inclusion (DEI). We have introduced comprehensive health and wellness programs, expanded our training and development offerings, and implemented policies to ensure equal opportunities for all employees.

SCOPE 1 INTENSITY

-10%

COMPARED TO PRIOR YEAR

Befesa ESG Report 2023 7

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1.2 Letter from Chairman and CEO continued

Moreover, we recognise the importance of supporting the communities in which we operate. Our community engagement programmes focus on education, health, and economic development, aiming to create lasting positive impacts.

GOVERNANCE EXCELLENCE

Strong governance is the foundation of sustainable business practices and we are committed to maintaining the highest standards of integrity, transparency, and accountability. In 2023, we have strengthened our governance structures by enhancing board diversity, improving risk management practices, and increasing transparency in our reporting. Our governance framework ensures that ESG is integrated into our decision-making processes and that we remain responsive to the needs and expectations of our stakeholders.

Furthermore, in 2023 we initiated the Sustainability Committee in Befesa. The Committee held three meetings over the course of the year with a focus on reviewing the ESG strategy of Befesa as well as the implementation of that strategy to achieve the agreed goals and targets.

LOOKING AHEAD

The introduction to our latest ESG report is the right place to announce that this will be Befesa's last standalone ESG report. With the new EU Corporate Sustainability Reporting Directive (CSRD), the scope and nature of sustainability reporting by

companies is profoundly changing. For financial year 2024, we will include our ESG disclosure within our Annual report and we have already set the foundations for reporting in line with the EU CSRD. This includes completing a double materiality assessment, as outlined later in this report, and preparing for limited assurance of our ESG content and data by our external auditor.

Befesa has reported on its ESG performance since 2018, but we hold some concerns about the development of more and more ESG-related regulations from the European Union. Befesa already reports on the EU Taxonomy and will from next year comply with the CSRD. These disclosures require significant internal effort, that can sometimes feel like a distraction from investing time and resources into ESG improvements. Looking to the horizon, the Sustainability Due Diligence Directive and regulation on deforestation-free products are incoming, and there are discussions about a Social Taxonomy and many more ideas. Our fear is that we will be faced with overregulation and extensive reporting demands that reduces the ability and time to actively do enough to address our material ESG themes themselves.

Nethertheless, we will find solutions and possibilities to fulfil all legal obligations on Befesa.

As we look to the future, we remain committed to our ESG principles. We

recognise that sustainability is a journey, and we are dedicated to continuous improvement. Our goals for the coming years include further reducing our environmental impact, advancing our social initiatives, and enhancing our governance practices even further.

We are grateful for the support and trust of our stakeholders, including our employees, customers, shareholders, and communities. Together, we can create a more sustainable and equitable world.

Thank you for your continued partnership and staying with us on this important journey.

ASIER ZARRAONANDIA

Chief Executive Officer

JAVIER MOLINA

Executive Chair

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1.3 ESG highlights 2023

Befesa performed again in 2023, despite ongoing challenging macroeconomic and political issues in an environment marked by inflation and still some covid restrictions.

Evnrironmental, Governance and Governance (ESG) topics are in the main focus at Befesa. Recycled volumes increased and the volume of materials new materials produced increased significantly. CO₂ intensity improved and further progress was made around HR issues and to improve safety further.

The main highlights of 2023 include:

Environmental

• Further increase in recycled volumes to 1.9 million tonnes
• Volumes of new materials produced increased again up to 1.7 million tonnes
• Climate change goals: Scope 1 intensity down by 10%
• 5% CO₂ intensity reduction compared to 2022
• EU funding for developing new technologies to recycle steel dust using hydrogen
• EU funding for developing technology to recover hydrogen from salt slags processes

Social

• Continued strong improvement in safety performance
• Diversity training
• Young talent programm
• Corporate Social Responsability

Governance

• Cybersecurity: training initiatives to avoid pishing attacks
• Sustainability Committee well established and met on their committees

Befesa ESG Report 2023 9