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    Risk framework Control environment

    Key risks & appetite

    Competitive Positioning Risk

    TSN operates in a highly competitive European and global steel market. Maintaining a resilient market position requires strong customer value propositions, cost competitiveness, and alignment with evolving sustainability requirements.

    TSN faces the risk of losing market share and pricing power if competitors achieve structurally lower cost positions, benefit more effectively from trade‑policy environments, expand import volumes into the EU, or accelerate innovation and substitution strategies. This risk is exacerbated by TSN’s own elevated cost base and structurally low productivity, which constrain competitiveness and weaken margin resilience. Increasing access of non‑EU producers to EU markets, differentiated customer requirements, and evolving sector dynamics could further reduce TSN’s ability to sustain premium pricing, retain key customers, and secure volumes in high‑value segments.

    The potential impact is assessed as High, as sustained erosion of TSN’s competitive position may lead to:

    • loss of sales volumes in core segments,

    • margin pressure due to reduced pricing power,

    • underutilisation of assets,

    • reduced commercial relevance in high‑value markets, and

    • inability to justify premium pricing for green or differentiated products.

    These effects would directly impact TSN’s profitability, long‑term strategic positioning, and ability to finance its Green Steel transformation.

    Link to TSN Strategy & Risk Appetite

    Strengthening competitiveness is a foundational pillar of TSN’s strategy, particularly during the transition to Green Steel. Maintaining leading positions in key market segments, ensuring customer loyalty, and achieving cost competitiveness are critical for sustaining commercial viability and supporting the investment requirements of TSN’s transformation.

    TSN’s risk appetite for market dynamics risk is accept, recognising that exposure to market cycles and competitive behaviour is inherent to the steel industry. However, the company actively manages this risk through focused commercial strategy, cost improvements, and portfolio optimisation.

    Mitigating measures – current and next 12 months

    Mitigating measures already in place or underway include:

    Strengthening portfolio focus

    TSN continues to optimise its product and customer portfolio by prioritising higher‑value segments and aligning commercial choices with long‑term market trends.

    Enhancing cost competitiveness

    Ongoing programmes aim to improve productivity, reduce structural costs, and secure more competitive energy and input prices, supporting a stronger long‑term cost position.

    Improving customer value and differentiation

    TSN is investing in superior service delivery, enhanced technical support, and customised product solutions to reinforce customer loyalty and maintain relevance in high‑value markets.

    Accelerating innovation

    Product innovation, development of advanced steel grades, and the commercial roll‑out of new steel solutions help TSN stay competitive and meet evolving customer and sustainability expectations.

    Supporting fair market conditions

    TSN engages with relevant authorities and industry bodies to promote effective trade measures, ensure fair competition, and support policies that strengthen the resilience of the European steel value chain.

    Diversifying markets and offerings

    TSN is expanding its presence in selected international markets and developing new routes‑to‑market, partnerships, and digital solutions to broaden commercial opportunities and reduce dependency on individual regions or sectors.

    These mitigation actions collectively strengthen TSN’s resilience against pricing pressure, import competition, and product substitution.

    Development in Prior Year & Outlook (12 Months)

    During the past year, competitive pressure in the EU steel market remained high, driven by sustained import volumes and tightening cost structures across the industry segments. TSN is making progress through margin optimisation efforts, improvements in customer value propositions, and ongoing work on the new Commercial Strategy.

    The risk is expected to remain elevated but increasingly managed over the next 12 months. While market dynamics remain challenging, the combination of portfolio shifts, cost measures, customer value improvements, and policy advocacy is expected to gradually reduce exposure.

    Execution & Process Compliance Risk

    Strong and consistent execution of commercial and operational processes is critical for TSN’s ability to ensure reliable customer delivery and safeguard revenue quality and protect margins. As TSN operates in increasingly complex markets and under evolving regulatory and contractual requirements, consistent process discipline and robust internal controls are essential to support growth, maintain trust, and reduce execution errors. Effective process execution is also a key enabler for the Green Steel transformation, where commercial stability, price realisation, and contractual reliability must be maintained during transition.

    TSN faces the risk that weak process discipline or inconsistent execution of key commercial procedures such as pricing governance, contract management, and order‑to‑cash processes, may lead to operational deviations and commercial losses. The potential impact is assessed as Medium to High, depending on the nature of the deviation.

    Link to TSN Strategy & Risk Appetite

    A high level of process consistency supports TSN’s strategic objectives to strengthen its competitive position, deliver reliable customer value, and maintain strong commercial governance. TSN’s risk appetite is accept, acknowledging that some process variation is inherent in a complex commercial environment. However, TSN seeks to actively reduce exposure through improved governance, standardisation, and enhanced compliance monitoring.

    Mitigating measures – current and next 12 months

    Strengthened governance and commercial standards

    TSN is reinforcing the application of core commercial processes by promoting consistent adoption of standard operating procedures and improving process documentation. This includes strengthening internal guidance and ensuring that key process steps are executed in a uniform and controlled manner.

    Enhancing monitoring and assurance

    Regular monitoring, audits, and compliance checks help ensure that commercial processes are executed as intended. These activities provide increased transparency, enable early detection of deviations, and support timely corrective action. 

    Strengthening pricing governance and controls

    TSN is improving pricing discipline through clearer authority structures, automated approval workflows, and reinforced pricing boundaries. This supports consistent margin protection and reduces the likelihood of pricing deviations. 

    Improving contract quality and control

    Contracting practices are being enhanced through standardised templates, mandatory legal review, and improved tracking of contractual obligations. This reduces the risk of contractual inconsistencies and strengthens commercial execution quality. 

    Building capability and reinforcing commercial professionalism

    Targeted training and strengthened commercial competencies support a more consistent, compliant way of working and reinforce a culture of discipline across teams involved in pricing, contracting, and order execution. 

    Development in Prior Year & Outlook (12 Months)

    During the past year, TSN has been strengthening process controls, updated commercial standards, and increased monitoring activities.

    The risk is expected to gradually decrease over the next 12 months as additional governance measures, process improvements, enhanced standardisation, and strengthened assurance activities continue to mature.

    Organisational Capability & Workforce Readiness Risk

    TSN’s ability to operate safely, reliably, and competitively and to deliver the Green Steel Project depends on a workforce with the right behaviours, capabilities, and technical skills. As the industry evolves and TSN transitions to new technologies and ways of working, strengthening organisational culture and securing critical skills become increasingly important.

    TSN faces the risk that organisational culture, behaviours, and workforce capabilities may not sufficiently support operational excellence or the demands of the transformation.
    This includes:

    • misalignment between desired behaviours and unintended actual day‑to‑day practices (affecting accountability, collaboration, and decision‑making), and

    • challenges in attracting, developing, and retaining critical skilled labour due to tight labour markets, demographic shifts, and competition for talent.

    If these issues persist, TSN may experience capability gaps in operations, maintenance, engineering, and transformation programmes, which could increase operational risk, slow down execution, and limit progress toward strategic objectives. The potential impact is considered high, as cultural misalignment and skills shortages may lead to weaker accountability and inconsistent decision-making, operational disruptions due to lack of qualified personnel, delays in transformation projects and loss of institutional knowledge due to demographic shifts.

    Link to TSN Strategy and Risk Appetite

    A resilient, skilled and aligned workforce is essential to TSN's strategic pillars:

    • Financial Performance

    • Green Steel Project

    • Licence to Operate

    TSN's risk appetite for workforce and cultural risks is minimise, acknowledging that external labour market conditions cannot be fully controlled. However, TSN actively manages exposure by reinforcing culture, leadership behaviours and capability development.

    Mitigating measures – current and next 12 months

    Strengthening leadership and behavioural expectations

    TSN is reinforcing the behaviours needed for reliable execution and transformation success through leadership development, structured feedback mechanisms, and clearer behavioural expectations.

    Enhancing performance management and accountability

    Performance frameworks are being strengthened to drive consistent behaviour, clearer accountability, and better decision‑making. This includes refining performance metrics, standardising evaluation processes, and improving consequence management. 

    Supporting organisational change and readiness

    TSN is building capability to manage organisational change effectively through enhanced communication, better assessment of change readiness, and structured support for teams adapting to new ways of working.

    Attracting and retaining critical skills

    TSN is investing in initiatives to strengthen its talent pipeline, including targeted recruitment efforts, competitive compensation measures, international talent support, and an inclusive working environment to attract and retain scarce technical skills. 

    Strengthening workforce planning and capability development

    Proactive workforce planning and capability‑building programmes help address demographic shifts, secure critical knowledge, and develop the skills needed for future operations and transformation activities. 

    Improving employer attractiveness and long‑term talent positioning

    TSN continues to enhance its employer brand through sustained market visibility, a strong Employee Value Proposition (EVP), and targeted outreach to critical talent groups to support long‑term recruitment and retention.

    Development in the Prior Year & Outlook (12 Months)

    Progress has been made in strengthening leadership behaviours and enhancing onboarding training for the transformation. However, labour market shortages and increased technical skill requirements continue to place pressure on capability. The overall risk is expected to remain elevated but increasingly managed.

    Business model transformation risk

    TSN’s Green Steel Project represents one of the most significant industrial transformations in the Netherlands, requiring major changes in technology, assets, energy systems, infrastructure, and operating models. As TSN prepares for implementation of this transformation, the company faces key risks in the areas of policy, execution, and price volatility.

    Link to TSN Strategy and Risk Appetite

    The Green Steel Project is a strategic pillar of TSN’s long‑term transformation, enabling the shift to sustainable, circular, low‑carbon steel production while materially improving the environmental performance of the IJmond region. Successful delivery is essential to protecting TSN’s competitive position, reinforcing customer and stakeholder confidence, and ensuring continued access to European markets that are subject to rapidly tightening regulatory requirements.

    TSN’s risk appetite for transformation-related risks is accept, meaning TSN recognises that certain risks are inherent to delivering such a large-scale transition. These risks are accepted within defined boundaries, supported by active management and mitigation to safeguard the timely and successful execution of the Green Steel Project.

    Mitigating measures – current and next 12 months

    Policy
    TSN’s Green Steel Project and business transformation rely on a predictable national and EU policy framework to recover higher operational and capital costs associated with producing low-CO2 steel and to remain competitive against (imported) grey steel. TSN faces the risk that relevant policy frameworks become ineffective, delayed, or altered. Critical EU risks include CBAM implementation and EU ETS predictability. National risks include rising network costs, additional national CO₂ measures, and the potential non‑approval of support for the Green Steel Project. Current measures include:

    • Active advocacy and engagement with policymakers, industry and NGOs on both a national and EU level.

    • Strengthened monitoring of regulatory developments to ensure timely adjustment of project plans.

    Execution
    The execution of TSN’s Green Steel Project, a megaproject on a brownfield site, presents a risk of schedule and cost overruns. In particular access to sufficient qualified construction and engineering resources, combined with the contractual maturity at Financial Investment Decision (FID), represents key risks. TSN installed a new team that is highly experienced in large, complex projects. Current measures include:

    • Securing key contracts prior to FID to limit exposure to cost and schedule fluctuations.

    • Accelerating Front End Engineering Design (FEED) maturity.

    • Building strategic partnerships with Original Equipment Manufacturers (OEM).

    • Strengthening access to qualified contractors and engineering resources.

    Price volatility
    Blast Furnace steel manufacturers have limited exposure to volatile prices, as the steel price is traditionally linked to the price of iron ore and metallurgical coal. With the execution of the Green Steel Business Transformation, TSN will be increasingly exposed to electricity and natural gas price volatility, which are not linked to the steel price. This increases the risk of volatile energy prices undermining the competitiveness of  lower CO₂ steelmaking.

    Current measures include:

    • Establishing strategic collaborations with selected suppliers, with the aim of securing long‑term, stable supply contracts prior to the start of production.

    • Preparing long-term supply agreements to reduce price exposure ahead of production start.

    Each identified risk has a high potential impact on the execution of the Green Steel Project. TSN is actively progressing the above-mentioned mitigation measures within the detailed project risk register aiming to reduce these risks and strengthen the overall project resilience.

    Development in the Prior Year & Outlook (12 Months)

    Looking ahead to FY27, the overall risk level is expected to remain high. However, with mitigation measures increasingly in place to monitor and manage these risks, overall exposure is becoming more controlled. As FEED maturity progresses, the associated business‑transformation workstreams are also advancing toward FID. Key contracts will be secured, and long‑term sourcing strategies will be implemented, resulting in a steadily declining risk profile.

    Financial risks

    Funding risk / access to capital markets / Interest rate risk

    As TSN has set ambitious goals to reduce its carbon footprint and transition to cleaner and greener steel production the Green Steel Project is the key initiative, aiming to develop and implement innovative technologies and processes that significantly reduce greenhouse‑gas emissions and environmental impact. TSN has selected DRP–EAF (Direct Reduction Plant / Electric Arc Furnace) technology as part of the first‑phase transition. In parallel, TSN is investing in other environmental measures (e.g., coverage of raw materials, energy efficiency, slag processing) and actions to reduce emissions from the Coke and Gas Plants. This transformation requires significant capital expenditures both for the transition and for decommissioning one blast furnace and related upstream facilities.

    Liquidity risk

    Steel-making operations are cash intensive and come with pressure on working capital, as the process requires inventories of raw materials and intermediate and finished goods. As a consequence, a considerable amount of cash is locked-in during the steel-making cycle and swings in procurement and sales may lead to material changes in required cash.

    Market price risk and currency risk

    As part of its normal operations, TSN is exposed to various market price risks. The development of raw material prices, grid tariffs, and gas, electricity and CO₂ emission prices (subject to the emissions trading scheme), all in relation to steel prices, impact the financial performance of TSN. Also, several commodities are commonly priced in other currencies than the euro, and some sales are also denominated in other currencies. This exposes TSN to the risk of changing exchange rates. To protect its financial performance, TSN has set up relevant treasury policies and processes in order to manage these risks and reduce volatility in financial performance due to these factors to within an acceptable bandwidth.

    Credit risk

    TSN sells its product to many clients and in many geographies. As a consequence, credit risk, defined as the risk of non-payment by TSN’s clients, is present. As one of the mitigations, TSN makes use of credit insurance, so that the reliability of fund collection is increased.

    Link to TSN Strategy and Risk Appetite

    TSN’s financial risk appetite reflects the company’s commitment to maintaining stability and resilience while progressing its Green Steel Project. TSN accepts that it is exposed to financial market movements such as fluctuations in steel, energy and commodity prices, currency and interest rates, since this is an inherent aspect of operating in a globally competitive and capital‑intensive industry. It plans to reduce the exposure to (long-term) fluctuations in CO₂ costs through its Green Steel Plan, reducing its CO2 emissions and consequently, the sensitivity to price movements.

    At the same time, TSN seeks to minimise risks that relate to its own financial management by maintaining robust liquidity, managing short-term risk of price movements and strong balance sheet discipline, effective treasury operations and an effective risk management framework. This balanced approach ensures that TSN can navigate market volatility while safeguarding financial soundness and supporting the substantial investments required for its transition.

    Mitigating measures – current and next 12 months

    To safeguard access to capital markets, TSN, with the support of Tata Steel Limited (TSL), will continue to explore differentiated funding sources. Key element for the Green Steel Plan is the path to the tailor-made agreement with the Dutch government and TSL, which shall also provide a financial foundation for the transition. In September 2025, the Company signed a Joint Letter of Intent with the Government of the Netherlands and TSL regarding the Green Steel Project. Ultimately, funding for the transition will come from a mix of operational cash generation, support from the shareholder and the Government of the Netherlands and third-party funding arrangements.

    Liquidity is actively managed on a day-to-day basis, to ensure cash generation is optimised and working capital requirements are kept to the necessary minimum. To optimise its cash position and working capital, TSN makes use of various trade finance instruments and opportunities. In addition, available overdraft facilities were increased during the reporting period, enabling the company to manage its cash position more efficiently.

    To reduce the impact of market price movements, TSN hedges price risks related to expected variable cash flows. This relates to prices of raw materials, metals and CO2 emissions and foreign exchange rates. This takes place within a robust hedging framework. Through forward purchases, prices of expected volumes are fixed, reducing potential impact on the financial performance. For CO2 emissions, volumes related to the reporting period are known, however, under the Emissions Trading System, TSN has to deliver the associated allowances only during the next financial year. By executing forward contracts for these allowances, TSN has been able to fix the price of CO2 emissions for the reporting period.

    At settlement of the CO2 allowances, TSN will see the cash outflow associated with the allowance requirement related to calendar year 2025.

    Development in the Prior Year & Outlook (12 Months)

    TSN’s financial risk appetite reflects the company’s commitment to maintaining stability and resilience while progressing its Green Steel Project. TSN accepts that it is exposed to financial market movements such as fluctuations in steel, energy and commodity prices, currency and interest rates, since this is an inherent aspect of operating in a globally competitive and capital‑intensive industry. It plans to reduce the exposure to (long-term) fluctuations in CO₂ costs through its Green Steel Project, reducing its CO2 emissions and consequently, the sensitivity to price movements.

    Product Quality risk

    Tata Steel Nederland produces approximately 7 million tonnes of steel annually and issues over 200,000 Steel Test Certificates each year. These certificates serve as legally binding documents that confirm products meet the specified order requirements, including industry standards, customer specifications, and relevant EU regulations.

    The risk concerns the issuance of inaccurate or unreliable Steel Test Certificates, meaning certificates may contain incorrect, incomplete, or invalid information. This risk can arise from manual data entry errors, wrong test data interpretation, neglecting procedures or failures in interconnected IT systems causing non-compliance of statements on Steel Test Certificates. The potential impact of issuing inaccurate or unreliable Steel Test Certificates is assessed as High as such inaccuracies can lead to high costs due to recalls, reputational damage and potential litigation.

    Link to TSN strategy and Risk Appetite

    In our customer satisfaction surveys, year on year our customers highlight that product quality is our number 1 differentiator. Hence, non-compliance will jeopardise our position as preferred quality supplier, lead to lower sales prices and, in the end, lower profitability of TSN. Given the legal, safety, and reputational implications, TSN’s risk appetite for product quality risks is minimise. This means TSN seeks to prevent occurrences that could compromise product integrity, customer safety, regulatory compliance, or the company’s ability to maintain its Licence to Sell.

    Mitigating measures – current and next 12 months

    Governance

    • Governance is in place top-down from TSN Board of Management to Product Quality managers in central and local downstream entities.

    Policy & standards

    • A TSN Quality Policy is in place, detailed in 25 Quality Standards, with which local entities have to comply. E.g., strict segregation of duties between Quality and Production to ensure absolute independence.

    • TSN is actively participating in the revision of international standards (EN, ISO) to ensure compliance.

    Controls and assurance

    • Compliance to Product Quality standards is risk based independently audited by TSN Audit & Assurance.

    • Product Quality risks are incorporated in the Internal Control Framework, in which per process step, risks, controls, and control owners are captured.

    • Biannual mandatory awareness training (e-Learnings) is held for all relevant stakeholders.

    Assessments and monitoring

    • Annually Quality Maturity Self-Assessments are deployed, in which all TSN sites must indicate whether they meet our TSNQ standards. In case of non-compliance, TSN sites are expected to respond with a mitigating action plan to be implemented (“comply or explain”).

    • Biannual Risk assessment for all TSN businesses. In the risk assessments, TSN businesses are expected to confirm that likelihood or impact has not changed, or apply changes as required. Additionally, the Risk assessment facilitates sharing and learning opportunities.

    • In the independent and ISO-certificated TSN testing facility, the “Certificate Monitor” is installed. The “Certificate Monitor” flags any data inconsistencies which immediately need to be investigated, and coils will be put in “quarantine”.

    Teams & Incident Response

    • A Product Quality response team and response manual are in place to ensure minimal consequential impact in case of a suspected Product Quality incident.

    Development in the Prior Year & Outlook (12 Months)

    TSN Audit has increased focus on Product Quality compliance and revealed a number of Product Quality cases, which have been addressed adequately. Over the next 12 months, the Product Quality risk monitoring will be enhanced for TSN to mitigate the risk within TSN's risk appetite.

    IT & OT Security risks

    IT and OT systems form the backbone of TSN’s operational and production processes. Stable, secure, and modern digital infrastructure is essential for maintaining operational continuity and supporting safety‑critical industrial control systems.

    Building on this growing dependency, several structural vulnerabilities and external developments create three material IT and OT security risks that could directly affect TSN’s ability to operate reliably and transform effectively.

    1. Risk of Legacy IT systems reducing efficiency

    TSN continues to (partly) rely on legacy IT systems with accumulated technical debt, limited integration capability, and increasing failure risk. These constraints slow down decision‑making, reduce productivity, and limit the ability to digitalise key processes, creating operational inefficiencies that hinder transformation progress. The impact of legacy IT systems is assessed as Medium.

    Modern, reliable IT capabilities are essential to support TSN’s operational excellence ambitions and enable the Green Steel transformation. Digitalisation, advanced analytics, and streamlined data flows are critical enablers of the future operating model, making IT stability a strategic priority.

    TSN's risk appetite for this area is minimise. While TSN recognises that legacy IT cannot be replaced immediately, the organisation seeks to reduce this exposure as quickly as practicable, prioritising stability, security, and modernisation to support operational continuity and transformation.

    Mitigating measures – current and next 12 months

    A multi‑year modernisation roadmap is underway, which includes:

    • lifecycle assessments of critical systems,

    • phased replacement of outdated applications and infrastructure, and

    • simplification of underlying IT architecture.

    These steps are aimed at progressively reducing technical debt and improving system reliability.

    Development in the Prior Year & Outlook (12 Months)

    The risk profile has remained stable, with gradual improvement as planned modernisation activities advance. However, structural exposure persists due to the scale of legacy components. Over the next 12 months, continued modernisation and rationalisation efforts are expected to reduce likelihood and operational impact further.

    2. Cyber threats to IT/OT systems

    TSN faces heightened cyber risk due to increasingly sophisticated attacks, IT/OT convergence, legacy OT environments, and limited specialist capacity. A successful attack could disrupt production, compromise safety systems, cause data loss, and lead to regulatory breaches, including violations under NIS2.

    The impact of cyber threats is assessed as High. A successful cyberattack could halt production, compromise safety systems, cause loss or corruption of critical operational data, or trigger regulatory breaches, including under NIS2. Such an event could lead to significant operational disruption, financial losses, and reputational damage.

    Cybersecurity is fundamental to TSN’s strategic objectives. The Green Steel transformation requires higher levels of digitalisation, system connectivity, and IT/OT integration, all of which increase exposure to cyber threats.

    The Board of Management’s risk appetite for cyber threats is to minimise. TSN acknowledges cyber risk cannot be eliminated but aims to reduce exposure as far as practicable, focusing on prevention, detection, rapid response, and compliance with evolving regulations such as NIS2

    Mitigating measures – current and next 12 months

    • Strengthened network segmentation and secure remote access.

    • OT system hardening to reduce vulnerabilities.

    • Expanded monitoring and capability building, supported by external security operations expertise.

    • Strengthening business resilience and crisis management framework.

    Development in the Prior Year & Outlook (12 Months)

    Inherent cyber risk has increased due to global escalation in threat sophistication. However, TSN has improved control maturity through enhanced monitoring, strengthened access controls, and ongoing NIS2 readiness efforts. Over the next 12 months, TSN is working on further strengthening of security measures, but the overall risk will remain elevated due to persistent external threat pressure.

    3. Obsolete industrial control systems threatening production

    Like any large industry, we face challenges with ageing production assets, lack of industrial control systems (ICS) and dependencies on scarce specialist knowledge. This increases the likelihood of prolonged outages impacting volume, quality and safety.

    The impact of the above is High and presents a substantial risk of prolonged production outages, quality deviations, and potential safety incidents, given their central role in managing critical production processes.

    Reliable and modern industrial control systems are essential to maintaining operational continuity, product quality, and safe production- key pillars of TSN’s competitiveness and the Green Steel transformation. TSN's risk appetite for this area is minimise, recognising that ageing control systems must be systematically upgraded.

    Mitigating measures – current and next 12 months

    • A risk‑based modernisation programme is in progress, focused on upgrading critical systems.

    • Improved documentation and structured knowledge transfer are being implemented to address reliance on scarce specialist expertise.

    • Capital allocation is in place to support accelerated upgrades in the coming year.

    Development in the Prior Year & Outlook (12 Months)

    The risk remains elevated but with a downward trend, with early progress on modernisation activities and reducing dependency on individual specialists. Continued system upgrades and capability strengthening are expected to further lower exposure, although full risk reduction will take time.

    Overall assessment

    Across all three domains, TSN’s IT and OT environments continue to face material structural risks. The “In Control Programme” strengthens governance, reinforces risk transparency, and supports ongoing improvement of digital resilience.

    While mitigation measures are progressing, these risks remain significant during TSN’s transformation and will require sustained investment, prioritisation and capability development to bring them within the company’s risk appetite.

    Asset risk

    Tata Steel IJmuiden operates with an ageing asset base, much of which was constructed in the 1970s. Maintaining the integrity, reliability, and availability of these assets is essential for safe and continuous operations.

    As TSN continues to operate high‑utilisation production facilities while preparing for the Green Steel transformation, asset integrity and availability remain foundational to operational stability, cost efficiency and compliance.

    The primary risk relates to asset breakdown in critical production areas, which could lead to unplanned outages, reduced production volume, compromised product quality, and direct financial losses. The potential impact is medium as the failure in critical assets could result in:

    • production interruptions and reduced availability,

    • increased repair and maintenance costs,

    • reduced profitability due to lost volumes,

    • potential safety or environmental risks depending on the asset involved.

    Link to TSN Strategy & Appetite:

    Asset integrity is vital for operational continuity and is directly linked to TSN’s ability to generate the cash flows required to support the Green Steel transformation. TSN’s risk appetite for asset‑related risks is minimise. While ageing assets cannot be replaced immediately, TSN actively seeks to reduce exposure through structured asset management planning, targeted investments and timely interventions in high‑risk areas.

    Mitigating measures – current and next 12 months

    • Asset health, lifecycle status and risks are continuously evaluated through the Asset Lifecycle Register (ALR).

    • Funding is allocated based on criticality and lifecycle risk, with additional resources assigned when justified by asset condition.

    Development in prior years and outlook

    The asset risk profile has remained medium, supported by continuous monitoring and mitigation through the ALR. Structural exposure persists due to the age of major equipment. Risk levels will continue to be re‑evaluated on an ongoing basis, with (additional) funding assigned where required to resolve issues in high‑risk areas.

    Environmental Compliance risk

    TSN operates in a strongly regulated environmental landscape within the Netherlands and the European Union. The company is, amongst others, subject to an extensive framework of permit conditions, and monitoring and reporting requirements related to air emissions, handling and transport of hazardous materials, soil and groundwater protection, waste management and incident reporting.

    Regulatory interventions to end, prevent or punish environmental compliance breaches by organisations may include fines, administrative sanctions such as corrective orders with penalties and, in severe cases, restrictions on permitted operations. Several of these measures have been applied in recent years across TSN processes and remain an important element of the environmental compliance landscape in the current year.

    Considering the JLoI agreements which include commitments around strengthening compliance culture and emissions stewardship, TSN is rightfully exposed to increased regulatory and public scrutiny, which underscores the need for robust compliance monitoring and strong environmental governance, and aligns with TSN’s commitment to reduce emissions.

    Main environmental topics under scrutiny are the compliant continuation of the coke and gas plants (CGPs), which receive stringent supervision by the Environmental Agency (EA). Improvement plans are regularly discussed between TSN and the EA, while existing orders under penalty continue and camera supervision has been intensified throughout the year. In addition, the status of steel slag remains under scrutiny, with the Human Environment and Transport Inspectorate (ILT) as main conversation partner and regulator. TSN is also taking part in REACH-deliberations around registration of steel slag, with final conclusions potentially impacting TSN’s decarbonisation plans. TSN’s continuous reporting obligations and permitting requirements, such as the Environment Effect Report (MER) and permitting required for the Green Steel transition, continue to be of strategic importance and require environmental compliance attention on a regular basis.

    Furthermore, the evolving regulatory framework on a range of environmental topics, including anticipated updates to regulation and evolving Best Available Techniques (BAT) conclusions, for example on tightened nitrogen and particulate matter standards, continue to elevate compliance complexity. Against this backdrop, TSN continuously faces environmental compliance risks, which carry regulatory, operational, financial, and reputational consequences.

    The impact on TSN's strategy is rated High. Environmental non-compliance or related regulatory findings may result in several types of enforcement measures (including regulatory or criminal fines), material remediation obligations, the need for accelerated technical modifications or corrective actions affecting capital allocation, hampering operational continuity due to (temporary) restrictions on production units (including ceasing certain operations) and delays or constraints in permitting processes required for e.g. the Green Steel transition. Environmental non-compliance could also lead to the revocation of permits, which may affect the continuity of our operations. ln addition, environmental non-compliance will lead to increased scrutiny affecting TSN’s reputation, stakeholders trust and social licence to operate.

    Link to TSN Strategy and Risk Appetite

    Environmental performance is a foundational pillar of TSN’s strategy to transition towards decarbonisation, reducing nitrogen and particulate emissions and improving the living environment in the IJmond region. TSN has no appetite for material breaches of environmental laws or regulations. Compliance is treated as a prerequisite for operational continuity, stakeholder trust and securing and maintaining permits and financing required for operational continuity and the upcoming transformation.

    Proactive environmental compliance embedded in and between the operations, HSE, R&C and other relevant supporting functions, with enhanced monitoring and transparent reporting is therefore essential for TSN’s strategy.

    Mitigating Measures – Current and Next 12 Months

    TSN is strengthening its environmental compliance and risk management through a coordinated set of measures designed to reinforce governance, improve monitoring and data integrity and support environmental compliance embedded in the organisation.

    Strengthened environmental governance and clearer accountability

    TSN is implementing a more structured operating model for Health, Safety & Environment while strengthening compliance culture through a wider Risk & Compliance programme, with specific focus on environmental compliance and enhanced transparency and clarity on accountability.

    Improved risk assessment, monitoring, quality and reporting discipline

    TSN is also developing a more coherent data foundation that enables better traceability and helps ensure that environmental risk information is validated, monitored and reported. This includes further integrating compliance requirements in environmental risk assessments and decision‑making processes.

    Enhanced capability and expertise in critical environmental and compliance domains

    TSN is increasing environmental and compliance capability across the organisation, supported by external expertise and focused improvement programmes. These efforts are aimed at strengthening day‑to‑day compliance, embedding a widespread compliance culture and ensuring the organisation is equipped to meet evolving regulatory expectations.

    Better coordination and prioritisation of environmental improvement programmes

    TSN is improving the planning and execution of environmental projects by consolidating key initiatives, clarifying milestones, and reinforcing cross‑functional coordination between Operations, HSE, Legal and R&C. This supports more predictable delivery of improvement measures and strengthens regulatory confidence.

    Development Compared to Prior Year and 12 Month Outlook

    In the past year, TSN made progress in implementing environmental improvement projects and strengthening environmental compliance governance. Monitoring processes were established or enhanced, while several enforcement and legal processes continued.

    The environmental compliance risk remains high but with its pending improvements in environmental compliance governance, framework and culture strengthening, TSN is committed to its journey towards a sustainable future, using evidenced progress to rebuild trust and transitions to compliant Green Steel.

    Health & Safety Risk

    TSN operates a large and complex 24/7 industrial site with a significant internal and external workforce. In such an environment, maintaining safe and healthy working conditions is essential. Multiple hazard types like process safety, occupational safety, chemical exposure, radiation and dust are inherent to steelmaking and require continuous attention, strict procedures, and strong safety culture to keep risks controlled.

    Given the scale and continuous nature of operations, safety and health risks can occur.

    • Process safety hazards pose the highest‑severity threats, as failures could lead to serious incidents.

    • Health risks arise from exposure to chemical substances, radiation, and dust, which require both short‑term and long‑term risk management.

    • Occupational safety risks include common incidents such as slips, trips and falls, as well as higher‑potential hazards such as falls from height, equipment misuse, or being struck by objects.

    Despite these efforts, incidents with serious consequences and several high‑potential events occurred, indicating that the overall trend of safety control has not improved enough.

    The potential impact of Health & Safety risks remains High, as these risks can result in serious injury or fatality, permanent impairment, psychological impact on TSN's workforce, disruption of operations, reputational damage and regulatory consequences. 

    Because the consequences are severe, TSN’s overall objective is to reduce these risks as far as reasonably possible.

    Link to TSN Strategy & Risk Appetite

    TSN’s strategic ambition to operate responsibly and sustainably is rooted in protecting the safety and health of the workforce and surroundings. Safety is a foundational value and an enabler of operational continuity, organisational trust, and transformation success. Therefore, TSN has no appetite for risks that can compromise human safety or health. 

    Where safety hazards cannot be fully avoided due to industrial operations, TSN works to reduce them As Low As Reasonably Possible (ALARP) through engineered and procedural barriers.

    Mitigating measures – current and next 12 months

    Process Safety

    • A strict hazard‑management system is in place, supported by periodic reviews and audits.

    • For new installations, process safety risks are designed out as far as possible, and sufficient engineered barriers are incorporated.

    • TSN aims to scale process safety risk down to ALARP, resulting in a low residual risk.

    Health Protection

    • Chemical, radiation and dust risks are controlled through tailor‑made risk assessments covering both short‑ and long‑term exposure.

    • Mitigation follows a clear hierarchy:

      • Elimination through design.

      • Technical measures.

      • Organisational measures.

      • Personal protective equipment (PPE) as a last resort.

    This structured approach reduces health risks to low levels.

    Occupational Safety

    • Daily assessment of potential safety risks across all workplaces.

    • Systematic incident investigation and corrective actions applied for TSN employees and contractors.

    • Focus on preventing high‑potential accidents such as falls from height, equipment misuse, or being struck by objects.

    • Current residual risk remains moderate due to the variety of hazards and recent serious incidents.

    TrueSafe Programme

    The TrueSafe safety programme is being continued and remains a multi‑year focus area.

    Priorities include:

    • Strengthening overall safety performance.

    • Improving safety culture.

    • Enhancing monitoring of safety performance.

    • Reviewing and considering additional controls, such as introducing Life‑Saving Rules.

    • Strengthening identification and prevention of high‑potential incidents.

    Development in the Prior Year & 12 Month Outlook

    TSN continued to implement process safety and occupational safety controls.

    Despite these efforts, incidents with serious consequences occurred, including permanent impairment and several high‑potential events, indicating that the overall trend of safety control has not yet improved.

    With the continued roll‑out of the TrueSafe programme, initiatives to improve safety culture, and evaluation of additional control measures (such as Life‑Saving Rules), TSN expects to strengthen its safety management system.

    While risk levels remain moderate due to inherent operational hazards, TSN aims to further reduce serious and high‑potential incidents through increased monitoring, clearer behavioural expectations, and enhanced contractor engagement.