CIF - EU Carbon border adjustment mechanism

EU CARBON BORDER ADJUSTMENT MECHANISM compliance, mitigation and latest state of playAbout Metalfer Group: - Private industrial group operating steel mill based in Sremska Mitrovica, Serbia - Electric Arc Furnace (EAF) technology – 600,000 tons/year - 20-30% of production exported to the EU → directly exposed to CBAM Lower Emissions Thanks to: - EAF = ~3x lower CO₂ emission than traditional BOF - 100% renewable electricity (certified by EPS) - Fully steel scrap-based → recycling loop - Substantial CAPEX over last 4 years in order to improve efficiency and lower CO₂ emissions Environmental Measures: - AI-driven process optimization - By-product reuse (slag → construction, EAF dust → zinc oxide) - Closed-loop water systems and transparent reporting Metalfer Group & CBAM – Who We Are and Where We Stand OVERVIEWEfficiency-focused Reducing Emissions per Ton: - Energy efficiency: EAF modernization, real-time monitoring - Local scrap sourcing: better quality, fewer additives - Green energy: solar PV projects, PPAs, Guarantees of Origin CBAM Preparation: - Internal reporting system per product and shipment - CBAM team + employee training - Collaboration with EU clients – transparent data sharing - Preparing for third-party emissions verification (mandatory by 2026) Emissions Reduction Measures & CBAM Readiness OVERVIEW MSM TOTAL EMISSIONS tCO2/t REBARS 0,251 tCO2/t WIRE ROD 0,252 tCO2/t REBARS IN COIL 0,251 tCO2/tRegulatory Gaps in Serbia: - No national CBAM law or verifier system - No incentives for green investment - Companies lack institutional support - The market does not recognize nor prefer products with lower carbon footprint as there are no financial incentives present.

What Is Needed: - National CBAM action plan and tax/customs protection from third countries products

• No incentives for green investment - Companies lack institutional support - The market does not recognize nor prefer products with lower carbon footprint as there are no financial incentives present.

What Is Needed: - National CBAM action plan and tax/customs protection from third countries products - Phased introduction of national CO₂ pricing mechanism - Decarbonization fund to support industry - Easier access to green financing from the credit providers - Institutional support for recycling and building of circular economy Key Messages: - CBAM could be an opportunity, not a penalty - Strong public–private cooperation is essential

Policy Challenges & Key MessagesT H A N K Y O U ! Децембар 2022.