Exhibit 99.2

TO THE 5,600 DEDICATED AND HARD
WORKING MEN AND WOMEN OF
SIMS METAL MANAGEMENT
LISTED IN THIS REPORT — AND THOSE
IN OUR JOINT VENTURE OPERATIONS —
THANK YOU FOR MAKING OUR COMPANY
A TRUE INDUSTRY LEADER.

CONTENTS

Financial Summary			1
Chairman’s and Group Chief Executive Officer’s Review			2
Managing Sustainability			8
Corporate Governance Statement			24
Financial Report			33
Board of Directors			34
Directors’ Report			36
Financial Statements			56
Directors’ Declaration			117
Independent Auditor’s Report			118
Auditor’s Independence Declaration			120
Annual Financial Report Extracts presented in US dollars			121
Shareholder Information			125
Five Year Trend Summary			127
Corporate Directory			128

CHAIRMAN’S AND GROUP CHIEF EXECUTIVE OFFICER’S

REVIEW

In the 2010 fiscal year, our 5,600 employees working at our 230 facilities around the world successfully navigated the Company through the macroeconomic challenges of the year, including lingering turbulence from the global financial crisis as evidenced by concerns regarding a potential European sovereign debt crisis, and a struggling North American economy.

We are confident that with our technology and best-in-industry talent, Sims Metal Management is well positioned to take full advantage of our leading market position when economies stabilise and recover.

Sims Metal Management is committed to a long-term strategy of solidifying its competitive position — both through acquisitions and by enhancing returns through organic initiatives. We are proud to report that, even during the trying times of the last two years, we have remained true to the principles that have sustained the Company since 1917.

IN THE FACE OF SIGNIFICANT
CHALLENGES DURING THE PAST
FISCAL YEAR, OUR COMMITMENT AND
DEDICATION TO OUR CORE VALUES
ALLOWED THE COMPANY TO RETURN
TO PROFITABILITY.

We remain committed to the following ideals:

•		First and foremost, we are committed to the safety of our employees, customers, suppliers and visitors to our facilities;
•		We encourage teamwork and the transfer of knowledge between our businesses and locations worldwide to maximise the competitive advantage of our global footprint;
•		We treat all employees, customers, visitors and communities in which we are located with courtesy, respect and the utmost integrity;
•		We operate with an entrepreneurial spirit that promotes fiscal discipline while seeking to maximise return on investment for shareholders; and
•		We remain focused on employing the most talented workforce in the industry.

In the face of significant challenges during the past fiscal year, our commitment and dedication to our core values allowed the Company to return to profitability. While we cannot predict if the global economies are finally emerging from economic malaise, we will continue to pursue smart growth and make full use of our most important asset — the talented employees of Sims Metal Management.

SAFETY

As we have emphasised in our previous annual reports and updates to the market, a top priority is, and will always be, the safety of our employees, contractors and visitors to our facilities. Our Board of Directors and management subscribe to the belief that there is a strong link between safety performance and the overall success of our Company when measured against all key parameters including production, quality and, ultimately, profitability. Well run businesses are also safe businesses.

Over the course of the past year we implemented new and improved safety procedures. Although our financial metrics significantly improved in fiscal 2010, our biggest gains have been in safety performance. We reduced our Lost Time Injury frequency rate from 4.8 to 3.2 and Medical Treated Incident frequency rate from 19.4 to 14.2 year-on-year. We are continuing our unrelenting effort to support a safety culture that will stand shoulder to shoulder with the safest manufacturing companies in the world.

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		3

CHAIRMAN’S AND GROUP CHIEF EXECUTIVE OFFICER’S REVIEW

SUSTAINABILITY

While our metals recycling business is inherently ‘green’, Sims Metal Management strives to go beyond what is required and make lasting progress in the environmental impact and sustainability of our operations.

Use of the recycled materials sold by Sims Metal Management during fiscal 2010 saved almost 13 million MWh of energy as compared to the use of the same amount of virgin material. Our operations also reduced carbon emissions, pollution and energy consumption — 13.2 million tonnes of CO₂ emissions were avoided by the use of scrap metal, a secondary raw material, instead of primary metallics.

Sims Metal Management was named, for the second year in a row, as one of the 100 Most Sustainable Corporations in the world, at the Davos World Economic Forum. We were honoured to again receive this award, which recognises companies that consistently demonstrate superior positioning and performance in environmental, social and governance issues relative to their industry peers.

We were also pleased when Sims Recycling Solutions (SRS), the world’s largest electronics recycler, was named as the top electronics recycler in North America in the July 2010 issue of Recycling Today magazine. Out of the 20 largest recycling companies, SRS maintained the highest volumes of electronic scrap recycled in calendar 2009.

We remain committed to our mission of enhancing the sustainability of our operations by continually improving safety, workplace conditions and environmental stewardship.

More information on Sims Metal Management’s commitment to sustainability can be found in this report under the heading ‘Managing Sustainability.’

FISCAL 2010 FINANCIAL RESULTS

As major Western economies attempted, with varying degrees of lack of success, to transition from recession to modest growth trajectories, our industry continued to encounter diminished flows of scrap metal and uneven demand from steel and metal producers. In spite of these difficult market conditions, Sims Metal Management saw improvement in many of our markets in fiscal 2010.

Our non-ferrous metals business achieved healthy margins and strong year-on-year growth. However, ferrous margins and scrap flows outside Australia continued to be disappointing, particularly in North America, our largest market, where the US economy continued (and continues) to struggle.

Revenue for fiscal 2010 was approximately $7.5 billion, which included an adverse effect from foreign exchange, and we recorded a net profit after tax on a statutory basis of $126.7 million. Our scrap intake and shipments for the year ended 30 June 2010 were 13.3 million tonnes and 12.9 million tonnes, respectively.

IN RECOGNITION OF OUR DEDICATION
TO SUSTAINABILITY, THE COMPANY
WAS NAMED, FOR THE SECOND YEAR
IN A ROW, AS ONE OF THE 100 MOST
SUSTAINABLE CORPORATIONS IN
THE WORLD, AT THE DAVOS WORLD
ECONOMIC FORUM.

Scrap intake increased 6% and scrap shipments decreased 2% on the prior year.

Sims Metal Management is financially strong. As of 30 June 2010, we had net cash balances of approximately $15 million, undrawn lines of credit of approximately $1.3 billion, and shareholder equity of $3.3 billion at the end of fiscal 2010. The Company believes that the strength of its balance sheet is without peer in its industry and notes that credit facilities available to the Company have recently been increased to $1.5 billion. Capital may indeed be amongst the world’s most precious commodities, and we are proud of our financial strength and deeply value our long-standing relationships with our commercial banking partners.

Our Board of Directors determined a final dividend of $0.23 per share (74% franked) to be paid on 22 October 2010. Dividends for fiscal 2010, including the interim dividend of $0.10 per share and the final dividend of $0.23 per share, represent a payout ratio of 51% of net profit. We are pleased to once again uphold, consistent with our dividend policy, our commitment to providing dividends from our earnings to our shareholders.

OPERATIONAL RESULTS

NORTH AMERICA

Our North American metals business continued to face difficult conditions in fiscal 2010 as a result of inadequate scrap flows and tight ferrous margins associated with the weak and uneven US economic recovery. We have used this low point in the cycle to invest in our business and bolster our trading and processing capabilities.

Sales revenue was down 21% on the prior corresponding period to $5 billion. On a US dollar equivalent basis, sales revenue was down 7% to US$4.4 billion as compared to fiscal 2009. EBIT (earnings before interest and tax) was $80 million. Scrap intake in North America increased 4% on the prior corresponding period to 10.2 million tonnes.

During the year we created a new trading platform for ferrous metals called North America Trade that will further improve our penetration of the market. We anticipate that North America Trade will enhance our ability to market and trade third-party generated material in North America, complementing our already strong global ferrous trading platform. As always, we continue to seek opportunities to execute on our industry consolidation strategy in North America. We remain confident that Sims Metal Management will generate high returns on capital in this historically scrap rich market as economic conditions allow for improved flows of scrap metals and margins.

AUSTRALASIA

Our Australasian business performed extremely well in fiscal 2010 against the backdrop of a relatively healthy Australian economy. During fiscal 2010 we made significant investments in our processing capabilities and, in fiscal 2011, we expect to continue investing in this critical region, including improving the non-ferrous recovery technology downstream of our shredders, among other capital projects. We anticipate that such investments will generate high returns and further enhance our leadership position in this market.

Sales revenue for the region was up 5% on the prior corresponding period to $1.2 billion. EBIT was up 227% to $61 million. Scrap intake in the region increased by 14% for the 2010 fiscal year to 1.7 million tonnes, on a year-on-year basis.

New state-of-the-
art non-ferrous
shredder residue
plant at Claremont
Terminal, Jersey City,
NJ, USA.

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		5

CHAIRMAN’S AND GROUP CHIEF EXECUTIVE OFFICER’S REVIEW

EUROPE

Despite the macroeconomic headwinds, our European division also delivered outstanding performance in fiscal 2010. These impressive results were led by strong contributions from SRS, our electronics recycling business, and solid performance by our UK metals recycling business.

Sales revenue was up 7% on the prior corresponding period to $1.2 billion. EBIT was $67 million. Scrap intake in the region increased by 4% to 1.4 million tonnes in fiscal 2010, on a year-on-year basis.

ACQUISITIONS

We continued our expansion efforts in fiscal 2010 through several quality acquisitions, including:

•		Fairless Iron & Metal, a ferrous and non-ferrous recycler based in Pennsylvania on the East Coast of the United States, which closed in the beginning of the 2010 fiscal year. Through this acquisition, we added two major facilities including a state-of-the-art mega-shredder, non-ferrous recovery systems and a deep water port for the export of our products.
•		In September 2009, Technorecycle GmbH, a leading German electronics scrap recycler and asset recovery specialist located in Hochheim am Main near Frankfurt, and the Company’s second recycling solutions operation in Germany.
•		In November 2009, the remaining 50% of our previous joint venture operation Port Albany Ventures, LLC, a mixed-use bulk material stevedoring operation in the Albany region of New York, located on a 28 acre dock facility on the Hudson River.

In addition, we are excited about the recent acquisition of the UK electronics recycling assets of Wincanton PLC which closed after the 2010 fiscal year ended on 13 August 2010. The transaction enhanced our geographical footprint within the UK market, allowing us to provide a more localised service to our growing client base. The retailer led capability and logistics expertise of Wincanton’s recycling division, together with its infrastructure, ideally complements our business model and processing expertise. Furthermore, the addition of a collaborative arrangement in reverse logistics with Wincanton PLC will allow us to offer an unparalleled level of recycling excellence and service convenience to our UK customer base.

INVESTING IN TECHNOLOGY

Sims Metal Management will emerge from the economic downturn a safer, stronger, more nimble and more efficient company. Part of our strategy in this regard involves investing in new technologies.

In North America, we installed new non-ferrous separation and recovery systems at several East Coast locations — in Jersey City, New Jersey; North Haven, Connecticut; as well as Long Beach, California. In addition, investments were made to further improve our operational efficiency, environmental compliance and safety procedures.

At our Canadian SRS operation, investment commenced on a new facility to process Ontario’s materials from that Province’s newly legislated e-recycling program.

In Australasia, we completed several major production and technology projects during the year. In Queensland, we significantly upgraded our Brisbane shredder which is delivering substantial capacity improvements while reducing energy consumption. We installed a state-of-the-art non-ferrous shredder residue plant at St Marys, New South Wales. This plant is already delivering substantially improved recoveries, and similar plants will be installed throughout Australasia during the 2011 and 2012 fiscal years.

In our Europe Division, the UK metals division has begun investment into technology for further separation to recover plastics and metals from residual waste streams; it is anticipated that these units will be commissioned in fiscal 2011. Sims Recycling Solutions has invested globally in value adding technologies including further investment in plastics and metals separation equipment. In Europe, SRS commissioned new TV and monitor glass recycling processes to automate processing and improve safety performance.

In all, as we continued to expand our infrastructure and invest in new technology, our capital expenditure in fiscal 2010 totalled $121 million. We will, given our growth plans and intention to sustain our industry leadership position, continue to invest in our facilities and technology to serve the long-term interests of Sims Metal Management.

THE BOARD OF DIRECTORS

At the November 2009 Annual General Meeting we had the pleasure of adding three new non-executive members to our Board of Directors: Geoff Brunsdon, Jim Thompson and Paul Sukagawa.

Geoff Brunsdon previously served on our Board for eight years, from 1999 until he voluntarily stepped down in 2007.

Jim Thompson has an impressive background in the steel industry and has Australian experience, having served as Chairman of the joint venture company North Star/BlueScope Steel.

Paul Sukagawa replaced Mike Iwanaga as a representative of Mitsui Group (Mike retired from the Board in November 2009). Paul has held various positions within Mitsui since 1973, including President & Managing Director of Mitsui Iron Ore Development from 2004 to 2007.

Geoff, Jim and Paul have already proven themselves to be valuable additions to our Board, and we look forward to their on-going contributions.

LOOKING FORWARD

Given our unique global metals and electronic recycling platform; and the best assets in our industry — our people; we are optimistic about our future prospects. We have taken steps to enhance our infrastructure and trading capabilities and we are confident that our operations will demonstrate tremendous operating leverage — particularly in North America — as and when scrap flows and margins normalise and macroeconomic trends demonstrate more meaningful economic recovery and growth characteristics. We will continue to grow and expand the leadership position enjoyed by our Sims Recycling Solutions division. Our solid balance sheet ensures that we have the financial flexibility to develop and implement new technologies, pursue acquisitions and expand and invest in our global business.

As always, we will continue to execute on our strategy to create substantial long-term value for our shareholders while meeting the needs of our customers and other stakeholders.

Paul J. Varello
Chairman

Daniel W. Dienst
Group Chief Executive Officer

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		7

MANAGING SUSTAINABILITY

2010 OVERVIEW

SIMS METAL MANAGEMENT REMAINS
COMMITTED TO THE VOLUNTARY
DISCLOSURE OF ITS KEY SUSTAINABILITY
PERFORMANCE FOR ALL STAKEHOLDERS
AND IS PLEASED TO PRESENT THE
FOLLOWING SUMMARY OF ITS EFFORTS
IN FISCAL 2010.

Since we commenced reporting on sustainability in 2006, our systems for collecting information, analysing the data and managing the many non-financial aspects of our business have grown significantly, both in scope and in application. This has presented many challenges, particularly considering that the number of Company sites has more than doubled in that period. The mergers and business acquisitions that the Company has been through bring the challenge not just of merging diverse information systems at various levels of maturity, but also of fostering a common culture, drawing on the very best of the skills, talents, views and beliefs of all our employees. It is great testimony to them that they continue to be committed to growing and improving our efforts in the areas of safety (which is now, and always will be, our number one priority), environmental management, energy and water use reduction, carbon emissions, waste generation, and the many other components that together form the basis for our journey towards being one of the world’s most sustainable businesses.

There is significant consensus among investors and analysts that companies that embrace sustainability as part of their management approach are better equipped to deal with the challenges of business and the ever-changing commercial, operational and political environment of the 21st century. While many continue to see sustainability reporting as a communications matter between a company and its stakeholders, Sims Metal Management has come to appreciate that sustainability provides a powerful tool to unite the men and women of our Company, continually inspiring us all to act with a common direction and determination to deliver excellence in all aspects of our business while further improving our internal management systems.

Of all the sustainability issues, the safety of our people, contractors and visitors remains the paramount goal at Sims Metal Management. Undertaking work safely is a non-negotiable work condition and, while we continue to make great improvements to our work environment and culture, we will never stop in our endeavour to create a zero harm workplace, where every person will go home in the same condition in which he or she came to work.

As the world increasingly focuses on the impact of global warming and how to mitigate its effects, it is inevitable that companies will need to change the way in which they do

1.		Upgraded shredder facility, Rocklea, QLD, Australia reducing energy consumption.
2.		The world’s largest and most modern WEEE plant at Newport, Wales, UK.
3.		An employee scans in an electronic device at the Dumfries, Scotland, UK Sims Recycling Solutions facility.

8

BEING A RECYCLING COMPANY,
OUR ENTIRE ETHOS IS ABOUT
RESOURCE EFFICIENCY AND
DOING MORE WITH LESS.

business. In a world where energy, water and waste disposal costs continue to rise — either as a direct result of diminishing availability of resources, or as an indirect result of policy measures designed to change how we use these resources — it makes prudent business sense to manage our resources in a clearly directed strategic framework. While many of the policy signals in the regions in which we operate may be mixed or unclear in the near term, there is no doubt that significant changes will occur in the longer term. Sims Metal Management is positioning itself to manage the impact that such changes, if they should arise, will have on its business environment.

Being a recycling company, our entire ethos is about resource efficiency and doing more with less. However, this of itself is not enough. In all of our regions, operational teams are formally tasked with finding ways to increase energy efficiency and reduce water usage and waste, thereby uniting our people in the common goal of finding better and more sustainable ways to conduct our operational activities. Our measuring and reporting on resource usage aspects of our business form a crucial basis for these efforts.

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		9

SUSTAINABILITY AT A GLANCE

												PERCENTAGE
KEY PARAMETER		REGION		F10				F09				CHANGE (+/-)
Energy Use		North America Total (GJ)			2,052,602				2,091,203				-2
		Europe and UK Total (GJ)			443,711				398,581				11
		Asia Pacific Total (GJ)			660,978				674,740				-2
		Group Total (GJ)			3,157,291				3,164,524				0
CO2 Emissions		North America Total (tCO2e)			200,797				202,656				-1
		Europe and UK Total (tCO2e)			39,429				37,200				6
		Asia Pacific Total (tCO2e)			73,219				79,400				-8
		Group Total (tCO2e)			313,445				319,256				-2
		Scope 1 (tCO2e)			142,256				143,045				-1
		Scope 2 (tCO2e)			171,189				176,211				-3
Water Consumption		North America Total (Cubic Metres)			1,062,125				895,150				19
		Europe and UK Total (Cubic Metres)			62,335				55,238				13
		Asia Pacific Total (Cubic Metres)			106,092				147,009				-28
		Group Total (Cubic Metres)			1,230,552				1,097,397				12
Waste Generation		North America Total (Tonnes)			1,291,903				1,023,176				26
		Europe and UK Total (Tonnes)			303,167				319,617				-5
		Asia Pacific Total (Tonnes)			243,139				261,960				-7
		Group Total (Tonnes)			1,838,209				1,604,753				15
Key OH&S Indicators		Group LTIFR (LTIx1,000,000/exposed hours)			3.2				4.8				-33
		Group MTIFR (MTIx1,000,000/exposed hours)			14.2				19.4				-27
Number of Employees		Male			4,740				4,699				1
		Female			878				855				3
		Group Total			5,618				5,554				1
Training		Group Total Hours (Corporate training only)			238,728				42,387				463

LMS Generation’s
jointly owned landfill
gas renewable
energy facility at
Eastern Creek, NSW
-Australia’s largest
built this decade.

We were particularly pleased that our ongoing efforts were recognised for the second consecutive year by the World Economic Forum in Davos, Switzerland, where Sims Metal Management again was nominated as one of the Global Top 100 Most Sustainable Corporations in the World. Our efforts also were recognised at the Ninth Australian Sustainability Awards, where Sims Metal Management received the “Special Award for Environment” for establishing best-of-sector low carbon intensity and for structuring its own strategies around a framework of energy efficiency, green energy usage and carbon offsets. Additionally, it was pleasing that our efforts were recognised by many other analysts and research organisations.

The Company once again participated in the global Carbon Disclosure Project, our fifth year of participation, and in the Dow Jones Sustainability Index, our third year of participation. Further, our UK operations were privileged to join the Carbon Trust — an initiative of the UK Government.

One interesting measure of the contribution that Sims Metal Management makes to a sustainable future is the impact that the use of its recycled materials provides in reducing energy use and therefore carbon emissions. Based on research by the Imperial College in London, the tonnes of secondary metal materials that were recycled by Sims Metal Management in fiscal 2010, when compared to the use of virgin materials in the manufacture of steel and other metal products, saved close to 13 million MWh of energy. Further, and most importantly, it also avoided 13.2 million tonnes of CO₂ being emitted to the atmosphere, more than that emitted by many small countries.

In addition, LMS Generation Pty Ltd (LMS), our 50% owned Australian based green energy provider, generated nearly 1.2 million tonnes of verified CO₂ emissions abatement, while generating nearly 300 thousand MWh of 100% sustainable energy.

Thus, the contribution made by Sims Metal Management in preserving millions of tonnes of valuable and increasingly scarce recyclable materials that would otherwise have ended up in landfills, and reducing the energy and water used in the manufacture of raw materials, illustrates why it is one of the world’s most sustainable companies.

Nevertheless, in delivering these very sustainable outcomes, the Company uses energy and other resources in the collection, processing and ultimate sale of its recyclable materials.

As in prior years, the sustainability parameters presented in this report, together with its reporting on fiscal and corporate governance, form the Company’s core response to the benchmark guidelines set out in the Global Reporting Initiative (GRI). The GRI is a network based organisation that pioneered the world’s most widely used sustainability reporting framework and is committed to its continuous improvement and application worldwide. Our sustainability efforts are supported by a wide spectrum of corporate policies and initiatives, many of which are located on the Company’s website at www.simsmm.com.

As in previous years, this report is based around the key areas of environment, health and safety, and community, specifically broken into the sub-categories of:

•		energy use and carbon footprint;
•		water use;
•		waste management and generation;
•		key environmental indicators;
•		key OH&S indicators;
•		safety initiatives;
•		employee retention and diversity;
•		human rights; and
•		training and development.

Key sustainability parameters are briefly summarised in the table on page 10, while further details are provided in the explanatory text.

As illustrated in the table on page 10, there has been a decrease in energy use and resulting carbon emissions in most regions, as well as for the Group as a whole. The exception is in Europe and the UK, where two large Sims Recycling Solutions (SRS) recycling plants (including the world’s largest and most modern e-recycling plant) were brought on line during the fiscal year. It also should be noted that the energy and carbon figures include data from SA Recycling, our 50% owned joint venture operation located in the Southwest of the United States comprising approximately 40 sites, with more than 1,000 employees. We chose to include the carbon profile of this operation for completeness and compatibility with last year’s data.

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		11

MANAGING SUSTAINABILITY

ENVIRONMENT

ENERGY AND CARBON

ENERGY AND CARBON POLICY

Our formal ‘Energy and Carbon Emissions Policy’ was revised during the fiscal year to provide clear goals and articulate formal requirements for management and employees to identify, pursue and implement energy initiatives and carbon reduction opportunities. These objectives fit into our continuing strategic hierarchy of:

•

Efficient use of energy — Striving to employ production processes and transport activities that facilitate a commercially viable level of energy efficiency and associated carbon emissions profile.

•

The use of renewable and cleaner forms of energy — Progressively striving, where commercially viable, to reduce the use of non-renewable energy sources and increase the use of energy sources with a lower carbon emissions profile.

•

The use of verifiable and accredited carbon offsets — Although our view is that carbon offsets are a last resort measure to be employed only when other carbon reduction efforts have been exhausted, our affiliate LMS annually generates accredited carbon offsets nearly four times the size of the Company’s total fiscal year 2010 carbon footprint.

Formal energy teams have been working for several years in each operating region to reduce our energy consumption and examine alternative energy sources, including the use of renewable fuels and co-generation. Once a project or operational development has been identified, a project team, which includes a “site energy champion”, is nominated to undertake implementation. Overall progress is monitored by the energy steering team and reported through the regional Safety, Health, Environment and Community (SHEC) Committees and communicated to the Company Board of Directors via the global SHEC Committee. Examples of projects undertaken during fiscal year 2010 include:

•

NORTH AMERICA — Shredder installations continue to be among our biggest users of electricity. The expanded use of capacitor banks at most of them, together with variable frequency drives for conveyors and higher efficiency motors, has provided improvements to power factors and energy efficiency. Where available and practical, energy demand-response programs are being used, and increased metering equipment is providing valuable data on energy usage and efficiency for the targeted equipment. Lighting audits have resulted in sweeping upgrades to more efficient lighting. A number of solar and wind energy proposals are under consideration. In addition, several initiatives with the potential for carbon reduction in

		mobile equipment have been implemented or are under examination, including the use of higher efficiency engines, and policies and equipment to reduce motor idling.
•		EUROPE — A number of energy initiatives produced a comparative overall reduction in electrical energy usage of 9.4% compared to fiscal 2009, although the new operations of Newport and Ellesmere Port waste electrical and electronics equipment (WEEE) plants, as well as an expansion of our transport fleet, resulted in a net increase in energy consumption for Europe of 11%. An annual carbon saving of 777 tCO2 was achieved through various efficiency measures at Stalybridge, while our plant at Dumfries reduced gas consumption by a very significant 53%. The general market downturn meant less feedstock and consequently a slight reduction in the energy efficiency of our UK shredders, but new operational measures such as idling policies and isolation of equipment provided for an absolute energy reduction.
•		AUSTRALASIA — As in North America, our shredder operations represent the major energy users within our scrap processing activities and continue to be the main focus for maximising our energy efficiency. Specifically, the Rocklea, Queensland shredder was upgraded, resulting in energy reductions per tonne processed in the order of 10%. Similarly, potential energy saving measures have been identified at the St Mary’s, NSW shredder, and are scheduled for implementation over the coming 12 months. Unfortunately, the amount of energy required for processing has increased as a result of rising demand for high density scrap in the challenging market conditions. While this has increased our energy consumption, lesser melt losses and higher transport efficiency for our customers mean an overall better outcome for the environment. The tilting rotary furnace system was upgraded at our Laverton North, Victoria aluminium smelter, resulting in increased energy efficiency and a reduction in emissions profile. Overall electricity consumption was reduced via the replacement of two older air compressors with a high efficiency unit, while furnace temperature monitoring was expanded, allowing for better burner management and temperature control, resulting in increased energy efficiency.

The continuing uncertainty surrounding government responses to carbon reduction measures in most of the regions in which we operate, combined with the overall sporadic availability and relatively high cost of renewable energy sources, makes it difficult for Sims Metal Management to formulate an absolute carbon reduction strategy. However, our systems for collecting and analysing data, combined with the innovation and skills of our energy teams,

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		13

MANAGING SUSTAINABILITY

make us well prepared to respond quickly and efficiently to policy and economic drivers as they emerge. One example of this has been the CRC Energy Efficiency Scheme (previously known as the Carbon Reduction Commitment), which is a new, mandatory, energy saving and carbon emissions reduction scheme for the UK. Our systems and data allowed Sims Metal Management to smoothly engage with the UK Government on this issue, as well as sign up with the Carbon Trust to gain recognition for the considerable energy initiatives that the Company has achieved over the years.

FUEL AND ELECTRICITY

Total energy use for the Group in fiscal 2010 was 3,157,291GJ, down by 7,233GJ from that in fiscal 2009. This was achieved despite an 11% increase in energy consumption in the UK, primarily a result of the world’s largest and most modern WEEE plant being commissioned by the Company in Wales, and our new television and monitor glass treatment facility opening in Ellesmere Port. The reduction in overall energy use is testimony to the important and ongoing work being done by the energy teams in each region.

Diesel consumption remains the largest component of the Company’s energy profile, followed by electricity; gas used primarily in our Australian aluminium smelter and the SRS metals smelting operation in Franklin Park, Illinois, USA; and relatively small contributions from LPG and petrol.

CARBON FOOTPRINT

The energy profile of the operational activities at Sims Metal Management may be converted into a corresponding carbon profile. This has been done by independent external experts using the most recent factors that apply to the relevant operational region and in accordance with the procedures recommended under the international Greenhouse Gas Protocol.

The total CO₂ equivalent profile for fiscal 2010 was 313,445 tonnes, down by 2% on fiscal 2009’s emissions profile. It should be noted that while diesel remains the highest component in terms of energy use, electricity accounts for the greatest contribution to the Company’s emissions profile. This is a result of the variation in the conversion factors applied under the Greenhouse Gas Protocol.

A company’s CO₂ profile may be divided into three different types of emissions:

•		Scope 1 — Emissions resulting from direct conversion of energy by the company, such as burning of fuels on site or in mobile equipment and transport;
•		Scope 2 — Emissions resulting from indirect conversion of energy, such as externally supplied electricity; and
•		Scope 3 — Emissions associated with activities under external control, such as independently operated service providers, air travel and so on.

Due to ongoing ambiguity in respect of boundary conditions and the practical difficulties of collecting reliable information from externally controlled entities, Sims Metal Management does not currently collect and account for Scope 3 emissions, although it continues to examine the opportunities for doing so prospectively.

Compared to fiscal 2009, Scope 2 emissions were reduced by 3%, while Scope 1 emissions were reduced by 1%.

Various metrics are often applied to normalise a company’s energy and carbon profile, so as to allow a year-on-year comparison of performance, while allowing for changes to the operational scope of a company. Typically, such metrics are related to financial parameters such as earnings or revenue but, because of the extreme volatility of commodity prices, such metrics are not meaningful in the case of Sims Metal Management Limited. Equally, the complex interaction of transport, intake volumes, processing and distribution to market makes it difficult to define a simple, but adequate, alternative.

In the absence of an ideal metric, Sims Metal Management has historically reported on the amount of CO₂ equivalent per shipped tonne.

Based on total shipped tonnes of 12.9 million tonnes, the CO₂ emissions for fiscal 2010 were 24kg/tonne, unchanged from fiscal 2009. This is largely because, while sales and intake volumes continue to be under pressure as a result of the global downturn, operational activity does not decrease proportionally. This continues to present challenges to the Company, and we are evaluating appropriate mitigating alternatives. There are also additional factors to consider. For example, the increased demand for higher density products requires more energy to produce. This raises the Company’s energy profile and yet also assists in decreasing the energy profile of its customers, resulting, overall, in a benefit to the environment.

To put our emissions profile into context, it is worth noting that while the Company emitted 313,445 tonnes of CO₂ equivalent as a result of its operational activities, the use of our secondary products avoided 13.2 million tonnes of CO₂ equivalent being released to the atmosphere, a ratio of 1 in 42. This again illustrates the very significant benefit to the environment of recycling.

OBLIGATED EXTERNAL REPORTING

Sims Metal Management is not required to report under the European carbon trading scheme, or under the USEPA or state-specific carbon reporting schemes in the US.

The Company does report under the Australian Energy Efficiencies and Opportunities Act 2006 (EEO Act) and the National Greenhouse and Energy Reporting (NGER) Framework on matters relating to its Australian operations. Reports are prepared, with the assistance of qualified external specialists, and submitted annually. Not only do they identify energy initiatives covering 80% of the total energy profile, but the reports also discuss progress made against initiatives. The reports are available to the public on the Company’s website at www.simsmm.com.

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MANAGING SUSTAINABILITY

The Company’s aluminium operation in Victoria, Australia also reports under that state’s Environment and Resource Efficiency Plan (EREP) and WaterMap, a state initiative to identify and act on water efficiency.

The Company’s UK operations are captured under the CRC Energy Efficiency Scheme (previously known as the Carbon Reduction Commitment). This scheme, which came into effect in April 2010, is a mandatory energy and climate change scheme administrated by the UK Environment Agency. The Company has registered with the scheme, and the systems it has developed for data collection and verification over several years, combined with the work undertaken by the energy teams, exceed the requirements of the legislation. Furthermore, Sims Metal Management has become the first metals and electronics recycling company in the UK to be awarded the Carbon Trust Standard, providing official recognition of our systems and the many energy initiatives undertaken to date.

VOLUNTARY EXTERNAL REPORTING

Sims Metal Management participated for the fifth consecutive year in the Carbon Disclosure Project (CDP). The CDP is an independent not-for-profit organisation which provides the largest database of corporate climate change information in the world. Since being formed in 2000, the CDP has become the global standard for carbon disclosure methodology and process, providing primary climate change data to the marketplace, institutional investors, purchasing organisations, analysts and government bodies. Details are available from the CDP website at www.cdproject.net, and, once the CDP completes its assessment, the annual submission will be available for viewing on our website as well.

The Company also completed its third submission to the Dow Jones Sustainability Index. While we were pleased with the results, the Company was not designated a ranking as this global index is weighted towards the dominant presence of very large turnover companies.

Due to changes in some of the assessment criteria, the Company was prevented from meeting the deadline for participation in the FTSE4Good index in fiscal 2010. However, as it has participated in this important index in previous years, the Company intends to resume participation going forward.

We continued our close working relationship with many external assessment and environmental research organisations, such as TruCost and Vigeo, which continue to rank us as a leading performer in our sector.

Most pleasing was the nomination of Sims Metal Management as one of the world’s 100 most sustainable companies for the second year running by the World Economic Forum in Davos, Switzerland.

Equally pleasing was receiving the Special Award for Environment at the ninth Australian Sustainability Awards in recognition of “best-of-sector” low carbon intensity and for developing our own strategy and systems in a framework of energy efficiency, green energy and carbon offsets.

GREEN ENERGY

LMS, the Company’s 50% owned Australian based green energy provider, continues to be prominent in the renewable energy industry, becoming the leading supplier of Renewable Energy Certificates (RECs) in Australia from electricity generation. A total of 272,722 RECs and 881,733 NSW Greenhouse Abatement Certificates were generated during fiscal 2010, as well as 272,668MWh of green power. LMS also generated approximately 200,000 verified Emission Reduction Units under the Department of Climate Change, Greenhouse Friendly Program. Being involved since its inception a decade ago, LMS’s has, under the program, successfully created more than 1.3 million tonnes of verified abatement from the destruction of methane.

Major achievements of our affiliate LMS during fiscal 2010 included the commissioning of a 750kW renewable energy facility at the Birkdale, Queensland landfill and a 2200kW facility in NSW. Together with increases to existing facilities in NSW and Tasmania, LMS’s total generation capacity of green energy now stands at over 320,000MWh.

As articulated in our Energy and Carbon Emissions Policy, we regard carbon offsets as a last resort once other reduction measures have been exhausted. At present, the Company has no plans to utilise carbon credit offsets. The option is, however, available at any time as the certified offsets generated by our affiliate LMS represent 3.7 times the global carbon footprint of Sims Metal Management.

WATER USE

Water is used in the Company’s shredder operations and mechanical separation processes and is recycled and re-used wherever possible. Where site layout and topography allow, runoff is harvested and, together with “grey water”, is always used in preference to town water. Nevertheless, many of our operations are located in warm climates with low rainfall/high evaporation characteristics which, coupled with the loss of water in the process chain, necessitate augmentation of water from external sources.

While water consumption decreased by 28% in our Asia Pacific operations, it increased by 12% in Europe and the UK, primarily as a result of the new WEEE operations at Newport and Ellesmere Port being brought on stream. The apparent significant increase of 19% in water usage in North America is attributed to improved data collection, management and reporting. Previously, this information was collected manually at site level, but the introduction of new systems has meant that this data is centrally managed from information sourced directly from the providing utility, with increased data reliability.

WASTE MANAGEMENT AND GENERATION

The Company continues to invest significantly in new separation processes that increase the recovery of valuable materials and decrease the amount of waste generated as a by-product of recycling. In fact, the successful implementation of these downstream recovery projects is our second most important goal in fiscal year 2011, behind only safety. While we are well known for our processing capacity of metals, we have been increasing our focus on the recovery of valuable plastics as they are replacing metals in many consumer applications and therefore becoming a more significant portion of the waste stream. This, however, is a challenging area, as traditional metals separation technologies do not work for plastics. Furthermore, plastics need to be separated into primary polymers to have any real value in the marketplace and, with the proliferation of plastic types in modern-day life, require a number of sophisticated and expensive separation technologies. Nowhere is this seen quite as starkly as in the processing of waste electronics, which have a very high percentage of plastic material. Glass, such as from television and computer screens, is another significant element of waste electronics, and our investment in new glass recovery and separation technologies has transformed these materials from a waste product to a recovered commodity.

Unfortunately, the combination of material complexity, available technology, regulatory obstacles, and costs does not always make recovery feasible. Consequently, our activities do generate a waste stream. However, the great benefit of recycling to the environment becomes apparent when considering that the 1.8 million tonnes of waste generated in total resulted from the production of 12.9 million tonnes of saleable material.

Despite decreases at its European and Australasian operations, the waste generated by the Company increased slightly overall, compared to fiscal 2009. With fiscal 2010 shipped volumes being generally comparable to fiscal 2009, the increase is attributable to

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MANAGING SUSTAINABILITY

the Company’s North American operations, primarily due to business acquisitions, as well as improved data collection procedures in fiscal 2010.

Of the Company’s total waste stream, 99.76% consists of simple waste or beneficial use material from our shredding operations. This material is classified as non-hazardous, and is considered beneficial in many landfill uses ranging from hygienic daily cover control to drainage and methane recovery.

It remains of particular concern that increasingly higher government taxes are being applied to this residual waste stream. While it is accepted that government taxes applied to waste disposal in general act as a driver towards recycling, the same taxes when applied to the unavoidable recycling residuals are a bottom line cost to the recycler, thus reducing the recycling outcome that otherwise could be delivered. By way of example, this report highlights the enormous energy and carbon savings that recycling can deliver, along with the preservation of resources and landfill, and governments should consider more sophisticated means of assisting, rather than hindering, the efforts of the recycling industry.

Sims Metal Management does generate a small portion of wastes classified as hazardous, accounting for 0.24% of its global waste stream. These wastes originate from the Company’s WEEE plants in the UK, the CFCs collected from our dedicated fridge recycling plants in Wales, UK, and certain residuals collected for specialised disposal in the USA. The UK fridge units are recycled in a fully enclosed environment and all refrigerants in the cooling circuit, as well as other chlorofluorocarbon compounds trapped in the insulation foam, are collected and sent to special government approved facilities for audited destruction.

KEY ENVIRONMENTAL INDICATORS

ENVIRONMENTAL POLICIES

The Company revised its formal Environmental Policy during fiscal 2010 to more clearly articulate its commitment to protection of the natural environment and to its environmental performance, objectives and targets, as well as the continual improvement of standards and the training and education of all its employees.

While the vast majority of the Company’s operations are located in heavily industrialised or urban areas, and the very nature of its activities aids the conservation of resources and thus biodiversity, the Company recognises that the management of biodiversity is a fundamental part of its public responsibilities. Therefore, it was appropriate that the Company articulated a Biodiversity Policy which, together with its environmental policy and operational guidelines, sets standards for the protection of the environment, habitats and waterways.

Both policies are available on the Company’s website at www.simsmm.com.

ACCREDITATION

Sims Metal Management continues to pursue feasible and appropriate environmental accreditation across all its operating regions.

NORTH AMERICA — All metal recycling facilities are covered by a rolling five year SHEC plan which is consistent with the core elements of ISO 14001. In fiscal 2011, North America is considering initial implementation at some facilities of a US-based ISO-modelled quality, environmental and safety accreditation system designed specifically for the scrap industry incorporating most ISO parameters. Ten of the 12 SRS facilities in North America have ISO 14001 certification, while the remaining two are scheduled for certification in fiscal 2011.

EUROPE — All metal shredder operations have ISO 14001 accreditation, while all feeder yards meet ISO 9001 standards. The progressive upgrading of these operations to ISO 14001 accreditation is currently under consideration. All SRS operations in the UK and Europe have ISO 14001 accreditation.

AUSTRALASIA — Six of the metal recycling operations have ISO 14001 certification, while all other operations meet the requirements of ISO 9001. All but two of the most recent SRS acquisitions have ISO 14001 accreditation and these are scheduled for accreditation in fiscal 2011. Our aluminium facility also has ISO 14001 accreditation.

AUDIT PROGRAM

All Sims Metal Management sites have an Environmental Management Plan that details, for each facility, the environmental issues that need consideration, the regulatory triggers for those issues, and the measures needed to respond appropriately. While these plans are based around a generic format developed over many years, each plan is tailored to the specific operational, compliance and environmental risk profile of the actual site.

These plans form an important part of our environmental monitoring and control systems that aim to prevent harm from our operations occurring. A central concept is our belief that the primary responsibility for good environmental performance lies firmly with the site, and that site management are the most appropriate persons to deal with such. In doing so, site management has the ability to draw on substantial internal resources available from environmental professionals across the Company, as well as external expertise as required.

To this end, each line manager is tasked with performing periodic environmental audits of his or her site. At many locations, the data is entered into a real-time interactive database which automatically generates follow-up actions, delegates responsibilities and deadlines, and informs responsible management of any deficiencies and corrective actions required. In turn, professionally trained environmental specialists audit these line management audits and conduct independent assessments to ensure comprehensive compliance.

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MANAGING SUSTAINABILITY

The frequency of these audits is determined based on the site’s risk profile and compliance rating. Discussion with line management is initiated to resolve discrepancies or issues that are identified, identifying the root cause and preventing a recurrence. The system is based around using the audit process as an ongoing education of the Company’s employees, rather than being seen as a punitive measure. The system is fully supported by line management taking ownership of its own operation.

Overall progress and results are reported and discussed monthly by senior management in the region and shared via the regional SHEC committees.

This key environmental management system is supported by several other tools, including a comprehensive and global electronic environmental (and safety) incident reporting system. This system utilises a computer-based data management system that allows information to be shared for learning purposes across the entire Sims Metal Management community. It also allocates responsibilities for corrective actions and deadlines which, if not met, result in the automatic commencement of notification to progressively senior management up to the Group CEO who may, if necessary, communicate same to the Board SHEC Committee.

Each region also operates a rolling five year environmental plan that identifies issues of an environmental nature that are considered of strategic importance for the continual improvement of the Company’s operations.

STATUTORY ENVIRONMENTAL BREACHES

While some environmental incidents did occur within our North American, European and Asia Pacific operations, there were no material statutory breaches.

OCCUPATIONAL HEALTH & SAFETY: KEY INDICATORS AND SAFETY INITIATIVES

Safety is our number one priority. It is a non-negotiable condition of employment and we are committed to a “zero harm” workplace, where every employee, contractor or visitor will return home in the same condition as he or she arrived. These objectives are clearly articulated in our Safety and Health Policy, available on our website at www.simsmm.com and supported by our SHEC “Golden Rules” — 10 key rules which all employees are required to observe.

After many years of reducing our lost time and medically treated injury frequency rates year-on-year, we recognised that a new approach was needed to take the next step towards safety excellence.

Crucial to health and safety is the engagement of the employee and a genuine change in the culture and safety behaviour of every individual. This is not an easy task, nor something that is achieved in a short period of time.

After engaging DuPont Safety Resources (DSR) more than two years ago, the Company embarked on a fundamental revision of all its OH&S systems and core philosophy. While this journey is now well underway, it is by no means complete. Known throughout Global SRS and UK/Europe as the SimsMMway, in North America as SAAFE (Safe Acts Are For Everyone) and in Asia Pacific as TOM — Towards One Million (hours without a reportable injury), the core philosophy is based around the Observational Behaviour Audit (OBA) process — a “felt leadership” tool in which everybody from the Group CEO to shop floor employee engages in observing and discussing safe behaviour in a positive, empowering and non-threatening manner.

Based on the premise that for each lost time injury there are 30,000 unsafe acts, the aim is to identify these unsafe acts and eliminate them so as to prevent an accident before it can occur.

At all our operations, OBAs are conducted throughout the day and recorded at the end of each shift, using the global SHEC database. Root cause analyses are performed for identified unsafe acts and for injuries, and corrective actions are allocated, together with deadlines and responsibilities, Firmly aimed at a “No Repeat” outcome. If a deadline is missed, or a proposed action is not completed, the system automatically elevates the issue to the next in line manager, continuing up to senior executive management level. While this system ultimately ensures that appropriate measures are actioned,

20

it also provides for comprehensive reports to be generated in any format. This provides many ways for examining the collected data, resulting in an excellent tool for sharing safety information among all our employees.

While our safety culture is based on an open sharing of ideas in a positive and supportive environment, all employees can, if desired, report any safety concerns anonymously using the Company’s whistleblower reporting systems. Each report triggers a thorough investigation and, in cases where our safety culture is not being recognised and respected by employees or others at a facility, appropriate action is considered and taken.

This framework is complemented by hazard identification (HazReps), job cycle analysis, safety audits and pre-work assessment checks, as well as many other safety initiatives. Collectively, this allows the Company to concentrate on what is known as leading safety indicators — predicting what may happen — as opposed to the traditional lagging indicators — telling what has happened.

The leading indicators are continuously analysed to provide real-time information about possible safety hazards, and to structure inductions, toolbox talks, safety training and other safety communication with a direct and immediate relevance to the safety issues of the day. During fiscal 2010, a total of more than 60,000 OBAs were conducted and analysed, providing valuable insight into where to concentrate our safety efforts and supporting our ongoing efforts in creating a safe working environment.

While we can never stop in striving for a safer workplace, it is pleasing to note that, after many years of little or no change in our safety statistics, the lagging indicators are again reducing. The Lost Time Frequency Rate (LTIFR) — the number of lost time injuries multiplied by one million and divided by the number of hours worked — dropped from 4.8 in fiscal 2009 to 3.2 in fiscal 2010. Equally, the Medically Treated Injury Frequency Rate (MTIFR), similarly defined, fell from 19.4 in fiscal 2009 to 14.2 in fiscal 2010.

The Company also has in place a comprehensive occupational health regime, where pre-employment and regular medical assessments are performed by doctors or qualified occupational hygienists. Specific tests such as audiometry, lung function, blood pressure, repetitive strain and others, are undertaken as needed to identify possible latent injuries or injuries.

In addition to this Company-wide framework, each region continues to add specific initiatives that enhance that region’s particular circumstances.

NORTH AMERICA — The main focus for safety was the continuing implementation of SAAFE, working in consultation with DSR. The program is developed and refined through five process improvement teams (PITs). One PIT has implemented the North America OBA process, while another PIT has implemented the Incident Investigation process, including the use of root cause analysis and the closing out of incidents. The remaining PITs are for the development of rules and procedures, communication tools, and means for identifying and addressing organisational stress and Performance Management issues. The program has been successful in focusing accountability on line managers and supervisors, together with having employees accept responsibility for safety, with a significantly enhanced focus on safe work practices and injury reduction. North America has continued the highly successful “Bootcamp” program, aimed at providing hands-on training in the many SHEC responsibilities that face our front-line management and workers, and how to act on those in a constructive manner.

In North America we achieved a 14% reduction in the All Accident Frequency Rate (AAFR) in fiscal 2010, when compared with fiscal 2009. The AAFR comprises the LTI, MTI and minor injuries frequency rate (minor injuries being those only requiring first aid).

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MANAGING SUSTAINABILITY

EUROPE — Two years ago, the UK metals division and SRS global set themselves a target of achieving a 50% reduction in the AAFR. It is a great testament to all our employees and safety professionals that this goal was achieved. A new strategic safety plan has been formulated for the coming two year period and another 50% reduction in the AAFR has been set as the safety target. The two year safety plan is cascaded into safety plans for each individual operation and further into personal safety plans which are reviewed and discussed on a regular basis and are linked to each employee’s Key Performance Indicators and, consequently, remuneration.

Many employees find conducting peer-to-peer OBAs challenging at a personal level. Therefore, it was decided to identify employees who were comfortable in undertaking them, and have them available as mentors — or “OBA champions” — to the broader workforce. This has proven to be a very positive initiative and has assisted in an accelerated uptake of this important safety tool.

At the end of fiscal 2010, 12 sites within Europe and SRS Global had attained OHSAS 18001 accreditation, the highest safety standard in Europe, with plans for further sites to be accredited in fiscal 2011.

AUSTRALASIA — A new electronic induction system for truck drivers and contractors has been implemented throughout Australasia, allowing the tracking of any driver’s induction record before he or she is allowed to enter an operation.

A program of Safety Champions has been developed and implemented in the yards in conjunction with training, induction and toolbox tools to further the safety message among all employees.

The “Hearts and Minds” project Towards One Million (TOM) hours without a reportable incident continues to be on track, supporting our SHEC Golden Rules and emphasising that safety is a condition of employment.

PEOPLE AND DIVERSITY

EMPLOYEE RETENTION

The strength of Sims Metal Management lies firmly with the approximately 5,600 people who make up the Company. Their skills, dedication and pursuit of excellence, together with the cultural and social diversity they represent, are key components in the performance culture that has served the Company well over many years and which continues to make it stand out among its peers.

While the economic environment remains challenging in developed economies around the world, it did not result in a contraction of our workforce in fiscal 2010. Total turnover remained relatively steady, mostly due to staff leaving voluntarily in basic production related activities.

Talent management and employee satisfaction are major priorities for Sims Metal Management. All salaried staff participate in annual performance assessments where job performance and career aspirations are constructively discussed with the one-up manager, and opportunities identified along with any training and/or further education that may be required. Many of our employees have been with the Company for 15 years or more, with several commencing in one of our trainee programs and working their way up into senior management positions, supported by both internal and externally delivered education programs, as well as mentoring schemes. While the Company has a policy of promoting from within, it supplements this with external recruitment. The relatively unique nature of our business means that there is often not a sufficient pool of experienced people to draw from. The Company therefore operates a number of well established programs to identify, hire and develop talented graduates in conjunction with tertiary education institutions.

Our formal grievance and fair treatment policy and procedures, together with its confidential complaints hotline, ensure that any employee concern is handled promptly, constructively and professionally without fear of retribution.

DIVERSITY

Close to 70% of our workforce is employed directly in production and, while gender equality and its promotion are priorities for Sims Metal Management, allowances must be made for the undeniably physical nature of this work, which presents an ongoing challenge in attracting female staff to yard positions.

HUMAN RIGHTS

Sims Metal Management is committed to being a respected and responsible corporate citizen by working constructively with its communities and other stakeholders and engaging in the honest and ethical conduct of its business. In this regard, we recognise that each employee is a representative of the Company and is required to act with courtesy, respect and integrity in all internal and external dealings. Furthermore, we are committed to respecting, promoting and upholding fundamental human rights, as set out in the UN Declaration of Human Rights and further defined in the OECD Guidelines for Multinational Enterprises. These commitments, as well as their specific application to our employees, are articulated in our Human Rights Policy, our Community Policy and our Code of Conduct, all available on our website at www.simsmm.com. Specifically, we recognise and uphold:

•		the right to equal opportunity and non-discrimination;
•		the right to security of persons;
•		the right to a safe and healthy workplace;
•		the right to adequate remuneration; and
•		the legal rights of our people pertaining to the workplace in the regions in which we operate.

Sims Metal Management is also specifically committed to the prohibition and elimination of child and forced and compulsory labour throughout the communities in which it operates, and does not, to the extent of its ability, support products that rely on inappropriate labour processes.

TRAINING AND DEVELOPMENT

In support of our people, their careers and our corporate vision, Sims Metal Management provides a range of comprehensive and ongoing training programs.

When joining the Company, all employees receive comprehensive induction training in the critical aspects of safety, environment and community. As an employee progresses through his or her career, refresher courses are provided on a regular basis, along with other job relevant training, allowing the employee to pursue professional enhancement and work skills.

During fiscal 2010, close to 240,000 hours of training was delivered, covering a range of issues. It should be noted that these training hours relate to corporate training only and exclude specific operational enhancement skills, which comprises many more training hours. The significant increase in the reported training hours delivered in fiscal 2009, as indicated in the table on page 10, reflects better tracking of these hours. A very large portion of this training (218,478 hours) was specifically related to safety training, again reflecting the high emphasis that Sims Metal Management places on the safety of its workers and in developing a genuine safety conscious culture.

Other training ranged from compliance matters such as Code of Conduct and Anti-Corruption Code training, to job enhancement training such as performance management, leadership and conflict resolution, and time management skills.

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CORPORATE GOVERNANCE STATEMENT

The directors and management of Sims Metal Management Limited are committed to operating the Company’s business ethically and in a manner consistent with high standards of corporate governance. The directors consider the establishment and implementation of sound corporate governance practices to be a fundamental part of promoting investor confidence and creating value for shareholders, through prudent risk management and a culture which encourages ethical conduct, accountability and sound business practices. Sims Metal Management Limited’s corporate governance statement for the 2010 financial year has been prepared with reference to the Australian Securities Exchange (ASX) Corporate Governance Council Corporate Governance Principles and Recommendations, 2nd edition (August 2007) (Recommendations). Sims Metal Management Limited has complied with the Recommendations.

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

1.1 BOARD OF DIRECTORS

The board is responsible for the corporate governance and overall performance of the Company and the Group and for providing strategic guidance for the Group. The board’s responsibilities encompass the setting of key objectives, monitoring performance and ensuring the Group’s internal control, risk management and reporting procedures are adequate and effective.

1.2 THE ROLE AND RESPONSIBILITIES OF THE BOARD AND SENIOR EXECUTIVES

The role and responsibilities of the board are formally set out in its charter. The board charter identifies the functions reserved for the board and those delegated to senior executives.

The board’s key responsibilities include:

•

overall corporate governance of the Group, including oversight of its control and accountability systems;

•

appointing, removing and appraising the performance of the Group Chief Executive Officer (CEO);

•

monitoring senior management’s performance and implementation of strategy, and ensuring appropriate resources are available;

•

enhancing and protecting the reputation of the Company by reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct, and legal compliance; and

•

approving and monitoring the progress of major capital expenditure, capital management, acquisitions and divestitures, and financial and other reporting.

The board has delegated general authority to manage the businesses of the Company to the CEO, who in turn may delegate functions to other senior management. However, the CEO remains answerable to the board and must comply with any limits on his authority established by the board from time to time.

Letters of appointment have been provided to all non-executive directors, covering responsibilities, time commitments, performance evaluation, indemnity and insurance arrangements, and induction and development. The responsibilities and terms of employment of the CEO, the Group Chief Financial Officer (CFO) and certain other senior executives of the Group are also set out in formal contracts of employment.

1.3 PERFORMANCE EVALUATION OF SENIOR EXECUTIVES

Annual performance objectives are set each financial year for all senior executives of the Group. These performance objectives include both financial and non-financial measures. A year-end appraisal is conducted to assess performance against the executive’s personal priorities and the responsibilities and demands of their role. The outcome of the performance review process is reflected in tailored training and development programs and succession planning for each executive, as well as an annual remuneration review. For the 2010 financial year, annual performance reviews were completed in August 2010, in accordance with the process disclosed.

The Remuneration Report on pages 38 to 55 contains further information regarding the process for evaluating the performance of senior executives for the purpose of determining their fixed and variable remuneration.

1.4 EXECUTIVE INDUCTION PROGRAMS

Senior executives are able to attend formal induction programs which provide an overview of the Group, and its key policies and processes. Meetings are arranged with other senior executives in the Group to brief the new executives on the Group’s businesses, strategic objectives, risk management practices and other information necessary to meet the requirements of their roles. Site visits are also arranged to familiarise the executives with the Group’s operations and key operating personnel.

A copy of the board charter is available from the corporate governance section on the Company’s website.

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

2.1 COMPOSITION OF THE BOARD

The board charter sets out the composition of the board and relevant criteria for assessing the independence of directors.

The board currently comprises nine non-executive directors and one executive director. Details of board members, including their skills, experience, qualifications and terms in office, are set out on pages 34 and 35.

2.2 BOARD ACCESS TO INFORMATION AND INDEPENDENT ADVICE

A director may, at the Company’s expense and subject to prior approval of the Chairperson, obtain independent professional advice relating to his or her duties and obligations as a board member. Board committees may also seek such independent professional advice. To the extent required to enable them to carry out their duties, all directors and board committees also have access to Company information and records and may consult senior management as required.

2.3 INDEPENDENCE OF DIRECTORS

The board charter states that board members shall be considered independent if they do not have any of the relationships identified in Box 2.1 of the Recommendations, and have been determined by the board to be independent, as defined in and to the extent required by the applicable rules of the United States Securities and Exchange Commission (SEC), the listing standards of the New York Stock Exchange, Inc. (NYSE) and other applicable laws and regulations, as they may be amended from time to time.

Having regard to these criteria, the board has determined that Messrs Paul Varello, Michael Feeney, Gerald Morris, Robert Lewon, Geoffrey Brunsdon and Jim Thompson were independent non-executive directors of the Company during the 2010 financial year. Mr Daniel Dienst, the CEO, is currently an executive director of the Company.

Mr Norman Bobins held the positions of President and Chief Executive Officer of LaSalle Bank Corporation (LaSalle) from 2002 to May 2007 and of Chairman from May 2007 until October 2007, at which time LaSalle was acquired by Bank of America (BoA). The Company has a US$200 million credit facility with BoA that was established by the former Sims Group Limited in September 2006. The Company also has a cash management services agreement in place with BoA, and processes cheque transactions and utilises lockbox services from BoA for certain of its subsidiaries in the United States. Transfer agent services previously utilised at LaSalle by the former Metal Management, Inc. were discontinued in March 2008. The board has determined that Mr Bobins is an independent non-executive director based on the fact that he was appointed a director of the Company in March 2008, well after the former Sims Group Limited had established the credit facility with BoA and that, in any event, he has no relationship with those responsible within BoA for that facility and, further, that the cash management systems relied upon at BoA by certain subsidiaries of the Company are non-material and routine in nature, and are determined by the Company acting at arm’s-length with BoA.

Mr Paul Sukagawa, a non-executive director, is not considered to be an independent director of the Company as a result of his association with Mitsui & Co., Ltd, which, through its affiliates, owns an 18% shareholding in the Company.

Notwithstanding the fact that Mr Christopher Renwick is a nominee of Mitsui & Co., Ltd, the board has determined that he is an independent non-executive director. This view has been reached as Mr Renwick is not, and may not be, in accordance with the constitution of the Company, an Associate of the Mitsui Group (as those terms are defined in the constitution of the Company), and because Mr Renwick regards himself as an independent director.

In accordance with Recommendation 2.1, the board has a majority of directors who are independent.

The independence of the directors is regularly reviewed. In accordance with the board charter, all directors must disclose to the board any actual or perceived conflicts of interest, whether of a direct or indirect nature, of which the director becomes aware and which the director reasonably believes may compromise the reputation or performance of the Company.

2.4 CHAIRPERSON

Mr Paul Varello, an independent non-executive director, has held the position of Chairperson of the board since 1 August 2009. Prior to that, Mr Paul Mazoudier, an independent non-executive director, held that position.

The roles of CEO of the Company and Chairperson of the board are separate, and the Chairperson must not also be the CEO. The Chairperson is responsible for the leadership of the board, establishing the agenda for board meetings, ensuring the board is effective, and chairing board and shareholders’ meetings.

2.5 BOARD PROCESSES

The board holds at least four scheduled meetings a year, and otherwise as it considers necessary. Details of directors’ attendances at board meetings in the 2010 financial year are reported on page 36.

To assist directors in enhancing their understanding of the Company’s business, directors are briefed from time to time by members of the executive team on divisional performance and key operational and strategic issues, financial matters, risk management, compliance and governance. The directors are also provided with an explanation of those proposed activities of the Group which require board approval.

The Group Company Secretary is responsible for ensuring that board procedures and policies are followed, and provides advice to the board on corporate governance and regulatory matters. All directors have unrestricted access to the advice and services of the Group Company Secretary.

2.6 BOARD COMMITTEES

The board has established five board committees to assist in the execution of board functions. Each committee has a written charter which is approved by the board and reviewed periodically. The charters of each of the board committees are available on the Company’s website.

Membership of the board committees is set out in the biographies of directors on pages 34 and 35.

Details of directors’ attendance at each committee meeting in the 2010 financial year are set out on page 36.

To enable each of the committees to discharge its responsibilities adequately and effectively, each committee has the authority to retain advisers and external legal counsel as required.

Each committee reports to the board and, following preparation of the minutes of each committee meeting, provides the board with copies of those minutes at the next occasion the board meets.

2.7 NOMINATION/GOVERNANCE COMMITTEE

The Nomination/Governance (Nom/Gov) Committee is responsible for recommending new nominees for membership of the board in accordance with the

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		25

CORPORATE GOVERNANCE STATEMENT

committee’s Policy and Procedures for the Selection and Appointment of New Directors and the Re-election of Incumbent Directors. The Nom/Gov Committee also assesses necessary and desirable competencies of board members.

The Nom/Gov Committee is also responsible for reviewing the corporate governance procedures of the Company and recommending changes to the board as appropriate; developing a plan for Board succession, including the succession of the Chairperson of the Board and the CEO of the Company, and monitoring succession plans for the Company’s management levels and key resources; and establishing procedures for and overseeing the evaluation of the board.

The Nom/Gov Committee has a formal charter, a copy of which is available from the corporate governance section on the Company’s website, approved by the board.

COMPOSITION

The Nom/Gov Committee shall comprise at least three directors of the Company, with a majority being independent. The current members of the Nom/Gov Committee are Messrs Robert Lewon (Chairperson), Paul Varello, Gerald Morris and Michael Feeney, all independent non-executive directors, and Mr Daniel Dienst. The board may appoint additional directors to the Nom/Gov Committee or remove and replace members of the Nom/Gov Committee by resolution. The Nom/Gov Committee Chairperson shall not be the Chairperson of the board.

MEETINGS OF THE NOMINATION/GOVERNANCE COMMITTEE

The committee charter provides that the Nom/Gov Committee shall meet at least twice each year on a formal basis and additionally as circumstances may require. The Nom/Gov Committee met four times during the 2010 financial year.

2.8 BOARD PERFORMANCE EVALUATION

The Nom/Gov Committee is responsible for establishing procedures and overseeing the evaluation of the board. A formal performance evaluation was conducted involving the directors self-assessing the collective performance of the board. As part of the review process, directors were also asked to assess the board’s composition and structure, and any areas where the board’s effectiveness could be improved. The results of the evaluation, and individual committee assessments, were independently documented and will form the basis for the development of appropriate action plans under the guidance of the Nom/Gov Committee for the 2011 financial year.

2.9 RETIREMENT AND RE-ELECTION OF DIRECTORS

The Nom/Gov Committee considers and nominates to the board candidates for election as directors. The Company’s constitution requires that non-executive directors appointed by the board during the year must offer themselves for election by shareholders at the next Annual General Meeting of the Company. In addition, a non-executive director may not serve without seeking re-election beyond the third Annual General Meeting following the meeting at which the director was last elected or re-elected, or three years, whichever is longer. At least one director, other than the CEO, must retire at each Annual General Meeting. Retiring directors may offer themselves for re-election by the shareholders. The board does not impose a pre-determined restriction on the tenure of directors as it considers that this restriction may result in the loss of vital experience and expertise.

2.10 DIRECTOR EDUCATION

A new board member orientation process has been established to provide new directors with an understanding of, and insight into, the industry, Company, management and control environment of the Group. As part of this process, directors receive a new board member orientation binder, meet with key senior executives and are given the opportunity to conduct site visits at significant operational facilities in various locations.

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

3.1 CODE OF CONDUCT

The Company’s Code of Conduct applies to all directors, officers and employees of the Group. It underpins Sims Metal Management Limited’s commitment to integrity, fair dealing and compliance with the law in its business affairs, and sets out expected standards of conduct with respect to all stakeholders, including fellow employees, customers, suppliers, shareholders and the community.

The Code of Conduct is designed to encourage ethical and appropriate behaviour by all Group personnel, and addresses a wide range of responsibilities to stakeholders, including conflicts of interest, security of information, use of Company assets and resources, discrimination and harassment, occupational health and safety, and the prohibition of corrupt conduct and the consequences in the event thereof.

The Code of Conduct encourages employees to raise any matters of concern without fear of retribution. The Company has implemented the Sims Metal Management Limited Ethics & Compliance Hotline to enable employees to report serious misconduct or unethical behaviour within the Group to an external third party. The Company also conducts employee education and compliance programs on a regular basis to help ensure compliance with various laws around the world.

3.2 ANTI-CORRUPTION CODE

In addition to the Code of Conduct, the Company has adopted an Anti-Corruption Code which has been developed to aid Sims Metal Management Limited employees, agents, contractors, consultants and partners in ensuring that they comply at all times with applicable anti-corruption laws and policies. Among other matters, the Code of Conduct sets out the Company’s policy in relation to conflicts of interests, gifts and hospitality, relationships with governments and political contributions.

Copies of the Company’s Code of Conduct and Anti-Corruption Code are available from the corporate governance section on the Company’s website.

3.3 DEALING IN COMPANY SECURITIES

Directors and employees of the Group are bound by the Company’s policy on dealing in the securities of the Company. Under the policy, directors, senior executives and other designated persons may only buy or sell Company securities during the period 24 hours to 28 days after the release of the Company’s yearly, half-yearly or quarterly results announcements or during such period following the conclusion of the Company’s Annual General Meeting, or during the currency of any capital raising prospectus issued by the Company or takeover bid for the Company.

A copy of the Company’s policy titled ‘Dealing in Sims Metal Management Limited Securities’ is available from the corporate governance section on the Company’s website.

PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

4.1 RISK, AUDIT & COMPLIANCE COMMITTEE

The Risk, Audit & Compliance (RAC) Committee assists the board in fulfilling its responsibility to oversee the quality and integrity of accounting, auditing and reporting practices of the Company. In particular, the primary role of the RAC Committee is to assist the board in fulfilling its corporate governance and oversight responsibilities in relation to the Company’s accounting and financial reporting, internal control structure, risk management systems (including the review of risk mitigation, which includes commercial insurance coverage), internal and external audit functions, and compliance with legal and regulatory requirements.

The RAC Committee has a formal charter approved by the board. The RAC Committee reports to the board on all matters relevant to the RAC Committee’s role and responsibilities. The specific functions of the RAC Committee are set out in its charter and include:

•		reviewing and assessing the internal and external reporting of financial information;
•		assessing management processes supporting the integrity and reliability of the Company’s financial and management reporting systems and its external reporting;
•		overseeing the relationship with and performance of the external auditor and assessing the independence of the external auditor; and
•		overseeing the performance of the internal audit function.

The RAC Committee charter establishes a framework for the RAC Committee’s relationship with the internal and external auditor, and a policy has been adopted for the selection and appointment of the external auditor and for rotation of external audit engagement partners.

A copy of the RAC Committee charter is available from the corporate governance section on the Company’s website.

4.2 COMPOSITION

The RAC Committee charter provides for the RAC Committee to have at least three members, all of whom must be non-executive independent directors. The current members of the RAC Committee are Messrs Gerald Morris (Chairperson), Michael Feeney, Jim Thompson and Geoffrey Brunsdon, all of whom are non-executive independent directors. Further, all members must be financially literate and at least one member must have accounting or related financial management expertise. Messrs Morris, Feeney and Brunsdon satisfy this requirement. Under the RAC Committee charter, a director may not be both the Chairperson of the RAC Committee and the Chairperson of the board.

4.3 MEETINGS OF THE RAC COMMITTEE

In accordance with its charter, the RAC Committee is required to meet at least four times each year on a formal basis, and holds additional meetings as necessary. Meetings are attended by invitation by the other directors, the CEO, the CFO, internal auditors and the external auditor, PricewaterhouseCoopers (PwC).

The RAC Committee met seven times during the 2010 financial year. Details of attendance at meetings of the RAC Committee are set out on page 36.

4.4 EXTERNAL AUDITOR

The external auditor is responsible for planning and carrying out the audit of the Group’s annual financial reports and reviewing the Group’s half-yearly financial reports. The auditor provides a written confirmation to the Company of its independence in connection with the Company’s financial reports for each half-year and financial year.

The external auditor, PwC, was appointed in 1991. The lead external audit engagement partner is next due for rotation after the 2012 financial year.

The RAC Committee may meet with the external auditor without management being present at any time during each financial year. The external auditor is also provided with the opportunity, on request, to meet with the board of directors without management being present.

The Company has adopted a policy titled ‘Procedures for the Selection and Appointment of the External Auditors and for the Rotation of External Audit Engagement Partners’, a copy of which is available from the corporate governance section on the Company’s website.

PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE

5.1 CONTINUOUS DISCLOSURE

The Company is committed to ensuring that the market and its shareholders are provided with complete and timely information. The Company has adopted a Market Disclosure Policy, supplemented by specific procedures, to ensure that it complies with the continuous disclosure obligations imposed by the ASX, and with its disclosure obligations under the rules and regulations of the SEC and the NYSE. A copy of the policy is available from the corporate governance section on the Company’s website.

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		27

CORPORATE GOVERNANCE STATEMENT

The Company has formed a Disclosure Committee comprising the CEO (as Chairperson), the CFO and the Group Company Secretary. The committee has a formal charter approved by the board. The primary role of the committee is to manage the Company’s compliance with its continuous disclosure obligations by implementing reporting processes and controls and determining guidelines for the release of disclosable information.

The Group Company Secretary has been appointed as the person responsible for communications with the ASX, SEC and NYSE, which includes overseeing and co-ordinating information disclosure to the ASX, SEC and NYSE.

All announcements provided to the ASX are posted on the Company’s website as soon as practicable after release to the market.

5.2 COMMENTARY ON FINANCIAL RESULTS AND PERIODIC DISCLOSURE

Sims Metal Management Limited strives to provide investors with sufficient information to make an informed assessment of the Company’s activities and results. Results announcements and media/analyst presentations are released to the ASX, SEC and NYSE and made available on the Company’s website. The Annual Report contains an operating and financial review to assist shareholders in understanding the Company’s operating results, business strategies, prospects and financial position.

PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS

6.1 COMMUNICATION WITH SHAREHOLDERS

The Company has adopted a statement on communication with shareholders which is designed to promote effective communication with shareholders and to encourage informed shareholder participation at the Annual General Meeting. A copy of the statement is available from the corporate governance section on the Company’s website.

Where practical, the Company uses technology to facilitate communication with shareholders. The Company’s website includes links to announcements to the ASX and copies of the annual, half-yearly and quarterly reports, notices of meetings, presentations and other information released to the market. By registering with the Company’s registrar, shareholders can receive email notifications when the Company makes an announcement to the ASX, including the release of financial reports. Sims Metal Management Limited’s Annual Report currently remains one of the principal means of communicating with shareholders. The Company also files a report on Form 20-F annually with the SEC.

The Company continues to review and enhance its website and to consider other ways to utilise technology to improve shareholder communication. Webcasts of results briefings allow access by all interested parties.

6.2 SHAREHOLDER MEETINGS

Shareholders have the opportunity to raise matters with the members of the board at the Company’s Annual General Meeting. The external audit firm partner in charge of the Sims Metal Management Limited audit also attends the Annual General Meeting and is available to answer questions from shareholders on audit-related matters.

PRINCIPLE 7: RECOGNISE AND MANAGE RISK

7.1 RISK MANAGEMENT FRAMEWORK

The board recognises that the effective management of risk is essential to achieving the Group’s objectives of maximising Group performance and creating long-term shareholder value while meeting its commitments to other stakeholders, including its employees, customers and the wider community.

The Company has adopted a Risk Management Policy and a statement on internal compliance and control systems.

The board is responsible for ensuring that there are adequate policies in place with respect to risk management. The board and senior management are responsible for determining the level of risks acceptable to Sims Metal Management Limited.

To help ensure all risks relevant to the Company are considered, a systematic approach to risk identification is followed. Identifiable risk areas which are considered include:

•		maintaining a safe work environment for the Company’s employees;
•		the safeguarding and efficient use of assets;
•		management of human resources;
•		ensuring the Company complies with its environmental obligations;
•		achieving established objectives and goals;
•		the reliability and integrity of financial and operational information;
•		compliance with internal policies and procedures;
•		compliance with laws and regulations; and
•		changes in the Company’s internal and external environments.

Measures of consequence and likelihood have been determined and are used on a consistent basis.

The Company’s primary risk assessment process comprises a comprehensive annual risk review.

The board is responsible, on the recommendations of the RAC Committee, for ensuring that there are adequate policies in place in relation to internal control systems over financial reporting. The board places considerable importance on maintaining a strong internal control environment. The internal control system is based upon written procedures, policies, guidelines, job descriptions and organisational structures that provide an appropriate division of responsibility. It also relies upon the careful selection and training of key personnel.

Internal control systems are reviewed on an ongoing basis to ensure that the systems are updated to reflect changes in Sims Metal Management Limited’s operations and the environment in which the Company operates. The Company has detailed written documentation covering critical areas. Internal Audit carries out regular systematic monitoring of control activities and reports to the RAC Committee and senior management. In the 2009 and 2010 financial years, the Company validated its internal controls over financial reporting as required under the Sarbanes-Oxley Act of 2002.

An internal audit plan is prepared, with input from the RAC Committee and senior management, annually by the Global Head of Internal Audit. This annual internal audit plan takes into consideration the findings of an annual risk assessment report prepared by senior management. The RAC Committee approves this annual internal audit plan.

Sustainability reporting is part of, and is integrated into, the Group’s risk management framework. The Group’s sustainability report, which provides stakeholders with an overview of Sims Metal Management Limited’s sustainability performance, is found on pages 8 to 23. The CEO has overall responsibility for Group sustainability matters, and a number of initiatives have been implemented to better enable the Group to measure, monitor and report on its sustainability performance.

SAFETY, HEALTH, ENVIRONMENT & COMMUNITY COMMITTEE

The board has established a Safety, Health, Environment & Community (SHEC) Committee.

The primary role of the SHEC Committee is to provide additional focus and advice to the board on key SHEC issues and to assist the board to fulfil and discharge its SHEC obligations.

The SHEC Committee shall comprise at least three directors of the Company, of whom one at least shall be independent. The SHEC Committee is composed of Messrs Christopher Renwick (Chairperson), Robert Lewon, Jim Thompson, Paul Sukagawa and Daniel Dienst.

FINANCE & INVESTMENT COMMITTEE

The board has established a Finance & Investment (FIC) Committee. The primary role of the FIC Committee is to review, advise and report to the board on the management of the Company’s financial resources and invested assets, shareholder dividend policy and shareholder dividends, the Company’s capital plan and capital position, debt levels, hedging policies and other financial matters. The FIC Committee also reviews broad investment policies and guidelines for the Group and makes recommendations to the board.

The FIC Committee shall comprise at least three directors of the Company, of whom one at least shall be independent. The FIC Committee is composed of Messrs Norman Bobins (Chairperson), Robert Lewon, Paul Sukagawa, Christopher Renwick, Geoffrey Brunsdon and Daniel Dienst.

FINANCIAL REPORTING AND INTERNAL CONTROLS

The board has responsibility for reviewing and ratifying internal compliance and control systems.

The RAC Committee reviews the effectiveness and adequacy of internal control processes relating to financial reporting on a regular basis and reports its findings to the board.

Management assumes the primary responsibility for implementing internal controls and for the internal control environment. In accordance with the Company’s policy, each regional President and regional Chief Financial Officer reports every six months to the CEO and the CFO and, if any exceptions, to the RAC Committee, on the operation and effectiveness of key internal controls. Any identified deficiencies in internal controls are followed up and addressed by division management.

In addition, the Company maintains an internal audit function to conduct internal audits and reviews of the Group’s operations.

The RAC Committee reviews the reports from the internal audit function on a regular basis, monitors its scope and resources, and approves the annual internal audit plan.

The Company monitors its control system on a continual basis and, where appropriate, enhances internal control processes to improve their effectiveness.

7.2 RISK MANAGEMENT ASSURANCE

The CEO and the CFO have stated in writing to the board in respect of the 2010 financial year that the Company’s financial reports present a true and fair view, in all material respects, of the Company’s financial condition and operational results and are in accordance with relevant accounting standards.

The board has also received a written statement of assurance from the CEO and the CFO that, in respect of the 2010 financial year, to the best of their knowledge and belief:

1.		the declaration provided in accordance with section 295A of the Corporations Act 2001 is founded on a sound system of risk management and internal compliance and control which, in all material respects, implements the policies adopted by the board; and
2.		the Group’s risk management and internal compliance and control system for the financial year is operating effectively in all material respects in relation to financial reporting risks.

Due to the geographic spread of the Group’s operations and the extensive delegation of authority and responsibility granted to senior business unit management, the CEO and the CFO, when attesting to the adequacy of the Company’s risk management and internal compliance and control system, rely significantly upon internal audit and the control certification reports received from each regional President and regional Chief Financial Officer regarding compliance with the

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		29

CORPORATE GOVERNANCE STATEMENT

various risk management, compliance and internal control policies and procedures in the region for which each is responsible.

PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY

8.1 REMUNERATION COMMITTEE

The primary role of the Remuneration Committee (Remco) is to support and advise the board on the implementation and maintenance of coherent, fair and responsible remuneration policies at Sims Metal Management Limited which are observed and which enable it to attract and retain executives and directors who will create value for shareholders of the Company.

Remco has responsibility for, among other things, reviewing and making recommendations to the board on the:

•		remuneration and incentive performance packages of the CEO and direct reports to the CEO;
•		Company’s recruitment, retention and termination policies and procedures;
•		introduction and application of equity-based schemes, including allocations; and
•		level of annual fees paid to the non-executive directors.

8.2 COMPOSITION

Remco shall comprise at least three directors of the Company, with a majority being independent. The Remco Chairperson is appointed by the board, and must be independent. Remco is composed of three independent non-executive directors, Messrs Michael Feeney (Chairperson), Paul Varello and Gerald Morris. The board may appoint additional directors to Remco or remove and replace members of Remco by resolution.

8.3 MEETINGS OF THE REMUNERATION COMMITTEE

Remco has a charter, which provides for Remco to meet at least twice each year on a formal basis and additionally as circumstances may require. Details of the number of Remco meetings held, and attendance at those meetings, during the 2010 financial year are set out on page 36.

A copy of the Remco charter is available from the corporate governance section on the Company’s website.

8.4 DIRECTORS’ REMUNERATION

The Remuneration Report sets out the total remuneration of non-executive and executive directors of the Company. Each of the non-executive directors is entitled to a fee for serving as a director of the Company and an additional fee for serving as Chairperson of a board committee. These fees are inclusive of any compulsory superannuation contributions (where applicable) and any retirement benefits. In general, no additional fees are payable to non-executive directors for other services performed outside the scope of their ordinary duties as a director or committee member.

The maximum aggregate remuneration of non-executive directors is determined by a resolution of shareholders and is then divided between the directors as agreed by the board. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned among non-executive directors is reviewed annually by Remco and recommendations are then made to the board. The board considers advice as to the fees paid to non-executive directors of comparable companies when undertaking the annual review process. When considered appropriate to do so, it will also obtain advice from external consultants.

8.5 REMUNERATION REPORT

The Company’s remuneration policy and procedures in respect of senior executives of the Company and Group are discussed in its Remuneration Report for the 2010 Financial year, which is set out on pages 38 to 55.

The Company’s statement prohibiting designated persons from entering into transactions in products associated with Company securities which operate to limit the economic risk of their security holding in the Company over unvested entitlements under any Company equity incentive plans, may be found in the Company’s policy titled ‘Dealing in Sims Metal Management Limited Securities’, available from the corporate governance section on the Company’s website.

ASX CORPORATE GOVERNANCE COUNCIL’S CORPORATE GOVERNANCE PRINCIPLES AND RECOMMENDATIONS

		Reference		Comply
Principle 1: Lay solid foundations for management and oversight
1.1 Establish and disclose the functions reserved to the board and those delegated to senior executives		1.1, 1.2		ü
1.2 Disclose the process for evaluating the performance of senior executives		1.3,
		Remuneration
		Report		ü
1.3 Provide the information indicated in the Guide to reporting on Principle 1		website, 1.1-1.4		ü
Principle 2: Structure the board to add value
2.1 A majority of the board should be independent directors		2.3		ü
2.2 The chair should be an independent director		2.4		ü
2.3 The roles of chair and CEO should not be exercised by the same individual		2.4		ü
2.4 The board should establish a nomination committee		2.6, 2.7, 2.9		ü
2.5 Disclose the process for evaluating the performance of the board, its committees and individual directors		2.8, 2.10		ü
2.6 Provide the information indicated in the Guide to reporting on Principle 2		website,
		Directors’
		Report, 2.1-2.10		ü
Principle 3: Promote ethical and responsible decision-making
3.1 Establish a code of conduct and disclose the code or a summary of the code as to the practices necessary to maintain confidence in the company’s integrity, the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders, and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices		3.1, 3.2		ü
3.2 Establish and disclose a policy concerning trading in company securities by directors, senior executives and employees		3.3		ü
3.3 Provide the information indicated in the Guide to reporting on Principle 3		website, 3.1-3.3		ü
Principle 4: Safeguard integrity in financial reporting
4.1 The board should establish an audit committee		4.1		ü
4.2 The audit committee should be structured to consist only of non-executive directors, a majority of independent directors and an independent chair (who is not chair of the board), and to have at least three members		4.2		ü
4.3 The audit committee should have a formal charter		4.1		ü
4.4 Provide the information indicated in the Guide to reporting on Principle 4		website, 4.1-4.5		ü
Principle 5: Make timely and balanced disclosure
5.1 Establish and disclose written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance		5.1, 5.2		ü
5.2 Provide the information indicated in the Guide to reporting on Principle 5		website, 5.1, 5.2		ü
Principle 6: Respect the rights of shareholders
6.1 Design and disclose a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings		6.1, 6.2		ü
6.2 Provide the information indicated in the Guide to reporting on Principle 6		website, 6.1, 6.2		ü

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		31

CORPORATE GOVERNANCE STATEMENT

		Reference		Comply
Principle 7: Recognise and manage risk
7.1 Establish policies for the oversight and management of material business risks and disclose a summary of those policies		7.1		ü
7.2 The board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively and should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks		7.1, 7.2		ü
7.3 The board should disclose whether it has received assurance from the CEO and CFO that the declaration provided in accordance with section 295A of the Corporations Act 2001 is founded on a sound system of risk management and internal control which is operating effectively in all material respects in relation to financial reporting risks		7.2		ü
7.4 Provide the information indicated in the Guide to reporting on Principle 7		website, 7.1, 7.2		ü
Principle 8: Remunerate fairly and responsibly
8.1 The board should establish a remuneration committee		8.1		ü
8.2 Clearly distinguish the structure of non-executive director remuneration from that of executive directors and senior executives		8.4, Remuneration Report		ü
8.3 Provide the information indicated in the Guide to reporting on Principle 8		website, 8.1-8.5		ü

FINANCIAL REPORT

CONTENTS

Board of Directors					34
Directors’ Report					36
Consolidated Income Statements					56
Consolidated Statements of Comprehensive Income					57
Consolidated Statements of Financial Position					58
Consolidated Statements of Changes in Equity					59
Consolidated Statements of Cash Flows					60
Notes to the Consolidated Financial Statements
1		Summary of significant accounting policies			61
2		Financial risk management			72
3		Critical accounting estimates and judgements			77
4		Segment information			78
5		Revenue			81
6		Other income			81
7		Expenses			82
8		Income tax and deferred tax			83
9		Trade and other receivables			86
10		Inventory			87
11		Other financial assets and liabilities			87
12		Property, plant and equipment			88
13		Goodwill			89
14		Intangible assets			90
15		Trade and other payables			91
16		Borrowings			91
17		Provisions			91
18		Retirement benefit obligations			92
19		Contributed equity			95
20		Reserves and retained earnings			96
21		Dividends			97
22		Contingencies			98
23		Commitments			98
24		Share ownership plans			99
25		Key management personnel disclosures			103
26		Remuneration of auditors			106
27		Business combinations and disposals			106
28		Subsidiaries			108
29		Investments in associates and jointly controlled entities			111
30		Related party transactions			113
31		Parent entity financial information			114
32		Earnings per share			115
33		Cash flow information			115
34		Events occurring after the reporting period			116
Directors’ Declaration					117
Independent Auditor’s Report					118
Auditor’s Independence Declaration					120
Annual Financial Report Extracts presented in US Dollars					121
Shareholder Information					125
Five Year Trend Summary					127

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		33

BOARD OF DIRECTORS

						Appointed as a director
		Executive Director and				in November 2009.
		Group Chief Executive				Member of the Risk, Audit
		Officer since March 2008.				& Compliance Committee
		Member of the Safety,				and Finance & Investment
		Health, Environment &				Committee. Until June
		Community Committee,		Appointed as a director in		2009, Mr Brunsdon was
		Nomination/Governance		March 2008. Chairman of		Managing Director and
		Committee and Finance &		the Finance & Investment		Head of Investment
		Investment Committee.		Committee. He was		Banking of Merrill
		Mr Dienst was formerly		formerly a director of		Lynch International
		a director (since June		Metal Management, Inc		(Australia) Limited. He is
		2001), Chairman (since		(since 2006). Mr Bobins is		Chairman of ING Private
		April 2003), Chief		the Chairman of Norman		Equity Access Limited
		Executive Officer		Bobins Consulting LLC		(since 2004), a director of
		(since January 2004)		(since 2008). From May		APN Funds Management
		and President (since		2007 until October		Limited (since November
		September 2004) of		2007, Mr Bobins was		2009), a director of
		Metal Management, Inc		the Chairman of the		Macquarie University
		which entity merged		Board of LaSalle Bank		Hospital and is a member
		with the Company on		Corporation. From 2002		of the Takeovers Panel.
Appointed as a		14 March 2008. From		to 2007, he was President		He was a member of
director in November		January 1999 to January		and Chief Executive		the listing committee
2005, appointed		2004, he served in		Officer of LaSalle Bank		of the Australian Stock
Deputy Chairman in		various capacities		Corporation. From 2006		Exchange between		Appointed as a
November 2008 and		with CIBC World		to 2007, he was President		1993 and 1997 and was		director in September
Chairman in August		Markets Corp., lastly		and Chief Executive		a Director of Sims		1991. Chairman of
2009. Member of the		as Managing Director		Officer of ABN AMRO		Group Limited between		the Remuneration
Remuneration Committee		of the Corporate and		North America. From		1999 and 2007. He is a		Committee and member
and Nomination/		Leveraged Finance Group.		2002 to 2007, he was		Chartered Accountant,		of the Risk, Audit &
Governance Committee.		From 2002 to 2005, he		Senior Executive Vice		a Fellow of the Financial		Compliance Committee
Mr Varello is Chairman		was Chairman of the		President at ABN AMRO		Services Institute of		and Nomination/
of Commonwealth		Board of Metals USA,		Bank N.V., the Dutch		Australia and a Fellow of		Governance Committee.
Engineering and		Inc., a NASDAQ-listed		parent of LaSalle Bank		the Institute of Company		Mr Feeney was formerly
Construction (CEC),		steel service center		Corporation. Mr Bobins		Directors. Mr Brunsdon		an Executive Director
located in Houston, Texas.		company until its sale		is the Non-Executive		is also involved in several		of Collins Partners
Prior to founding CEC in		to a private entity. He		Chairman of The		non-profit organisations,		Corporate Advisory and
2003, he was Chairman		is a director of other		PrivateBank and Trust		including as Chairman		prior to that Finance and
and CEO of American		Sims Metal Management		Company. He is also a		of Redkite (supporting		Strategy Director for
Ref-Fuel Company. He is		Limited subsidiaries and		director of NICOR, Inc.,		families who have		Philip Morris, Executive
a registered professional		associated companies.		Transco, Inc., and AAR		children with cancer),		Director, Strategy &
engineer and a member		He is a graduate of		CORP. He earned his BS		and is a director of the		Corporate Affairs for
of the American Society		Washington University		from the University of		Wentworth Group of		Elders IXL and Executive
of Civil Engineers and the		and received a Juris		Wisconsin and his MBA		Concerned Scientists and		Director, Corporate
American Institute of		Doctorate from The		from the University of		Purves Environmental		Strategy of Elders
Chemical Engineers.		Brooklyn Law School.		Chicago.		Custodians.		Resources NZFP.
PAUL J VARELLO BCE(CIVIL ENGINEERING) CHAIRMAN AND INDEPENDENT NON-EXECUTIVE DIRECTOR (AGE 66)		DANIEL W DIENST JD GROUP CHIEF  EXECUTIVE OFFICER (AGE 45)		NORMAN R BOBINS BS, MBA INDEPENDENT NON-EXECUTIVE (AGE 67)		GEOFFREY N BRUNSDON B COM INDEPENDENT  NON-EXECUTIVE (AGE 52)		J MICHAEL FEENEY B COM (MARKETING) INDEPENDENT NON-EXECUTIVE (AGE 64)

								Appointed as a director
								in November 2009.
								Member of the Safety,
								Health, Environment &
								Community Committee
								and the Risk, Audit &
								Compliance Committee.
Appointed as a director								Mr Thompson was, from
in March 2008. Chairman								2004 until his retirement
of the Nomination/								in 2007, Executive Vice
Governance Committee.								President-Commercial
Member of the Safety,								for The Mosaic Company,
Health, Environment &								one of the world’s largest
Community Committee								fertiliser companies with
and Finance & Investment								sales of US$8 billion and
Committee. He was		Appointed as a						some 7,500 employees,
formerly a director		director in March 2008.						which is publicly traded
(since March 2004) of		Chairman of the Risk,						on the New York Stock
Metal Management, Inc.		Audit & Compliance						Exchange. Prior to that,
Mr Lewon has over 40		Committee and member						he was engaged for
years of experience in		of the Remuneration						30 years in the steel
the scrap metal industry		Committee and						industry from 1974 to
and has served as an		Nomination/Governance						2004 in various roles at
executive of scrap		Committee. He was						Cargill, Inc of Minnesota,
companies, including		formerly a director		Appointed as a				United States leading to
President of Simsmetal		(since January 2004)		director in June 2007.		Appointed as a director		the position of President
USA Corp. He has been		of Metal Management,		Chairman of the Safety,		in November 2009.		of Cargill Steel Group
active in the Institute		Inc. Mr Morris		Health, Environment &		Member of the Finance &		from 1996 to 2004.
of Scrap Recycling		currently serves as		Community Committee		Investment Committee		During that period he
Industries, Inc. and its		President and CEO of		and member of the		and the Safety,		also served for a time
predecessor ISIS, serving		Intalite International		Finance & Investment		Health, Environment &		as Co-Chairman of the
as director and national		N.V., a diversified		Committee. Mr Renwick		Community Committee.		North Star BlueScope
officer, among other		holding company with		was employed with the		Mr Sukagawa joined		Steel joint venture, and
positions. Additionally,		investments primarily in		Rio Tinto Group for over		Mitsui & Co., Ltd in 1973		was a member of various
he has served as a		the metals fabrication		35 years rising, in 1997, to		and has held various		industry boards including
consultant to scrap		industry. He also		Chief Executive, Rio Tinto		positions within that		AISI (American Iron and
metal companies since		serves as Chairman and		Iron Ore, a position he		company, including		Steel Institute), SMA
his retirement from		director of Beacon Trust		held until his retirement		President & Managing		Steel Manufacturers
Simsmetal in 1993, and,		Company. He previously		in 2004. He is Chairman		Director of Mitsui Iron		Institute) and MSCI
prior to his appointment		served as a director of		and director of Coal and		Ore Development 2004		Metals Service Center
as a director of the		Metals USA, Inc., Rexel,		Allied Industries Limited		to 2007), President & CEO		Institute). Mr Thompson
company, he was a		Inc. and Tivoli Industries,		(since 2004), a director of		of PT. Mitsui Indonesia		is currently a director
long-time advisor/		Inc.; and as trustee of		Downer EDI Limited (since		(2007 to 2009) and, most		of Hawkins Chemical,
consultant to TAMCO,		the Blanchard Group of		2004) and Chairman of		recently, since April 2009,		Inc. He has a BS from
the only steel mill in		Funds. He is a Certified		the Rio Tinto Aboriginal		Senior Adviser of Mitsui		the University of
California.		Public Accountant.		Fund (since 2004).		Iron Ore Development.		Wisconsin-Madison.
ROBERT LEWON		GERALD E MORRIS		CHRIS J RENWICK		PAUL SUKAGAWA		JAMES T THOMPSON
BS		BA		AM, FAIM, FAIE, FTSE — BA, LLB		BA		BS
INDEPENDENT		INDEPENDENT		INDEPENDENT		NON-INDEPENDENT		INDEPENDENT
NON-EXECUTIVE		NON-EXECUTIVE		NON-EXECUTIVE		NON-EXECUTIVE		NON-EXECUTIVE
DIRECTOR		DIRECTOR		DIRECTOR		DIRECTOR		DIRECTOR
(AGE 67)		(AGE 78)		(AGE 67)		(AGE 59)		(AGE 60)
The following persons		Masakatsu Iwanaga —		Paul K Mazoudier —		Jeremy L Sutcliffe —`
were directors during		retired		retired		agreement terminated
the 2010 financial year:		20 November 2009		20 November 2009		by way of redundancy
						on 26 August 2009

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		35

DIRECTORS’ REPORT

Your directors present their report on the consolidated entity (Group) consisting of Sims Metal Management Limited (Company) and the entities it controlled at the end of, or during, the year ended 30 June 2010.

NAMES AND PARTICULARS OF DIRECTORS

The names of the directors of the Company in office at the date of this report together with their qualifications and experience are set out on pages 34 and 35 of this annual report.

COMPANY SECRETARIES

FRANK MORATTI
B COM, LLB, MBA (EXECUTIVE)

Mr Moratti was appointed to the position of Company Secretary in 1997. Before joining the Company, he held positions of assistant company secretary/legal counsel in a number of publicly listed companies over a period of some 12 years and, prior to that, worked as a solicitor with a major legal practice.

SCOTT MILLER
BS, MS, JD, PE

Mr Miller was appointed to the position of Company Secretary in 2008. Since joining the Company in 1997, Mr Miller has held positions as legal counsel and manager for environmental affairs for North American operations. Before joining the Company, he held positions at an environmental mediation firm, as an attorney with a major legal practice, and as a consulting engineer.

DIRECTORS’ MEETINGS

The following table shows the actual board and committee meetings held during the financial year and the number of meetings attended by each director.

										SAFETY,
										HEALTH,
						RISK, AUDIT &				ENVIRONMENT								FINANCE &				NOMINATION/
		BOARD OF				COMPLIANCE				& COMMUNITY				REMUNERATION				INVESTMENT				GOVERNANCE
		DIRECTORS2				COMMITTEE3				COMMITTEE				COMMITTEE4				COMMITTEE5				COMMITTEE6
Meetings held			11				7				5				6				6				4
P Varello			11				—				—				2				4				4
D Dienst			10				—				5				—				6				4
N Bobins			10				—				—				—				6				—
G Brunsdon			4				5				—				—				2				—
JM Feeney			11				6				—				6				—				4
M Iwanaga			5				—				—				—				—				—
R Lewon			8				—				5				—				6				3
P Mazoudier			7				2				2				2				—				—
G Morris			10				7				—				6				—				3
C Renwick			9				—				5				—				2				—
M Sukagawa			3				—				2				—				1				—
J Sutcliffe1			—				—				—				—				—				—
J Thompson			4				4				2				—				—				—

DIRECTORS’ INTERESTS

As at the date of this report, the interests of the directors in the shares, options, or performance rights of the Company are set forth below. Shares owned by each director are either in the form of ordinary shares or American Depositary Shares (ADS).

		SHARES				OPTIONS OVER SHARES				PERFORMANCE RIGHTS
P Varello (ADS)			52,125				—				—
D Dienst (ADS)			601,293				769,691				258,098
N Bobins (ADS)			54,600				—				—
G Brunsdon			3,870				—				—
JM Feeney			27,789				—				—
R Lewon (ADS)			—				91,000				—
G Morris (ADS)			25,000				205,000				—
C Renwick			3,144				—				—
M Sukagawa			—				—				—
J Thompson			—				—				—

PRINCIPAL ACTIVITIES

The Group operates predominantly in the secondary metal recycling industry. Its core businesses include:

•		Ferrous secondary recycling, which comprises the collection, processing and trading of iron and steel secondary raw material.
•		Non-ferrous secondary recycling, which comprises the collection, processing and trading of other metal alloys and residues, principally aluminium, copper and nickel bearing materials.
•		Recycling solutions, which comprises the provision of environmentally responsible solutions for the disposal of post-consumer electronic products.
•		Secondary processing, which comprises a value-added process involving the melting, refining and ingoting of certain non-ferrous metals; the reclamation and reprocessing of plastics; and landfill gas renewable energy.

REVIEW OF OPERATIONS

A review of the operations of the Company during the financial year and the results of those operations are set out in the Chairman’s and Group Chief Executive Officer’s Review on pages 2 to 7 of this annual report .

DIVIDENDS

The board determined a 74% franked final dividend of 23 cents per share for the financial year to be paid on 22 October 2010. The interim dividend for the financial year was 10 cents per share fully franked and was paid on 9 April 2010.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no significant changes in the state of affairs of the Group during the financial year not otherwise disclosed elsewhere in this annual report.

SUBSEQUENT EVENTS AFTER THE BALANCE SHEET DATE

The directors are not aware of any other matter or circumstance that has arisen since the end of the financial year which will significantly affect, or may significantly affect, the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in subsequent financial years.

LIKELY DEVELOPMENTS

Information as to the likely developments in the operations of the consolidated entity is set out in the Chairman’s and Group Chief Executive Officer’s Review on pages 2 to 7 of this annual report.

ENVIRONMENTAL REGULATION AND GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTS

The Group has licences and consents in place at each of its operating sites as prescribed by environmental laws and regulations that apply in each respective location. Further information on the consolidated entity’s performance in relation to environmental regulation is set out on pages 8 to 23 of this annual report.

The Group’s Australian operations are subject to the reporting requirements of both the Energy Efficiency Opportunities Act 2006 and the National Greenhouse and Energy Reporting Act 2007 of Australia.

The Energy Efficiency Opportunities Act 2006 requires the Company to assess the energy usage of its Australian operations, including the identification, investigation and evaluation of energy saving opportunities, and to report publicly on the assessments undertaken, including what action the Company intends to take as a result. As required under this Act, the Company has registered with the Department of Resources, Energy and Tourism as a participant entity and submitted its assessment plan and reporting schedule prior to 31 December 2009. The assessment is available for review on the Company’s website at www.simsmm.com.

The National Greenhouse and Energy Reporting Act 2007 requires the Company to report its annual greenhouse gas emissions and energy use of its Australian operations. The Company has implemented systems and processes for the collection and calculation of the data required to enable it to prepare and submit its report to the Greenhouse and Energy Data Officer by 31 October 2010.

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		37

DIRECTORS’ REPORT

INSURANCE AND INDEMNIFICATION OF OFFICERS

During the financial year, the Company had contracts in place insuring all directors and executives of the Company (and/or any subsidiary companies in which it holds greater than 50% of the voting shares), including directors in office at the date of this report and those who served on the board during the year, against liabilities that may arise from their positions within the Company and its controlled entities, except where the liabilities arise out of conduct involving a lack of good faith. The directors have not included details of the nature of the liabilities covered or the amount of the premium paid as such disclosure is prohibited under the terms of the contracts.

SHARE OPTIONS AND RIGHTS

UNISSUED SHARES

As of the date of this report, there are 3,275,367 share options outstanding and 1,395,186 rights outstanding in relation to the Company’s ordinary shares. Refer to Note 24 of the consolidated financial statements for further details of the options and rights outstanding as at 30 June 2010. Option and right holders do not have any right, by virtue of the option or right, to participate in any share issue of the Company.

SHARES ISSUED AS A RESULT OF THE EXERCISE OF OPTIONS AND VESTING OF RIGHTS

During the financial year, there were 32,000 ordinary shares issued upon the exercise of share options and 192,361 ordinary shares issued in connection with the vesting of rights. Refer to Note 24 of the consolidated financial statements for further details of shares issued pursuant to share-based awards. Subsequent to the financial year, 10,021 ordinary shares were issued in connection with vesting of rights.

NON-AUDIT SERVICES

The Company may decide to employ its external auditor (PricewaterhouseCoopers) on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important.

Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the financial year are set out in Note 26 of the consolidated financial statements.

The board has considered the position and, in accordance with advice received from the Risk, Audit & Compliance Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set forth in Note 26 of the consolidated financial statements, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

•		All non-audit services have been reviewed by the Risk, Audit & Compliance Committee to ensure they do not impact the impartiality and objectivity of the auditor; and
•		None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 120 of this annual report.

ROUNDING OF AMOUNTS

The amounts in this report, where appropriate and unless otherwise stated, have been rounded off to the nearest hundred thousand dollars in accordance with ASIC Class Order 98/100.

REMUNERATION REPORT

REMARKS BY THE CHAIRMAN OF THE REMUNERATION COMMITTEE

Dear Shareholder,

We are pleased to present your Company’s 2010 Remuneration Report and hope that you will find it to be clear, informative and easy to comprehend.

During the past year, we engaged in conversations with key shareholders and shareholder advisory groups to solicit feedback on last year’s remuneration report. We have taken this feedback into consideration in the development of this year’s report and executive remuneration framework and will continue to liaise with shareholders and their advisors in the future.

In light of the above, and as part of our objective to provide simple transparent information, we have made the following enhancements to the remuneration report for the 2010 financial year:

•		A table of contents has been added to page 40.
•		The new “Target Remuneration Components” chart on page 42 provides a summary of fixed, Short Term Incentive (STI) and Long Term Incentive (LTI) remuneration as a percentage of total target remuneration.
•		We have moved to a tabular formatting of the STI and LTI Plan information on pages 43 to 46 and added expanded commentary on the STI “Financial measures and Targets”.
•		Two new charts on page 48 provide more transparency around the STI plan performance and reward for the 2010 financial year.
•		The presentation of executive contract information on pages 50 and 51 has been simplified.
•		A new table on page 52 provides full transparency on current year Option activity.
•		The Rights activity table (also found in the financial section) on page 53 provides a more complete picture of equity activity within the remuneration report.

In the 2010 financial year, the Company completed the successful integration of executive remuneration practices and adopted a formal remuneration philosophy. This philosophy is designed to provide a remuneration program that:

•		attracts, motivates and retains the best and brightest in its senior executive, leadership and staff positions;
•		drives the Company’s business strategy of continued growth and success as a major global corporation; and
•		aligns reward opportunities with shareholder interests.

The Company continues to use demanding financial and non-financial performance criteria focused on delivering short-term and long-term value to shareholders.

The Company endeavours to achieve simplicity and transparency in remuneration design while balancing the complexities of Australian and US based incentive practices.

The following provides a summary of remuneration activity in the 2010 financial year:

•		Fixed remuneration merit increases were suspended in the 2010 financial year due to poor market conditions. The only exceptions to this suspension were increases in fixed remuneration based on promotions, significant market benchmark deficiencies or increased scope of responsibility.
•		A new global STI Plan, approved by the Remuneration Committee, was introduced for the 2010 financial year. The Financial goals for this plan were determined using the Company’s strategic plan and were in alignment with the Company’s cost of capital. Overall, the STI plan performance against such goals came in below target, although, as shown on page 48, some regions did out-perform their targets.
•		The Company made LTI Plan awards, to selected Company executives, in the form of Total Shareholder Return (TSR) based Performance Rights (Rights) and Share Options (Options), consistent with the awards made to the executive director as approved by shareholders in November 2009. These awards provide meaningful remuneration opportunities aligned with the Company’s performance, and reflect the importance of retaining the Company’s world class management team. We note that one of the specific areas of feedback from key shareholders and shareholder advisory groups was with regard to the use of re-testing in the LTI Plan. The Company and the Remuneration Committee maintain a firm belief that re-testing motivates executives to exert an extra level of effort in the years subsequent to the failed performance period to bring performance above the median (or higher) of the comparator group. This extra effort translates to enhanced shareholder value in those subsequent years.
•		The Committee retained the services of Mercer, an outside consultant, to perform an external benchmarking review of senior executives’ remuneration. The analysis revealed Messrs Davy’s and McGree’s total remuneration to be below regional market data. This was addressed by increasing their LTI targets from 75% to 100% of fixed remuneration. In addition, to align with benchmark data and in recognition of an expansion of his role to include the Australian Manufacturing business, Mr McGree’s Fixed remuneration was increased by approximately 7.5%.
•		A special bonus was paid to Mr Larry to recognise his extraordinary efforts in the successful and timely implementation of Sarbanes-Oxley requirements (SOX 404) and his integral role in managing the Company’s capital structure during a tumultuous period in financial markets.
•		There was no increase in the fees paid to non-executive directors (NEDs) in the 2010 financial year.

We will keep our remuneration policy and practices under constant review as we continue to strive to achieve “best practice” in the alignment of remuneration with corporate strategy and shareholder wealth.

We welcome and value your feedback as we continue to find ways to improve communications with our shareholders.

Yours sincerely,

Michael Feeney
Remuneration Committee Chair

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		39

DIRECTORS’ REPORT

CONTENTS AND SCOPE OF THIS REMUNERATION REPORT (AUDITED)

The directors of Sims Metal Management Limited present the Remuneration Report for the Company and the Group for the 2010 financial year. The information provided in this Remuneration Report has been audited.

The Remuneration Report forms part of the Directors’ Report and is set out as follows:

PAGE #		SECTION		DESCRIPTION
41		A		The Role of the Remuneration Committee
41		B		Executive Remuneration Policy
42		C		Executive Remuneration Framework
47		D		Remuneration outcomes for executives during the 2010 financial year, including discussion of remuneration and Company performance linkages
50		E		Executive contracts
51		F		Additional executive disclosures
54		G		Non-executive director remuneration

As required, the scope of this Remuneration Report is limited to Key Management Personnel (KMP) as defined by Australian Accounting Standard (AASB) 124 (Related Party Disclosures), and the five most highly remunerated executives of the Group and Company as defined in the Corporations Act 2001. KMP consist of the executive and non-executive directors (NEDs) and other key management personnel who are referred to as ‘senior executives’ in this report, as outlined below:

The following persons were directors of the Company during the financial year:

NAME		POSITION
Paul Varello		Independent Non-Executive Director, and Chairman (since 1 August 2009)
Paul Mazoudier		Independent Non-Executive Director (Chairman up to 1 August 2009 retired 20 November 2009)
Daniel W Dienst		Executive Director and Group Chief Executive Officer
Jeremy Sutcliffe		Executive Director (terminated by way of redundancy on 26 August 2009)
Norman Bobins		Independent Non-Executive Director
Geoff Brunsdon		Independent Non-Executive Director (since 20 November 2009)
Michael Feeney		Independent Non-Executive Director
Mike Iwanaga		Non-Independent Non-Executive Director (retired 20 November 2009)
Robert Lewon		Independent Non-Executive Director
Gerald Morris		Independent Non-Executive Director
Chris Renwick		Independent Non-Executive Director
Paul Sukagawa1		Non-Independent Non-Executive Director (since 20 November 2009)
Jim Thompson		Independent Non-Executive Director (since 20 November 2009)

The following persons were senior executives of the Company during all or part of the financial year:

NAME		POSITION
Thomas Bird		Managing Director — United Kingdom Metals (resigned 17 August 2009)
Graham Davy		Chief Executive Officer — European Metals and Sims Recycling Solutions, Global Operations
Robert Kelman		President — Commercial North America
Robert Larry		Group Chief Financial Officer
Darron McGree		Managing Director Australia and New Zealand
Alan Ratner		President — Operations North America

A. THE ROLE OF THE REMUNERATION COMMITTEE

The primary role of the Remuneration Committee (Committee) is to support and advise the board on the implementation and maintenance of coherent, fair and responsible remuneration policies and practices which are observed by the Company and which enable the Company to attract and retain executives and directors who will create value for shareholders of the Company. The Committee reviews and makes recommendations to the board on:

•		executive remuneration philosophy;
•		executive remuneration policies;
•		executive remuneration and incentive performance packages;
•		introduction and application of equity-based schemes;
•		the establishment and review of performance goals for the Group Chief Executive Officer;
•		executive recruitment, retention and termination policies; and
•		the non-executive directors’ remuneration framework.

In fulfilling these responsibilities, the Committee engages external advisers from time to time. The relevant advisers report directly to the Committee in completing this work.

Members of the Committee during the financial year were:

•		Michael Feeney — Chairman;
•		Gerald Morris — Member;
•		Paul Varello — Member (since 20 November 2009); and
•		Paul Mazoudier — Member (from 1 July 2009 to 20 November 2009).

The Committee’s charter, which is available on the Company’s website at www.simsmm.com, provides further information on the role of the Committee.

B: EXECUTIVE REMUNERATION POLICY

Approach to determining executive remuneration policy and framework

The Committee recognises that the Company operates in a global environment and that the Company’s performance depends on the quality of its people. The Committee considers recommendations presented by management in developing an executive remuneration philosophy, policy and framework aligned to the Company’s overall strategic direction. The Committee seeks input directly from external advisors, as appropriate, to assist in its reviews. Final recommendations are approved by the board.

The policy and framework are continually reviewed by the Committee to ensure alignment to the Company’s remuneration philosophy, business strategy and the needs of its shareholders. The Company also undertakes an annual remuneration review to determine the total remuneration positioning of its executives against the market.

Aims of the executive remuneration policy and framework

The overall aim of the Company’s remuneration policy and framework is to attract, motivate and retain high calibre executives. To do so, the Company provides executive remuneration packages that are competitive, referencing market data, and commensurate with employee duties, responsibilities and accountabilities. The Committee also recognises that remuneration for the executive director and senior executives should:

•		reward capability, experience and performance against business strategy;
•		provide a competitive reward for contribution to growth in shareholder wealth;
•		provide a clear structure for earning rewards;
•		provide recognition for non-financial contributions in areas key to best business practice, such as safety, talent management, corporate social responsibility and sustainability; and
•		support the Company’s core values of safety, teamwork, respect, integrity, financial discipline and entrepreneurialism.

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		41

DIRECTORS’ REPORT

The executive remuneration framework has three components. These remuneration components, and the factors that determine them, are summarised in the table below:

COMPONENT		PROVIDED AS		VARIABLES DETERMINING REWARD				PURPOSE
Fixed Remuneration		Annual salary and benefits		Set with reference to market data for role, experience and performance				Reward based on capability, experience, responsibilities and accountability commensurate with role.
Short-term incentives		Cash		Financial performance targets measured by Return on Controlled Capital Employed (ROCCE)		Personal performance goals; e.g. safety, operational efficiencies, talent management, corporate social responsibility		To reward for business performance and individual contribution to annual financial performance. To drive alignment with Company values through achievement of non-financial goals.
Long-term incentives		Equity		Relative TSR targets and continued service				Retain executives and ensure they focus on delivering long-term value to shareholders through sustained growth in shareholder wealth, consisting of dividends and growth in share price and superior market performance relative to a relevant peer group.

Fixed and variable (“at risk”) remuneration mix

In line with the Company’s intent to ensure the executive remuneration framework is aligned to the Company’s performance, a significant portion of an individual’s remuneration is “at risk”. The following chart sets out the target remuneration mix; that is, fixed remuneration (salary/package), target short-term incentive and long-term incentive for the Group Chief Executive Officer, Group Chief Financial Officer and other senior executives.

TARGET REMUNERATION COMPONENTS
AT RISK

		FIXED				STI				LTI
Group CEO			19	%			25	%			56	%
Group CFO			31	%			31	%			38	%
Other Senior Executives			34	%			33	%			33	%

Securities Trading Policy

The trading by the non-executive directors, executive director and senior executives of securities issued pursuant to the Company’s LTI Plan is subject to, and conditional upon, compliance with the terms of the Company’s policy titled ‘Dealings in Sims Metal Management Limited Securities’ (a copy of which is available on the Company’s website at www.simsmm. com). Executives are prohibited from entering into any hedging arrangements over unvested awards under the Company’s LTI Plan.

C: EXECUTIVE REMUNERATION FRAMEWORK

(a) Fixed remuneration policy

Fixed remuneration comprises base salary and benefits. Base salary is determined on an individual basis, taking into consideration the individual’s capability, experience, responsibilities and accountability, as well as external market factors.

Benefits programs may include health insurance, life and disability insurance, retirement programs (depending on national government and tax regulations) and car allowances.

Fixed remuneration generally does not vary over the course of a year based on an individual’s performance. However, remuneration packages (including fixed components of base salaries and benefits) are reviewed annually. The Committee references market-based comparable positions in public surveys and obtains advice from external remuneration consultants where necessary, in reviewing any changes to executive remuneration. There are no guaranteed increases to any components of fixed remuneration for senior executives.

(b) At-risk remuneration policy

At-risk remuneration comprises both short-term (annual) and long-term incentives. “At-risk” means an absence of certainty regarding the payment of a particular component of remuneration in the event agreed-upon performance hurdles or employment conditions are not met during the performance period. The remuneration of the executive director and senior executives is linked to performance through short- and long-term incentives as follows:

42

(b)(1)(i) Short Term Incentive Plan (STI Plan)

The Company’s executives are eligible to participate in the Company’s STI Plan.

The table below summarises the key aspects of the STI Plan.

Frequency, timing and form of award		•		Executives have an opportunity to receive an annual cash-based incentive based on the achievement of targets over the financial year.
		•		Individual targets are set on an annual basis.
		•		Payment is made in September following the finalization of the audited financial results.
Financial measures and targets		•		Group or business unit performance is based on achievement of ROCCE targets.
		•		ROCCE is computed as Profit Before Interest and Taxes (PBIT) divided by Average Controlled Capital Employed (CCE).
		•		ROCCE has been approved by the Committee as the appropriate measure for the STI as the Committee believes that ROCCE is a key performance driver of the Group. ROCCE focuses on the effective management of invested capital while encouraging maximisation of operating profits.
		•		The Company understands the desire for greater transparency of specific targets. However, given the Company’s size and position in the industry, we believe disclosing precise financial targets would put us at a competitive disadvantage due to commercial sensitivity. The Company’s practice is to take into account Group or business unit cost of capital when setting payout targets.
		•		In the 2010 financial year the Company’s overall financial performance, along with the performance of its business units, significantly improved versus the 2009 financial year.
		•		The financial component of the STI payments and business unit performance compared to target are discussed in section D.
		•		Financial targets are determined by taking into consideration stretch performance targets in the context of the economic cycle.
		•		The financial targets for senior executives are recommended each year by the Group Chief Executive Officer and reviewed by the Committee for recommendation to the board for approval. The financial targets for the Group Chief Executive Officer are recommended by the Committee and approved by the board.
Individual measures and targets		•		Individual goals are set in several key performance areas, which focus on individual initiatives which are critical to the overall success of the Company. Individual targets may include safety, succession planning, management development, as well as shareholder and community relations.
		•		Individual measures and targets are recommended on an annual basis by the Group Chief Executive Officer, and approved by the Committee, taking into consideration the Company’s stretch performance targets. The targets for the Group Chief Executive Officer are recommended by the Committee for approval by the board.
Weighting of performance measures		•		Payments from the STI Plan are determined based on the Financial performance of the Group or business unit, and individual performance. Approximately 80% of the STI payment is determined by Group or business unit financial performance and approximately 20% of the STI payment is determined by individual performance. The financial component for Group executives is based wholly on overall Group performance. The financial component for the Regional Executives is based wholly on the results of their own business units.
		•		Executives may receive a payment of up to 20% of their target STI for achievement of individual performance goals regardless of ROCCE achievement, as the Company seeks to drive and reinforce the desired individual behaviors and outcomes even in difficult economic and Financial times.

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		43

DIRECTORS’ REPORT

Key aspects of the STI Plan (continued)

Assessment of performance against measures		•		Threshold, target and maximum individual award opportunities have been established and vary by position.
		•		A minimum ROCCE target and individual level of performance must be met for individuals to be eligible for payment. Payment between threshold and maximum is then determined by reference to ROCCE and individual performance outcomes against pre-defined targets.
		•		At the end of the financial year, each executive’s individual performance is assessed based on appropriate ROCCE performance (e.g., overall Company performance or the relevant business unit) and a review of individual performance achievement against defined key performance areas. The individual’s performance is rated on a scale of 0 to 4.0. Participants must receive a rating of at least 2.0 (meets expectations) to receive a payment based on the individual performance component. Senior executive performance is assessed by the Group Chief Executive Officer, and recommended payments are considered and, if appropriate, approved by the Committee. For the Group Chief Executive Officer, performance is assessed by the Committee and a recommended payment is approved by the board.
		•		The STI target is expressed as a percentage of fixed remuneration. The payout for performance ranges from 0% to 200% of target.
Service condition		•		A voluntary termination or termination for cause prior to the annual assessment date will result in no STI being paid for the year unless the Committee determines otherwise. Upon termination due to death, disability or redundancy, STI performance for the relevant period will be assessed and paid.

(b)(1)(ii) Other bonuses

From time to time, the board, following recommendations from the Committee, chooses to pay bonuses outside the scope of the annual STI Plan to recognise significant performance of individual executives which the STI structure does not adequately address.

In February 2010, a special bonus in the amount of US$800,000, consisting of US$500,000 in a cash award and a share award equivalent to US$300,000, was awarded to Mr Larry in recognition of his extraordinary efforts in the successful implementation of Sarbanes-Oxley requirements (SOX 404) as well as his integral role in managing the Company’s capital structure during an extremely tumultuous period in the global financial markets. The share award vests annually in three equal installments, provided that Mr Larry remains an employee of the Company, subject to a qualifying cessation, at the date of vesting. A qualifying cessation is ceasing to be an employee by reason of death, permanent disability, termination without cause, or other circumstances determined at the discretion of the board.

(b)(2) Long-term incentives

The Committee believes that executive participation in equity-based incentive plans is a key element which aligns executive and shareholder objectives. The Company’s Long-Term Incentive (LTI) Plan is the principal means of allowing the Group Chief Executive Officer and senior executives the opportunity to be rewarded for the Company’s growth in share price and total shareholder return.

The LTI Plan creates a direct link between the value created for shareholders, and the reward earned by the Group Chief Executive Officer and senior executives. In addition, the LTI Plan assists in retention of the Group Chief Executive Officer and senior executives.

The LTI Plan allows for grants of Rights and Options. The LTI Plan structure is designed to focus on two key aspects of future performance. First, Rights recognise shareholder value creation relative to companies within the Company’s industry, as measured by TSR. Second, Options reflect creation of absolute shareholder value, as recognized by growth in the Company’s share price.

Due to the strong correlation with the peer group used in the Company’s relative TSR measure, the Company must outperform its peers regardless of how the broader stock market is performing. The second part of the award consists of Options, which require continuous service in order to vest, and require a higher share price than the exercise price in order to generate value.

It is common practice in Australia for Rights to be issued subject to a relative TSR hurdle. However, in the US, where the Company competes for much of its talent and business, Options are more commonly utilised and based only on a continuous service vesting condition. The board believes that the combined Rights/Options structure provides an appropriate balance in terms of ensuring that rewards for the Group Chief Executive Officer and senior executives are competitive, aligned to the business and shareholders, and reflect market practice in both Australia and the US.

44

In the 2010 financial year the following changes were made to the LTI Plan:

•		All awards were granted after the Annual General Meeting in November 2009 to enable the grant date of all awards to be aligned with that of the Group Chief Executive Officer’s grant.
•		The award structure was standardised so that all LTI Plan participants received a mix of TSR hurdled Rights and service-based Options. Previously, some executives below senior executive level had received only Option awards.

The following table summarises the details of the LTI Plan as they relate to grants made in the 2010 Financial year.

				OPTIONS		RIGHTS
Form of award				•   An Option is a contract that gives the holder the right, but not the obligation, to acquire an ordinary share at a fixed price over a specified period of time. US participants may have their Options settled in American Depositary Shares.		•   A Right is a contractual right to acquire an ordinary share for nil consideration. US participants may have their Rights settled in American Depositary Shares.
Frequency and timing of awards				•   The Company’s shareholders approved an LTI award for the Group Chief Executive Officer at the Company’s 2009 Annual General Meeting. In conjunction with that meeting, the Committee approved and granted LTI awards for other senior executives.
				•   Awards are typically made on an annual basis.
Valuation of grants				•   The fair value of Options and Rights are calculated by Mercer, the Company’s external valuation consultant, at their grant date using a Black-Scholes, Binomial or Monte Carlo simulation option pricing model as appropriate. See Note 24 of the financial report for assumptions used in determining the fair value.
Treatment of dividends				•   Holders of Rights or Options are not entitled to dividends over the term of the relevant vesting period (and in the case of Options, until exercised).
Performance conditions		Performance measure and rationale		•   In order for Options to deliver value to participants, the Company’s share price must increase above the exercise price. This aligns the award’s value to absolute growth in shareholder wealth, as measured by share price.		•   In order for Rights to vest, the Company’s TSR must be at the 51st percentile or higher against a comparator group of companies. Above 51% vesting is prorated. TSR aligns the vesting of executive awards to relative shareholder wealth creation.
		Performance period		•   All Options granted in the 2010 financial year vest in three equal instalments over a three year period. This vesting schedule reflects common US practice. Each instalment vests following the date the Company announces its annual financial results to the Australian Securities Exchange (ASX) for its 2010, 2011 and 2012 financial years. Options expire seven years after the date of grant.		•   Performance is measured during a three-year period, starting at the beginning of the financial year of the award. The initial performance period is the three-year period from 1 July 2009 through 30 June 2012. •   If any Rights remain unvested at the end of year three, they will be re-tested at the end of year four using the four-year performance period. •   If any Rights remain unvested at the end of year four, they will be re-tested at the end of year five using the Five-year performance period.
						•   Any unvested Rights outstanding after the final re-test will immediately lapse.
						•   Re-testing is limited to two re-tests, each over the extended performance period.
						•   Re-testing may require the executive to exert considerable effort to bring performance above the median of the comparator group and higher.

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		45

DIRECTORS’ REPORT

Details of the LTI Plan as they relate to grants made in the 2010 Financial year (continued)

				OPTIONS		RIGHTS
Performance conditions (continued)		Exercise price		•   The exercise price of Options is set at grant, and is equal to the volume weighted average price for the five days preceding the grant date. For US executives, Option awards are not Incentive Stock Options for the purposes of section 422 of the United States Internal Revenue Code.		•   Nil
		Comparator group		•   N/A		•   The following companies comprise the current comparator group, chosen from comparable industry sectors:
						AK Steel		Posco
						Allegheny Technologies		Reliance Steel
						ArcelorMittal		Schnitzer Steel
						BlueScope Steel		Steel Dynamics
						Commercial Metals		The Timken Company
						Gerdau Ameristeel		Tokyo Steel
						Mueller Industries		U.S. Steel
						Nucor		Worthington
								Industries
						OneSteel
		Vesting schedule		•   N/A		•   The vesting schedule for those Rights measured against relative TSR is set out below:
						TSR GROWTH RELATIVE TO		PROPORTION OF TSR
						THE COMPARATOR GROUP		GRANT VESTING
						Less than		0%
						51st percentile
						51st percentile		50%
						51st percentile to		Pro-rata
						75th percentile		straight line
						75th percentile or
						higher		100%
Sales restrictions post vesting				•  Australian residents are restricted from selling or disposing of any shares issued on exercise of Rights and Options until the board approves the release of shares, the executive ceases to be an employee, or seven years from the grant date.
Treatment of awards on				•  Where participants resign, or are terminated for cause, awards are forfeited.
cessation of employment
				•  Where cessation of employment is as the result of death, total or permanent disablement, or other circumstances at the discretion of the board, participants will be entitled to unvested awards in accordance with the original vesting schedule.
				•  Unvested awards will continue to be held by participants and tested at the end of the performance period. However, no additional re-testing will be permitted. Any unvested awards lapse at the end of the initial performance period, subject to the board’s discretion.
Treatment of awards on change of control				•  Typically a change in control of the Company may trigger full vesting of awards, subject to board discretion.

D: REMUNERATION OUTCOMES FOR EXECUTIVES DURING THE 2010 FINANCIAL YEAR, INCLUDING DISCUSSION OF REMUNERATION AND COMPANY PERFORMANCE LINKAGES

Overview of the link between remuneration and performance

The board believes that, notwithstanding the impact of the more difficult external environment in the 2009 and 2010 financial years, the operational and financial performance of the Company over the last five years has been strong relative to industry benchmarks. The board is of the view that the financial rewards provided to executives are consistent with the Company’s performance. The Company’s performance over the last five years is summarised in the table below:

		2010				20091				2008				2007				2006
Total revenue (A$m)			7,458.5				8,641.0				7,670.5				5,550.9				3,754.5
Profit/(Loss) after tax (A$m)			126.7				(150.3	)			440.1				239.9				184.9
Diluted EPS (cents)2			64.5				(82.5	)			306.3				191.0				163.4
Total dividends (cents)			33.0				38.0				130.0				120.0				105.0
Share price at 30 June A$			17.11				26.51				41.69				26.50				20.00

The TSR graph below compares the Company’s TSR against the comparator group (as referenced above) for the five year period ending 30 June 2010. TSR is the return to shareholders provided by share price appreciation plus dividends (which are assumed to be reinvested in the Company’s shares) expressed as a percentage of the share price at the beginning of the measurement period, adjusted where appropriate for bonus issues, capital consolidation or equivalents. Relative TSR is the Company’s TSR divided by the mean of the comparator group expressed as a percentage.

SIMS METAL MANAGEMENT ANNUAL REPORT 2010		47

DIRECTORS’ REPORT

Short-term incentives

As noted previously in this report, STI measures are based on financial ROCCE and individual targets. The table below outlines business unit performance against STI ROCCE targets.

AREA		ROCCE PERFORMANCE AGAINST TARGET
Group		Under target
North America Metals		Under target
Australia/New Zealand Metals		Above target
United Kingdom Metals and Global SRS		Above target

The following table outlines the proportion of the target STI that was paid and forfeited in relation to the 2010 financial year. Both ROCCE and individual performance influences individual STI payments.

		PROPORTION OF TARGET STI PAID DURING				PROPORTION OF TARGET STI FORFEITED DURING
NAME		THE 2010 FINANCIAL YEAR				THE 2010 FINANCIAL YEAR
D Dienst			20	%			80	%
G Davy			168	%			0	%
R Kelman			20	%			80	%
R Larry			20	%			80	%
D McGree			148	%			0	%
A Ratner			20	%			80	%

Long-term incentives

Performance Rights awards vesting in the 2010 financial year had up to three performance metrics: TSR, Earnings Per Share (EPS) and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA). Rights based on a TSR performance of 55.6% vested at 59.6% and Rights based on EBITDA performance vested at 56.2%. No Rights vested based on EPS performance. All the Performance Rights contain re-testing provisions for two years subsequent to the initial performance period.

48

Remuneration disclosure for the 2010 financial year (and comparatives)

Certain executive directors and senior executives (as disclosed below) are not residents of Australia. Their respective remuneration paid in foreign currency has been converted to Australian dollars at an average exchange rate for the year. Both the amount of any remuneration and any movement in comparison to the prior year may be influenced by changes in the respective currency exchange rates.

																						POST-
																						EMPLOYMENT
																						BENEFITS
										SHORT-TERM BENEFITS												PENSION &				OTHER				TERMIN-				SHARE-
										CASH				CASH				OTHER				SUPER-				LONG-TERM				ATION				BASED
(A$)		LOCATION				YEAR				SALARY1				BONUS2				BENEFITS3				ANNUATION				BENEFITS4				BENEFITS				PAYMENTS6				TOTAL
Executive Directors:
D Dienst6		USA					2010				1,417,073				368,439				394,689				7,507				13,657				—				2,574,459				4,775,824
							2009				1,328,038				2,665,438				195,796				—				15,915				—				1,357,334				5,562,521
J Sutcliffe7		Australia					2010				449,095				387,000				35,209				484,290				1,981,054				1,551,200				1,328,297				6,216,145
							2009				1,347,284				2,630,160				144,071				219,798				43,554				—				(613,272	)			3,771,595
R Cunningham10		Australia					2010				—				—				—				—				—				—				—				—
							2009				255,915				192,545				2,809				51,550				26,437				3,130,316				364,243				4,023,815
Senior Executives:
T Bird6,9		UK					2010				56,192				—				5,714				5,878				—				—				(664,803	)			(597,019)	)
							2009				451,112				272,664				41,441				42,631				28,229				—				476,240				1,312,317
G Davy6		UK					2010				483,361				943,588				34,288				35,273				—				—				899,728				2,396,238
							2009				584,198				440,969				41,441				42,631				—				—				765,199				1,874,438
R Kelman6,8		USA					2010				708,536				141,707				204,684				22,257				—				—				724,993				1,802,177
							2009				835,875				1,221,782				43,031				15,373				—				—				682,840				2,798,901
R Larry6		USA					2010				708,536				708,536				113,461				20,006				14,001				—				867,373				2,431,913
							2009				835,875				417,938				50,068				—				15,915				—				398,833				1,718,629
D McGree		Australia					2010				573,743				1,029,977				21,449				100,580				27,328				—				712,110				2,465,187
							2009				536,651				315,870				17,513				105,772				20,379				—				578,093				1,574,278
A Ratner6,8		USA					2010				708,536				141,707				34,091				7,507				14,001				—				807,306				1,713,148
							2009				835,875				1,434,696				36,683				—				15,915				—				1,098,471				3,421,640
Total							2010				5,105,072				3,720,954				843,585				683,298				2,050,041				1,551,200				7,249,463				21,203,613
							2009				7,010,823				9,592,062				572,853				477,755				166,344				3,130,316				5,107,981				26,058,134