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                                                                     EXHIBIT 4.3

                       CALIFORNIA STEEL INDUSTRIES, INC.

                            SHAREHOLDERS' AGREEMENT

                                 June 27, 1995

                               RIO DOCE, LIMITED
                          COMPANHIA VALE DO RIO DOCE
                      KAWASAKI STEEL HOLDING (USA), INC.
                          KAWASAKI STEEL CORPORATION
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                            SHAREHOLDERS' AGREEMENT

RIO DOCE, LIMITED (hereinafter called "RDL"), a corporation organized and
existing under the laws of the State of New York, U. S. A. with its principal
office at 114 West. 47th ST., New York, N. Y. 10036, U. S. A., an affiliated
corporation of COMPANHIA VALE DO RIO DOCE (hereinafter called "CVRD"), a
corporation organized and existing under the laws of the Federative Republic of
Brazil with its principal office at Av. Graca Aranha, 26, Rio de Janeiro,
Brazil, on one side.

KAWASAKI STEEL HOLDING (USA), INC. (hereinafter called "KSH"), a corporation
organized and existing under the laws of the State of Delaware with its
principal office at Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, Delaware 19801, U. S. A., an affiliated
corporation of KAWASAKI STEEL CORPORATION, a corporation organized and existing
under the laws of Japan with its principal office at 1-28, Kitahonmachidori 1-
chome, Chuo-ku, Kobe, Japan (hereinafter called "KSC"), on the other side.

RDL and KSH hereinafter sometimes referred to individually as a "Party" and
collectively as the "Parties";

WITNESSETH THAT:

WHEREAS California Steel industries, Inc. (hereinafter called "the Company") was
organized in 1984, and manufactures and sells steel products;

WHEREAS CVRD is one of the shareholders of CST and as one of the world's leading
iron ore suppliers, has developed considerable expertise in businesses in Brazil
and abroad, which expertise CVRD has provided to the Company;

WHEREAS KSC is one of the shareholders of CST and as one of the world's leading
steel manufacturers, has developed considerable expertise in the production of
steel and steel products, which expertise KSC has provided to the Company;

WHEREAS Companhia Siderugica Tubarao (hereinafter called "CST") is a corporation
organized and existing under the laws of the Federative Republic of Brazil with
its principal office at Av. Brigadeiro Eduardo Gomes, s/n-Jardim Limoeiro,
Serra, State of Espirito Santo, Brazil, and is engaged in the production and
commercialization of steel slabs;

                                      -1-
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WHEREAS SEAMAR Shipping Corporation (hereinafter called "SEAMAR") located
at 49 Broad Street, Monrovia, Liberia, is an affiliate company of CVRD, and is
engaged in the shipment of various types of goods between Brazil and other
countries, which services SEAMAR has provided to the Company;

WHEREAS RDL and KSC became, as from September 17, 1986, the sole shareholders of
the Company and a shareholders' agreement was newly concluded as of June 1, 1987
by the between RDL and KSC. As of May 22, 1989, the stock of the Company held by
KSC was transferred to KSH;

WHEREAS RDL and KSH realize the necessity to review and amend the shareholders'
agreement of June 1, 1987, since it has been eleven years from initiation of the
Company's operation, and RDL and KSH are willing to conclude a newly revised
shareholders' agreement;

NOW THEREFORE, in consideration of the premises and covenants herein contained,
the Parties do hereby agree as follows:

ARTICLE 1 - OBJECT

The Parties agree that the business and affair of the Company shall be conducted
in accordance with the provisions hereinafter set forth.

ARTICLE 2 - CAPITAL STOCK

2.1          The capital stock of the Company fully paid in is of forty
             million U.S. dollars (U.S. $40,000,000) divided into one
             thousand (1,000) shares of the common stock and three
             thousand (3,000) shares of the preferred stock.

2.2          The capital stock of the Company is currently distributed
             between the Parties as set forth below:

--------------------------------------------------------------------------------
                                                    RDL                   KSH
--------------------------------------------------------------------------------
COMMON       Amount paid in                     $5,000,000           $5,000,000
STOCK        -------------------------------------------------------------------
             Number of Shares                          500                  500
--------------------------------------------------------------------------------
PREFERRED    Amount paid in                    $15,000,000          $15,000,000
STOCK        -------------------------------------------------------------------
             Number of Shares                        1,500                1,500
--------------------------------------------------------------------------------

                                      -2-
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2.3          The characteristics and rights of the common stock and the
             preferred stock currently issued are as follows:

             (1)    Each share of the common stock shall have no par-value and
                    shall entitle its holder to one vote in the resolutions of
                    the meeting of Shareholders of the Company.

             (2)    Each share of the preferred stock shall have a par-value of
                    ten thousand U.S. dollars (U.S. $10,000) and shall have no
                    voting right.

             (3)    The common stock and the preferred stock may be represented
                    by multiple or single certificates.

             (4)    The holders of the common stock shall be entitled to
                    preemptive rights to subscribe to any additional issue of
                    the common stock or any securities convertible into the
                    common stock.

             (5)    The redemption of the preferred stock or the conversion of
                    the preferred stock into the common stock may be done at
                    such time and in such manner as decided by Parties.

             (6)    The preferred stock shall enjoy priority to the common stock
                    in the distribution of dividends at a fixed rate of ten
                    percent (10%) of the par value thereof per annum, on a
                    cumulative basis, and shall thereafter be entitled to
                    further participate in the distribution of dividends beyond
                    the said annual fixed rate on the same conditions with the
                    common stock.

2.4          In the event the capital stock of the Company is increased from
             time to time, such increase shall be represented by the common
             stock, and/or the preferred stock, as agreed upon between the
             Parties, and each of the Parties shall have the right and
             obligation to subscribe to and pay fully for such new shares in
             proportion to their respective shareholding ratio of the common
             stock of the Company. However, either Party may let its Affiliated
             Corporation(s) subscribe, in whole or in part, to the shares to be
             issued to it pursuant to the provisions of Section 10.2 hereof.


                                      -3-
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2.5          For the purpose of this Agreement, "Affiliated Corporation" means a
             corporation which, directly or indirectly, controls, is controlled
             by, or is under common control with the Party and has a common
             policy with respect to this Agreement. As used herein, the term
             "control" means the ownership of fifty percent (50%) or more of the
             outstanding voting stock of the corporation concerned, but shall
             include also any direct or indirect stock ownership which permits
             de facto control.

ARTICLE 3 -  AMENDMENT TO CERTIFICATE OF INCORPORATION
             AND BYLAWS

3.1          The Certificate of Incorporation and Bylaws of the Company
             consolidated until the present day shall be as per Annex 1 attached
             hereto and may be amended from time to time upon mutual agreement
             between the Parties.

3.2          The Parties recognize that the contents of the Certificate of
             Incorporation and Bylaws of the Company shall always be read,
             interpreted and applied within the spirit and the provisions of
             this Agreement. The Parties recognize further that the contents of
             certain provisions of the Certificate of Incorporation and Bylaws
             are more fully explained in this Agreement.

ARTICLE 4 -  MEETING OF SHAREHOLDERS

4.1          The annual meeting of Shareholders shall be held no later than the
             end of March each year at such date, time and place as the Board of
             Directors may determine.

4.2          The special meetings of Shareholders may be called at any time by
             the Chairman of the Board of Directors, upon resolution of the
             Board of Directors or upon the written request of any Shareholder.
             The special meetings of Shareholders shall be held at such place as
             the Board of Directors shall direct. At any special meeting of
             Shareholders, only such matters shall be discussed and decided as
             have been indicated by specific description in the notice thereof.

4.3          The meetings of Shareholders shall establish the general policies
             and guidelines for the administration of the Company and shall
             deliberate and decide on the matters specified below:

                                      -4-
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             (1)    Change in the business purposes of the Company;

             (2)    Dissolution or liquidation of the Company, or merger or
                    consolidation of the Company with any other corporation or
                    entity;

             (3)    Disposition of the whole or an important part of the
                    business or assets of the Company;

             (4)    Acquisition of the whole or any important part of the
                    business or assets of any other corporation or entity;

             (5)    Establishment of a subsidiary company of the Company or
                    acquisition of the capital stock of any other entity;

             (6)    Amendment of the Certificate of Incorporation and Bylaws of
                    the Company

             (7)    Increase or decrease of the capital stock of the Company;

             (8)    Redemption of the preferred stock or conversion of the
                    preferred stock into the common stock;

             (9)    Issuance of debentures convertible to stocks;

             (10)   Appointment of the Board of Directors of the Company;

             (11)   Medium-term Business Plan of the Company including
                    Investment Plan and its Annual Revisions;

             (12)   Investment for improvement or expansion of the Company in
                    excess of two million U.S. dollars (U.S. $2,000,000);

             (13)   Contracts for leasing out the whole or an important part of
                    the business or assets of the Company;

             (14)   Disposition of profit or dealing with losses of the Company;


                                      -5-
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             (15)   The Board's Annual Report and Annual Audited Financial
                    Statement of the Company;

4.4          Written  notice of each meeting of  Shareholders,  whether it is an
             annual or a special meeting of Shareholders,  specifying the place,
             day and time of the  meeting  and the  purposes  thereof,  shall be
             delivered  to each  Party at least  fifteen  (15) days  before  the
             meeting.  Such  notice may be given by  telefax,  telex or airmail,
             addressed to each Party at its address  registered  on the books of
             the Company.

4.5          The Parties  specifically  agree that the  meeting of  Shareholders
             shall be legally convened only when both  Shareholders are present,
             or  legally   represented  by  their  respective  agents,  and  the
             decisions  thereat shall only be made by the unanimous  vote of the
             Parties.

4.6          Each Party entitled to vote shall have the right to do so either in
             person  or by an agent or  agents  authorized  by a  written  proxy
             executed by such Party and filed with the Secretary of the Company,
             provided that no such proxy shall be valid after the  expiration of
             one (1) year from the date of its  execution,  unless  the  Parties
             executing it specify therein a longer period of time.

ARTICLE 5 -  CONSULTATIVE COUNCIL

5.1          The  Consultative  Council shall be constituted  of two (2)
             members,  one appointed by KSH or KSC and one appointed by RDL or
             CVRD for a term of two (2) years.

5.2          The  Consultative  Council is a high level  decision board which
             shall decide on all relevant matters submitted to it by both or
             either Party, and shall specifically  resolve any deadlock among
             the  Directors  of the Company  with  respect to any issue under
             the  functions  of the Board of Directors.

5.3          The Consultative  Council shall meet whenever convened by any of
             its members or called by the Chairman of the Board of Directors,
             at the request of both or either Party. The decisions of the
             Consultative

                                      -6-
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             Council shall always be taken by the unanimous affirmative votes of
             its members.

ARTICLE 6 -  BOARD OF DIRECTORS

6.1          The Board of Directors shall be constituted of five (5) Directors,
             Shareholders or not, one being its Chairman elected by and among
             the Directors. RDL and KSH shall have the right to appoint two (2)
             Directors each. The fifth Director shall be elected by unanimous
             affirmative votes of Shareholders.

6.2          The Chairman of the Board of Directors shall call and preside at
             all meetings of Shareholders and of the Board of Directors.

6.3          The term of office of each Director shall be for one (1) year and
             shall extend until his successor has been appointed and qualified.
             The compensation of each Director shall be fixed by the meeting of
             Shareholders.

6.4          The business and affair of the Company shall be managed under the
             direction of the Board of Directors. In the event of a deadlock
             between the Directors with respect to any issue under its
             functions, the matter shall be submitted by both or either Party to
             the Consultative Council which shall endeavor to resolve the
             impasse. Should the deadlock be not resolved at the Consultative
             Council, any of the Parties may resort to the arbitration procedure
             as stipulated in Section 18.10 hereof.

6.5          The regular meetings of the Board of Directors shall be held every
             quarter and the special meetings of the Board of Directors shall be
             held whenever called by its Chairman, at his own initiative, or
             upon request of any Director. The meetings shall take place at the
             head office of the Company, located at Fontana, California, or
             anywhere agreed upon by four (4) affirmative votes of the
             Directors. Meetings through telephone shall be permitted, if
             necessary, subject to the terms and conditions to be established by
             the Board of Directors.

6.6          Calls for any meeting of the Board of Directors, whether regular or
             special, shall be given by the Secretary to each Director in
             writing at least five (5) business days before the meeting, unless
             the members waive the right to such prior notice.


                                      -7-
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6.7          The quorum of the meeting of the Board of Directors  shall be four
             (4) Directors and four (4) affirmative  votes of  Directors
             present at such  meeting  shall decide any matter being the
             subject of the meeting.

6.8          The Board of Directors shall deliberate and decide on the matters
             specified below:

             (1)    The Board  shall  deliberate  matters  listed on Section 4.3
                    hereof and propose them for the approval of the Parties;

             (2)    Establishment  of  the  Medium-Term  Business  Plan  of  the
                    Company   according   to   Shareholders'   strategies,   and
                    establishment of the basic policy, annual plan and budget of
                    the Company, including production,  sales, profit estimates,
                    investment plan and other budget related matters;

             (3)    Investment for improvement or expansion of the plant of the
                    Company less than two million U.S. dollars (U.S.
                    $2,000,000);

             (4)    Establishment or change of
                       i) the organizational structure, at the Managers' level,
                          including branches or liaison offices of the Company;

                      ii) the Internal Regulations of the Company;

             (5)    Appointment or removal of the Officers and External Auditors
                    of the Company;

             (6)    Determination of detailed terms and conditions for the
                    receiving of personnel from each Party or its Affiliated
                    Corporations;

             (7)    Engagement of outside certified public accountant(s),
                    counsel(s), and consultant(s);

             (8)    Creation of advisory and other Board committees;

             (9)    Appointment of authorized signer(s) of the Company with
                    respect to contracts, checks or any other documents;

                                      -8-
<PAGE>

             (10)   General increase or decrease of the level of salary and wage
                    for employees and change of the salary/wage structure and
                    system;

             (11)   Determination of the amount of contribution by the Company
                    for profit sharing plan of employees with prior consultation
                    with the Shareholders;

             (12)   Loans or prepayments or other financing agreements or
                    borrowing of money in excess of one million U.S. dollars
                    (U.S. $1,000,000), except draw-downs under already approved
                    loans or other financing agreements;

             (13)   Creating a pledge or other encumbrance on the assets of the
                    Company in excess of five hundred thousand U.S. dollars
                    (U.S. $500,000);

             (14)   Opening of credit in favor of a customer of the Company in
                    excess of five hundred thousand U.S. dollars (U.S.
                    $500,000);

             (15)   Settlement of a claim with customers, suppliers, or others,
                    in excess of two hundred thousand U.S. dollars (U.S.
                    $200,000);

             (16)   Approval of policies and general conditions for the purchase
                    of slabs, ocean transportation, unloading, transportation by
                    train and purchase of machinery and equipment, materials,
                    utilities and services, and for the sale of finished steel
                    products of the Company;

             (17)   Approval of policies and general terms for the contracts not
                    specified in Paragraph (16) above in excess of five hundred
                    thousand U.S. dollars (U.S. $500,000);

             (18)   Initiation and defense of legal and administrative
                    proceedings involving the Company, its Director(s), and/or
                    its Officers(s), provided that in the case of initiation of
                    such proceedings the Parties should previously be informed;

             (19)   Any other business which may be submitted to the Board of
                    Directors from time to time, subject to the provisions of
                    item 4.3 hereof;.

                                      -9-
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6.9          Any powers other than those enumerated in Section 6.8 above shall
             also be reserved for the Board of Directors, subject to the
             provisions of item 4.3 hereof;

ARTICLE 7 -  OFFICERS

7.1          The Officers of the Company shall consist of:
             i)  a President; and

             ii) such other Officers as may be appointed by the President
                 and designated by the Board of Directors

7.2          RDL and KSH shall always jointly appoint the President.

7.3          RDL shall always appoint the Officers responsible for the following
             areas:

             (1)  financial matters of the Company and its subsidiaries,
                  including treasury, and accounting;

             (2)  procurement, purchasing, transportation and handling of slabs.

             KSH shall always appoint the Officers responsible for the following
areas:

             (1)  production, maintenance and quality control;

             (2)  engineering and technological matters.

             RDL and KSH shall always have the right to appoint an equal number
             of Officers of the Company.

                                     -10-
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7.4          In the case of vacancy of one or more Officers, the Board of
             Directors shall immediately appoint the required number of new
             Officers to fill the vacancy. Each of the new Officers so appointed
             shall hold office for the unexpired term of his predecessor.

7.5          In the case of temporary absence or impediment of an Officer, such
             Officer shall appoint in writing one of the other Officers, who
             shall exercise, along with his own, the functions of the Officer
             absent or under impediment.

7.6          The term of office of each Officer shall be one (1) year and shall
             extend until his successor has been appointed and qualified. The
             compensation of each Officer shall be fixed by the Board of
             Directors.

7.7          The powers and duties of the President and CEO and each Officer
             shall be established by the Board of Directors.

7.8          It is understood that the idea and spirit of check and balance
             between RDL and KSH will be aimed and realized whenever possible in
             the nomination of Officers by the respective Parties as well as in
             the organization of the Company.

7.9          The President shall designate one of the Officers to perform, along
             with his own, the functions of the Secretary of the Company.

ARTICLE 8 -  EXTERNAL AUDITORS

8.1          External Auditors shall be designated by the Board of Directors
             prior to the close of business in each fiscal year, who shall audit
             and examine the books of accounts of the Company and shall certify
             to the Board of Directors and Shareholders the annual balance of
             said books, which shall be prepared at the close of each fiscal
             year.

8.2          No Director or Officer of the Company, and no firm or corporation
             of which such Director or Officer is a member, shall be eligible to
             discharge the duties of the External Auditors.

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8.3          The compensation of the External Auditors shall be fixed by the
             Board of Directors.

ARTICLE 9 -  INTERNAL ORGANIZATION

9.1          The internal organization of the Company for performance of the
             day-to-day activities, such as departments/sections and the number
             of employees to be allocated to each department/section, shall be
             established by the Board of Directors in due course, always aiming
             at the most efficient performance.

9.2          The functions and duties of each department/section shall be
             defined in the Internal Regulations to be timely approved by the
             Board of Directors.

9.3          Appointments of managers, each of whom shall be the head of each
             department, shall be confirmed by the Board of Directors based upon
             nomination made by the Officer in charge of the respective area.

ARTICLE 10 - TRANSFER OF SHARES

10.1         It is the basic intention of the Parties to continue to own the
             stock shares of the Company in their possession. In the event,
             however, that any of the Parties desires to transfer, assign or
             create a pledge or other encumbrance on the shares of the Company
             in its possession, the following rules shall apply:

             (1)    In the event RDL or KSH desires to transfer or assign the
                    shares of the Company in its possession to a third party
                    other than its Affiliated Corporations, RDL or KSH shall
                    first offer to each other, as the case may be, the sale of
                    such shares at the same terms and conditions at which the
                    third party has offered to purchase the shares, and RDL or
                    KSH shall respond to the other whether to purchase the
                    offered shares within thirty (30) days after such offer is
                    made. If the response is negative or no reply has been
                    obtained within such period, RDL or KSH, as the case may be,
                    may transfer or assign such shares to the third party,
                    provided that the terms and conditions of such sale shall
                    not be more favorable than those offered to the other Party;

                                     - 12-
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             (2)    The Party, who will sell, transfer, assign or create a
                    pledge or other encumbrance on the shares of the Company in
                    its possession to or in favor of a third party other than
                    its Affiliated Corporations, shall cause such third party to
                    execute and deliver to the other Party an undertaking letter
                    that such third party shall undertake unconditionally and
                    irrevocably the obligations of the Party under this
                    Agreement in proportion to the number of shares so sold,
                    transferred, assigned, pledged or encumbered to or in favor
                    of the third party.

10.2         Any Party may sell, transfer or assign to its Affiliated
             Corporations all or any part of its shares or its preemptive right
             to subscribe to new shares of the Company, by giving written notice
             to the other Party; provided, however, that no such sale or
             transfer shall relieve the transferrer of its obligations
             hereunder, and provide, further, that such Affiliated Corporation
             shall have agreed to become a party hereto, and the transferor and
             such Affiliated Corporation shall both be deemed to be parties to
             this Agreement whereby they shall jointly assume all the
             obligations of the transferor under this Agreement.

ARTICLE 11 - COMMITMENTS ON EXERCISE OF VOTING RIGHTS

11.1         The Parties agree to exercise their voting rights at all meetings
             of Shareholders of the Company, whether annual or special, in such
             a manner as to assure the implementation of their covenants and
             undertakings in this Agreement, and to cause all elections of the
             members of the Board of Directors of the Company to be effected in
             accordance with the relevant provisions of this Agreement.

11.2         The Parties further agree to cause their respective designated
             members of the Board of Directors to exercise their votes, whenever
             required, so that the contents of this Agreement be fully respected
             and implemented.

11.3         In the case the Party transfers the whole or any part of its shares
             of the Company to its Affiliated Corporation, the Party and such
             Affiliated Corporation shall exercise their voting rights as an
             integral party.

                                     -13-
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ARTICLE 12 - ADJUSTMENT OF RIGHT TO APPOINT DIRECTORS AND OFFICERS

In the event that the shareholding ratio of the common stock between the Parties
as specified in Section 2.2 hereof should be substantially altered in the
future, each Party's right to appoint the Directors and Officers shall be
reasonably adjusted.

ARTICLE 13 - FINANCING POLICY

The Company shall target to operate as a standing-alone company, by securing its
own financial resources as may be requested by the normal operation of the
Company or by its investments. Judging from the soundness and strength of the
Company achieved in these eleven years of successful operation, the Parties
further agree not to provide any "shareholders' letter" as comfort letter or any
other letter of awareness, as may be requested by financial institutions when
the Company is securing a new financing mechanism.

ARTICLE 14 - PURCHASE OF SLABS

The Company shall continuously purchase slabs from CST as raw material for its
operation pursuant to the basic terms and conditions as agreed from time to time
between the Company and CST.

ARTICLE 15 - DISTRIBUTION OF PROFIT

Subject to any limitation on the payment of dividends contained in any agreement
to which the Company is a party, the Parties shall cause the Company to
distribute from its profits as much dividends as possible that may be
distributed under the applicable laws and regulations, provided that such
profits shall first be applied to the payment of dividends on the preferred
stock. Payment of dividends shall be discussed and determined at the annual
meeting of Shareholders taking into consideration factors such as maintaining
competitiveness of the Company, its financial position and cash flow of the
Company.

ARTICLE 16 - ACCESS TO DATA OF THE COMPANY

16.1         Either Party, through its duly authorized representative and at its
             own expense, may, during business hours of the Company, examine

                                     -14-
<PAGE>

             and copy the books and records of the Company. Further, either
             Party may likewise visit the production site and any other premises
             of the Company or its subsidiaries.

16.2         The Company shall prepare and send to each Party every month a
             business report describing and analyzing in reasonable detail the
             operation, purchase of raw materials, sale of products and
             financial conditions for each period. Furthermore, the Company
             shall report to each Party whenever any extraordinary event arises.

ARTICLE 17 - SPECIAL PROVISIONS

17.1         The Parties agree and undertake that the existing contracts signed
             by the Company with CST and SEAMAR for the purchase of slabs and
             for ocean transportation of slabs from CST to the Company,
             respectively, shall be maintained in accordance with the terms and
             conditions thereof.

17.2         RDL and KSH will send their respective personnel to the Company as
             required by the Board of Directors of the Company for its
             management and operation pursuant to the terms and conditions to be
             agreed upon between the Company and the Party concerned in the
             spirit of equal treatment between the Parties.

ARTICLE 18 - MISCELLANEOUS PR0VISIONS

18.1         Governmental Approvals
             ----------------------
             The Parties acknowledge that the implementation of some provisions
             of this Agreement is subject to the previous approval of the
             competent governmental authorities of Japan, Brazil and the United
             States of America.

18.2         Confidentiality
             ---------------
             Each Party shall keep strictly secret and confidential any secret
             and confidential information of the other Party and of the Company
             which may have come to its knowledge in connection with and through
             the performance of this Agreement.

                                     -15-
<PAGE>

18.3         Assignment of Agreement
             -----------------------
             No Party shall assign this Agreement without the prior written
             consent of the other Party.

18.4         Amendment of Agreement
             ----------------------
             No amendment to this Agreement and/or the documents annexed hereto
             shall be deemed to be effective and valid unless it is executed in
             writing and the express consent of the Parties appears on the
             written amendment. In the case of any change of the common stock
             holding ratio between the Parties, necessary and proper amendments
             hereto shall be agreed upon by and between the Parties.

18.5         Notice
             ------
             All notices to be given hereunder shall be in writing sent by
             registered or certified airmail, return receipt requested, to the
             addresses stated below. If any of the Parties has changed its
             address, written notice thereof shall be given to the other Party,
             with copy to the Company. All notices shall be effective upon
             receipt thereof. Notice by telecopy shall also be effective upon
             receipt thereof, provided, however, that it shall be confirmed by
             means of registered or certified airmail without delay. Any such
             notices given by mail shall be considered to have been given on the
             fifteenth (15th) day after having been mailed in the manner
             provided above.

             to RDL:        c/o Companhia Vale do Rio Doce
                            Avenida Graca Aranha, 26-9 andar
                            Rio de Janeiro, RJ, Brazil
                            Attn: Steel Division
                            Telefax: (55-21) 272-4696

             to KSH:        c/o Kawasaki Steel Corporation
                            2-2-3, Uchisaiwai-cho, Chiyoda-ku
                            Tokyo 100, Japan
                            Attn.: Steel Business Planning Department
                            Telefax: 03-3597-3246

18.6         Applicable Law
             --------------
             This Agreement shall be governed by the laws of the State of
             Delaware of the United States of America.

18.7         Waiver
             ------
             No waiver of any default under this Agreement shall be effective
             unless embodied in writing and signed by the Party against whom


                                     -16-
<PAGE>

             such waiver is claimed. No waiver of any breach or default shall be
             deemed to be a waiver of any other or subsequent breach or default.

18.8         Entire Agreement
             ----------------
             This Agreement sets forth the entire agreement between the Parties
             and shall prevail over any previous agreement or understanding,
             whether written or not, between the Parties. This Agreement
             supersedes the Shareholders Agreement signed by and between RDL and
             KSC on June 1, 1987.

18.9         Termination
             -----------
             In the event of substantial breach of this Agreement by one of the
             Parties, this Agreement may be terminated by the other Party upon
             ninety (90) day prior written notice to the Party committing such
             breach. The said termination shall become effective at the end of
             such ninety (90) day period unless the breach is cured within the
             said period.

18.10        Arbitration
             -----------
             Any dispute, deadlock, controversy or claim arising out of or
             relating to this Agreement not resolved at the Consultative Council
             shall be settled by arbitration in accordance with the American
             Arbitration Association rules then in effect. In any such
             arbitration proceeding there shall be three (3) arbitrators. Each
             Party shall appoint one (1) arbitrator and the two (2) arbitrators
             so appointed shall appoint the third arbitrator who shall act as
             chairman of the arbitration tribunal. The arbitration proceeding
             shall be conducted in Los Angeles, California. The award of such
             arbitration shall be final and binding upon the Parties.

18.11        Effective Date and Duration
             ---------------------------
             (1)    This Agreement shall come into force on the date when, after
                    it has been signed by the Parties, the respective Boards of
                    Directors of the Parties have obtained from the authorities
                    of their respective governments all approvals and
                    authorizations hereof that may be required. Each Party shall
                    make its best efforts to obtain, as soon as possible, such
                    approvals and authorizations and shall extend to the other
                    Party necessary assistance and cooperation for such purpose.
                    Such approvals and authorizations, when obtained, shall
                    promptly be notified by one Party to the other.

             (2)    This Agreement shall remain in full force unless and until
                    the first to occur of (i) either RDL or KSH ceasing to own
                    at least twenty five percent (25%) of the outstanding
                    common stock of

                                     - 17-
<PAGE>

                    the Company, it being understood that those shares held by
                    any Affiliated Corporations of any of the Parties shall be
                    regarded as being owned by such Party, or (ii) the
                    dissolution or liquidation of the Company.

IN WITNESS WHEREOF, the Parties have caused their representatives, duly
authorized for the purpose, to execute three (3) copies of this instrument, all
of which shall be original, this 27 day of June, 1995, each Party retaining a
copy thereof.

RIO DOCE, LIMITED                         KAWASAKI STEEL HOLDINGS (USA). INC.
-----------------                         -----------------------------------

By: /s/ Mario Pierry                      By: /s/ M. Iwahashi

Title:                                    Title:     President

IN ACKNOWLEDGEMENT WHEREOF, the representatives of the parent companies of the
parties have signed hereunder.

COMPANHIA VALE DO                          KAWASAKI STEEL CORPORATION
-----------------                          --------------------------
RIO DOCE
--------

By: /s/ Guilherme Gazolla                  By:  /s/ K. Emoto

Title:                                     Title: Senior Managing Director

CALIFORNIA STEEL INDUSTRIES, INC. hereby duly acknowledges this Agreement,
on the same day and year above.

                                            CALIFORNIA STEEL INDUSTRIES, INC.
                                            ---------------------------------

                                            By: /s/ Marcus Mota e. Silva

                                            Title:

                                     -18-