Steel Sector Gerdau S.A. Consolidated Capital Markets Environment

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1 LATAM MATERIAL CEO TRIP Credit Suisse First Boston Gerdau Group December, 20 Steel Sector Gerdau S.A. Consolidated Capital Markets Environment

2 World Largest Steel Producers Crude Steel - 20 COMPANY Source: Metal Bulletin / Gerdau OUTPUT 20 COMPANY RANKING Arcelor (LUX) Nippon Steel (JAP) LNM Group (NED) JFE Group (JAP) 29.8 na 5 Posco (KOR) Shanghai Baosteel (CHI) Corus Group (UK) With the North Star plants and the new São Paulo mill, Gerdau should inch up to the 12 th position in (17.3 million metric tons of installed capacity) In milion metric tons Mittal Group (Ispat, LNM e ISG) will be the largest steel producer in the world. (60 million metric tons of installed capacity) OUTPUT 20 RANKING US Steel (USA) Thyssen Krupp Steel (GER) Riva Group (ITA) Nucor (USA) Sumitomo Metal (JAP) Sail (IND) Gerdau (BRA) Evraz Holding (RUS) 12.1 na Prices in the International Market FACTORS THAT INFLUENCE PRICES IN THE INTERNATIONAL MARKETS US$/ton Speculation Advance purchases Reduction of purchases Increasing input costs Raw materials shortages Greater demand for main inputs Increased demand for steel products Growing imports 100 Prices FOB Antwerp * Recovering economies Rebars Wire rod Bars and Shapes * Data through september, 20 Source: Metal Bulletin

3 Cost of Inputs US$/ton 450 Scrap (Rotterdam) 350 Pig iron (CIS/Bálticos) Coke (China) Iron ore (sinter feed) Billets and wire rod producers are unanimous about long steel prices going up, based on the estimate that input and freight costs will continue to raise in the foreseeable future... INCREASING COSTS OF INPUTS SHOW THAT PRICES SHOULD NOT DROP Coal prices should double in 2005 and may decrease in International prices for pig iron have stabilized at higher levels while steel producers compete for raw material on a market environment of scarcity. Pig iron producers are sold out until February, Despite the increases in wire rod production capacity and the slowdow in growth in China, the perception of reduced supply of these inputs is accelerating a movement towards long term supply contracts. Source: Steel Business Briefing/ World Steel Dynamics / Metal Bulletin 05 IBS Projections Brazil / 05/ PRELIMINARY (%) (%) OUTPUT (million metric tons) CRUDE STEEL ROLLED STEEL SEMI-FINISHED FOR SALE (12.6) ( 1.0) DOMESTIC SALES FLAT STEEL LONG STEEL FOREIGN TRADE EXPORTS (million metric tons) ( 7.5) 3.0 FLAT STEEL (11.8) 1.3 LONG STEEL (US$ Billion) APPARENT CONSUMPTION (million metric tons*) FLAT STEEL LONG STEEL (*) Excludes intercompany sales Source: IBS 06

4 Steel Sector Gerdau S.A. Consolidated Capital Markets Environment Geographical Distribution NORTH AMERICA Steel plants 14 Joint Venture (Gallatin Steel 50%) 01 Fabrication shops 30* Downstream operations 13 Scrap collection and processing units 15 * Includes the 7 Gate City and RJ Rebar SOUTH AMERICA (Brazil included) Steel plants 12 Joint Venture (SIPAR 38%) 01 Fabrication shops 14 Downstream operations 06 Pig iron production units 02 Scrap collection and processing units 08 Iron ore extraction areas Private sea terminal 02 Comercial Gerdau stores & Flat steel service centers 75 Prontofer units 09 Thermal Cutting Service Center 06 08

5 North American Operations 15 Scrap Operations 30% of internal scrap supply located in close proximity to mills Retain scrap profit 15 Strategically Located Mills Broad geographic coverage 8.4 million tons of capacity 36 Downstream Facilities (*) Less capital intensive Higher margin and return Base load demand for mills Minimal import competition Minimill facilities (15) Scrap operations (15) Downstream Operations (36) (*) Excludes Gate City and RJ Rebar 09 Growth in North America Cambridge Mill Ameristeel (Jackson, Jacksonville, Charlotte, Knoxville, downstream operations) Cartersville Mill Co-Steel (Whitby, Sayreville, Perth Amboy, Gallatin JV, recycling facilities) Midwest Fabricati ng Region Gate City/RJ (pending) Total Finished Steel Capacity (mm short tons) Manitoba Mill 0,3 0,6 Northeast Cold Fabricating Drawn Region Facility (Orrville) Gerdau Ameristeel 2,8 Cold Drawn Facility (Cartersville) 3,4 North Star Steel (Beaumont, St. Paul, Wilton, Calvert City, downstream operations) ,4 8,4 10

6 Investment Program INVESTMENTS PLANNED: US$ 2.2 BILLION Brazil: Expansion: US$ 1,165 million Tech. Update: US$ 670 million Abroad: Tech. Update: US$ 400 million INSTALLED CAPACITY EVOLUTION Brazil Crude Steel Current: 7,580 thousand metric tons New: 10,920 thousand metric tons Consolidated Crude Steel Current: 16,380 thousand metric tons New: 19,720 thousand metric tons Brazil Rolled Steel Current: 4,730 thousand metric tons New: 5,960 thousand metric tons Consolidated Rolled Steel Current: 12,970 thousand metric tons New: 14,200 thousand metric tons INVESTMENT SCHEDULE 2005: US$ 770 million 2006: US$ 795 million 2007: US$ 670 million 11 Results by Region NORTH SOUTH TOTAL TOTAL TOTAL BRAZIL AMERICA AMERICA 3Q 9M 9M In US$ million Net Sales ,830 5,143 3,370 Gross Profit , EBITDA , Net Profit In US$/Ton Net Sales Gross Profit EBITDA Net Profit In % Gross Margin 46% 23% 34% 36% 32% 25% EBITDA Margin 39% 23% 32% 32% 29% 21% Net Margin 27% 17% 23% 23% 17% 8% Shipments 1,681 1, ,171 9,453 9,022 All tonnage in metric tons on less otherwise stated. 12

7 Evolution of Results NET SALES EBITDA In US$ million 1,705 1,830 In US$ million ,195 1,055 1,435 1, Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q GROSS MARGIN EBITDA MARGIN 50% 43.6% 46.1% 50% 45% 30% 20% 34.1% 34.4% 23.3% 45% 30% 20% 35.8% 32.1% 39.3% 31.7% 22.6% 10% 2.9% 10% 3.6% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Brazil North America South America 13 Sales Track Record In thousand metric tons 3,156 3,123 3,148 3,134 3,171 TOTAL SHIPMENTS South America 1,290 1,295 1,389 1,334 1,353 North America Brazil (exports) ,9 1,109 Brazil (domestic market) 3Q 4Q 1Q 2Q 3Q TOTAL SHIPMENTS 9M: 9.5 million metric tons 9M annualized: 12.6 million metric tons (+3.8% over 20) 14

8 Steady Growth in NA Shipments Shipments by quarter k tons ,153 5,570 4,475 (Sep YTD) 8% 7.5% Fabricated Specials Rod Flat Rolled Merchant Rebar Q02 2Q02 3Q02 4Q02 1Q 2Q 3Q 4Q 1Q 2Q 3Q Proforma Actual 2002 shipments pro forma for Co-Steel merger Shipments in short tons 15 Exports from Brazil DESTINATION OF EXPORTS - 9M (2,342 thousand metric tons) DESTINATION OF EXPORTS - 9M (1,927 thousand metric tons) Europe 12% Africa 11% Central Anerica 12% Europe 10% Africa 6% Central America 15% Asia 46% North America 10% South America 9% Asia 37% South America 18% North America 14% EXPORTS 9M: 1.9 MILLION METRIC TONS (-17.7% OVER 9M) Export revenues US$ 752 million (+31.8% over 9M) Strong demand in the international markets Attractive prices (57% higher than 9M) No credit risk 16

9 Sales by Product Line GERDAU AÇOMINAS 3Q (1,681 thousand metric tons) 14% Drawn & Others 6% Specialty Steel 30% Slabs, Blooms & Billets 4% Flat Steel (resale) 46% Common Long Rolled GERDAU AMERISTEEL 3Q (1,353 thousand metric tons) 6% Specialty Sections 13% Drawn & Others 13% Flat Steel (Gallatin) 68% Common Long Rolled PRICE INCREASES 9M (Net sales per ton shipped) 9M 9M VAR. Domestic US$ 565 US$ % Export US$ 427 US$ % BRAZIL AVERAGE US$ 512 US$ % North America US$ 587 US$ % South America US$ 502 US$ % TOTAL US$ 544 US$ % 17 Total Sales by Segment GERDAU AÇOMINAS 3Q (1,681 thousand metric tons) GERDAU AMERISTEEL 3Q (1,353 thousand metric tons) 41% Civil Construction 57% Industry 34% Civil Construction 66% Industry 2% Agriculture MAIN PRODUCTS BY SEGMENTS CIVIL CONSTRUCTION INDUSTRY AGRICULTURE Fences Black annealed wire Transfer bars POP Columns Joists Heavy structural shapes Wire mesh for concrete tubes Telcon welded mesh Rebars Wires Bars and shapes Equal angles Galvanized cordage Grinding balls Welding electrode Gg-er Wire rod Elevator guide rails Screws Slab, Blooms and Billets Star bars Light structural shapes Tribars Barbed wire Galvanized wire Oval shaped wire Eletric fencing wire Wires for aerial cultures Cercafix Wire rope / strands Griple Fence staples High resistance steel posts Posts for eletric fences 18

10 Production Costs GERDAU AÇOMINAS 3Q Others 11% Metallic Inputs 37% * Scrap * Pig Iron * Iron Ore * Alloys Labor 13% Maintenance 8% Energy sources and Reduction agents 23% Depreciation 8% GERDAU AMERISTEEL 3Q (does not include Gallatin Steel) Metallic Inputs 59% * Scrap * Pig Iron * Alloys COST OF SALES PER TON (US$ per ton shipped) Others* 17% Labor 6% Maintenance 6% Energy sources and Reduction agents 9% Depreciation 3% * Includes support team labor costs Net Sales per ton Cost per ton Net Sales per ton Cost per ton Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Gerdau Açominas data converted into US dollars at FX rate of R$2, North Star Acquisition Overview FOUR LONG STEEL MILLS, FOUR DOWNTREAM FINISHING OPERATIONS, AND TWO RECYCLING OPERATIONS ACQUIRED FROM CARGILL Sales of approximately $700 million* EBITDA of approximately $82 million* 2.0 million short tons of mill capacity 300,000 tons of downstream capacity TOTAL PURCHASE PRICE: US$ 266 MILLION CASH PLUS US$ 12 MILLION IN OBLIGATIONS $97 million for assets $181 million for net working capital Acquired at $49/ton or $139/ton including working capital *Fiscal year ended May

11 North Star - Acquisition Rationale Complementary geographic fit Expands customer base / product mix Favorable contributions from scrap and downstream operations Synergies anticipated from: SG&A reductions Manufacturing cost savings Midwest market logistics Increased purchasing power Calvert City billet supply Attractive purchase price Broad geographic coverage with 15 mills and 8.4 million short tons of finished capacity St. Paul Manitoba Wilton Carrollton Duluth Beaumont Calvert City Jackson Memphis Cambridge Whitby Perth Amboy Sayreville Gerdau Mills Gallatin North Star Mills North Star Charlotte Scrap Operations Knoxville North Star Downstream Cartersville Operations Jacksonville 21 Consolidated Indebtedness In US$ million SEP JUN TOTAL DEBT 2, % 2,075 SHORT TERM % 715 Brazilian Currency 70 3% 61 Foreign Currency % 363 Companies Abroad % 291 LONG TERM 1,382 68% 1,359 Brazilian Currency % 226 Foreign Currency % 607 Companies Abroad % 526 CASH AND CASH & EQUIVALENTS % 479 Local Currency % 196 Companies Abroad % 284 COST OF DEBT (per year) Brazilian local currency 14.9% Brazilian foreign currency FX+5.2% Companies abroad 7.0% FX VARIATION EXPOSURE Foreign currency debt 2,461 Swap operations 257 Exports (annualized) 1,0 Cash in US$ 1,179 TOTAL 2,439 COVERAGE RATIO 1.0x DEBT AVERAGE LIFE 4.2 YEARS NET DEBT 1,346 1,595 22

12 Indebtedness Evolution NET DEBT In US$ million 2,000 1,500 1,764 1,965 1,863 1,816 1,797 1,595 1,346 1, GROSS DEBT COMPOSITION 1Q 2Q 3Q 4Q 1Q 2Q 3Q SHORT TERM US$ 645 mm Companies abroad 49% Imports 16% Resolution % Pre Export 10% BNDES 9% Others 5% LONG TERM US$ 1,382 mm Companies abroad 32% Pre Export 16% Securitization 17% Imports 10% BNDES 10% Debentures Brazil 7% Debentures GNA 6% Others 2% 23 Net Financial Expenses In US$ million T 2T 3T 4T 1T 2T 3T +56 NET FINANCIAL EXPENSES Interest & Others FX and Monetary Variations FINANCIAL INDICATORS Sep. 20 Jun. 20 Sep. 20 Net Debt / Total Net Capitalization 52.4% 45.7% 35.9% EBITDA / Net Financial Expenses (-VM/VC)* 5.6x 8.4x 14.3x Gross Debt / EBITDA* 2.6x 1.6x 1.2x Net Debt / EBITDA* 2.1x 1.3x 0.8x * Last twelve months. 24

13 Debt Amortization Flow Sep. 20 In US$ million BNDES = 19 Pre Export = 16 Imports = 46 ECP = 167 Others = 53 BNDES = 20 Pre Export = 17 Imports = 18 ECP = 23 Others = BNDES = 69 Pre Export = 22 Others = BNDES = 32 Securitization = 38 Imports = 57 Debentures GNA = 79 Others = 34 BNDES = 53 Pre Export = 38 Imports = 32 Securitization = 27 Others = Secured Export Notes Senior Secured Credit Facility Senior Unsecured Notes Securitization = 41 Pre Export = 118 Others = Q 1Q05 2Q05 3Q05 4Q and thereafter SHORT TERM = US$ 644 LONG TERM = US$ 1,382 Exchange rate of US dollar 1,00 R$ 2, Outlook IN GENERAL TERMS, THE TREND FOR RESULTS IN THE CURRENT QUARTER IS POSITIVE. THIS STATEMENT IS SUPPORTED BY THE FACT THAT, DESPITE THE PREDICTIONS OF INCREASES IN THE PRICES OF SOME INPUTS, THE SPREAD BETWEEN SALES PRICE AND THE COST OF RAW MATERIALS SHOULD REMAIN WIDE COMPARED TO HISTORICAL FIGURES. BRAZIL Economic growth above 4% gives us the confidence that steel products demand continue to increase, despite the uncertainties regarding oil prices and interest rates. NORTH AMERICA In spite of the twin deficit instability, unbalanced and modest job recovery, the economy shows evidence of strength and continued growth (GDP of 3,5%). SOUTH AMERICA The forecast is of growth and includes Argentina, which experienced power shortages in the third quarter and currently shows strong signs of recovery. 26

14 Steel Sector Gerdau S.A. Consolidated Capital Markets Environment Controlling Shareholders METALÚRGICA GERDAU S.A. GERDAU S.A. Other Shareholders 42% Gerdau Companies 23% Met. Gerdau and other Gerdau Companies 50% Brazilian Instit. Investors 10% Foreign Instit. Investors 9% Foreign Instit. Investors 11% Brazilian Instit. Investors 24% Other Shareholders 21% ADR s 10% GERDAU AÇOMINAS S.A. GERDAU AMERISTEEL CORP. Gerdau Companies 92% CEA Clube / Aços Foundation 4% Other Shareholders 4% Gerdau Companies 66% Management 3% Other Shareholders 31% Positions held on

15 Stock Perfomance GOAU4 METALÚRGICA GERDAU S.A. GGBR4 GERDAU S.A Metalúrgica Gerdau S.A. Ibovespa Market Cap: US$ 1.7 bi +381% +100% Gerdau S.A. Ibovespa Market Cap: US$ 4.6 bi +282% +100% GGB GERDAU S.A. ADRs GNA GERDAU AMERISTEEL CORP. 400 ADRs - Gerdau S.A. +232% 300 Gerdau Ameristeel Corp. +152% 300 Dow Jones S&P TSX % % Market Cap: US$ 4.6 bi Market Cap: US$ 1.8 bi Source: Economática/Bloomberg - Date: through (Base 100). 29 Stock Liquidity Bovespa GGBR4 492 trades US$ 5.4 mm 4 3 GOAU trades US$ 1.6 mm 1 GERDAU S.A. (GGBR4) Monthly daily volume Monthly daily average # of trades Volume (US$ million) METALÚRGICA GERDAU S.A. (GOAU4) Monthly daily volume Monthly daily average # of trades # of trades GGBR trades US$ 11.6 mm GOAU4 240 trades US$ 2.4 mm Dec Feb 20 Mar May 20 Jun Aug 20 Sep Nov 20 30% Stock bonus + 70% Split (GOAU) 100% Stock bonus (GGBR) 30

16 ADR Liquidity NYSE DAILY AVERAGE VOLUME TRADED AT THE NYSE 7.2 In US$ million Daily Average Value Traded in 20 Dec Feb Mar May Jun Aug Sep US$ 1.2 million Source: The Bank of New York 31 Steel Sector Gerdau S.A. Consolidated Capital Markets Environment

17 Sustainable Development All Gerdau mills operate in compliance with the standards of the Environmental Management System (Sistema de Gestão Ambiental SGA), that determines rules of environmental preservation backed by ISO patterns. Gerdau invested more than US$ 125 million in environmental technologies over the last 10 years. A pioneer in Brazilian steel, Gerdau developed an environmental monitoring and diagnosis program that will serve as a technical reference for the sector. Air treatment capacity has increased by 57% since Industrial water recirculation rate at Gerdau is among the best in the global steel industry. 33 Environmental Control & Scrap Collection The Orientation for the Scrap Supply program is an innovating project for the certification in scrap management and in association with the National Center for Clean Technologies (Centro Nacional de Tecnologias Limpas/CNTL - Senai/RS). The initiative involves the technical trainning of approximately 1.5 thousand professionals, among employees and suppliers. This certification improves the strict control of environmental quality accomplished by the mill when receiving and selecting its raw material. 34

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