REFERENCE FORM. Base date: 12/31/2012 As per Annex 24 of CVM Instruction 480, of December 7, Usinas Siderúrgicas de Minas Gerais S.A.

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1 REFERENCE FORM Base date: 12/31/2012 As per Annex 24 of CVM Instruction 480, of December 7, 2009 Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS A Publicly Traded Company CNPJ/MF nº / NIRE

2 Table of Contents 1. Identification of the parties responsible for the Form s content Auditors Selected financial information Risk factors Market risks Issuer s background Issuer s activities Business group Relevant assets Comments from the directors Forecasts Shareholder meetings and management Management compensation Human Resources Ownership control Transactions with related parties Capital Securities Repurchase plans treasury securities Securities trading policy Policy for disclosure of information Extraordinary business

3 REFERENCE FORM Base date: 12/31/2012 As per Annex 24 of CVM Instruction 480, of December 7, 2009 Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS A Publicly Traded Company CNPJ/MF nº / NIRE Identification Head Office Director of Investors Relations Audit Firm Usinas Siderúrgicas de Minas Gerais S.A. Usiminas, a company organized by shares, listed in the National Corporate Tax Payer Registry of the Finance Ministry (CNPJ/MF) under nbr / and articles of incorporation filed at the Trade Board for the State of Minas Gerais under NIRE Rua Prof. José Vieira de Mendonça, nº 3.011, in the City of Belo Horizonte, State of Minas Gerais. Mr. Ronald Seckelmann, business address at the Company s head office in the City of Belo Horizonte, State of Minas Gerais. The telephone number for the Investor Relations Department is +55 (31) , the fax number is +55 (31) and the address is investidores@usiminas.com Ernst & Young auditores independentes Custody Agent Securities Issued Newspapers in which the Company discloses its information Bradesco S/A Corretora de Títulos e Valores Mobiliários ( Custody Agent ). Common and preferred shares, American Depositary Receipts (ADR), American Depositary Shares (ADS) and debentures. Information regarding the Company is published in the Official Gazette of the State of Minas Gerais and in the State of Minas and Valor Econômico newspapers. Internet site Catering Shareholders to. Information contained in the company s website is not a part of the present Reference Form and should not be therein incorporated by reference. Company Shareholder s needs are met by the Investor Relations department located at Company headquarters. The company s telephone, fac-simile and are + 55 (31) , +55 (31) and cristina.drummond@usiminas.com, respectively. Shareholders are likewise catered to by the Custody agent s shareholders department. The custody agent s telephone, fac-simile and are +55 (11) , +55 (11) and 4010.acecustodia@bradesco.com.br, respectively. Shareholders may also be served by the shareholders' department of the Issuer. The telephone, fax and of the Issuer are +55 (11) , +55 (11) and 4010.acecustodia@bradesco.com.br, respectively. 3

4 Identification of people responsible for the reference guide content 1.1 Statement by the President and by the Director of Shareholder Relations Declare that I have seen the Reference Form, that all information contained therein complies with the dispositions of CVM Instruction 480, especially regarding articles 14 to 19 and that the whole of the information contained herein constitutes a faithful, precise and complete picture of the economic and financial situation of Usinas Siderúrgicas de Minas Gerais S.A. - Usiminas and of the risks inherent to its activities and to the securities it issues. Julián Alberto Eguren, Director President Ronald Seckelmann Vice-President for Finance and Investor Relations 4

5 2. Auditors 2.1 Regarding the independent auditors For current fiscal years Business denomination: Ernst & Young auditores independentes CNPJ: / CVM Code National Auditor: Responsible: Rogério Xavier Magalhães CPF: Telephone: (31) Date of services hired: April 01, Description of the hired services: Examination and external auditing of the Balance Sheet and corresponding Income Statement, Equity Flows, Cash Flows for the Company as well as the Consolidated Financial Statements and a special review of the Quarterly Information ITR all developed according to accounting practices adopted in Brazil. Review of the basis for calculating Corporate Income Taxes - IRPJ and the Social Contribution on Net Profits CSLL, the Contribution for the Social Integration Program PIS, and the Contribution for Social Security Revenue COFINS assessed to the Company and to entities it controls. For fiscal years ended on December 31, 2010 and December 31, 2011 and December 31, 2012: Business denomination: PriceWaterhouseCoopers Auditores Independentes CNPJ: / CVM Code National Auditor: Responsible: Carlos Augusto da Silva CPF: Telephone: (31) carlos_augusto.silva@br.pwc.com Date of services hired: April 01, 2009 to March 31, 2010, April 01, 2010 to March 31, 2011, April 01, 2011 to March 31, 2012 and April 01, 2012 to April 30, Description of the hired services: Examination and external auditing of the Balance Sheet and corresponding Income Statement, Equity Flows, Cash Flows for the Company as well as the Consolidated Financial Statements and a special review of the Quarterly Information ITR all developed according to accounting practices adopted in Brazil. Review of the basis for calculating Corporate Income Taxes - IRPJ and the Social Contribution on Net Profits CSLL, the Contribution for the Social Integration Program PIS, 5

6 and the Contribution for Social Security Revenue COFINS assessed to the Company and to entities it controls. Accounting and tax advisory related to the application of accounting and tax standards, hired in 2012 Accounting and tax advisory related to the application of accounting and tax standards, hired in Appraisal report and accounting advisory in corporate restructuring operations, hired in Accounting and tax advisory related to the application of accounting and tax standards, hired in 2010 Replacement of the audit firm: The Company approved the hiring of the company Ernst & Young as its New Independent Auditor, as from the second quarter of This change is due to the auditors pool set forth at CVM Instruction 509/ Inform the total amount of remuneration paid to the independent auditors during the last fiscal year, separating fees related to audit services and those for any other service rendered. Total remuneration related to audit service fees paid to the independent auditors in the last fiscal year amounted to R$2,841, For the service of accounting and tax advisory related to the application of accounting and tax standards, the amount spent was R$174 thousand Other information which the Company considers relevant All the relevant information pertinent to this topic was disclosed in the above items. 6

7 3. Selected financial information 3.1. Based on the financial statements or when the issuer is obligated to disclose consolidated financial information, based on consolidated financial statements, develop a table informing: Amounts in thousands of reais, unless otherwise mentioned Consolidated 12/31/ /31/ /31/2010 a) Shareholder s Equity 18,513,073 19,014,205 19,029,437 b) Total Assets 32,774,219 33,360,425 31,784,751 c) Net Revenue 12,708,799 11,901,959 12,962,395 d) Gross Profit 660,499 1,294,168 2,530,856 e) Net Profit (531,300) 404,133 1,583,650 f) Number of shares, excluding those held in treasury 987,199, ,199, ,199,180 g) Equity value per share R$ R$ R$ h) Net earnings per share (R$ 0.54) R$ 0.41 R$ 1.60 i) Other accounting data selected by the Company From January 2013, the jointly controlled Unigal Ltda, Usiroll and Fasal Trading Brasil are no longer consolidated in the financial statements of the Company, pursuant to CVM Resolution 694/2012 (CPC 19 - R2). Nevertheless, its subsidiary Mineração Usiminas ceased to consolidate its jointly controlled Modal. Thereafter, the shares in these companies started being recorded by the equity method. 7

8 3.2. In the event the issuer, in the course of the last fiscal year, has disclosed or wishes to disclose in this form non-accounting measurements, such as EBITDA (earnings before interest, taxes, depreciation and amortizations) or EBIT (earnings before interest and income taxes) the issuer should indicate: a) Value of the non-accounting measurements; and b) Reconciliation between the amounts disclosed and those reported in the audited financial statements. Adjusted EBITDA Amounts in thousands of reais, unless otherwise mentioned 12/31/ /31/2011 Net income (531,300) 404,133 Income tax and social contribution (109,806) 113,752 Net financial result 502,631 50,015 Depreciation, amortization and depletion 997, ,888 EBITDA - CVM Instruction ,243 1,424,788 Net result from discontinued operations 124,919 Equity in the results (61,168) (66,967) Other additions and exclusions (i) (219,048) Adjusted EBITDA 798,075 1,263,692 (i) the additions and exclusions comprise mainly recovery of judicial contingencies and offset of tax credits, non recurring. c) Explanations on the reasons why the Company understands that such measurements are more appropriate for the correct interpretation of its financial situation and its operating result Adjusted EBITDA is calculated from net profit (loss), reversing profit (loss) from discontinued operations, income tax and social contribution, financial result, depreciation, amortization and depletion, and equity in the results of Associate, Joint Subsidiary and Subsidiary Companies. From 2013 on, as a consequence of CPC 19 (R2) application Business Combination, Adjusted EBITDA includes the share participation on joint controlled Companies, making possible the comparison to 2012 reported figures. 8

9 3.3. Identify and comment on any event following the closing of the last consolidated fiscal year financial statements that may have altered them substantially: Issuance of Debentures On 01/30/2013 Usiminas concluded the 6th issuance of simple debentures in the amount of R$1,000,000,000.00, with maturity in 2 tranches, 50% on 01/30/17 and 50% on 01/30/2019, as set forth CVM Instruction nº 476/09 ( Restricted Offering ). The resources obtained through the issuance shall be used for the reshaping of the debts falling due in 2013 for enhancement of the Company s cash, as per the ordinary management of its businesses Describe the policy for allocating the profits in the last three fiscal years, indicating: a) Rules for retaining profits According to the Company s by-laws, CHAPTER VI, 4rd paragraph of article 24, statutory clauses determine that: The Board of Directors may propose and submit to the General Meeting for discussion the deduction from the fiscal year s net profit, after constituting the legal reserve, a portion not greater than 50% for setting up a Reserve for Working Capital Investments, which shall obey the following principles: a) Its constitution will not impair shareholders right to receive payment of the obligatory dividend foreseen on paragraph 5 of article 24 in the bay-laws; b) its balance may not exceed 95% of the capital stock; c) the purpose of the reserve is to assure investments in fixed assets or increases to working capital, including for the amortization of Company debt, regardless of retention of profits related to the capital assets budget, and its balance may be used for: i) absorbing losses, whenever necessary; ii) the distribution of dividends, at any moment; iii) in share pay-back, reimbursement or purchase operations, authorized by law; iv) incorporation to the capital stock, including through new shares bonuses. The legal reserve is based on 5% of the net profits for each fiscal year up to the point it reaches 20% of the value of the capital stock. Complied with the appropriations mentioned in paragraphs 3, 4 and 5 of article 24 of By Laws, related to the Legal Reserve, Investments Reserve and Working Capital and Dividends, respectively, the General Meeting may resolve to hold a portion of net income for the year set forth in capital budget previously approved, pursuant to article 196 of Law 6.404/1976, and the remaining portion shall be distributed to the shareholders as supplementary dividend. b) Rules for dividend distribution Shareholders are assured a minimum dividend of 25% of the net profit at year end, calculated pursuant to corporate law and adjusted as follows: i) addition of the following amounts: - resulting from the reversals, during the fiscal year, of reserves for contingencies constituted previously; - resulting from the reversal, during the fiscal year, of reserves for contingencies which had previously been formed; - resulting from the realization, during the fiscal year, of 9

10 profits which had been previously transferred to retained earnings ii) deduction of the amounts allocated, during the fiscal year, to the constitution of the legal reserve, the reserve for contingencies and to retained earnings. The amount calculated in this manner may, at the discretion of the General Meeting or of the Board of Directors, as the case may be, be paid out against the profit which was the basis for its calculation or against pre-existing retained earnings. Holders of preferred shares receive dividends 10% greater than those payable to common shares. The constitution of reserves cannot impair the shareholders right to receive payment of the mandatory dividend equivalent to 25% of the amount of the fiscal year profit. The amount of interest paid or accrued as remuneration of own capital, pursuant to article 13, letter x, of the By-laws, may be imputed to the amount of dividends to be distributed by the Company, in this manner being incorporated to them for all legal effects. c) Periodicity of Dividend Distribution The company distributes dividends on an annual basis. The Board of Directors may yet decide to distribute dividends against profits verified in semi-annual or interim financial statements prepared by the Company. d) Eventual restrictions to the distribution of dividends imposed by legislation or special regulations applicable to the issuer, as well as by agreements or legal, administrative or arbitration court decisions The Law of Corporations allows the Company to suspend distribution of the mandatory dividend in the event the Board of Directors informs the General Meeting that the distribution is incompatible with its financial situation. The Fiscal Council, if instituted, must issue its opinion on the Board of Director s recommendation. Moreover, the Board of Directors must present a justification for the suspension to CVM within five days from the holding of the General Meeting. Profits not distributed due to the suspension in the manner mentioned above shall be allocated to a special reserve and, if not absorbed by subsequent losses, must be paid out, as dividends, as soon as the Company s financial situation permits. No changes to the rules on restrictions to distribution have occurred in the last three fiscal years. Some of the loan and financing agreements entered into by the Company (including, without limitation, the debentures of the 4th and 5th issuance described in item 18.5 of this reference form) provide that, in the hypothesis the Company does not comply with its obligations, it must restrict payment of dividends to the minimum 25% of adjusted net profit. The debentures of 4th issuance were early settled by the Company in December/2010, as highlighted in item Currently the Company understands that it is in full compliance with all of the agreements that foresee such a restriction. There are no restrictions to dividend distribution imposed by legal, administrative or arbitration court decisions involving the Company. 10

11 3.5. In table format, indicate, for each of the last 3 fiscal years: (In thousands of reais) Fiscal Year 12/31/2012 Fiscal Year 12/31/2011 Fiscal Year 12/31/2010 Adjusted net income - 221,424 1,493,248 Dividends distributed in relation to adjusted net income - 36,84% 36,84% Return rate in relation to the issuer net equity - 0,43% 2,89% Total distributed dividends - 81, ,144 Retained net income - 151,500 1,021,696 Date of retention approval - 04/25/ /14/2011 Amount Payment Dividend Amount Payment Dividend Amount Payment Dividend Interest on Own Capital Common ,600 04/26/ /20/2010 Common /04/2011 Preferred Class A ,970 04/26/ /20/2010 Preferred Class A /04/2011 Preferred Class B /26/ /20/2010 Preferred Class B /04/2011 Mandatory Dividend Common Common Preferred Class A Preferred Class A Preferred Class B Preferred Class B

12 3.6 Inform whether, in the last 3 fiscal years, dividends against retained earnings or reserves constituted in prior fiscal years were declared. No dividends against retained earnings or reserves constituted in prior fiscal years were declared in the last 3 fiscal years. 3.7 Using a table format, describe the degree of debt of the issuer: (a) total amount of the debt, of whatever nature; (b) debt-to-equity ratio (current plus non-current liabilities divided by net shareholders equity) Amounts in thousands of reais, unless otherwise mentioned Consolidated Current and Non-current Liabilities Description of the Account 12/31/ /31/ /31/2010 Current Liabilities 5,402,921 4,092,173 3,497,015 Loans and Financing 1,429, , ,560 Debentures 257, ,419 22,416 Taxes payable in installments 35,434 61,169 57,555 Suppliers 2,283,644 1,462,373 1,288,109 Taxes, Charges and Contributions 488, , ,243 Dividends Payable 26,635 69, ,819 Acquisition Mineração Ouro Negro S.A. 178, ,193 Other 703, , ,313 Non-current Liabilities 8,858,225 10,254,047 9,258,299 Loans and Financing 6,467,587 7,373,126 6,404,124 Debentures 250, ,000 Actuarial Liabilities 1,396,812 1,277,473 1,301,940 Taxes payable in installments 38,637 38,637 70,538 Provisions 357, , ,864 Acquisition Mineração Ouro Negro S.A. 178, ,385 Other 419, , ,833 Total Current liabilities+ Non Current liabilities 14,261,146 14,346,220 12,755,314 Net Equity 18,513,073 19,014,205 19, 029,437 Debt-to-equity ratio (current + non-current liabilities / Net Equity)

13 c) If the Company so wishes, any other debt ratio, indicating: i) Method employed to calculate the ratio Debt compared to EBITDA Loans and Financing according to indexation - Consolidated Amounts in thousands of reais, unless otherwise mentioned 12/31/ /31/ /31/2010 TOTAL TOTAL TOTAL Local Currency 4,223,927 4,614,232 3,792,220 Long Term Interest Rate 959,700 1,122, ,317 Debentures 257, , ,416 Taxes payable in installments 79,693 99, ,093 Other 3,126,870 2,867,839 2,573,394 Foreign Currency (*) 3,810,426 4,248,216 4,052,973 TOTAL DEBT 8,234,353 8,862,448 7,845,193 CASH AND CASH INVESTMENTS (4,718,322) (5,190,695) (4,543,566) NET DEBT 3,516,031 3,671,753 3,301,627 EBITDA 798,075 1,263,692 2,650,215 (Net Debt Index/ EBITDA) 4,4x 2,9x 1,2x (*) In 2012 and 2011, 99% of total foreign currency is US dollar ii) The reason why the Company understands that this ratio is appropriate for a correct reading of its financial situation and level of debt The adjusted EBITDA is employed by the Company s management as a measure of operational performance. As such, the Company understands that the debt compared to adjusted EBITDA method is an appropriate index, as it measures the capacity of the Company to honor its obligations in relation to the cash generated by its operations. 13

14 3.8. Total amount of the Company s obligations according to payment term, indicating separately debt with secured collateral, fluctuating s and unsecured debt The Company does not possess debt d by third party assets. Consolidated Position at 12/31/2012 Amounts in thousands reais Less than 1 year Over 1 and under 3 years Over 3 and under 5 years Over 5 years Total Secured Collateral 372, , , ,479 1,647,011 Fluctuating Guarantee Unsecured Debt 5,030,293 2,574,612 1,657,221 3,352,009 12,614,135 TOTAL 5,402,921 3,150,566 2,158,172 3,549,488 14,261, Provide other information that the issuer deems relevant Other than the information disclosed above, the Company understands that there is no further relevant information that requires reporting in this item 3 of the Reference Form. 4. Risk factors 4.1. Describe risk factors that may influence investment decisions, in particular those related to: a) The issuer The operating results of the Company may be adversely affected if there is a decrease in the demand and/or price of steel, be it in Brazil or in the world. The demand for steel is cyclical as much in Brazil as abroad and a reduction in demand may adversely affect the Company. Accordingly, the operating results of companies in the steelmaking sector and those of the Company may be affected by macroeconomic fluctuations in global markets and in the domestic economies of countries that consume steel, including volatility in the automotive and automobile parts, electronic appliances, and electronic equipment and industrial construction sectors, among others. Over the last years, China has greatly driven the increase in demand for steel products in the world. In 2006 China became the largest steel producer in the world as well as an exporter of 14

15 its surplus of metallurgical products. In addition, there is a world over offering of steel which negatively affects the prices of steel products and the results of the sector companies. More recent estimates of OECD Organization for Economic Co-operation and Development indicate about 540 million tons in exceeding capacity of steel world production. In general, any significant reduction in demand and/or supply of steel in domestic or export markets (including China) may have an adverse effect on the Company. For purposes of this section of the Reference Form, when an adverse effect is indicated and related to a specific risk factor, it should be considered to mean that it can or will affect the Company s activities or those of the entities it controls, its financial situation, its operating results, its perspectives, its business and/or the price negotiated for the shares it issues. The Company faces strong competition regarding prices and other products, which may negatively affect its profitability and market share. The world metallurgical sector was prejudiced by its excess production capacity, which reflects the decrease in demand for steel in Western industrial nations. Due to the high costs involved in starting up a steel plant, the system for maintaining it constantly running may require that operators maintain high levels of production even in periods of low demand, which results in greater pressure on the sector s profit margins. Pressure to lower prices exerted by the Company s competitors may affect its profitability. Moreover, continuous scientific advances in materials gave origin to products such as plastics, aluminum, ceramics and glass which compete with steel in various segments. The intensification of the crisis in Europe may negatively affect the company s businesses. The crisis in Europe, on one hand, may cause the increase in direct and indirect imports of steel in Brazil, on the other hand, the measures adopted for the currency devaluation and the implementation of measures of trade defense with the increase in the import tax for some lines of steel laminated, has been promoting a significant fall in imports. Accidents with or flaws in critical equipment belonging to the Ipatinga and Cubatão mills may lead to production being reduced or halted, which may lower the Company s operating revenues. Insurance taken out by the Company may not be sufficient to cover the losses resulting from such decreases or interruptions. The steel production process depends on certain crucial equipment such as melting furnaces, converters and continuous rollers. This equipment may be subject to serious defects or damage which may generate significant breaks in production at the Ipatinga and Cubatão mills and which in turn would decrease the Company s production volume and consequently, its operating revenue. The insurance policies taken out by the Company to cover losses resulting from operating risks which include material damage to the facilities (including breakdown of machinery and port blockade) and interruption in operations may not be sufficient to fully cover all the liabilities that may arise in the event of an interruption or reduction in the production of the Ipatinga and Cubatão mills, including those related to the inability to fill customers orders within the agreed-upon term due to such events. 15

16 The Company has insurance for loss of profit as from the 21 st day of loss of income due to claims. Additionally, should the Company be unable, in the future, to take out insurance under terms similar to those in effect, its operating and financial results may be adversely affected if it incurs liabilities that are not fully covered by its insurance policies. The Company and entities it controls are subject to risks related to pending legal, arbitration and administrative proceedings. The Company and entities it controls are cited in several legal, arbitration and administrative proceedings, including those involving tax collections, labor disputes as well as civil and public litigation, the effects for some of which are difficult to measure. At December 31, 2012 the Company had provisioned a total of R$455 million against these cases and had effected legal deposits amounting to R$175 million. It is not possible to forecast the outcome of these proceedings. In the event a substantial portion of these lawsuits or one or more of relevant values are lost and the provision is below the value of the cause, the Company s results may be adversely affected. Moreover if this does in fact occur, even if sufficient amounts have been provisioned the Company s liquidity may be adversely affected. For more information refer to items 4.3 to 4.8 in this Reference Form. The Company may face difficulties in implementing its investment projects, which may affect its growth. The company has invested and intends to continue investing to improve its product mix and efficiency while increasing its production capacity and productivity. During implementation of its investment projects the Company may face several obstacles, among which: flaws and/or delays in the acquisition of the equipment or of the services required for building and operating the projects; increase in costs over those initially estimated for carrying out the projects; difficulty in obtaining the environmental licenses necessary for developing the projects; and changes in market conditions that cause the projects to be less profitable than initially forecasted by the Company. If the Company is unable to manage these risks successfully, its growth potential and profitability may be adversely affected. Fluctuations in the value of the Real in relation to the U.S. dollar may harm the Company s financial performance and operating results. Variations in exchange rates especially that of the Real in relation to the U.S. dollar may have a significant impact on the Company. The Company cannot assure that it will be able to substantially protect any and all of its obligations fixed in dollars at a future rate. The fluctuation of the Real in relation to the U.S. dollar may have an impact on Company s financial expenses, operating costs and net export income, which may adversely affect its operating and financial results. For more information, see item 5.1. of this Reference Form. 16

17 Increases in domestic and international interest rates can negatively affect the Company s results. A substantial portion of the Company s debt is tied to floating interest rates. Hence, increases in domestic and/or international interest rates, especially SELIC, TJLP and LIBOR, may negatively affect the Company s results. For more information see item 5.1 of this Reference Form. Due to its business and investment plan, the Company may not be in a position to implement, entirely or successfully, future acquisitions, partnerships or alliances that it enters into and may incur incremental costs to finance such projects. The Company may not be able to identify potential acquisitions, alliances or partnerships that fit into its business strategy and/or acquire them within a reasonable time frame, considering their cost and returns. The integration of any transaction also involves risks, among which we highlight: - loss of consumers or key employees; - difficulties in integrating personnel, consolidating work environments and infrastructures, standardizing information and other systems, in addition to coordinating logistics structure; - flaws in maintaining quality standards of its products and services; - costs not provisioned; - difficulty to control different accounts internally; and - loss of focus on daily business by the senior management of the Company and of entities it controls. Even if the Company is successful in integrating future acquisition, alliance or partnership operations, these may not achieve the desired objectives. A flaw in the integration process or in achieving the benefits of an acquisition, alliance or partnership may adversely impact the Company s operational revenue and results. Any integration process shall require significant time for research and, even so, may not be able to operate successfully. The Company may need to include in its expense budget additional funds for possible acquisitions, alliances or partnerships. A significant increase in Company debt may have consequences of equal magnitude. An eventual energy crisis may reduce energy supply with possible rationing and a reduction in the level of industrial activity. The matrix of Brazilian electric energy, according to ANEEL the National Agency for Electric Energy is, to a great extent, made up of energy generated by water, the rest being generated mainly by heat. Restrictions imposed by the Government on the consumption of electricity or price increases may have an adverse impact on the Brazilian economy, reducing economic activity and consequently, the demand for steel which in turn would negatively affect the Company s operations, results and financial situation. Furthermore the Company is not self-sufficient in the production of energy and as its production processes demand large quantities of energy, eventual restrictions to electricity consumption or a price increase can negatively affect its financial situation. 17

18 Reduction or Repeal of Import tax on steel The Brazilian Government, in view of the claims of Usiminas and steel sector, temporarily raised the import tax on hot-rolled and plates, for reasons of trade imbalances derived from the international economic situation. The tax rates were increased from 10% and 12% to 25% by September 30, 2013 and may be extended for another 12 months. The mechanism is temporary and cannot that the rate will be renewed and when the tax returns to original rates, or if the government at any time revokes such decision, the company may have its revenue affected, due to increased imports of steel in the country. b) The Company s direct or indirect controlling party or controlling group The interests of controlling Company shareholders may conflict with those of the other Company shareholders. The controlling Company shareholders have the power to, among other things, elect the majority of the members of the Board of Directors and to determine the result of any deliberation that requires shareholder approval, in terms and limits of the By-laws and applicable law. The controlling power yielded as described above may differ from the interests of the Company s minority shareholders. c) Its shareholders Not applicable as we have not identified any risks related to the Company s shareholders. d) Entities it controls or associated companies The Entities the Company controls are subject to risks related to judicial, arbitration and administrative pending items. The entities it controls are cited in several legal, arbitration and administrative proceedings, including those involving tax collections, labor disputes as well as civil and public litigation, the effects for some of which are difficult to measure. It is not possible to forecast the outcome of these proceedings. In the event a substantial portion of these lawsuits or one or more of relevant value is lost and the provision is below the value of the cause, the Company s results may be adversely affected. Moreover if this does in fact occur, even if sufficient amounts have been provisioned the Company s liquidity may be adversely affected. For more information refer to items 4.3 to 4.8 in this reference form. e) Its suppliers The volatile nature of raw material costs to which the Company is exposed, particularly those of coal and iron ore, may adversely affect its profitability. The main raw materials used in the production of steel are coal and iron ore. Usiminas maintains long term agreements with strategic suppliers of coal so as to supply part of its supply chain. Such suppliers are assessed on the global contractual and financial performance as well as the flexibility in deliveries. In the case of coat, for being imported raw materials, security inventories are maintained to minimize the risk of lack for eventual logistics problems. 18

19 The coal price is negotiated monthly, quarterly or semi-annually with the suppliers. If coal prices increase due to fluctuations in the value of the Real vis-à-vis the U.S. dollar, the cost of importing coal may increase the general cost of production to the Company, resulting in lost profitability. The supply of iron ore to Usiminas is priced based on the monthly averages of the spots prices of the ore traded in China, discounting the maritime and railway transportation cost, and port handling, in addition to the movement, translated into reais using the prior month foreign exchange rate, plus freight costs. The Company may be adversely affected in the event of increase in the price of iron ore in the international Market and in the case of increase in the foreign exchange rate (R$/US$), if it cannot pass-on the costs to its products. In 2012 raw material costs represented approximately 41% of the consolidated costs of production for the Company. In 2011 this amount was approximately 37% and in 2010 this amount was 41%. Raw material prices may increase in the future which will result in less profitability for the Company since not always the company can pass-on the increase in costs to its product prices. Currently the Ipatinga and Cubatão plants are practically dependent on two suppliers for all of their electric energy requirements. Pursuant to the terms of the agreements for the supply of electric energy, CEMIG (Electric Energy Centers for the state of Minas Gerais) and Santo Antônio Energia SAESA must supply practically all of the electric energy required for the Ipatinga mill to operate and part of the electric energy necessary to operate the Cubatão mill, up to December 31, In the event these companies do not or cannot supply all the energy required for the Company s mills to operate normally, or if one of them breaches or rescinds the supply agreements, the mills may be forced to acquire energy at higher prices than those negotiated, which can adversely affect its results. f) Its customers The demand for Usiminas steel is strongly concentrated in specific industrial sectors, so that an eventual reduction in this demand could adversely affect its results. Usiminas has a relative concentration of its sales to the domestic market in the Automotive segment. During 2012, the Automotive Segment (which aggregates the Automobile and Auto parts sectors) was responsible for 33% of the Company s sales volume. Alterations to the demand for vehicles and parts may significantly reduce Company sales, in detriment to its results. However, this risk is minimized by the fact that the Company s and the customers of this segment relationship is based not only on the supply of steel, but also on services, as application engineering, pre and post-sale technical assistance and logistics facilities, among others. g) Sectors of the economy in which the issuer is active Changes to Brazilian tax policy as well as in charges to the steelmaking sector can cause a relevantly adverse effect to the Company. The Federal Government may implement, in the future, alterations to its tax policies as well as to the fiscal levies to the steelmaking sector that may affect the Company. These changes include alterations to tax rates and to the tax calculation basis and, occasionally, the collection of temporary levies related to specific government propositions. Some of these measures may 19

20 result in an increase in taxes and, in this case, the Company may be unable to proportionately increase its revenue which would cause a relevant adverse effect. See, further, the risk factor indicated in item 4.1. a above under the heading The Company faces strong competition regarding prices and other products, which may negatively affect its profitability and market share. h) Regulation of the sector in which the issuer is active The Company is subject to a variety of increasingly restrictive environmental and sanitation regulations which may result in increases to its liabilities and capital expenditures. The company s facilities are subject to federal, state and municipal laws, regulations and licenses related to the protection of human health and the environment. The company may suffer civil penalties, criminal sanctions and injunctions to interrupt its operations for not complying with these regulations which, among other things, restrict or prohibit the emission or spilling of toxic substances produced as a result of its activities. Current and past waste removal practices may cause the Company to be obligated to clean up or recover its facilities at a substantial expense, which can further result in significant losses. Bearing in mind the possibility that new, unforeseen regulations and norms may be edited, future environment costs may significantly vary in relation to those presently forecasted. Any investment in the environment may reduce funds available for other investments. The company depends on large volumes of water to produce steel and the Federal Government may impose levies on the use of water. Steelmaking requires large quantities of water. In the production of steel, water is used as a solvent, catalyst, cleaning agent, cooling agent and in the dilution of pollutants. The only sources of water for the Company are the rivers that flow near its steel mills. Most of the water used by the Company is circulated back into its facilities and a smaller volume of water, after being processed, is returned to the rivers. A law approved in 1997 allows the Federal Government to charge for the use of river water. Presently this does not occur. The Company has no means of knowing if the Federal Government will begin to impose levies on the use of river water and, assuming that it will, is unable to measure the impact to its operating results. i) Foreign countries where the issuer is active Protective regulations may impair the Company s capacity to export its products to important markets. Usiminas exports to various countries in Americas, (Chile, Argentina, Colombia, Venezuela, Mexico), and, when there is offer of slabs production by the plants, the sales of these products are concentrated in the markets of Mexico, USA and Asia (Taiwan, India). Protective measures in those countries may affect the Company s exports. 20

21 4.2 Regarding each of the risks mentioned above, if relevant, comment on eventual expectations for a reduction or increase of the issuer s exposure to said risks. The risks to the business that may adversely impact its operations and results, including changes to macroeconomic and sector scenarios which may influence the Company s activities, are being constantly monitored. Presently the Company cannot identify a scenario in which the risks mentioned in item 4.1 above would increase or diminish and their mitigating factors, when applicable, are discussed in the respective items Describe the legal, administrative or arbitration proceedings in which the issuer or entities it controls are participants, specifying whether they are labor-related, taxrelated, civil-related or of another nature: (i) which are not classified, and (ii) which are relevant to the businesses in which the issuer or entities it controls are involved: Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environment ( ) Other: Case Nbr. Ordinary Suit Judicial Authority Level 18th Federal District Court - Minas Gerais Judicial Section 2nd Date Commenced 05/12/2000 Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved Usiminas Federal Government None Rolim, Godoi, Viotti, Leite Campos Advogados R$ 101,647, NON-PAYMENT OF CORPORATE INCOME TAX ON THE BALANCE OF INFLATIONARY PROFITS. COMPENSATION OF AMOUNTS PAID IN 1993 PURSUANT TO LAW # 8.200, LATER REVOKED Main facts Request for advance protection conceded Publication of the court decision considering the request valid Appeals filed by both parties (Usiminas appeal: regarding the monetary correction criterion employed by the judge). CURRENT PHASE: AWAITING TRIAL. If the chance of loss is: ( ) probable ( ) possible ( x ) remote Analysis of the impact if the case is lost Only the amount involved in the litigation, which is not provisioned Amount provisioned, if any None. 21

22 Authority: (x ) Administrative ( ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environment ( ) Other: Case Nbr. PTA nº / Judicial Authority Level Administrative Council for Tax Appeals 2nd Date Commenced 04/12/2006 Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved Usiminas S/A Federal Government None Botelho, Spagnol Advogados R$ 77,122, REQUEST FOR APPROVAL OF USE OF CSL CREDITS. DIVERGENCE ON THE POSSIBILITY OF OFFSETTING IN RELATION TO THE LAPSE PERIOD Challenge of tax assessment notice registered. Main facts Summons on the decision that: 1) gathered the tax assessment notices / (IRPJ) and / (CSL), as well as of the noncompliance related to the lawsuit / (IRPJ), for trial 2) offsetting request not registered; and 3) judged the entry partially founded, determining the reduction of the isolated fine from 75% to 50% Protocol of voluntary appeal by Usiminas. CURRENT PHASE: AWAITING TRIAL. If the chance of loss is: ( ) probable ( ) possible ( x ) remote Analysis of the impact if the case is lost Only the amount involved in the litigation, which is not provisioned Amount provisioned, if any None. 22

23 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environment ( ) Other: Case Nbr. Ordinary Suit Judicial Authority Level 5th Federal District Court Minas Gerais Judicial Section 1st Date Commenced 06/16/2008 Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved Usiminas S/A Federal Government None De Biasi Auditores e Consultores S/C R$ 87,011, Suit entered into by Usiminas to question the non-ratification of compensation of corporate income tax (IRPJ) as a result of a revision to the 1995 Tax Books, undertaken by the contracted firm. Main facts Request for advance protection conceded Decision conceding an accounting expert inspection requested by Usiminas Publication of the expert opinion (favorable to Usiminas) made available to the parties Manifestation from our technical assistant corroborating the conclusions in the expert opinion presented The Federal government requested a 30-day suspension of the legal proceedings to await the Internal Revenue Dept. to return on the matter Request for suspension denied Appeal filed against this decision. CURRENT PHASE: AWAITING THE FEDERAL GOVERNMENT TO RETURN. If the chance of loss is: Analysis of the impact if the case is lost Amount provisioned, if any ( ) probable ( x ) possible () remote Only the amount involved in the litigation, which has not been provisioned. None 23

24 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( x ) Civil () Tax ( ) Environment ( ) Other: Case Nbr Judicial Authority Level Regional Federal Court 2nd Region 2nd Date Commenced 11/10/1997 Parties Involved: Plaintiff: Defendant: Others: Federal Public Prosecutor s Office (MPF) Usiminas S/A Gerdau Açominas and ArcelorMittal Comercial Responsible office Values, assets or rights involved Internal Legal Department Commercial Legal Management Right to exploit the Praia Mole Private Port Terminal THE SUIT S OBJECTIVE IS TO ANNUL THE VALIDITY OF THE CONTRACTS THAT FORMALIZE THE CONCESSION Suit distributed Injunction requested by the Public Prosecutor s Office (MPF) denied, in which the control of the parties over the Terminal would be removed. Main facts Court decision favorable to the companies. The motion of the legal proceedings deemed totally invalid Appeal presented by the MPF Suit forwarded to second level court for the judging of the MPF s appeal Favorable decision to the companies MPF filed appeal to STJ and to STF. CURRENT PHASE: AWAITING TRIAL. If the chance of loss is: ( ) probable ( ) possible ( x ) remote Analysis of the impact if the case is lost Amount provisioned, if any If the suit is judged valid, Usiminas loses the right to exploit the Praia Mole Private Port Terminal. None 24

25 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( x ) Civil () Tax ( ) Environment ( ) Other: Case Nbr. Declaratory Action Judicial Authority Level Justice Court of Minas Gerais 2nd. Civil District Court of Ipatinga/MG 1st Date Commenced Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved IPS Port Systems Ltda. e IMPSA Port Systems Ltd. Usiminas Mecânica S/A None Davi Teixeira de Azevedo Advogados R$ 301,791, Civil lawsuit in which the plaintiffs claim reimbursement and indemnity for losses allegedly incurred due to the supposed manufacturing of cranes out of specification (which was the purpose in the supply contract) Distribution of the main suit to the 17th. Civil court for São Paulo, SP under n the judge assigned to the case accepted the preliminary arguments of connection and determined that the suit be redistributed to the Ipatinga/MG judicial district since there was in Ipatinga/MG a process involving the same parties and related to the same contract; b) denied the expert investigation in Spain Filed petitions insisting on the suit extinguishment in relation to the foreign plaintiff for lack of proper caution and lack of financial credibility of the Brazilian defendant to present it Main facts The Plaintiff, Impsa Port Systems, was excluded from the active pole of the action The plaintiffs presented interlocutory appeal to challenge the plaintiff exclusion from the action Return of the letter rogatory from Spain whose purpose was the technical expertise UMSA claimed the nullity of the expertise evidence produced in Spain the plaintiff s bill of review was judged partially founded and IMPSA is part of the plaintiff of the action Both parties filed Special Appeal Published decisions of TJMG Vice Presidency not admitting Special Appeals Filed bills of review at TJMG against the decisions not admitting special appeals. Awaiting the processing of the bills of review to STJ. The main action continues with the progress suspended, although the bills of review have already been judged by TJMG. Awaiting procedural reactivation by the Courts or the interested plaintiffs IPS and IMPSA. CURRENT PHASE: AWAITING TRIAL OF THE BILLS OF REVIEW AT STJ. If the chance of loss is: Analysis of the impact if the case is lost Amount provisioned, if any ( ) probable ( x ) possible () remote Only the amount involved in the litigation, which has not been provisioned. None 25

26 Authority: ( x ) Administrative ( ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environment ( ) Other: Case Nbr. PTA nº Judicial Authority Level Administrative Council of tax Resources (CARF) 1st Date Commenced 08/30/2010 Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved Federal Government Usiminas None Sacha Calmon Misabel Derzi Consultores e Advogados R$ 159,306, THE TAX AUTHORITIES CLAIM THE PAYMENT OF IRPJ AND CSLL ON THE PROFITS ASSESSED BY THE SUBSIDIARY USIMINAS INTERNACIONAL AT THE BALANCE SHEET DATE FOR REDOMICILIATION (10/2005), FROM BRITISH VIRGIN ISLANDS TO LUXEMBURG, ACCORDING TO ART. 74 OF PM , AND WHICH HAVE NOT BEEN OFFERED TO TAXATION BY USIMINAS In BRAZIL. Main facts Awareness of the tax notice Refutation of the tax notice presented by Usiminas Unfavorable decision to Usiminas Voluntary appeal filed by Usiminas. CURRENT PHASE: WAITING FOR DECISION If the chance of loss is: Analysis of the impact if the case is lost Amount provisioned, if any ( ) probable ( x ) possible () remote Only the amount involved in the litigation, which has not been provisioned. None 26

27 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environment ( ) Other: Case Nbr. Tax Collection Procedures Judicial Authority Level Justice Court of Minas Gerais Treasury of the Judiciary District of Ipatinga/MG 1st. Date Commenced 01/12/2011 Parties Involved: Plaintiff: Defendant: Municipality of Ipatinga/MG Unigal Ltda. Others: Responsible office None Rodolfo Gropen Advocacia Values, assets or rights involved R$ 103,074, ISS LACK OF PAAYMENT OF TAX ALLEGEDLY DUE FOR GALVANIZATION SERVICES RENDERED (SUBITEM OF LIST OF SERVICES - LAW 2.033/2003) Published the distribution of Tax Collection Procedures. Main facts Unigal offered industrial equipment as collateral pledge to the debt and distribution of Motion to the tax collection procedure Granted the indication of assets and determined the drawing upon f the collateral terms Collateral term executed Distributed Motions to the Foreclosure. CURRENT PHASE: AWAITING TRIAL. Elapsed period 01 to 12/2004 and 01 to 08/2005 If the chance of loss is: Analysis of the impact if the case is lost (06/12) R$ 35,048, (09/12) R$ 35,718, (12/12) R$ 36,328, ( ) probable ( ) possible ( x ) remote Period from 09/2005 to 06/2009 (06/12) R$ 64,393, (09/12) R$ 65,623, (12/12) R$ 66,745, ( ) probable ( x ) possible ( ) remote Amount provisioned, if any none Case Nbr. None 27

28 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Case Nbr. Ordinary Suit Judicial Authority Level 6th Federal District Court Minas Gerais Judicial Section 1st Date Commenced 06/03/1994 Parties Involved: Plaintiff: Defendant: Others: Responsible office Usiminas Federal Government None Sacha Calmon Misabel Derzi Consultores e Advogados Values, assets or rights involved R$ 68,396, USIMINAS DISCUSS THE POSSIBILITY OF DISCONTINUING THE PROCEEDING DUE TO ITS JOINT TO AMNESTY (LAW 11,941/09) EVEN AFTER ITS FINAL UNAPPEALABLE DECISION, SINCE THIS REQUIREMENT IS NOT EXPRESSED IN LEGISLATION. Main facts Filed petition informing the adhesion to Payment in installments distributed by Law /2009 and the waiver to the right on which the suit is based and requiring the conversion into income of the deposit and survey of the remaining balance by the company according to calculation attached to the petition Issued decision refusing the waiver of rights on which the suit is based and the request for survey of balance by the company and determining the conversion of the full amount of the deposit into definite payment to the Federal Government Appeal filed by Usiminas. CURRENT PHASE: WAITING FOR THE APPEAL JUDGMENT. If the chance of loss is: ( ) probable ( x ) possible ( ) remote Analysis of the impact if the case is lost Amount provisioned, if any Only the amount involved in the litigation, which has not been provisioned. None 28

29 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Case Nbr. Ordinary Suit Judicial Authority Level 6th Federal District Court Minas Gerais Judicial Section 2nd Date Commenced 12/12/2006 Parties Involved: Plaintiff: Defendant: Others: Responsible office Usiminas S/A Federal Government INSS, INCRA, SESC, SENAC, FNDE, SEBRAE Botelho, Spagnol Advogados Values, assets or rights involved R$ 79,419, IN THE PERIOD FROM 05/1995 TO 10/1998, USIMINAS DISTRIBUTED THE AMOUNT RELATED TO PROFIT SHARING TO ITS EMPLOYEES, WHICH IS EXEMPT FROM SOCIAL CONTRIBUTION, PURSUANT TO THE FEDERAL CONSTITUTION. IN 2002, INSS DRAFTED AN ASSESSMENT AGAINST USIMINAS, REQUIRING THE PAYMENT OF SOCIAL CONTRIBUTIONS ON THE PROFIT SHARING FOR ALLEGEDLY BEING GRANTED NOT IN COMPLIANCE WITH THE LEGAL FORMALITIES, WHAT WOULD RESULT IN THE LOSS OF THE CONSTITUTIONAL IMMUNITY Suit Distribution. Main facts Judicial deposit in the amount of R$ 44,539,737.63, by Usiminas (precautionary action Court decision favorable to Usiminas Appeal filed by the defendants the defendants appeal was judged partially favorable (80% of the debt excluded and 20% maintained) Usiminas filed motions. CURRENT PHASE: AWAITING TRIAL. If the chance of loss is: Analysis of the impact if the case is lost Analysis of the impact if the case is lost Amount provisioned, if any ( 06/12) R$ 61,296, (09/12) R$ 62,467, (12/12) R$ 63,535, ( ) probable ( ) possible ( X ) remote ( 06/12) R$ 15,324, (09/12) R$ 15,616, (12/12) R$ 15,884, ( ) probable ( X ) possible ( ) remote Only the amount involved in the litigation, which has not been provisioned. None 29

30 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( x ) Civil ( ) Tax ( ) Environmental ( ) Other: Case Nbr Judicial Authority Level Justice Court of the Federal District and Territories 18th Brasília/DF Federal Court 1st Date Commenced 02/16/2011 Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved MPDFT Public Ministry of the Federal District Usiminas Mecânica S/A 7th defendant Elmar Luiz Koenigkan, Espólio de Claudio Oscar de Carvalho Santanna, Clarindo Carlos da Aviane Filho, Projconsult Engenharia de Projetos Ltda., Via Engenharia and UMSA. Sérgio Bermudes Advogados R$ 284,807, PUBLIC ACTION FOR THE ASSESSMENT OF ALLEGED OVER BILLING IN THE CONSTRUCTION OF JK BRIDGE IN BRASÍLIA, CLAIMING THE REIMBURSEMENT OF THE AMOUNTS IN EXCESS THROUGH THE AMENDMENT TO THE CONTRACTOR AGREEMENT 516/ Summons UMSA filed appeal. Main facts Protocol of evidentiary document Conciliation hearing without agreement Awaits decision of the preliminary argued and the request for the production of evidences Preliminaries denied and production of evidences approved CURRENT PHASE: AWAITING PRODUCTION OF EVIDENCES. If the chance of loss is: Analysis of the impact if the case is lost Amount provisioned, if any ( ) probable ( x ) possible ( ) remote The risk amount of Usiminas Mecânica is equal to the demand, which is not provisioned. However, a right of recourse is feasible in case any payment is made on account of joint liability. None 30

31 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Case Nbr. Popular action Judicial Authority Level Justice Court of Minas Gerais Treasury of the Judiciary District of Ipatinga/MG 1st Date Commenced 02/03/2012 Parties Involved: Plaintiff: Defendant: Others: Responsible office Chenia Paula Rodrigues Lucas Usiminas S/A Municipality of Ipatinga, Sebastião de Barros Quintão (mayor of Ipatinga ), Robson Gomes da Silva (mayor of Ipatinga ), Nilton Manoel (councilor). Rodolfo Gropen Advocacia Values, assets or rights involved R$ 1,683,291, POPULAR ACTION FOR THE PAYMENT OF IPTU ALLEGEDLY DUE BY USIMINAS TO THE MUNICIPALITY OF IPATINGA, FROM 1997 TO Main facts THE PLAINTIFF CLAIMS THAT THROUGH DOCUMENTS AND INFORMATION IT COULD BE NOTICED THAT SINCE 1997 USIMINAS PLANT IN IPATINGA/MG CARRIED OUT SOME CONSTRUCTION, WITHOUT INCLUDING IT IN THE IPTU CALCULATION BASIS, WHICH WOULD HAVE GENERATED A LOSS OF RESOURCES TO THE MUNICIPALITY IN THE APPROXIMATE AMOUNT OF R$ 1,590,727, REQUIRES THE DEFENDANT AWARD TO THE REIMBURSEMENT OF THE UNCOLLECTED CREDIT AMOUNTS. 02/03/2012 Distribution. CURRENT PHASE: WAITING SUMMONS. If the chance of loss is: ( ) probable ( ) possible (x ) remote Analysis of the impact if the case is lost Amount provisioned, if any Only the amount involved in the litigation, which has not been provisioned. None 31

32 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( x ) Labor ( ) Civil ( ) Tax ( ) Environmental ( ) Other: Case Nbr Judicial Authority Level 2nd Court of Federal Justice in Ipatinga/MG 1st Date Commenced 06/15/2012 Parties Involved: Plaintiff: Defendant: Others: Responsible office Sérgio Santos Lopes e outros (+22 plaintiffs) Federal Government, MTE, IBAMA, USIMINAS and TEADIT None PAR Advogados Associados Values, assets or rights involved R$ 200,053, Main facts POPULAR ACTION FILED BY 22 EX-EMPLOYEES AND 1 USIMINAS EMPLOYEE, BEFORE THE FEDERAL JUSTICE IN IPATINGA, CLAIMING THAT USIMINAS HAS ALWAYS USED AND STILL OWNS IN ITS AREA, THE PRODUCT ASBESTOS NOT IN COMPLIANCE WITH LEGISLATION. DEMAND ARISING FROM ACTS ALLEGEDLY HARMFUL TO THE LABOR ENVIRONMENT Defense presented. CURRENT PHASE: AWAITING FOR ORDER. If the chance of loss is: ( ) probable ( ) possible (x ) remote Analysis of the impact if the case is lost Amount provisioned, if any Only the amount involved in the litigation, which has not been provisioned. None 32

33 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( x ) Civil ( ) Tax ( ) Environmental ( ) Other: Case Nbr. Public Civil Action Judicial Authority Level Justice Court of the Federal District and Territories 1st Court of the Public Treasury of Florianópolis/SC 1st Date Commenced Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved General Prosecutor of Santa Catarina Usiminas Mecânica S/A 5th defendant UMSA, Neri dos Santos, Miguel Rodrigues Orofino, José Acelmo Gaio and Ster Engenharia S/A Sérgio Bermudes Advogados R$ 58,959, PUBLIC CIVIL ACTION FILED BY THE GENERAL PROSECUTOR OF SANTA CATARINA AIMING AT THE REIMBURSEMENT OF DAMAGES CAUSED TO THE STATE TREASURY DUE TO ALLEGED UNDUE EXPENDITURES IN THE CONSTRUCTION OF BRIDGE PEDRO IVO CAMPOS UMSA filed challenge and implead BNDES and Representações STER Engenharia S/A Decision granting the implead of BNDES and STER S/A BNDES filed denial to the implead made by UMSA. Main facts Published decision justifying the suspension of suit and requiring the remittance of records to the Justice Court, for having defendant in the condition of ex-federal Deputy Decision that the matter is not of the jurisdiction of the Justice Court of the State of Santa Catarina, requiring the return of records to the origin UMSA filed questions and pointed out a technical assistance The appointed expert filed petition informing the acceptance of the appointment and presented fees proposal, requiring the amount of R$287, for payment of expert fees. CURRENT PHASE: AWAITING TRIAL. If the chance of loss is: Analysis of the impact if the case is lost Amount provisioned, if any ( ) probable ( x ) possible ( ) remote The risk amount of Usiminas Mecânica is equivalent to the demand, which has not been provisioned. It shall entitle however, the right of recourse if any payment is made on account of joint liability. None 33

34 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Case Nbr. Assessment Judicial Authority Level Finance Secretariat of the State of São Paulo 1st Date Commenced 09/24/2012 Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved Main facts State of São Paulo Usiminas S/A None Sacha Calmon Misabel Derzi Consultores e Advogados R$ 99,099, THE STATE OF SÃO PAULO REQUIRED THE RETURN OF EXTEMPORARY CREDITS USED BY USIMINAS ALLEGING THAT THE CREDITS ARE: (I) USED IN DUPLICITY AND WITHOUT INDICATION OF THE DETERMINING REASONS; (II) WITHOUT EVIDENCE OF ORIGIN AND WITHOUT INDICATION OF THE DETERMINING REASONS; AND (III) RELATED TO OPERATIONS OF INCOMING OF GOODS FOR OWN USE AND CONSUMPTION AND WITHOUT INDICATINNG THE DETERMINIG REASONS Impugnation to the assessment filed by Usiminas. CURRENT PHASE: AWAITING TRIAL. If the chance of loss is: ( ) probable ( x ) possible ( ) remote Analysis of the impact if the case is lost Amount provisioned, if any Only the amount involved in the litigation, which has not been provisioned. None 34

35 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: (x ) Labor ( ) Civil (x ) Tax ( ) Environmental ( ) Other: Case Nbr Judicial Authority Level 1st Court of Cubatão/SP 1st Date Commenced 12/12/2012 Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved Main facts Sindicato dos Metalúrgicos (STISMMMEC) Usinas Siderúrgicas de Minas Gerais - USIMINAS None Russomano Advocacia Not estimated PUBLIC CIVIL ACTION IN WHICH THE UNION ALLEGES THE MASS DISMISSAL BY USIMINAS IN 2012 WITHOUT PREVIOUS NEGOTIATION WITH THE UNION. REQUIRES THE REINTEGRATION OF ALL THE EMPLOYEES DISMISSED IN 2012 (MORE THAN 1,000), AS WELL AS THE PROHIBITION OF ANY NEW DISMISSAL BY USIMINAS WITHOUT THE PREVIOUS JUDICIAL ACCEPTANCE AND AS REPAIR THE REALIZATION OF ADVERTISING CAMPAIGN AGAINST MASS DISMISSAL AND PAYMENT OF THE AMOUNT OF R$200, TO SANTA CASA DE MISERICÓRDIA DE SANTOS Summons received. CURRENT PHASE: AWAITING HEARING ON 04/13. If the chance of loss is: ( ) probable ( ) possible (x ) remote Analysis of the impact if the case is lost Not estimated. Amount provisioned, if any None 35

36 4.4. Describe the legal, administrative or arbitration proceedings, which are not classified, in which the issuer or entities it controls are participants and in which the opposing parties are managers or ex-managers, controllers or ex-controllers or investors in the issuer or in entities it controls: Not applicable, since the Company has no judicial proceedings having as opposing parties managers, ex-managers, controllers, ex-controllers or investors of the Company or its subsidiaries Regarding relevant, classified proceedings in which the issuer or entities it controls are participants and which have not been disclosed in items 4.3 and 4.4 above, analyze the impact in the event they are lost and indicate the amounts involved. Not applicable, as there are no relevant, classified legal proceedings in which the company or entities it controls participate, in this manner possible impacts are inexistent. 36

37 4.6. Describe the legal, administrative or arbitration proceedings which are ongoing or interconnected, based on similar facts and legal causes, which are not classified and which as a whole are relevant, in which the issuer or entities it controls are participants, specifying whether they are labor-related, tax-related, civil-related or of another nature: Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Amount involved R$ 775,973, Amount provisioned, if any Practices adopted by the issuer or by entities that it controls that caused such contingency None ICMS TAXES REQUIRED TO BE PAID ON EXPORTS OF PRODUCTS CONSIDERED SEMI- MANUFACTURED BY THE TAX AUTHORITIES (PRIOR TO EC 42/03). Official notification from the State of São Paulo was received under the allegation that Usiminas reportedly shipped semi-manufactured merchandize overseas during the May, 1991 to February, 1994 period. However, the exported merchandise was fully manufactured and, as so, was not subject to ICMS on exportation, that being the reason the company did not pay this tax. Quantity of Proceedings 3 Nbrs. of the proceeding(s) Judicial Authority Level I - Ordinary Suit nº ; II -Ordinary Suit nº ; III - Ordinary Suit nº JUSTICE COURT OF SÃO PAULO: I and III 4th VFP; II 2th VFP I and III- 1st; II 2nd Date Commenced I 2004; II 2005; III 2008 Parties Involved: Plaintiff: Defendant: Others: Responsible office Chance of loss: Usiminas S/A State of São Paulo None Advocacia Krakowiak ( ) probable ( ) possible ( x ) remote Main facts I - Ordinary suit nº Suit distributed in court Writ to suspend the demand for payment of the tax debt. CURRENT PHASE: WAITING TAKING OF EVIDENCE. II - Ordinary suit nº Suit distributed in court Writ to suspend the demand for payment of the tax debt. CURRENT PHASE: WAITING TAKING OF EVIDENCE. III - Ordinary suit nº Suit distributed in court Writ to suspend the demand for payment of the tax debt Court decision favorable to Usiminas Special Appeal filed by the Treasury of the State of São Paulo Court decision confirming the favorable award to Usiminas the State filed special and extraordinary appeal CURRENT PHASE: WAITING THE EXAMINATION OF ADMISSION OF APPEALS. 37

38 Authority: ( X ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Amount involved R$ 503,658, Amount provisioned, if any Practices adopted by the issuer or by entities that it controls that caused such contingency Quantity of Proceedings Nbrs. of the proceeding(s) None The company (Mill II) failed to attach the tax invoices for material in transit to customs premises in Cubatão with those for material in transit for exportation (period: 08 to 12/2004). 2 I Tax Collection Procedure nº II Tax Collection Procedure nº Judicial Authority Level Date Commenced Parties Involved: Plaintiff: Defendant: Others: Responsible office Chance of loss: Main facts I/II Cubatão Jurisdiction - Sector of Fiscal Attachment I/II 1st I II 2011 Usiminas S/A State of São Paulo - Public Treasury None Sacha Calmon Misabel Derzi Consultores e Advogados ( ) probable ( x ) possible ( ) remote I Tax Collection Procedure nº Tax Collection Procedure distributed by the State of São Paulo Usiminas offered to pledge area 19, located in Cubatão/SP Plant, related to high furnace 2, registration 7289, in order to the debt and distribution of Motions to the tax collection procedure Pledge term executed Motions to Tax Collection Procedure distributed. CURRENT PHASE: AWAITING TRIAL. II Tax Collection Procedure nº Tax Collection Procedure distributed by the State of São Paulo Usiminas offered to pledge area 05, located in Cubatão/SP Plant, related to registration 7275, in order to the debt and distribution of Motions to the tax collection procedure judicial decision granting the pledge on the assets pointed out by Usiminas Pledge term executed Motions to the tax collection procedure distributed CURRENT PHASE AWAITING TRIAL Motion to Execution distributed. CURRENT PHASE: AWAITING TRIAL. 38

39 Authority: ( X ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Amount involved R$ 713,920, Amount provisioned, if any Practices adopted by the issuer or by entities that it controls that caused such contingency Quantity of Proceedings 3 Nbrs. of the proceeding(s) Judicial Authority Level None. Tax authorities require the reversal of ICMS credits of materials considered as use and consumption: USIMINAS classifies the refractory materials used in the steel production as intermediary materials, whose appropriation of ICMS credits is permitted. However SÃO PAULO tax authorities classify such materials as of use and consumption, whose appropriation of ICMS credits is prohibited and requires the reversal of the related credits by USIMINAS. I Tax Collection Procedure nº II - Tax Collection Procedure nº III Infraction notice nº IV Infraction notice nº T Justice Court of the State of São Paulo: I/II Cubatão Jurisdiction - Sector of Fiscal Attachment III State Finance Secretariat of Santos/SP I 2nd II/III 1st Date Commenced I 03/15/2006; II 07/15/2010; III 01/02/2012 Parties Involved: Plaintiff: Defendant: Others: Responsible office Chance of loss: State of São Paulo Usiminas S/A None Sacha Calmon Misabel Derzi Consultores e Advogados ( ) probable ( x ) possible ( ) remote Main facts I Tax Collection Procedure nº Tax Collection Procedure distributed by the State of São Paulo Draft of the pledge instrument of the following assets offered by Usiminas: thick plates hot laminated and cold laminated Refusals to execution distributed by Usiminas Refusals to tax collection procedures judged groundless Interposal of appeal by Usiminas. CURRENT PHASE: WAITING FOR ANSWER OF APPEAL RECEIPT. II - Tax Collection Procedure nº Tax Collection Procedure distributed by the State of São Paulo Usiminas granted to pledge 117 thousand tons of thick plates of steel in order to the debt and distribution of Motions to the Tax Collection procedures The State Finance disagreed from the assets granted for pledge by Usiminas and required the judicial deposit of the executed amount Usiminas granted new assets for pledge: part of areas 01, 03, 16 and 30A of Cubatão Plant judicial decision granting the pledge on the assets indicated by Usiminas Draft of the pledge instrument Motions to tax collection procedures distributed Appeal by the State of São Paulo in the attempt to obtain the pledge of financial assets of Usiminas. CURRENT PHASE: WAITING JUDGMENT. III Infraction notice nº Denial to the infraction notice filed by Usiminas. CURRENT PHASE: WAITING DECISION. IV Infraction notice n Denial to the infraction notice filed by Usiminas Unfavorable decision to Usiminas CURRENT PHASE AWAITING PRESENTATION OF APPEAL 39

40 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( ) Tax ( ) Environmental ( X ) Other: Defense of Competition Amount involved R$ 108,992, Amount provisioned, if any Practices adopted by the issuer or by entities that it controls that caused such contingency Quantity of Proceedings 2 Nbrs. of the proceeding(s) Judicial Authority Level None Lawsuits proposed by Usiminas and by the now-extinct Cosipa requesting the annulment of the decision of the Administrative Council for Economic Defense - CADE which imposed fines on the companies referred to for supposedly engaging in illegal anti-trust practices (cartel formation), jointly with CSN. I- Ordinary Suit n (Usiminas); II Ordinary Suit n (Cosipa) Federal Regional Court of the 1st. Region 2nd Date Commenced 07/12/1999 Parties Involved: Plaintiff: Defendant: Usiminas S/A Administrative Council of Economic Defense CADE Others: Responsible office CSN Franceschini e Miranda Advogados (Cosipa) Wald e Associados Advogados (Usiminas) Chance of loss: ( ) probable ( x ) possible ( ) remote Main facts Ordinary Suit n and Ordinary Suit n Suit distributed in court At a first-level court the condemnation was maintained, being suppressed a portion of the fine, related to the alleged deceptive practice Appeals judged in TRF 1st Region, in decision that maintained the award pursuant to the award issued in 1st trial court Motion appeals by the companies Distributed tax collection procedure n , aiming at the collection of the fine applied to Usiminas. Usiminas has not been summoned yet Order granting the acceptance of the insurance granted by Usiminas and Cosipa, in order to the debt Suspension of the Tax Collection procedures aiming at the penalty collection determined Special and Extraordinary Appeal filed. CURRENT PHASE: APPEALS AWAITING TRIAL. 40

41 Nature: ( x ) Labor ( ) Civil ( ) Tax ( ) Environmental ( ) Other: Amount involved R$ 127,453, Amount provisioned, if any None. Practices adopted by the issuer or by entities that it controls that caused such contingency Suits filed by former employees and outsourced employees of USINA DE CUBATÃO claiming sundry labor amounts (overtime, transportation voucher, salary raises, labor risk, unhealthy working conditions, meal voucher, indemnifications and fines of 40% of FGTS). Quantity of Proceedings Nbrs. of the proceeding(s) Judicial Authority Level Date Commenced Sundry. Sundry. Sundry. Sundry. Sundry. Parties Involved: Plaintiff: Defendant: Others: Responsible office Chance of loss: Ex-employees of Usiminas S/A or ex-employees of companies hired by Usiminas (Cubatão Plant). Usiminas S/A (Cubatão Plant). Companies hired by Usiminas (Cubatão Plant). Rocha e Rosi Advogados Associados ( ) probable ( x ) possible ( ) remote Main facts Joint responsibility of Usiminas (Cubatão Plant) in suits filed by former employees of hired companies. 41

42 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( x ) Labor ( ) Civil ( ) Tax ( ) Environmental ( ) Other: Amount involved R$ 132,452, Amount provisioned, if any Quantity of Proceedings Nbrs. of the proceeding(s) Judicial Authority Date Commenced R$ 132,452, Sundry Sundry Sundry Sundry Parties Involved: Plaintiff: Defendant: Others: Ex-employees of Usiminas S/A or ex-employees of companies hired by Usiminas (Ipatinga Plant). Usiminas (Ipatinga Plant). Companies hired by Usiminas (Ipatinga Plant). Responsible office Rocha e Rosi Advogados Associados Chance of loss: ( x ) probable ( ) possible ( ) remote Main facts Joint responsibility of Usiminas (Cubatão Plant) in suits filed by former employees of hired companies. 42

43 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( x ) Labor ( ) Civil ( ) Tax ( ) Environmental ( ) Other: Amount involved R$ 94,100, Amount provisioned, if any Quantity of Proceedings Nbrs. of the proceeding(s) Judicial Authority Date Commenced None Sundry Sundry Sundry Sundry Parties Involved: Plaintiff: Defendant: Others: Responsible office Chance of loss: Ex-employees of Usiminas S/A or ex-employees of companies hired by Usiminas (Ipatinga Plant). Usiminas (Ipatinga Plant). Companies hired by Usiminas (Ipatinga Plant). PAR Advogados Associados ( ) probable ( x ) possible ( ) remote Main facts Joint responsibility of Usiminas (Ipatinga Plant) in suits filed by former employees of hired companies and own former employees suits involving the private pension plan of Usiminas. 43

44 Authority: ( X ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Amount involved R$ 351,413, Amount provisioned, if any Practices adopted by the issuer or by entities that it controls that caused such contingency None REQUIREMENT OF IPATINGA PLANT IPTU FOR 2011 AND USIMINAS DEFENDS THE NULLITY OF THE IPTU PAYMENT, DUE TO THE ADOPTION OF QUESTIONABLE CRITERIA FOR THE ASSESSMENT OF THE TAX CALCULATION BASIS. THE MUNICIPALITY UNDERSTANDS THAT THE AMOUNT DUE BY YEAR IS APPROXIMATE R$47MM. USIMINAS, ON ITS TURN, UNDERSTANDS THAT THE AMOUNT DUE BY YEAR IS R$17MM. IN RELATION TO IPTU 2011, USIMINAS PAID R$17MM AND SHALL CHALLENGE IN COURTS THE REMAINING AMOUNT. FOR IPTU 2012, USIMINAS DEPOSITED IN COURTS R$17MM AND IS CHALLENGING THE REMAINING AMOUNT IN THE ADMINISTRATIVE SPHERE. New assessment in which the municipality charges the IPTU amounts from 2007 to Quantity of Proceedings 3 Nbrs. of the I Tax foreclosure procedure nº proceeding(s) II Administrative process nº /03407 III Administrative process nº /02513 I-Justice Court of Minas Gerais Treasury of the Judiciary District of Ipatinga/MG II and III- Judicial Authority Finance Secretariat of the Municipality of Ipatinga/MG Level I/II/III -1st Date Commenced I 20/01/11; II 19/01/12; III 06/07/12 Parties Involved: Plaintiff: Defendant: Others: Responsible office Chance of loss: I Municipality of Ipatinga II - Usiminas S/A III Municipality of Ipatinga I - Usiminas S/A II Municipality of Ipatinga III Usiminas S/A None Rodolfo Gropen Advocacia (06/12) R$ 66,942, (09/12) R$ 68,221, (12/12) R$ 69,387, ( ) probable (x) possible ( ) remote (09/12) R$ 280,159, (12/12) R$ 282,025, ( ) probable ( ) possible (X) remote I Tax Foreclosure procedure nº Suit distribution for collection of IPTU 2010, in the amount of R$35MM. CURRENT PHASE: WAITING SUMMONS. II Administrative process nº /03407 Main facts Receipt of form for the payment of IPTU 2011, in the amount of R$47MM, by Usiminas Usiminas deposited in courts R$17MM and filed defense against the remaining amount of R$30MM Unfavorable decision to Usiminas. CURRENT PHASE: AWAITING ENROLLMENT IN ACTIVE DEBT. III Administrative processº / Filed administrative defense Unfavorable decision to Usiminas. CURRENT PHASE: AWAITING ENROLLMENT IN ACTIVE DEBT. 44

45 Authority: ( X ) Administrative () Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Amount involved R$ 56,049, Amount provisioned, if any None. Practices adopted by the issuer or by entities that it controls that caused such contingency THE TAX AUTHORITIES REQUIRE THE REVERSAL OF ICMS CREDITS OF MATERIALS CONSIDERED AS OF USE AND CONSUMPTION, AS WELL AS THE PAYMENT OF THE DIFFERENCE OF RATES RELATING TO INTERSTATE ACQUISITIONS OF MATERIALS OF USE AND CONSUMPTION Quantity of Proceedings 2 Nbrs. of the proceeding(s) I Infraction notice nº II -Infraction notice nº Judicial Authority Level I/II Taxpayers Council of Minas Gerais I 1st II 2nd Date Commenced I 01/20/11; II 01/19/12 Parties Involved: Plaintiff: State of Minas Gerais Defendant: Usiminas S/A Others: None Responsible office Rodolfo Gropen Advocacia Chance of loss: ( ) probable ( x ) possible ( ) remote I Infraction notice nº Denial to the infraction notice filed by Usiminas Denial to Usiminas partially deemed valid Review appeal filed by Usiminas Denied provision to the Review Appeal of Usiminas Main facts CURRENT PHASE: WAITING DECISION. II - Infraction notice nº Denial to the infraction notice filed by Usiminas Denial judged partially founded Appeal filed CURRENT PHASE: WAITING DECISION 45

46 Authority: ( X ) Administrative () Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Amount involved R$ 159,318, Amount provisioned, if any Practices adopted by the issuer or by entities that it controls that caused such contingency Quantity of Proceedings Nbrs. of the proceeding(s) None Manifestations of noncompliance filed in face of decision making orders which did not register the offsetting declarations transmitted in order to offset the following debits and credits: credit of negative CSLL balance (2009) with CSLL and IPI debits (2010); credit of negative IRPJ balance (2009) with IRPJ and CSLL debits (2010) and CSLL (2011); credit of negative CSLL balance (2009) with PIS and COFINS debits (2009); credit of negative IRPJ balance (2009) with IRPJ, CSLL, PIS/PASEP debits (2009). 4 I II III IV Judicial Authority Level I/IV Federal Revenue Service of Belo Horizonte/MG I/IV 1st Date Commenced I/IV 2012 Parties Involved: Plaintiff: Defendant: Others: Responsible office Chance of loss: Federal Revenue Usiminas S/A None Botelho, Spagnol e Advogados Associados ( ) probable ( ) possible ( x ) remote Main facts I II III IV Filed Noncompliance Manifestation 46

47 4.7. Describe other relevant contingencies not covered in prior items. The Company presents below other active contingencies considered relevant and which were not covered in prior items. Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Nbrs. of the proceeding(s) Judicial Authority Level Ordinary Suit nº STJ Second panel STJ Date Commenced 12/22/1998 Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved Main facts If the chance of loss is: Analysis of the impact if the case is lost Amount provisioned, if any Extinguished Cosipa (Usiminas) Eletrobrás and Federal Government CVRD, Copene, Cimento Mauá and others Advocacia Krakowiak R$ 702,490, Ordinary suit filed by COSIPA and other (Plaintiffs) aiming to receive the full amount paid to ELETROBRÁS as compulsory loan, in the period from 1977 to 1993, with the due monetary restatement and interest, in accordance with the effective legislation criteria at the time of the tax payment Suit distributed Issued award partially favorable to the Plaintiffs: the Judge did not agree with the indices indicated by the plaintiffs for the monetary restatement of the amount due by Eletrobrás Appeals, special and extraordinary filed by the Plaintiffs and appeal motioned by Eletrobrás. The Plaintiffs succeeded on the challenge to the applicable index for monetary restatement purposes, however, had an unfavorable decision that judged the amounts paid from to 1977 to 1986 elapsed Appeal filed to STF aiming at the reversal of decisions related to the prescription barring. CURRENT PHASE: WAITING TRIAL. ( x ) probable () possible ( ) remote None None 47

48 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Nbrs. of the proceeding(s) Judicial Authority Level Ordinary Suit nº Regional Federal Court of the 1st Region Seventh Group 2nd Date Commenced 12/19/2001 Parties Involved: Plaintiff: Defendant: Usiminas Eletrobrás and Federal Government Others: Responsible office Values, assets or rights involved Main facts If the chance of loss is: Analysis of the impact if the case is lost Analysis of the impact if the case is lost Amount provisioned, if any None Advocacia Passarinho Y Amoedo R$ 1,896,539, ORDINARY SUIT BROUGHT BY USIMINAS AIMING AT THE RECEIPT OF THE FULL AMOUNT PAID TO ELETROBRÁS AS COMPULSORY LOAN IN THE PERIOD FROM 1977 TO 1993, WITH DUE MONETARY RESTATEMENT AND INTEREST IN ACCORDANCE WITH THE CRITERIA OF EFFECTIVE LEGISLATION AT THE TIME OF THE TAX PAYMENT Suit distributed Published award partially favorable to Usiminas: the Judge did not agree with the indices indicated by Usiminas for the monetary restatement of the amount due by Eletrobrás Appeal filed by all the parties Refused appeal to the defendants. Usiminas appeal partially approved Requests for reconsideration from the Government judged groundless and special appeal filed by Eletrobrás not admitted Special appeal filed Special appeal of the Federal Government halted until final judgment of the repetitive appeal in STJ Judged the repetitive appeal in STJ Filed petition of Usiminas requiring the adequacy of reconsideration rendered by TRF to the decision term of the repetitive appeal The request for adequacy was granted and the process remitted to the seventh panel of TRF Judgment issued adequating to the leading case with some contradictions Motions filed by the parties New judgment issued with some new contradictions New motions filed by the parties. CURRENT PHASE: AWAITING TRIAL. ( x ) probable ( ) possible ( ) remote ( ) probable ( x ) possible ( ) remote None. None 48

49 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Nbrs. of the proceeding(s) Judicial Authority Ordinary Suit Regional Federal Court of the 1st Region Seventh Group Level 2nd Date Commenced 13/10/2006 Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved Main facts Usiminas S/A Federal Government None Sacha Calmon Misabel Derzi Consultores e Advogados R$ 149,745, EXCLUSION OF THE ICMS TAX FROM THE BASIS FOR CALCULATING THE PIS AND COFINS TAXES THE COMPANY SEEKS REIMBURSEMENT FOR AMOUNTS PAID IN PRIOR YEARS REGARDING ICMS INCLUDED IN THE BASIS FOR CALCULATING PIS AND COFINS TAXES Suit distribution Published award favorable to Usiminas Appeal filed by the Federal Government Federal Government appeal judged valid Requests for reconsideration from Usiminas. CURRENT PHASE: AWAITING TRIAL. If the chance of loss is: Analysis of the impact if the case is lost Amount provisioned, if any ( ) probable ( x ) possible ( ) remote None None 49

50 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor ( ) Civil ( x ) Tax ( ) Environmental ( ) Other: Nbrs. of the proceeding(s) Judicial Authority Level Ordinary suit nº th Court of Federal Justice Court Judiciary section of MG 2nd Date Commenced 08/18/2009 Parties Involved: Plaintiff: Defendant: Others: Responsible office Values, assets or rights involved Usiminas S/A Federal Government None Botelho, Spagnol Advogados R$ 142,897, JUDICIAL SUIT FILED BY USIMINAS AIMING TO OBTAIN THE DECLARATION OF RIGHT OF THE COMPANY TO USE THE PIS/PASEP AND COFINS CREDITS ON MACHINERY, EQUIPMENT AND OTHER ASSETS INCORPORATED TO FIXED ASSETS Suit distributed. Main facts Award issued judging Usiminas requests groundless Appeal filed by the Federal Government. CURRENT PHASE: WAITING TRIAL. If the chance of loss is: ( x ) probable ( ) possible ( ) remote Analysis of the impact if the case is lost Amount provisioned, if any None None 50

51 Authority: ( ) Administrative ( x ) Judicial ( ) Arbitral Nature: ( ) Labor (x ) Civil (x ) Tax ( ) Environmental ( ) Other: Nbrs. of the proceeding(s) Ordinary suit nº Judicial Authority Level 19th Civil Court of the Capital São Paulo 1st Date Commenced 05/02/2012 Parties Involved: Plaintiff: Defendant: Others: Responsible office Usiminas S/A Brastubo Construções Metálicas Ltda. None Sergio Bermudes Advogados Associados Values, assets or rights involved R$ 89,730, Main facts COLLECTION SUIT FILED IN ORDER TO RECEIVE FROM BRASTUBO THE AMOUNTS RELATED TO THE SUPPLY OF STEEL IN THE PERIOD FROM OCTOBER/2009 TO MAY/ Distribution of suit. CURRENT PHASE: DEFENSE PRESENTED. If the chance of loss is: ( ) probable ( x ) possible ( ) remote Analysis of the impact if the case is lost Only the amount involved in the demand, which has not been provisioned. Amount provisioned, if any None 4.8. Regarding the rules for the country of origin of foreign issuers and those of the country in which securities belonging to the foreign issuer are in custody, if different from the country of origin, identify: Not applicable, seeing that the Company is not a foreign issuer. 51

52 5. Market risks 5.1. Describe, in a quantitative and qualitative manner, the main market risks to which the issuer is exposed, including in relation to exchange and interest rates. The company s activities, financial situation and operating results may be impacted by changes in policies or norms which involve or affect factors such as interest rates, exchange rates, inflation, financial market liquidity and commodity prices. Alterations to these factors influence the Company s results. Regarding commodity prices, the Company is basically exposed to the prices for coal and iron ore, which represent 28% of the consolidated cost of its production. Part of the Company s debt is in foreign currency, especially U.S. dollars, while a significant portion of its revenue is Real-denominated. On December 31, 2012, 48% of the Company s consolidated debt, in the amount of R$3,810,426 thousand, was in foreign currency, especially U.S. dollars. On the other hand the Company s exports, mostly in U.S. dollars, represented approximately 20% of its total revenue. In the face of this fact, the Company s exchange exposure implies that it incurs market risks associated with exchange fluctuation of the Real in relation to the U.S. Dollar. A significant portion of the Company s revenue is in Reais while a substantial portion of its debt is in U.S. Dollars, so that a devaluation of the real vis-à-vis foreign currencies (particularly in relation to the U.S. Dollar) can increase the Company s debt in Reais with an adverse effect on its results and its financial situation. Increases in domestic and international interest rates can negatively affect the Company s results. A substantial portion of the Company s debt accrues interest at floating rates. On December 31, 2012 part of the Company s total consolidated debt was tied to floating rates, especially LIBOR and the Long Term Interest Rate/LTIR, more specifically R$ 959,700 thousand to LTIR and R$ 2,501,209 thousand to Libor, corresponding respectively to 12% and 32% of its total consolidated debt. In this manner increases in domestic and/or international interest rates, especially in the LTIR and Libor, may negatively affect the Company s results. The Federal Government has exerted and will continue to exert significant influence on the Brazilian economy. The Brazilian economic and political conjunction has a direct impact on the Company s activities. The Federal Government frequently intervenes in the Country s economy and at times significantly alters monetary, tax and credit policies, among others, to influence its course. Federal Government measures to control inflation and to influence other policies can be implemented through price and salary ceilings, depreciation of the Real, control of remittances abroad, changes to the base interest rate as well as other means. 52

53 Measures related to the economy adopted by the Federal Government may have important effects on businesses and other entities in Brazil, including on the Company, and on market conditions and the value of Brazilian securities. The Company may be adversely affected by changes to the Federal Government s policies, as well as by other economic factors such as: inflation; economic stagnation; exchange rate fluctuations and currency devaluation; liquidity of the domestic securities and loan markets; price instability and scarcity of electric energy and rationing programs. The uncertainty about the implementation of changes by the Federal Government in the policies or rules that may affect these or other factors in the future may contribute for the economic uncertainty in Brazil. Accordingly, such uncertainties and other future occurrences in the Brazilian economy may harm the Company s activities and operating results. The company cannot predict which tax, monetary, exchange, social security policies, among others, will be adopted by the current and future Administration, nor if such policies will result in adverse consequences for the country s economy, our business, our operating results, our financial situation and our perspectives. The government s efforts to combat inflation may retard the economy s growth and harm the Company s business. In the past Brazil suffered from extremely high inflation rates and as a consequence, adopted a monetary policy that resulted in one of the highest real interest rates in the world. Between 2005 and December, 2012 the SELIC rate varied between 18.00% and 7.25% per annum. Inflation and the measures adopted by the Brazilian government to control it, especially via the Central Bank of Brazil, had and may once again have considerable effects on the Brazilian economy and on the Company s business. Rigorous monetary policies with high interest rates may restrict Brazil s growth and the availability of credit. Inversely, softer government and monetary policies and the reduction in interest rates may lead to a higher rate of inflation and consequently volatility in growth and the necessity for sudden and significant increases in interest rates. Furthermore, we may not be in a position to adjust prices in effect to compensate for inflation, under the Company s cost structure. Any of these factors may negatively affect its business. Exchange instability may harm the Brazilian economy as well as the Company. Over the last decades Brazil s currency has been subject to frequent and substantial variations in relation to the U. S. dollar and other foreign currencies. At December 31, 2012, 2011 and 2010, the Exchange rate was R$ 2.04, R$ 1.88 e R$ 1.67 per US$ 1.00 respectively, with real devaluating at 8.5% in 2012, 12.6% in 2011 and appreciating 4.0% in

54 Devaluation of the Real in relation to the U.S. dollar could create inflationary pressures in Brazil and lead to an increase in interest rates, which in turn could negatively affect the Brazilian economy s growth through reduced consumption in such a way as to harm the Company s financial situation as well as its operating results. Additionally, access to international financial markets would be restricted and government intervention could occur by way of recessive policies. Conversely, the strengthening of the Real in relation to the U.S. dollar and other foreign currencies could result in a worsening of Brazil s balance of trade, facilitating imports and increasing competition for our products in the local market, as well as in restraining export-based growth. Occurrences and the perception of risk in other countries, especially emerging countries, may adversely affect the market value of Brazilian securities and the price of Company shares. The market for securities issued by Brazilian companies is to a certain extent influenced by the economic and market conditions verified in other countries, including other Latin American and emerging nations. Although the economic conditions in these countries are different than those in Brazil, the manner in which investors react to what happens in these other countries may adversely affect the market value of Brazilian company securities, including shares issued by the Company. Eventual crises in other emerging countries may reduce investor demand for securities issued by Brazilian companies, among which those the Company places. These facts can adversely affect the market value of Company shares which, if reduced, can make it difficult or even impossible for the Company to gain access to the capital financing market for funding its future operations. The relative volatility and lack of liquidity of the Brazilian securities market may substantially limit investors capacity to sell Company shares at the desired price and time. Investments in securities negotiated in emerging markets, such as Brazil s, frequently involves greater risks compared with those for other world markets, being that the nature of such investments is generally considered more speculative. The Brazilian securities market is substantially smaller, less liquid and more concentrated and can be more volatile than the main world securities markets. Additionally the company cannot assure liquidity of the shares it issues. These factors may considerably limit the capacity of a Company shareholder to sell the shares at the desired price and moment Describe the market risk management policy adopted by the issuer, its objectives, strategies and instruments, indicating: a) Risks against which the Company seeks protection The Company seeks to reduce exposure to exchange rate variations, commodity prices and interest rates, cash flow volatility and avoid the mismatch between currencies. It does not adopt specific protection related to inflation or market liquidity. 54

55 b) Balance Sheet Hedge To protect its Balance Sheet in relation to exposure to debt and supplier payables in foreign currency, the Company possesses certain assets equally tied to foreign currency to grant it a corresponding accounting hedge. These assets include cash invested in foreign currency and export receivables. c) Hedging Instruments employed The instruments used by the Company are: (i) currency swap operations which replace foreign currency subject to exchange exposure with Reais; (ii) NDF (Non Deliverable Forward) operations with the objective of fixing exchange rates for foreign currency that the Company must purchase to pay its obligations in these currencies; (iii) interest rate swaps, in which floating rates are substituted for fixed rates; and (iv) commodities hedges, to avoid brusque oscillations in their prices and (v) cash flow hedge (hedge accounting),as protection instrument against foreign exchange risk. d) Parameters employed to manage these risks The company s Finance Policy, which is extended to entities it controls, sets the following parameters: - establishment of criteria for selecting banks and for choosing the allowed investments. - stipulation of the objectives and of limits allowed for derivative operations. - definition of the contracting level of its operations - control of the degree of exposure to the financial Market risks - monitoring of the foreign Exchange exposure e) If the issuer operates with financial instruments with a variety of hedging objectives and what these objectives are As described in letter c above, instruments used are derivative financial instruments with the purpose of hedging the Company from exposure to volatile foreign currencies, commodity prices and interest rates, volatility of cash flow and avoid the mismatch between currencies Regarding the last fiscal year, inform whether there were any significant changes to the main market risks to which the issuer is exposed or to the adopted risk management policy. In relation to the risks presented in items 5.1 and 5.2, the Company understands that there were no significant changes in the risks presented, when compared to the prior year. As from 2009, the Company adopted Financial Policy in order to establish general guidelines for the management and investment of financial resources, coherent with the strategic guidelines and the business risk profile. This policy aims to assure the efficiency in the management of the company financial assets and liabilities, supported by the guidelines of Cash Management and Market Risks Management, approved by the Executive board. 55

56 In 2012, the foreign exchange impact on the Company s financial result was negative at R$191 million, due to the 8.9% devaluation of real before the US dollar. In 2011 the Company had positive exchange impacts on its results in the amount of R$54 million, basically due to the appreciation of real before the US dollar of 13%. In 2010 these exchange impacts were also positive on its results in the amount of R$189 million, due to real appreciation before the US dollar of 4 % and in 2009 these foreign exchange impacts were also positive in the amount of R$ 970 million, due to the appreciation of real before the US dollar of about 25.5%. These impacts are basically related to the loan and financing contracts in foreign currency, which were 47% of the total amount financed in 2011, 50% in 2010 and 59% in 2009 (mainly US dollar). The Company searches for protection from the currency variations, carrying out swap transactions, always subject to the guidelines established in its financial policy Provide other information which the issuer deems relevant There is no other information deemed relevant. 6. Issuer s background 6.1. Regarding the issuer s incorporation, inform: a) Date: 04/09/1954 b) Form: Publicly Traded Company c) Country of incorporation: Brazil 6.2. Inform the term of duration of the issuer Undetermined 6.3. Brief Background of the Issuer Historical cycles of the Company INCORPORATION ( ) In a scenario of optimism generated by the Development Plan for the government of President Juscelino Kubitscheck ( JK ), the company is founded on April 25, In June 1957, the Lanari-Horikoshi agreement consolidated Japanese participation in the Company which received financial funds from the governments of the state of Minas Gerais, Brazil and Japan. On August 16, 1958, JK lays the foundation stone for the construction of the plant in Ipatinga, back then nothing more than a village with 300 inhabitants. 56

57 CONSTRUCTION ( ) Ipatinga lacks infrastructure to house the 10 thousand workers needed for the Company s building site and it develops an urban plan for the village which creates conditions for housing company employees as well as the construction workers. On October 26, 1962, President João Goulart lights the first blast furnace and inaugurates the plant, which then had a production capacity of 500,000 tons of steel per year. SOCIAL INVESTMENT (1965) This year is a milestone in the development of the Company s social responsibility. On May 1 st, the Company inaugurates the Marcio Cunha Hospital. That same year it delivers to the population a center for treatment of pneumonia, a center for preventive medicine, three clinical wards with dental offices, a first-aid center located inside the mill - and a day-care center. 1st EXPANSION CYCLE ( ) Brazil is going through a period of strong economic growth and the Company initiates its first expansion cycle, which elevates production capacity to 1.4 million tons per year. In 1970, with the founding of Usiminas Mecânica, it starts to sell to the civil construction and machinery sectors. The following year the Research Center begins to develop its own projects and to engage in the transfer of technology. In 1974, with the inauguration of blast furnace 3, annual production reaches 3.5 million tons of steel. BEATING THE RECESSION (1980) The Company reacts to the financial crisis the country is going through with an internal savings program, putting to work a new, more flexible and intelligent management system which allows for improvements in the use of physical, financial and human resources. The Company moves its head office to the new headquarters building in the Pampulha region, in Belo Horizonte. ENVIRONMENTAL INVESTMENT (1984) The Company becomes a pioneer in the state of Minas Gerais by initiating the Xerimbabo Project. This name in the indigenous Tupi language means pet, and the purpose of the project was to develop courses, seminars and exhibitions focused on environmental education. PRIVATIZATION AND MODERNIZATION (1991) On October 24, 1991 the Company becomes the first government-owned business to be privatized in the National Privatization Program. Soon after it receives investments in the order 57

58 of US$ 2.1 billion to increase and optimize production through technological updates, as well as for making environmental protection viable. In November of that year the Company s shares begin to be negotiated in the São Paulo State Stock, Commodities and Futures Exchange (BM&FBOVESPA S.A.). INCORPORATION AND PIONEERING ( ) Companhia Siderúrgica Paulista - Cosipa, one of the largest mills in Brazil, located in Cubatão (São Paulo state), is purchased by the Company which invests in technological updating, environment recovery and safety. Still in 1993 the electrolytic galvanization process is inaugurated with a US$ 228 million investment. In 1996 the Ipatinga mills becomes the first in the country and the second in the world to receive the ISO certification, regarding respect for the environment and environmental protection. RESTRUCTURING ( ) The current corporate structure of Usiminas is the result of a corporate restructuring process that occurred during the 1998 to 2001 period, involving Usiminas and Cosipa, through which Usiminas became the sole shareholder of Cosipa. The restructuring included the reallocation of assets and liabilities among Usiminas and Cosipa in such a manner that at the end of the process the old Usiminas was incorporated by the old Cosipa which in turn altered its corporate identity and headquarters, giving origin to the present Usiminas. The main assets of the old Cosipa were transferred to a new corporation, which presently is Cosipa. The right-of-use of the Cubatão cargo port terminal and related activities; the right to use the oxygen plant and to exploit gases generated by the steelmaking process at Cubatão; and the assumption of short-term debt were concentrated in Usiminas. Furthermore Cosipa issued convertible debentures which were underwritten by Usiminas and converted to shares in October, 2001, which consequently increased the Company s participation in Cosipa s total capital from 32% to 93%. In 1999, after a USS$ 852 million investment, the Company inaugurates the most modern production line for cold rolled sheets in the country Cold Roll Sheeting Facility 2, with an annual production capacity of 1 million tons. In the same year Unigal Usiminas Ltda ( Unigal Usiminas ), a company for manufacturing galvanized steel sheets used in automobile production, is formed. INTEGRATION ( ) Usiminas issues a public offer for the acquisition of Cosipa s remaining shares held by the latter s minority shareholders, via an auction at BOVESPA and concluded on March 18, The purpose was to cancel Cosipa s open registration as a publicly traded company. This registration was cancelled on April 5, With the closing of its capital, Cosipa becomes a fully-owned subsidiary of the Company. Also in 2005, a partnership with the Techint Group is announced together with a 14,2% participation in Ternium mills, forming a company with a 12 million ton per year installed capacity. In November, 2006 a new shareholder agreement is signed which strengthens the 58

59 control group and reaffirms the commitment to continually improve the Company s production process. RECENT INVESTMENTS ( ) In order to optimize its business, throughout the latest 5 years, Usiminas carried out a series of investments in its different units to improve the quality of its products, its production mix and optimize the production and shipment of own iron ore. In 2008 Usiminas acquired its iron ore mines, consisting in a reserve of 2.6 billion tons of iron ore in the region of Serra Azul MG, one of the largest mining places in Brazil. This investment is essential for Usiminas plans of protecting against the fluctuations of prices of its main input. In order to ship this ore, the company also acquired, in the same year, a plot of land in Baía de Sepetiba/RJ., for the construction of a port terminal. Still in 2008, Usiminas acquired Zamprogna, so far the largest independent distributor of steel and the largest manufacturer of welded pipes in Brazil, increasing its network distribution mainly in the South of the country. In 2009 Usiminas consolidated all its steel processing and distributor companies in a single company creating Soluções Usiminas was also marked by the merger of old Cosipa, aiming at a synergy gain and optimization of human and financial resources. On March 18, 2009, Usiminas announced the launching of a new brand, initiating a large effort to reformulate the architecture of its businesses. The new brand became an integral part of Usiminas process of self-renovation which began in 2008 with the implementation of a differentiated management model and the reformulation of its business structure. Still in 2009, the Company consolidated the grouping of its areas of activities in four Business Units: Mining, steel, Steel Processing and Capital Goods. In 2010 the conclusion of two important investments should be highlighted. Coke Plant 3, in Ipatinga, made the company self-sufficient in coke, contributing for the reduction of costs of Usiminas. CLC, equipment of accelerated cooling of Thick Slags, provided Usiminas product a new technology placing it at a new quality level. This equipment allows the access of Usiminas products to promising markets (such as of oil and gas), in categories of products that could not formerly be served by the company. Still in 2010 Mineração Usiminas S.A. (MUSA) was created in partnership with Sumitomo Corporation and, later, this company carried out several agreements to optimize its production and shipment of product. With MMX, made a deal to use the Port in the region of Itaguaí, which shall provide MUSA an export capacity as its production level increased. In 2011 several agreements of cooperation and joint drawing were made to increase its productive capacity, with MMX, MBL and Ferrous, in addition to acquiring the old litigation area. In 2011, high investments were made, such as the new Hot Galvanization Line in Ipatinga, increasing the product production capacity of more added value of the company and the foundry line of Usiminas Mecânica was marked by the entry of Ternium / Tenaris in replacement to Votorantim and Camargo Correa in the controlling group formed by the shareholders Nippon Steel & Sumitomo 59

60 Metal Corporation ( new name of Nippon Steel Corporation) and Previdência Usiminas, which executed a new Shareholders Agreement until The Company strengthened to redeem its competitiveness through efforts focused on the key commercial and industrial areas of our business. In 2012, a large investment cycle in the Steelmaking came to an end. In the last five years, about R$11 billion was invested in the modernization of our steel units and in the increase of lamination and galvanization capacity for the production of more added value. The Company completed its new Hot Strip Mill (LTQ2). With investments of about R$ 2.5 billion held since 2007, the equipment installed in the Cubatão plant (SP), is one of the most modern in the world, and has a production capacity of 2.3 million tons/year of hot rolled steel. With this, the company increases its range of products aimed at markets with higher added value, such as the auto parts industry, oil and gas, machinery and equipment, among others. In parallel the Company started searching for more efficient industrial processes and for more integration with the clients, searching for costs and CAPEX control and adapting to the context of challenges experienced by the industrial sector. In Mineração Usiminas the investments amounted to R$554.8 million in 2012, mainly related to the Friable Projects, whose start up is forecast for the beginning of the second half of 2013, when the production capacity of iron ore in MUSA shall reach 12 million tons per year Date of CVM registration 04/11/

61 6.5. Describe the main corporate events, such as incorporations, mergers, spin-offs, incorporation of shares, sales or purchases of corporate control, acquisition of important assets, which have affected the issuer or any of its related companies or controlled entities in the last three fiscal years: Fiscal year ended December 31, 2012 a) Event b) Main conditions of the business c) Companies involved MUSA and SEM d) Effects of the transaction on shareholder structure, especially regarding the controlling parties participation, of shareholders with over 5% ownership of the capital stock and Company management e) Shareholder structure before and after this transaction Downstream merger of Summit Empreendimentos Minerais Ltda. On October 26, 2012, Mineração Usiminas S.A. ( MUSA ), in order to obtain operating synergies, merged its shareholder Summit Empreendimentos Minerais Ltda. ( SEM ), limited liability company, headquartered in São Paulo, State of São Paulo, as downstream merger. Due to this merger, the capital shares of MUSA owned by SEM were attributed to Serra Azul Iron Ore L.L.C. and to Sumitomo Corporation do Brasil S.A., sole quotaholders of SEM. No changes to the Company s shareholder structure after the downstream merger of SEM. a) Event Merger Mineração Ouro Negro b) Main conditions of the business On September 28, 2012, Mineração Ouro Negro was merged by Mineração Usiminas c) Companies involved Mineração Usiminas and Mineração Ouro Negro d) Effects of the transaction on shareholder structure, especially regarding the controlling parties participation, of shareholders with over 5% ownership of the capital stock and Company management e) Shareholder structure before and after this transaction This transaction did not cause any effects. No changes to the Company s shareholder structure after the merger of Mineração Ouro Negro. 61

62 a) Event Close down of Usiminas Portugal activities b) Main conditions of the business On November 30, 2012, the Company restructured its corporate interest abroad, opting for closing down Usiminas Portugal activities, company located in Portugal. This company was subsidiary of Usiminas International. c) Companies involved Usiminas International and Usiminas Portugal d) Effects of the transaction on shareholder structure, especially regarding the controlling parties participation, of shareholders with over 5% ownership of the capital stock and Company management e) Shareholder structure before and after this transaction This transaction did not cause any effects. No changes to Usiminas International corporate structure a) Event Close down of Fasal Trading Corporation activities b) Main conditions of the business On August 03, 2012, the Company restructured its corporate interest abroad and closed down Fasal Trading Corporation activities, located in Florida, United States of America. This company was subsidiary of Fasal Trading Brasil. c) Companies involved Fasal Trading Brasil and Fasal Trading Corporation d) Effects of the transaction on shareholder structure, especially regarding the controlling parties participation, of shareholders with over 5% ownership of the capital stock and Company management e) Shareholder structure before and after this transaction This transaction did not cause any effects. No changes to Usiminas International corporate structure 62

63 Fiscal year ended December 31, 2011 a) Event Acquisition of Mineração Ouro Negro b) Main conditions of the business On November 25, 2011, the subsidiary Mineração Usiminas acquired 1,214 thousand common shares from the company Mineração Ouro Negro, representing the totality of its capital share. Mineração Ouro Negro is a privately held company, headquartered in the city of Itaúna, State of Minas Gerais, whose main corporate purpose is the exploration and sale of iron ore. c) Companies involved Mineração Ouro Negro d) Effects of the transaction on shareholder structure, especially regarding the controlling parties participation, of shareholders with over 5% ownership of the capital stock and Company management e) Shareholder structure before and after this transaction This transaction did not cause any effects. No changes to the Company s shareholder structure after the acquisition of Mineração Ouro Negro. Fiscal year ended December 31,

64 a) Event Optimization of and adding value to Mining-related businesses b) Main conditions of the business For Mineração Usiminas S.A. ( Usiminas Mining ), an entity controlled by the Company, the following asset transfers are highlighted: i. Mining assets and corporate participation in ore embarkation terminals in the Serra Azul region, state of Minas Gerais; ii. Shares representing 49.9% of the voting stock and 83.3% of the total capital stock of Usiminas Participações e Logística S.A. ( UPL ); iii. Land located in Itaguaí, state of Rio de Janeiro, after the already authorized restoration process is finalized. Acquisition by Sumitomo Corporation of 30% of the capital stock of Usiminas Mining, through exercising stock options for new shares up to the total amount of US$ million, of which US$674 million are conditioned to the confirmation of future events. c) Companies involved Mineração Usiminas S.A. d) Effects of the transaction on shareholder structure, especially regarding the controlling parties participation, of shareholders with over 5% ownership of the capital stock and Company management e) Shareholder structure before and after this transaction This transaction did not cause any effects. The mining assets were part of Usiminas holdings, and after this transaction Usiminas became the owner of 70% of Mineração Usiminas S.A., consequently becoming its controlling party. Sumitomo Corporation is the other participant. 64

65 a) Event Transfer of the participation held by Usiminas in MRS Logística S.A. b) Main conditions of the business Usiminas full participation in MRS Logística S.A. will be transferred to Usiminas Participações e Logística S.A. ( UPL ), a holding company which has never before engaged in any transaction or activities and which is controlled by the Company. This is subject to the prior approval of the ANTT National Agency for Terrestrial Transportation. c) Companies involved Usiminas Participações e Logística S.A. ( UPL ) and MRS Logística S.A. d) Effects of the transaction on shareholder structure, especially regarding the controlling parties participation, of shareholders with over 5% ownership of the capital stock and Company management e) Shareholder structure before and after this transaction This transaction did not cause any effects. After this transaction, MRS Logística S.A. became an indirectly controlled party of the Company Indicate if the issuer filed for bankruptcy, as long as it was based on a relevant amount, or for judicial or non-judicial recovery There was no filing for bankruptcy in the last three fiscal years Provide other information deemed relevant by the issuer The company understands that there is no further relevant information to be added to this item 6 of the reference form, other than that provided above. 7. Issuer s activities 7.1. Describe briefly the activities the issuer and controlled entities engage in In accordance with its values, vision and corporate identity, the Company consolidates the group of its operations into four main business units: 1. Mining and Logistics; 2. Steel; 3. Steel Transformation; 65

66 4. Capital Goods. The mining assets belonging to the Serra Azul mine in the Minas Gerais Iron Quadrilateral have been allocated to the mining and logistics business unit along with an area located in Itaguaí Port, state of Rio de Janeiro, owned by Usiminas and which shall be transferred to Mineração Usiminas. The business unit also features the Company s participation in MRS Logística S.A. ( MRS ), a concessionaire which controls, operates and monitors the southeast region of the Federal Railway Network (Rede Ferroviária Federal). The steel activity includes the Ipatinga (MG) and Cubatão (SP) mills and the participation of Unigal Usiminas Ltda, joint-venture between the Company (70% of participation) and Nippon Steel & Sumitomo Metal Co. (30% of participation), that processes hot dip galvanized coils. The galvanized steel is mainly used in the automobile, electrical appliances and civil construction industries. Up to February 2011 the steel activities still counted on the participation in Ternium S.A. ( Ternium ), company in which a Company subsidiary held 14.25% of total capital. The Company sold its participation in February/2011. Two private terminals for mixed-use also belong to the steel works business unit: The Praia Mole Private Terminal (TPPM) in Espírito Santo state, in which the Company participates under a condominium arrangement and the Private Maritime Terminal in Cubatão (TMPC) in São Paulo state, both located outside of the Organized Ports of Vitoria and Santos. The steel processing business unit encompasses the following companies: Soluções em Aço Usiminas S.A ( Soluções Usiminas ) and Automotiva Usiminas S.A. ( Automotiva Usiminas ). Soluções Usiminas was consolidated in 2009 with the merger of Fasal S.A. Comércio and Industria de Produtos Siderúrgicas ( Fasal ) and Rio Negro Usiminas S.A. (new corporate name for Dufer S.A. - Dufer ) following the incorporation of Rio Negro Comércio e Indústria de Aço S.A. ( Rio Negro ), Zamprogna NSG Tecnologia do Aço S.A ( Zamprogna ) and Usimpex Industrial S.A. ( Usial ), the organizations of the Company that deal with processing and distributing steel, and the Usicort industrial unit. Soluções Usiminas capital stock is divided among the Company (68.9%), Metal One Corporation (20%) and the Sleumer family (11.1%). Automotiva Usiminas is the only company in the auto parts sector that produces and assembles complete truck cabin kits fully painted in either base or metallic finishes. Due to its proximity to the automotive industry, it plays an important role as a sensor of this market and of its peculiarities to the Company. Through it the Company is in a position to meet market needs and is qualified to develop strategic actions for the future. Additionally the Company can promote training to offer goods and services ranging from raw material development to the finished product by way of the stamping, welding, painting and final assembly processes. The Company is active in the capital goods sector through Usiminas Mecânica S.A. ( Usiminas Mecânica ), one of the largest companies in its sector in Brazil that supplies various industrial segments with high value-added products such as industrial equipment and metallic structures, blanks and stamped items, a variety of assembled kits and cast and forged iron products. For more information on the Company s and its controlled entities business activities, see item 9.1. c of this Reference Form. 66

67 7.2. Regarding each operating segment that has been divulged in the latest tax-year closing financial statements or, when applicable, in consolidated financial statements, indicate products and services sold, revenue generated by the segment and its share in the company s overall net revenue, and the profit or loss of the segment and its share in the overall result. a) Products and services sold In the Business Unit of Steel, Usiminas produces and sells heavy plates, hot rolled and cold rolled laminated products and slabs, which are among its uncoated products; and electrolytic and hot-dip galvanized goods, which are part of its coated product line. Slabs: Primary products, resulting from the continuous casting of carbon steel (from ultra-slow to high content) and/or micro alloyed, from 200 to 250 millimeters thick, 700 to millimeters wide and millimeters long. The slabs are basic input for the production of other flat products but can also be sold to clients. Heavy plates: Heavy plates are produced in a lamination process involving low-carbon steel plates with low alloy and welded steel content, which can be thermally treated and are produced in different resistance levels (300 to 1000MPa). As regards to dimensions, they may vary from 6.0 to 150 millimeters thick, width from 900 to 3,900 millimeters and length from 2,400 to 18,000 millimeters. Heavy plates can be supplied as laminated, normalized or temperate, and as conventional lamination, controlled lamination or lamination with thermo mechanical control. Heavy plates are normally used in infrastructure projects, naval construction, structural engineering (including bridges, sheds and buildings), platforms, piping, agricultural and mining inputs and electric energy generation plants. Hot rolled flat steel: These products comprise coils and sheets and feature levels of resistance that range from intermediate to high. Hot rolled coils are a maximum of 20.0 millimeters and a minimum of 1.5 millimeters thick. Hot rolled laminated products are manufactured with a thickness that varies from 715 millimeters to millimeters. The coils are used in auto parts manufacturing, small diameter pipes, civil construction, heavy structures, machinery and equipment, road and railway equipment, agricultural inputs and components of electro electronic equipment. Cold rolled flat steel: The company s mills produce a complete line of cold rolled sheets and coils with a thickness ranging from 0.20 to 3.0 millimeters and widths from a minimum of 750 up to a maximum of millimeters. Cold rolled sheets and coils are used in the automotive and auto parts industry, in household objects, electrical appliances, packaging, small diameter pipes and in the civil construction and furniture sectors. Galvanized Products: Galvanized products are manufactured out of cold rolled steel sheets. The galvanizing process consists of coating the steel with zinc on one or both sides. The zinc is applied in a heat immersion process (hot dip galvanized products) or a process of electrolysis (electrolytic galvanization). Galvanized products can be used in the manufacturing of a wide range of products, including car and truck chassis, civil construction (walls, tiles, partitions, chutes) electrical appliances and electric equipment, storage tanks and agricultural equipment. Items galvanized via hot dip and electrolysis are produced at the Ipatinga facilities. 67

68 Galvanization is one of the most effective and cheap processes to protect steel against corrosion caused by exposure to water or the atmosphere. The company produces galvanized sheets and coils in continuous hot dip assembly lines in thicknesses that range from 0.40 millimeters to 3.00 millimeters and in electrolytic galvanization line with thickness between 0.40 and 2.00 mm and width from 700 millimeters to 1,650 millimeters. Both processes result in products with a highly adherent layer of zinc, capable of being further worked in practically all bending and stamp pressing machinery. Automobile manufacturers and the electronic home appliance and civil construction sectors use products processed in stamping presses (which leads the process of forming designs on the steel).the value-added nature of the galvanization process allows the Company s mills to obtain a higher profit margin in galvanized products. In the Business Unit of Capital Goods, Usiminas counts on Usiminas Mecânica which is one of the largest companies of capital goods in Brazil. The Company performs in Metallic Structures, Naval and Offshore, Oil and Gas, Industrial Equipment, Industrial Assemblies and Foundry and Railway Wagons. In the Business Unit of Steel Transformation, Soluções Usiminas performs in the distribution, services and manufacture of small diameter pipes, providing to its clients products of high added value. The Company is able to process more than 2 million tons of steel per year in its 11 industrial units, strategically distributed in the States of Rio Grande do Sul, São Paulo, Minas Gerais, Espírito Santo, Bahia and Pernambuco. In addition to the services of cut of steel products Soluções Usiminas manufactures Stamped and Blanks for different economic sectors, such as Automobile, Auto parts, Civil Construction, Distribution, Electric electronic, Machinery and Equipment, Household appliances, among others. Below is the description of these items. Stamped Products: Stamped products are, in their majority, cold rolled and electrolytic galvanized sheets and coils, cut and stamped in special shapes. They include internal and structural (chassis) auto parts. The Company considers stamped products to represent another highly profitable market niche. Blanks: Blanks are hot or cold rolled or electrolytically galvanized sheets or coils cut in special shapes (blanks), stamped parts, automotive and engineering services, manufactured and processed in the Company s distribution service centers. Still in the Business of Steel Transformation, there is the industrialization and sale of laminated steel, processed in the plants, to meet the specific needs of clients. Soluções Usiminas sells products (the whole line of the Company s flat steel, in addition to different blanks, welded sets, coils, welded pipes in carbon and stainless steel) and services (cross and longitudinal sectional, laser welding, offline washing and sheets spreading) for clients from different sectors. Automotiva Usiminas manufactures parts and cabs painted at their definite color, from the raw material development to the finished products, going through the stamping, welding, painting and assembling processes. In the Mining Business Unit, Mineração Usiminas owns mining assets with potentially drawing reserves estimated at 2.6 billion tons. In 2012, Mineração Usiminas sales totaled 6.1 million tons of iron ore, 71% of which to Usiminas and 29% to other clients. 68

69 Other Products: The Company s mills engage in sales of the so-called special products, which are cast or forged iron, non-laminated products (such as those used in sludge and slag chutes), carbon chemicals (benzene-toluene-xylene BTX, ammonia, tar, naphthalene and pitch) and lamination services for slabs and discarded items (such as old engines, non-ferrous scrap and deactivated equipment). The Company s foundry in Ipatinga, the largest in South America in terms of the size of items it produces, manufactures special-order parts for ownuse and for external customers including other steelmakers. Forged parts are produced in steel, cast iron and other metals under specification for a variety of hydro-electric plants, mines, mills, paper mills among others. Ipatinga also manufactures forged bars. b) Revenue generated by the segment and its share in the overall net revenue of the issuer; and c) profit or loss of the segment and its participation in the issuer s overall result. The following table shows the revenue generated by each segment and its share in total Company net revenue, as well as the operating profit or loss for each segment. At December 31, 2012 In thousands of reais MINING STEEL MAKING STEEL PROCESSING CAPITAL GOODS ADJUSTMENTS CONSOLIDATED COMPANY Net Sales Revenue 898,537 11,452,533 2,077,086 1,017,371 (2,736,728) 12,708,799 Internal Market 669,154 9,053,942 2,045,724 1,015,049 (2,673,075) 10,110,794 External Market 229,383 2,398,591 31,362 2,322 (63,653) 2,598,005 Cost of Products sold (341,994) (11,488,927) (1,887,065) (997,214) 2,666,900 (12,048,300) Gross Profit 556,543 (36,394) 190,021 20,157 (69,828) 660,499 Operating (Expenses)/ Revenue (151,246) (469,701) (183,228) (55,967) (860,142) Operating Profit/(Loss) before Financial exp. 405,297 (506,095) 6,793 (35,810) (69,828) (199,643) EBITDA 439, ,482 59,724 (10,566) (68,821) 798,075 EBITDA MARGIN 48.9% 3.3% 2.9% -1.0% 6.3% % Share of Consolidated Net Revenue 5.82% 74.15% 13.45% 6.59% 69

70 At December 31, 2011 In thousands of reais MINING STEEL MAKING STEEL PROCESSING CAPITAL GOODS ADJUSTMENTS CONSOLIDATED Net Sales Revenue 974,253 10,421,067 2,148,859 1,418,709 (3,060,929) 11,901,959 Internal Market 822,251 9,047,223 2,107,330 1,417,536 (3,048,996) 10,345,344 External Market 152,002 1,373,844 41,529 1,173 (11,933) 1,556,615 Cost of Products sold (270,272) (10,230,829) (1,976,996) (1,234,875) 3,105,181 (10,607,791) Gross Profit 703, , , ,834 44,252 1,294,168 Operating (Expenses)/ Revenue (138,308) (244,156) (192,382) (99,067) 5,597 (668,316) Operating Profit/(Loss) before Financial exp. 565,673 (53,918) (20,519) 84,767 49, ,852 EBITDA 603, ,327 40, ,905 44,252 1,263,692 EBITDA MARGIN 62.0% 4.4% 1.9% 7.9% 10.6% % Share of Consolidated Net Revenue 6.51% 69.65% 14.36% 9.48% At December 31, 2010 In thousands of reais MINING STEEL MAKING STEEL PROCESSING CAPITAL GOODS ADJUSTMENTS CONSOLIDATED Net Sales Revenue 959,787 11,496,110 2,433,063 1,447,313 (3,373,878) 12,962,395 Internal Market 882,604 9,686,274 2,379,256 1,447,313 (3,373,878) 11,021,569 External Market 77,183 1,809,836 53, ,940,826 Cost of Products sold (288,011) (10,047,953) (2,189,638) (1,260,056) 3,354,119 (10,431,539) Gross Profit 671,776 1,448, , ,257 (19,759) 2,530,856 Operating (Expenses)/ Revenue (89,200) (229,516) (202,933) (106,744) (628,393) Operating Profit/(Loss) before Financial exp. 582,576 1,218,641 40,492 80,513 (19,759) 1,902,463 EBITDA 638,192 1,818, , ,373 (19,759) 2,650,215 EBITDA MARGIN 66.5% 15.8% 4.2% 7.7% 20.5% % Share of Consolidated Net Revenue 5.88% 70.37% 14.89% 8.86% 70

71 7.3. Regarding the products and services corresponding to the operating segments disclosed in item 7.2., describe: Mining and Logistics a) Features of the production process The production process consists of iron ore extraction (excavation, breakdown and moving) and processing (crushing, washing, concentration). The technology employed is domestic, furnished by former J. Mendes, now acquired, and continuously improved by Usiminas, always aligned to the sustainability of its business and expansion projects. Annual production reaches 8 million tons of iron ore. The machines, equipment and facilities are covered by the Company s corporate insurance policy. Prevention maintenance is done periodically in conformity with its security plans and policies. b) Features of the distribution process In 2012, 70.9% of the total volume sold was to the Ipatinga MG and Cubatão SP mills owned by Usiminas, with the remainder being commercialized without the interference of commissioned or reselling third parties. In 2010 the total volume sold to the plants owned by Usiminas was 82.6%, and in 2011 was 77.8%, such reduction is due to the increase of share in the foreign market. Distribution occurs via highway transportation contracted with independent transport companies and those belonging to the Company, goods being delivered at the Itaúna and Sarzedo, Minas Gerais railway terminals. The other distribution steps are the defined in accordance with the commercial agreement, through railway transportation up to the plants owned by Usiminas or to the port terminals when addressed to the foreign market. c) Features of the markets in which the activity operates 2010 started with signs of heating and more stable markets, other than 2009, marked by uncertainties. The prices of iron ore products recovered to pre-crisis levels and the price methodology previously determined with annual duration varied and started being determined based on quarterly readjustments, better reflecting the demand fluctuations for iron ore. The margins for iron ore products have significantly increased, when compared to the crisis period, and the expansion projects returned to decisions making considerations to be accelerated. This year, 6.8 million tons were produced, shipped to their own Plants, clients in the domestic and foreign markets. In 2011, although the iron ore prices have achieved a record during the first quarter of the year, as from the end of the third quarter, the international economy presented levels of deheating, particularly arising from stagnation in the developed countries and moderate growth of the emerging economies. Internally, the country s growth shows traces of vigor, representing 2.7% of GDP according to IBGE data. The iron ore prices in the first half of the year presented more favorable levels in comparison to the previous year, declining in the second half due to some uncertainties mainly in the maintenance of the growth pace of large Asian markets, purchasers of iron ore ended its activities with a production of 6.3 million tons, shipped to its own Plants, to clients in the domestic and foreign markets. 71

72 Due to an uncertainty environment, 2012 was a challenge to the global economy, grew below the long term trend for the second consecutive year. The drop in ore prices was one of the consequences for the adverse macro scenario. The iron ore prices became much more volatile, with a great low volatility, particularly in the third quarter of the year. The ore extraction occurs in mining concession areas authorized by DNPM, in own and third party drawings. d) Eventual seasonal factors There are none. e) Main supplies and raw materials The main supplies and raw materials purchased are fuel (diesel oil, gasoline), the market for which is regulated by the National Petroleum Agency ANP, and explosives for civilian use regulated by the Ministry of Defense. i) Description of the relationship with suppliers, including whether they are under government control or regulation with the indication, if this is the case, of the respective agencies and applicable legislation they are subject to The Company has entered into long and short-term agreements with fuel suppliers which do not belong to the Usiminas group of companies to supply all of its units, negotiating more favorable prices due to the volumes consumed. Regarding explosives, the Company has entered into long and short-term agreements with suppliers which do not belong to the Usiminas group of companies for the supply of a large part of this input and purchases a smaller portion from various suppliers in the market. The supplies are subject to specific regulations: the diesel oil and gasoline market is regulated by the National Petroleum Agency (ANP Resolution nbr. 12 of March 21, 2007) while explosives for civilian use are regulated by the Ministry of Defense (Decree 3665 of November 20, 2000). ii) Eventual dependence on a few suppliers The supply of input and raw materials that the Company requires is contracted with a dispersed supplier base. For this reason the Company is not restricted to a few suppliers to purchase these inputs and raw materials. iii) Eventual volatile supplier prices The prices of supplies and raw materials that the Company purchases are not relevantly volatile, except for the fuel that is influenced by the oscillations related to the price behavior of the oil price in the international market. 72

73 Steel a) Features of the production process The Ipatinga and Cubatão mills are integrated. Below follows a brief description of the mills process. - Raw Material patios The main raw materials employed in steel production in integrated mills are coal, iron ore, limestone, dolomite and manganese. Iron ore and coal are stored in raw material patios. Later they are homogenized, strained and calibrated to be used in the coke plants and blast furnaces. - Coke plants The coal mixture (high, medium and low volatility and soft coal) is crushed and heated in vertical furnaces for the removal of its volatile components. This distillation process transforms the coal into coke, the fuel for the blast furnaces which furnishes heat and acts as a reduction agent. This process also produces gas as a by-product which is burnt in the mills furnaces and used as a source of fuel for their own generators. See Raw Materials. - Sintering plants After the homogenization and straining process, the iron ore and coal dust are mixed with other matter (fine coke, limestone, dolomite, dunite and anthracite) and processed in such a manner as to create an agglomerated substance called sinter. These raw materials are mixed and accommodated on moving conveyors which at their starting point possess ignition furnaces which initiate the combustion of the coke and anthracite in the mixture. Next, by means of air suction, the mixture is kept burning until its full combustion, when the particles of the fine iron ore and other added matter also go through a superficial bonding process in which they agglomerate and form a cake. After this mass is crushed and strained it will be used in producing sinter, measured in adequate amounts for use in the blast furnaces together with the iron ore and coke pellets. - Blast furnaces The blast furnace is filled with sinter, coke, granulated ore and pellets. During the process air is introduced by special compressors, goes through a heating process in heat regenerators and is blown into the blast furnace by special vents, which leads to the combustion of the injected coke and coal. This combustion generates mainly carbon monoxide reduction gas which will react with the oxygen from the iron ore (contained in the sinter, pellets and granulated ore) in the top part of the blast furnace and will absorb the oxygen, generate carbon dioxide and free up the iron metal. In the lower part of the blast furnace, where the combustion of injected coke and coal occurs, iron and the other impurities in the ores are melted and are deposited in two phases: pig iron (composed mainly of iron and carbon) and the slag, mainly made up of silica, aluminum, calcium and magnesium oxides. This compound matter, composed mainly of 73

74 iron and about 4% of carbon which it absorbs in contact with the coke, is called pig iron, the main raw material used in producing steel. - Mills In the mills the molten pig iron together with purchased scrap pig iron, scrap steel and other additives in small volumes such as manganese, nickel and aluminum ores are oxygen-blown after being loaded in converters. This will cause the combustion of the carbon in the pig iron thereby reducing its content in the ferrous-carbon alloy and generating heat to melt the scrap and other additives. The alloy with less than 2% carbon content is called steel. Normally the carbon content is in the order of to 0.15%. In addition to the blowing process in the converter, there are other complementary metallurgical procedures such as the removal of sulfur, gases and silica conducted by specific equipment and cauldrons according to the desired metallurgical and mechanical features of the final product. Continuous bar production occurs in the mills where the molten steel is deposited on rolling tables to solidify in special cooling systems. As the process is fully refrigerated, the steel s surface rapidly solidifies forming slabs in the order of 200 to 250 millimeters thick, when they are then handled and stocked. In this manner the liquid pig iron becomes steel which can then be refined in accordance with standard specifications or those required by customers. When ready, the steel is transformed into slabs which can be laminated or exported as semi-finished products. - Hot roll production line At the hot roll production line the slabs are reheated and then processed in laminating and paring equipment, generating the drafts. The slabs are then transferred to the hot laminator, which is a set of six laminators in sequence which reduce the slabs thickness from 1.5 to 2.0 millimeters. The coils may then be cut in the cutting line and transformed into sheets according to customer requirements. - Pickling line At the pickling line the oxides in the hot rolled coils, generated by the high temperatures of the lamination process, are removed in a chemical process employing hydrochloric acid. The resulting material can be sold for specific use (such as re-lamination) or used as raw material in cold rolling. - Cold roll production line After the pickling process, the material is sent on to the cold roller where it is straightened-out, laminated to reduce thickness for up to 0.2mm and then transformed into coils again, sent to reheating ovens to set the mechanical property, surface flatness and roughness. In such case, the cold rolled coils products results. 74

75 - Galvanization lines There are three distinct galvanization lines: 2 by hot dip and 1 by electroplating. In the electrolysis line, the cold rolled material from the reheating ovens is treated in an electrolytic bath which can be applied to one or both sides of the sheet, protecting it with a layer of zinc. The final so-called electro-galvanized product of this line is, therefore, cold rolled material coated in zinc on one or both sides. In its turn, the hot dip galvanization line processes fullyhard laminated material in a bath of molten zinc. Upon exiting the molten zinc cauldron and before the coat solidifies, the product receives a jet of nitrogen which purpose is to adjust the thickness of the coating. As this is a dip process, this type of galvanization requires that both sides of the sheet be coated. - Maintenance The mills are subject to programmed maintenance. The lamination and coating lines are maintained on a weekly basis or twice a month, while the blast furnaces and other important operating equipment are submitted to monthly, semi-annual or annual maintenance. - Unigal Unigal Usiminas makes the cold roll through hot dip, with the generation of zinc hot rolled coils. - Insurance The insurance policies kept by the Company and by some of its subsidiaries provide coverage considered sufficient by Management. At December 31, 2012, the Company and some of its controlled entities had insurance coverage for buildings, merchandize and raw material, equipment, machinery, furniture, objects, utensils and facilities. These items make up the establishment and are included in the insurance policy for the respective facilities of the Company, Automotiva Usiminas, Usiminas Mecânica, Unigal and Usiroll. The amount insured was US$ 28,299,921 thousand (December 31, 2011 US$ 28,201,088 thousand), under an operational All Risks policy with a maximum indemnification of US$ 1,000,000 thousand per accident. At December 31, 2012 and 2011 the maximum deductible amount for material damage is US$7,500 thousand and, for loss of revenue/ceasing profits coverage the maximum deduction is twenty-one days. This insurance expires on June 30, Production During 2012, Ipatinga and Cubatão plants produced 7.2 million tons of raw steel, 7.5% higher than the raw steel production in In 2011, these plants produced 6.7 million tons of raw steel, 8.2% lower than the raw steel production for 2010 which was 7.3 million tons. 75

76 Usiminas nominal production capacity is distributed as per the table below: Product Nominal Capacity (thousands ton/year) Ipatinga Plant Cubatão Plant Heavy plates 1,000 1,000 Hot rolled sheets 3,600 4,400 Cold rolled sheets 2,500 1,200 Slabs 5,000 4,500 Galvanized Products Electrolytic Hot dip 1,050 - b) Features of the distribution process Usiminas currently owns a logistics structure composed of ten distribution centers, eleven closed warehouses at customers and two ports. They are almost entirely located in the southeastern and southern regions which are strategic for efficiently attending to the main customers. Coupled with the quality of its products and services, this service structure has allowed the Company to stand out as the largest supplier of flat steel to the main consumer segments in the country. To meet domestic market demand the Company strategically employs the Brazilian railway and highway networks. Usiminas uses two large railway companies, MRS Logística S.A., of which participates with 20% of the voting capital, and Vale, this one with FCA Central Atlantic Railway and the Vitória-Minas Railway, and approximately 26 highway transportation companies including Rios Unidos which is related to the Company. To meet the domestic market demand, the Company counts on two maritime terminals. The Cubatão steelwork s exports are shipped overseas directly via the Cubatão terminal while Ipatinga s production is exported via the Praia Mole Terminal. c) Features of the markets in which the activity operates The main focus of Usiminas business is the domestic market. In 2012, Usiminas total sales amounted to 6.9 million tons, 73% of which to the domestic Market, corresponding to 5.0 million tons of products. The exports (27% of sales) increased in volume and in participation in line with the strategy of reducing working capital through the process of unstocking of steel products manufactured in prior periods. The main destinations for Usiminas exports were Mexico, USA, Argentina and Colombia. 76

77 In the domestic market Usiminas sells a wide range of products for the Automotive, Industrial, White Line and Civil Construction segments. Among these, the Automotive segment has more representativeness in Usiminas sales, with share of 33%. Usiminas also strongly operates in the distribution Market of steel, through Soluções Usiminas, of the partner clients of Rede Usiminas and sales to other distributor clients. In 2012, 33% of Usiminas sales were addressed to this sale channel. Regional Distribution of Sales of Usiminas Flat laminates(%): Discrimination % % % Internal Market São Paulo Minas Gerais Rio de Janeiro Rio Grande do Sul Paraná/Santa Catarina Center West/ES North/Northeast Sector Distribution of Usiminas Sales (%): Markets % % % Automotive Industrial White Line Grande Rede Civil Construction Not including slags. Usiminas estimates the Brazilian Market of flat steel at about 14.0 million tons in 2012, with 87% of the volume supplied by local plants and 13% by imports. The comparison with 2011 showed a resumption of growth (+3%) after significant drop of 6% in the comparison 2011/2010. Inventories had a determining role in this sequence of variation rates and explain the fact that, notwithstanding 2012 presented worse activity indicators, with the GDP and Industrial Production growing less, the steel consumption in 2012 was higher than In 2011 part of the inventories accumulated in 2010 was consumed, which reduced that basis for comparison with The domestic plants effort to contain imports resulted, however, in considerable loss of the steel business margins. Another challenge faced by local steel are the indirect imports of steel, 77

78 estimated at 5.0 million tons. Of this total, about 3.8 million tons would be related to flat steel contained in imported final products. It is further estimated that two thirds of these indirect imports of flat steel occur by the import of machinery and equipment, vehicles and auto parts. Despite the challenges, the environment for steelmaking tends to benefit from the stronger resumption of industrial investments, mainly in infra-structure, and from the good pace in consumption of durable assets noticed in the latest years. It is also expected that measures of political and commercial defense to support the local industry lead to an improvement in the business environment for the local steelmaking. d) Eventual seasonal factors We have observed that, historically for the domestic market, the demand for the months of December, January and February is slightly lower due to the interruptions in production and collective vacations that occur in several of the companies that consume steel. As the Company s sales are subject to the seasonal variations described above, the sales planning function at the Usiminas Group takes the compatibility of these variables into consideration at the same time it seeks to maintain production stable, compensating for domestic oscillations with exports to other markets. Physical Sales (Tons in 000 s) Market 1Q12 2Q12 3Q12 4Q Domestic Market 1,246 1,327 1,262 1,209 5,044 Foreign Market ,837 TOTAL 1,513 1,888 1,749 1,731 6,881 Distribution of sales per market over the entire year: Domestic Market 24.70% 26.31% 25.02% 23.97% % Foreign Market 14.53% 30.54% 26.51% 28.42% % Total 21.99% 27.44% 25.42% 25.16% % Sales mix per market during the period: Domestic Market 82.35% 70.29% 72.16% 69.84% 73.30% Foreign Market 17.65% 29.71% 27.84% % TOTAL % % % % % 78

79 Physical Sales (Tons in 000 s) Market 1Q11 2Q11 3Q11 4Q Domestic Market 1,230 1,343 1,162 1,136 4,871 Foreign Market ,045 TOTAL 1,588 1,583 1,405 1,340 5,916 Distribution of sales per market over the entire year: Domestic Market 25.25% 27.57% 23.86% 23.32% % Foreign Market 34.26% 22.97% 23.25% 19.52% % Total 26.84% 26.76% 23.75% 22.65% % Sales mix per market during the period: Domestic Market 77.46% 84.84% 82.70% 84.78% 82.34% Foreign Market 22.54% 15.16% 17.30% 15.22% 17.66% TOTAL % % % % % Physical Sales (Tons in 000 s) Market 1Q10 2Q10 3Q10 4Q Domestic Market 1,173 1,437 1,235 1,069 4,914 Foreign Market ,651 TOTAL 1,615 1,821 1,550 1,579 6,565 Distribution of sales per market over the entire year: Domestic Market 23.87% 29.24% 25.13% 21.76% % Foreign Market 26.77% 23.26% 19.08% 30.89% % Total 24.60% 27.74% 23.61% 24.05% % Sales mix per market during the period: Domestic Market 72.63% 78.91% 79.68% 67.70% 74.85% Foreign Market 27.37% 21.09% 20.32% 32.30% 25.15% TOTAL % % % % % 79

80 e) Main supplies and raw materials, informing: i) Description of the relationship with suppliers, including whether they are under government control or regulation and this being the case, indicate the respective agencies and applicable legislation they are subject to Regarding Energy Supplies (electric energy and gas), Usiminas maintains a long-term relationship with the strategic suppliers to assure adequate supply of electric energy and other energy items. These suppliers are evaluated for their performance in meeting the terms of the supply agreements for these products. Nowadays electric energy is supplied by the free market which makes it possible to purchase energy from any generating party and/or energy seller, the local distributor being responsible for delivering the product. On the other hand natural gas is only supplied by a local concessionaire which has the right to distribute the product in its region of concession. This scenario may be altered with the new gas law which will change the gas market to one similar to that for electric energy. The supply of electric energy is regulated by the Federal Government through ANEEL (National Electric Energy Agency) and is controlled by other bodies / entities such as the ONS (National System Operator), the CCEE (Energy Trading Board) and others. The supply of natural gas is regulated by state agencies which set the tariffs for the product. The other energy products are not regulated; however the suppliers are tied to a single producer. Regarding Coal Usiminas maintains long-term agreements with strategic suppliers to furnish the part of its supply chain related to solid fuels. Such suppliers are evaluated in terms of their all-in contractual performance and flexibility in delivery. As this raw material is imported, security inventories are kept to minimize the risk of lack of supply due to eventual impacts on logistics. Regarding green petroleum coke, a local supplier attends the market while importation from various sources has occurred from time to time. Regarding Metals and other material input, we seek to maintain long-term relationships with suppliers, prizing good relations and the continuity of supply. We continually research new market agents with the purpose of supporting healthy competition and capitalizing on opportunities. All suppliers are continually evaluated and we always strategically plan the best purchase. Suppliers are evaluated for their capacity to meet Usiminas demand volume, quality/performance of the material, environment controls and work conditions. Generally speaking the suppliers maintain adequate product stocks in their factories for our requirements. Usiminas has always been open to new suppliers and we do not have any supply problems with our partners. 80

81 ii) Eventual dependence on a few suppliers The furnishing of energy (electric and gas), is not dependent on a sole supplier however the consuming unit is required to sign agreements for the use of the electric system with the local distributor, if connected to the distribution network, or with the National System Operator if connected to the basic network. Presently Usiminas has supply contract with CEMIG until Regarding other energy products, although there is more than one supplier there is great dependence on a single producer, Petrobrás. Regarding Coal / Coke, there is no explicit dependence on any specific supplier. However, we aim at developing lasting relationships. We work with a variety of suppliers that possess superior quality material which we tend to favor in our purchasing base. With regards to metals and other material input, for certain specific materials we have only one supplier but this does not occur with the majority. Material purchases are always approved by the technical area and developed jointly. There is an ongoing investment in homologating new suppliers and products. The largest part of the disbursements is concentrated in a few materials which do not offer a variety of supply options. iii) Eventual volatile supplier prices Regarding energy products (electric and gas), prices included in the supply agreements are negotiated by the parties and are adjusted annually for inflationary indices (the Expanded General Price Index - IGP-M and the National Consumer Price Index - IPCA). Tariffs for using the system are regulated by ANEEL and are likewise adjusted annually. Tariffs practiced by other energy suppliers are highly dependent on the prices charged by Petrobrás refineries, hence the reason their volatility is tied to the adjustments Petrobrás passes-on to its distributors. Regarding Coal, prices in supply contracts are readjusted semi-annually, quarterly or monthly, according to the market conditions and supply contracts. With regards to metals and other material input, prices for the majority of purchased items are volatile as many are tied to international market prices. Eventually, we hedge to minimize this effect and to improve budget forecasting. We always attempt to negotiate longer terms and fixed prices where applicable. Steel Processing a) Features of the production process The production process in steel processing occurs in the following manner: Automotiva Usiminas is equipped to supply stamped parts, assembled and/or painted components, industrial cutters, standard or custom-made blanks, concrete reinforcement bars and other services through a just-in-time or scheduled delivery system. Solução Usiminas supplies heavy plates, hot and cold rolled laminated products and galvanized steel are cut into round, standard or custom-made blanks at the service centers for use in the 81

82 automotive or electric appliance industries. Additionally, laser-welded blanks, which offer several advantages to the automotive industry, can be supplied together with longitudinally cut coils (which are smaller and simplify the production of items such as pipes, electric equipment and engines), and stamped steel parts which are delivered ready-for-use to customers. The steel Processing segment is grouped together in: Soluções Usiminas, the largest distribution company in the country, renders convenience to the client by the steel management, from the acquisition of plates, coils, strips, until the delivery directly in production line, always meeting the most demanding rules of quality and specifications. It also performs in the distribution of flat steel with special conditions, as minimum lot and reduced delivery terms, and in the sale of welded pipes in carbon steel and a wide range of coils, shapes and thickness for different applications. Automotiva Usiminas is the only company in the automotive sector that produces complete, fully painted kits and cabins with solid or metallic finishes, and is separated into the following processing sectors: Product development engineering; Partnerships with Toolmakers; Development and Production of stamped items; Development and Production of Welded Secondary Kits; Full Painting e-coat (KTL), Surfaces and Varnish; Final Trimming; Integration of Logistics. Among its main customers are the most important automakers in the country, such as Ford, Mercedes-Benz, Volkswagen, General Motors, Iveco Fiat and others. This segment enters into short and long-term agreements for the supply of material input for its production lines. Automotiva Usiminas is covered by the same insurance policy mentioned in this chapter of the Reference Form, in the steelmaking section. Soluções Usiminas has its own insurance policy for equipment, buildings and other assets. b) Features of the distribution process Soluções Usiminas has the capacity for processing over 2 million tons of steel per annum. Its 11 industrial units, strategically located in the states of Rio Grande do Sul, São Paulo, Bahia, Minas Gerais, Espírito Santo and Pernambuco, will supply the automotive, auto parts, civil construction, distribution, electric and electronic equipment, household appliances segments among others. In this manner Usiminas complements its presence in the various sectors that consume steel by broadening its product lines and services and moreover, these actions will allow the Company to better understand the needs of customers and achieve gains in efficiency. 82

83 The Steel Processing segment possesses several service centers which analyze each customer s needs to offer each a custom-made solution, which adds value to its products. The distribution centers offer scheduled deliveries in line with specific customer requirements. A just-in-time and logistics service was implemented which allows the Company s customers to keep storage room available for the installation of production units, maintain lower inventory levels, reduce labor costs and assure punctual deliveries. Sales of products and services to the domestic market are conducted by regional offices in Belo Horizonte and Santa Luzia /MG, São Paulo/ SP, Porto Alegre/RS, Camaçari/BA, Serra/ ES and Recife/PE. The product may be delivered directly by the mills or via Usiminas service or distribution centers, also strategically located near the major consumer markets. The distribution centers for Usiminas companies are located near customers so that products sold can be delivered straight to their production lines. The just-in-time system permits that deliveries occur according to the quantity, quality and timing desired by customers. Furthermore the just-in-time delivery system offers the following advantages to customers: Reduction in lead time (time from the order to the delivery); Possibility of delivering and billing small quantities; Lower inventory levels; Great flexibility in servicing their clients; Reduction in transportation time; Improvement in the quality of services rendered. Exported products are sold directly to the final customer or through trading companies which act as middlemen for the Company s products and manage marketing abroad. Some of these companies export products that later will be processed for sale to the final consumer. At Automotiva Usiminas and Soluções Usiminas, product distribution occurs mainly via highway / roadway transportation. c) Features of the markets in which the activity operates As described in this same item for the steelmaking segment. d) Eventual seasonal factors As described in this same item for the steelmaking segment. e) Main supplies and raw materials, informing: i) Description of the relationship with suppliers, including whether they are under government control or regulation and this being the case, indicate the respective agencies and applicable legislation they are subject to The main raw material employed in Soluções Usiminas production process is the steel coil, almost entirely purchased from a Usiminas supplier in the country. 83

84 The main material input and raw materials at Automotiva Usiminas are: flat steel items, aluminum, automotive paints and components supplied mostly by Usiminas itself. The suppliers of the steel Processing segment are companies in the Usiminas Group and therefore maintain good relationships between the productive units and respective suppliers. The suppliers described above are subject to the same authorities and regulations as those mentioned in item 7.5 of this Reference Form. ii) Eventual dependence on a few suppliers At Soluções Usiminas the main material input is acquired from Usiminas suppliers located in the country itself. Soluções Usiminas does not depend in a relevant manner on suppliers which do not belong to Usiminas and is not subject to a likewise relevant risk in supply. At Automotiva Usiminas the flat steel articles are purchased primarily from Usiminas itself, its controlling entity. The paints are mainly purchased from DuPont, a customer requirement. This requirement is not expressly foreseen in the agreements the company enters into but is due to the fact that DuPont is the customers validated supplier. Validation of the supply of paint in its turn is aimed at granting uniformity and adequateness to the specifications of material input used by customers, which generates gains of scale in the development of their products. In this manner, purchasing from another source is practically unfeasible as a new supplier would have to develop the product and go through the validation process at our customers. iii) Eventual volatile supplier prices The primary supplier for Soluções Usiminas and Automotiva Usiminas is the controlling party (the Company). Eventual volatility in the prices of merchandise is related to the oscillations in the prices of products that the Company sells or in those of raw material and other material input that are used in its production processes. Capital Goods a) Features of the production process Group division in the capital goods sector, Usiminas Mecânica is among the largest capital goods companies in Brazil. The company operates by business areas, namely: Bridges steel and Structures, Industrial Equipment, Industrial Assemblages, Blanks and Stamping, Foundry operations and Railway Car production, and Steelmaking. The production process for capital Goods goes from setting the technical specifications and developing blueprints for equipment, bridges, structures, etc. to the final assembly, which includes sheet cutting, special welding, tests, assembly at the factory and if contracted, transportation and assembly at the site. Presently Usiminas Mecânica is focusing its expectations on the following fronts: 1. Metallic structures and Bridges: Engineering, Supply and Assembly of metallic structures for plants and industrial buildings in the civil construction area, mining, refineries and 84

85 steelmaking, including projects for airport, railway infra-structure, ports and airports, as well as for the World Soccer Cup in 2014 and Olympic Games in 2016; 2. Naval/ Offshore: Equipment for E&P- Petrobrás area, processing modules for FPSOs, components for fixed platforms, vessels of small and medium size (up to 200 tons), Plets, Plems; 3. Oil and Gas: Large and medium size equipment (up to 250 tons) for petro chemical industries, refineries, fertilizer and industrial plants; 4. Steel and Mining: searches for integrated solutions and turn key projects, such as vacuum degassing systems, coke plants; 5. Energy: Equipment and components for generation of hydro electrical, thermo electrical and Eolic plants; 6. Industrial Assemble: Services of electro mechanical assemblies, systems and buildings for plants and industrial units in mining, steelmaking, oil and gas; 7. Wagons: Engineering and Supply of railway wagons type Gondolas/GDU, PEE, Telescopes FTT (pulp), Platforms and other. Capacity up to 3,000 wagons/year. Supplies to all large railway companies in Brazil, with emphasis to VALE, MRS, FCA, ALL as well as for different companies such as Eldorado (Pulp), Usiminas, etc. GDU type, with 220 units for Vale and 360 units for MRS; 8. Foundry: Total capacity of 25,000 tons/year, of which 2,000 tons for large dimension parts (up to 80 tons each), and 23,000 tons for parts of up to 3 tons each, through automated system, segment for the railway and automotive/agricultural segments (parts for harvesting machines, tractors). In the 1st Quarter 2013, the following concretized businesses should be highlighted: 1. Services of reform of coke plant 2 battery 3 Usiminas, in Ipatinga/MG; 2. Assembly of the building of Gerdau Açominas Laminator; 3. Supply of blanks - naval industry for Wilson Sons. Long-term projects presently under execution are highlighted as follows: Supply of furnaces, platforms and towers to Petrobrás; Supply and assembly of storage tanks to Petrobrás; Production of blanks for wind energy towers and implements for farming, highways and the ship-building industry; Supply of structures for the mills building of Gerdau Açominas; Manufacture and assembly of shipyard for Brasfels; Disassembly and assembly of Furnace for Mineração Onça-Puma Vale; Supply of steel girder for change of ways of urban transportation Projeto São Paulo Expresso Tiradentes Bonbardier Transportation Brasil Ltda; 85

86 Services of Electromechanical assembly for Projeto da Nova Oeste, in the West Mine of Mineração Usiminas (MUSA), in the Region of Serra Azul, in Itatiaiuçu/MG. b) Features of the distribution process In this segment, at the rate an asset is manufactured, it is distributed, its parts and sections being transported via highway, railroad or marine waterway. Transportation is carried out mainly by third party companies which are not part of the Usiminas group. Rios Unidos, which is a related company, also transports Usiminas Mecânica products but not in a relevant quantity. Usiminas Mecânica s sales are conducted by its own commercial department which includes two sales offices, one in Company headquarters in Belo Horizonte/MG and the other in the city of São Paulo. c) Features of the markets in which the activity operates As described in this same item for the steelmaking segment. d) Eventual seasonal factors Usiminas Mecânica s sales are tied to the demand for infrastructure projects and capital Goods and therefore depend on the economy s performance, not being subject to relevant seasonal variations. e) Main supplies and raw materials, informing: i) Description of the relationship with suppliers, including whether they are under government control or regulation and this being the case, indicate the respective agencies and applicable legislation they are subject to The primary raw material is steel and the main suppliers are companies related to Usiminas (which is the controlling party of Usiminas Mecânica), which adopts market practices in its commercial relationships. In their turn, these are subject to CVM regulations, for example, and periodic independent audits to evaluate the adequateness of accounting practices regarding these relationships and the financial statements. Given that the supplies are mostly purchased from companies belonging to Usiminas, the authorities and legislation to which they are subject are the same applicable to the Company as described above as well as in item 7.5. below. ii. Eventual dependence on a few suppliers The Capital Goods segment depends primarily on companies belonging to Usiminas for the supply of raw material, which is steel. For other main material input other than steel, such as electrodes and paint, there is no dependence on a few suppliers. 86

87 iii. Eventual volatile supplier prices Eventual volatility in the prices of merchandise is related to the possible oscillations in the prices of products that the Company sells in the market, seeing that the relationship between Usiminas Mecânica with its controlling party follows normal market practices Identify if there are customers which individually are responsible for over 10% of the issuer s total net revenue In the last three years, none of the Company s customers were individually responsible for over 10% of its total net revenue Describe relevant effects of government regulations on the Company s activities, specifically commenting on: a) requirement for government authorizations to engage in steelmaking activities and a history of the company s relationship with public administration to obtain such authorizations Brazilian Environmental Legislation According to Brazilian law, the environment is classified as a public asset to be necessarily secured and protected for collective use. For this purpose the legal ordainment is armed with a variety of control instruments through which it can verify the feasibility and regularity of any intervention affecting the environment under consideration. The steelmaking industry is included in those activities which bear significant influence on the environment, hence its exploitation (and sales of its products) obeys legal precepts, administration norms and pre-established rituals. The obtaining of environmental licenses from the administrative branch is an indispensable condition for locating, installing, expanding and operating such endeavors. In the case of businesses with the dimensions of a steelmaker, the state government s environment agency has the delegated power to concede environmental licenses. Therefore, in the states of São Paulo and Minas Gerais, where Usiminas industrial mills are located, state authorities regulate the operations of the Ipatinga and Cubatão plants, applying to them the environmental norms directly linked to their operating licenses. In the case of mining, being the area to be mined within the limits of a Federation State, it is also the state bodies responsibility the concession of proper environmental licenses. The licenses obey to similar and sequential criteria, their concession is, for high impact activities, mandatorily preceded by the presentation of studies and reports (EIA/RIMA), and the licenses are to validate the location (previous license), the venture installation (Installation License) and the operation (operation license). There are parallel licenses, to be obtained in specific situations, as for example, the license for vegetation suppression, in cases in which this activity is necessary, the granting, which is the license for the use of water resources. 87

88 Environmental Licenses The production process in mills results in the emission of gaseous, liquid and solid residual matter which can be harmful to the environment and to the use of its assets. Each state in which Usiminas operates is responsible for its own environmental licenses and for controlling potentially polluting activities. The Usiminas companies have been duly licensed or are renewing their license and are fully authorized to operate. In the case of mining, are required the Previous environmental license (LP) of Installation (LI) and of Operation (LO) each of which with variable validity, namely: LP not above 05 years, LI not above 06 years, and LO with a minimum of 04 years and maximum of 10 years. Regarding the area close to Porto de Itaguaí, we obtained the license for environmental repair of the area. This area was acquired in auction and was owned by the bankrupt estate of Ingá. The land with 850 thousand square meters concentrates one of the largest environmental liabilities of the State of Rio de Janeiro and is a strategic area for the Company since it will be used as area for mobilization of iron ore load for export and as possible alternative for future port facilities of the Company. It should be emphasized that not only the obtaining but also the maintenance of licenses is subject to the fulfillment of certain specific conditions, permanently monitored by the environmental authorities. Regarding the Ipatinga mills, the state environmental authorities include: The State Agency for Sustainable Development and Environment - SEMAD, the State Foundation for the Environment - FEAM and the State Board for Environmental Policy COPAM. For the Cubatão mills, the authorities are the Secretariat for the Environment of the State of São Paulo (SMA) and CETESB (State Company for Water Treatment and Basic Sanitation). Presently Ipatinga possesses a license to operate its industrial plant which is valid up to February 17, The license renewal has been required in legal term, being the business licensed until the manifestation of the Environmental Agency. In 2008 Usiminas obtained an operating license for the implementation of a thermal-electric power plant, which is valid up to October 8, In August, 2006 Usiminas was granted by COPAM an Installation License (LI nbr. 113/2006) for implementing coke plant 3 at the Ipatinga mills, with an annual production capacity of tons of coke per year, with validity until August 22, 2009, which was extended in February 2010, with validity until 06/30/2010. The Operation License for Coke Plant 3 was obtained, with validity until 08/19/2014. The conditions of this operating License will be fulfilled within the term of validity. On July 18, 2006, the Company signed a Term of Commitment to Adjust Behavior - TAC with the State Prosecutor s Office for Minas Gerais, containing obligations already inserted in the previously mentioned installation license as conditions. The TAC was added in October 2009 and was extended the deadlines for compliance with its terms and conditions, which have also been renegotiated with the competent environmental agency. The Cubatão mills have been duly licensed by CETESB, possessing 01 Renewable Operating License encompassing all its units and valid up to December 13,

89 Federal Technical Register At the Federal level, with the purpose of assuring the control and inspection of activities which are potentially polluting and which employ natural resources, Usiminas activities are filed at IBAMA (Brazilian Institute for the Environment and Natural Resources) as potentially polluting and which use natural resources. In this manner Usiminas possesses a Certificate of Registration CR issued by IBAMA and which is valid for both of its steel plants. Authorization to Develop Mining Properties Mining activities are subject to the limitations imposed by the Brazilian Federal Constitution and by the Mining Code (Decree-law 227, of February 28, 1967) and are likewise subject to laws, rules and other applicable regulations, especially those issued by the National Department for Mineral Production - DNPM. Among the requirements we highlight those related to (i) the manner in which mineral deposits are exploited; (ii) workers health and security; (iii) environmental protection and restoration; (iv) prevention of pollution; and (v) promoting healthcare and security for the local communities where the mines are located. The Mining Code also imposes certain restrictions regarding notification and reporting of activities. Pursuant to Decree , of April 10, 1989, business ventures which purpose is the exploitation of mineral resources must be approved by the competent environment agency together with a plan for recovering the damaged area, a study on environmental impact EIA and its corresponding report RIMA. Any eventual deficiency in recovering the environment may be considered a crime pursuant to Law 9.605, of February 12, 1998, which disposes on the penal and administrative sanctions arising out of behavior or attitudes which are damaging to the environment, and sets other dispositions. The Company has obtained all the required authorizations and is fully compliant with its obligations vis-à-vis the DNPM. Grant for the Use of Water On February 29, 2012, IGAM renewed the grant for the use of state public water of Piracicaba River, through the grant of water, subject to the volume of 3m 3 /s, effective for 4 years. Pursuant to Ordinance 1678 issued by the Water and Electric Energy Department - DAEE, this body authorized the Cubatão mills to collect water up to May 20, 2015 at the following points: Quilombo River, Brites Spring, Morrão Spring, Mogi River and canal, the last two being used solely for industrial purposes. Law 9.433, of January 8, 1997 allows charging for the use of water as an instrument of the National Policy for Hydro Resources. This however has still not occurred regarding the water used by the Ipatinga mills as, although there are Hydrographic Basin committees, the other mechanisms required for charging have not been implemented, such as an agency and Plan for Hydro Resources of the Hydrographic Basins. To Cubatão Plant, it was implemented the payment for the use of water as from February

90 Mining Activities As detailed in item 9.1. b of this Reference Form, the mining business is subject to regulations issued by the National Department for Mineral Production - DNPM, which granted Usiminas 38 mining concessions to exploit iron-ore in the areas described in the item referred to. Although Usiminas has been registered at the DNPM as a mining company since the 70 s, it was only with the acquisition of J. Mendes, in February of 2008, that we effectively entered into a relationship with this body. b) the Company s environment policy and costs incurred to comply with environmental regulations and, if applicable, with other environmental practices including adhesion to international environmental protection standards In its operations, the Company adopts as guideline the development of activities in harmony with the environment through sustainable integrated practices to reduce the environmental impacts of its operations. Accordingly, it is preventively concerned with the generation of solid residues, atmospheric emissions and noise, rational use of water, energy and inputs and the discharge of hydric effluents. In the certification Field, Usiminas was the first one in the Brazilian steel sector and the second in the world to obtain certification ISSO All the products sold by the Company complied, as usual with the strict environmental requirements of the international policies RoHS and ELV, the so called green stamps, worldwide reference. Still in 2012, the Company continued with the social environmental projects in the regions in which it maintains units, in addition to the recycling of materials and residuals, preservation and recovery of green areas. The climate and the businesses In 2012, the Company continued the process started in 2010, when it provided the first corporate inventory of carbon dioxide emissions (CO2) and established the monitoring procedures. With this Project, the Company improved the corporate strategy to reduce the Greenhouse effective gases (GEE) volume, and in parallel, attempted to develop business opportunities. The emissions of CO2 in the steel plant calculated through the methodology established by the World Steel Association (Data Collection) presented an average value in 2012 of 1.95 t CO2 equivalent per ton of crude steel produced. 90

91 Solid residuals and recycling In 2012, it should be highlighted in the steel plant the initiatives for the search of new recycling forms in the process and identification of good practices for collection, handling, storage and transportation of residuals. 92% of the generated residuals were reused as raw material for the productive processes or addressed to external recycling. The remaining 8% were disposed in industrial landfills or addressed to treatment in companies prepared and licensed for this purpose. Control of Atmospheric Emissions, Effluents and Noise The Company performs in a preventive manner to reduce atmospheric emissions, of effluents and noise. Among the 2012 results, is the reduction of 14% of total direct and indirect emissions of greenhouse effective gases, in the Steel business, in comparison to the previous year due to the lower level of coat consumed in the coke plants and anthracite in sintering, internal reuse and recycling of by products, partial replacement of GLP and fuel oil for natural gas. Energetic efficiency At the end of 2011, the Company created a diagnosis group of specific consumption in order to identify the opportunities of improvement in the energetic efficiency in the behavior aspects and processes, prioritizing the activities that do not require investments. After training in the Plants of Nippon Steel & Sumitomo Metal Corporation in Japan, the team developed in 2012 a planning listing the largest energetic potentialities of Ipatinga and Cubatão Plants. The developed plan contemplates the diagnosis in 17 equipment until Presently the team has 5 Energetic diagnosis in progress and 2 already finished. The diagnosis made provided a reduction of Gj in It is expected that the Diagnosis Plan results until 2016 in economy of about Gj per month. Also in 2012 some large Projects related to Energetic Efficiency were ended as: 1) Project for the Installation of medium voltage AC drive in Engines in Ipatinga 2) Project for Modernization of Compressor of Compressed Air of Ipatinga Steel Mill. Environmental Commitment The environmental certifications, green stamps and the constant technological investments to promote the efficient use of natural resources attest the Company s commitment with the environment. This commitment is highlighted in some social environmental projects maintained by the Company. Xerimbabo: Created in 1984, the Xerimbabo Project of Environmental Education presents actions to promote the environmental preservation, the conscious leisure and the 91

92 environmental education. It provides preparatory seminars for all education level educators, contests to students and exhibitions of Environmental Education, distributes pedagogical material to the participants, providing 25,000 seedlings in average for the plantation workshop contributing for the recreational activities and guided visit, in addition to monitoring to schools for pedagogical supplementation. The Project is part of the school calendar of several institutions of the states of Minas Gerais (most of them), Espírito Santo and Bahia. Since 2010, the Project has also been presented in the region of Serra Azul, where Mineração Usiminas operates. Throughout 28 years of existence in the Vale do aço region and 3 years in Serra Azul region, Xerimbabo has received more than two million and two hundred participants, being consolidated as a wide Environmental education proposal, which remits to all manners of life; providing to internal and external public the knowledge of the Company s productive process, within a sustainability discourse. Program for Fishing Support: since 2006, it has been assisting about 1,500 people of three communities close to Cubatão Plant (SP), with the sponsor of materials, equipment and training provided to the fishermen of the region to generate income through the fishing activity. Social environmental agent: Cooperation entered into by Cubatão Plant and the Municipality to develop the municipal program "Social environmental agent", through the transfer of financial resources to cost the Program agents compensation. The resources are addressed for the promotion of environmental sanitation, environmental education, improvement of landscaping and the redemption of the Cubatão citizen identity. The agents perform in the community clarification on the importance of recycling, so as to create in the population the environmental awareness to reduce the domestic garbage and its improper discharge. Handling of Cotia-Pará Park: The Company sponsored, in Cubatão (SP), the preparation of a technical study, based on the general objectives of a Preservation Unit, to establish its zone and the rules for the use of the Park area and the handling of natural resources, including the implementation of the physical structures necessary for the Unit management. Permanent Protection Area (PPA): Ipatinga Plant occupies about 8 square kilometers and is located beside the Parque Estadual do Rio Doce, a core zone of Biosphere Reserve of Mata Atlântica recognized by Unesco. Cubatão Plant occupies an area of 12.5 square kilometers adjacent to mangroves and to Parque Estadual da Serra do Mar, whose handling plan takes into account the existence of an industrial pole in the region. The industrial complex of Cubatão is in Permanent Protection Area (PPA), comprising river margins, hilltops and all the archeological heritage of Sambaquis do Morro do Casqueirinho. Woods Program: Upon the preservation of hydric resources, the Company included in the green areas program the restoration of the woods stripe in the left margin of Piracicaba and Doce Rivers, developed in partnership with Fundação Relictos, a Local NGO, and Instituto Estadual de Florestas (IEF), in an extension of 22 km, constituting an area of 186 hectares, comprising the municipalities of Coronel Fabriciano, Ipatinga and Santana do Paraíso, in Minas Gerais. From 1996 to 2011, approximately 400 thousand seedling of native species of the original primary woods were planted to rehabilitate the quality of these rivers water, maintain their stability and eliminate one of the main causes of silting. The results from the implementation of Woods Program ( Programa Mata Ciliar ) show the improvement of the local conditions of Piracicaba and Doce Rivers, besides fostering the development of actions aiming to maintain these important hydric springs for the region of Vale do Aço. 92

93 Program for the Recovery of Green Areas: Since its foundation, the Company has been developing actions to implement, recompose and preserve the Company s green areas, with the cultivation and supply of seedlings. In 2012, 103,019 seedlings of different species and 29,708 seedlings of trees and fruit trees and 73,311 of ornamental seedlings were planted in the Company s green areas. Also 5,044 kilos of humus were processed to meet the cultivation of seedlings and reforestation. Since 2010, the mining unit, in Serra Azul-MG, has also integrated the project. To favor the pollination of trees and obtain seeds for the Green Area Program, the Company started, in 1985, the Apiculture Program. It comprises six apicultural cores with 140 boxes, which together, may produce five tons of honey per year. Part of the production is used by the Company as institutional gift in internal, external events and visits. The remaining production is distributed to 38 assistance entities in Vale do Aço. In 2012 approximately 2.8 tons of honey was produced. Horto Florestal Constituted by a seedlings nursery and areas with native forest, it is an area managed by Ipatinga Plant dedicated to the development of social environmental programs for production of seedlings to recover degraded areas in the metropolitan region of vale do aço and environmental preservation, conscious leisure and environmental education. In 2012, 96,965 seedlings were planted, 34,053 of which of trees and fruit trees and 62,812 of ornamental seedlings. Mineração Usiminas owns a structured area, equipped with IT room, seedlings nursery and a large space to promote environmental education. The space is also adapted to receive disabled persons. In 2012, the seedlings nursery produced 14,672 seedlings, more than 11,000 of which planted or donated to the community. The space is open to receive educational institutions and the local community, providing the development of the company s social environmental programs, aiming at the vegetation reproduction, environmental preservation, conscious leisure and environmental education. Retro-area of Itaguaí (Port) In 2011, the Company started the environmental recovery of the retro-area owned close to the Port in the municipality of Itaguaí (RJ) acquired in This area was acquired in auction and was owned by the bankrupt estate of Ingá. The land with 850 thousand square meters concentrates one of the largest environmental liabilities of the State of Rio de Janeiro. The tailings contaminants from this area were enveloped and held in the basement of the place itself, in a PVC blanket waterproof, which will be monitored to prevent leaks. The project lasted 20 months and was completed in December 2012, obtaining Usiminas, the INEA ENVIRONMENTAL CERTIFICATE - State Environmental Institute (environmental watchdog agency), in March Indicators of Environmental Performance In 2012, the Company expanded the management of the energy theme and performed with responsibility in the management of gases, effluents and residuals emissions. 93

94 Materials The table below presents the main inputs and raw materials used in the company in Main nonrenewable raw materials and inputs Steel Consumption of material per type (in tons) Anthracite 338,780 Argon, Natural Gas, GLP 233,182 Lime and Welding pastes 2,106,000 Coal 2,982,250 Coke 66,161 Petroleum Coke 1,025 Ores 17,795,800 Total 24,547,304 Steel processing Steel and Aluminum 1,055,721 Argon, Natural, GLP 408 Diesel 185 Total 1,056,315 Capital Goods Argon, Natural, GLP 2,590 Consumed in Welding 1,091 Uneven Laminated products 8 Paints, Solvents, Fillers 290 Total 3,979 Consolidated Argon, Natural, GLP 236,181 Total Usiminas 236,181 Percentage of materials used arising from recycling In 2012, approximately 92% of the generated residuals, including the reuse in the productive process and sales were recycled. The internal recycling of residuals is performed at the Plants, where such procedure is spread to all the employees. The main residuals internally recycled were steel scrap, rust, dust and light scrap generated in different units. The blast furnace and steel mill slags for sale should be highlighted. 94

95 Energy Energetic efficiency and significant improvements The consumption of renewable and non-renewable energy is mainly related to the level of activities of Cubatão and Ipatinga plants. The total energy consumed in 2012 in plants was 297,886,488 GJ. Some diagnosis made in the steel plant provided a reduction of 81,610 Gj in The expectation is that the execution of the Diagnosis Plan results in an economy of about 135,078 Gj per month until Hydro Resources The industrial and mineral exploration operations of Usiminas also require large volumes of water. In the steel production, it is used as solvent, catalyzer, cleaning agent, cooling agent and dispersion of pollutants. Most of the water used by the Company circulates inside its own facilities. After being processed, a part of it, in a lower volume, is returned to the rivers. The Company obtains water from the rivers close to its Plants. The Company possesses legal grants for also impounding the waters of the Mogi (industrial use) and Quilombo(only for human consumption) Rivers in São Paulo and of the Piracicaba River in Minas Gerais. The Steel Plant recycled its consumption of water, equivalent to 1.6 billion of cubic meters. Total amount of water impounded by source and business area total consumption per source (m 3 ) Total Surface water, including humid areas, rivers, lakes and oceans 168,741, Surface river water 3,626,574,00 Subterranean water 2,789, Furnished by the Municipality of by other water supply companies - Total 175,258, Effluents The discharge of water used in the operations of Usiminas companies was lower in 2012, indicating the continuous improvement of the Company in this issue, since it had already presented a reduction in 2011 compared to Usiminas submits these effluents to rigorous treatment before disposing of them. The treatment phases include decantation, flocculation and filtering so that the disposed material is within the standards set by the federal, state and municipalities where it operates. 95

96 In 2012, million of cubic meters of water were discharged from the treatment stations of effluents of Ipatinga (MG) and Cubatão (SP) Plants. The volume was discharged in Piracicaba River (Ipatinga) and in Estuário (Cubatão). In 2011, the volume of discharge corresponded to million of cubic meters of water Atmospheric Emissions The Company recorded the emissions of Greenhouse Effect Gases (GEE) for the Steel Plant business and focused on the generator sources in the productive and logistics processes. Reduction of SOx emissions in 2012 at Ipatinga Plant due mainly to lower consumption of coat in the coke plants and anthracite in sintering, internal reuse and recycling of by products, partial replacement of GLP and combustible oil for natural gas and increase in the internal generation of electrical energy through the use of steel gases. NOx, SOx and other significant atmospheric emissions Emissions (t) 2012 NOx 26,897 SOx 13,110 Volatile organic compounds (VOC) Chimney and fugitive emissions 11,688 Particle matter (PM) Total 51,695 Direct and indirect emissions of gases aggravating the greenhouse effect, by weight Usiminas uses the methodology CO2 reporting for IISI Sector Approach (WSA) to calculate volume of GEE emissions. In 2012, the below presented data refer to the Steel Plant. Type of emissions Tons of CO2 eq. Direct (sources controlled by the organization) 13,164,557 Indirect (consumption of electrical energy acquired from SIN) 1,218,853 Indirect by other sources (third party activities) -544,824 Total 13,838,586 Residuals In the Company, this volume was maintained at about 6.1 million tons in 2012, as well as in About thousand tons of which are hazardous residuals, which received specific 96

97 treatment procedure with the processing or the disposal in proper and licensed industrial landfills. The Company operates by means of Special Sales, integrated to Usiminas Environmental Management in the sale of generated residuals, except those used in the process. The offer of residuals in the market fosters the creation of partnership with investors, universities and companies upon enabling the application of a reject in a certain business as input from another organization and foster studies to use and mitigate the environmental impacts. The net revenue generated from the sale of by products and residuals of the steel plant was R$181 million. The tables below present the destination of the generated residuals: Non Hazardous Residuals (weight in tons) Mining Steel processing Capital Goods Sanitary landfill ,546 Reuse/Recycling , Recovery Own industrial landfill Internal recycling Sale ,269 Inventories Total 1,369 43,342 30,145 Hazardous Residuals (weight in tons) Mining Steel processing Capital Goods Processing Internal recycling Treatment Sale - - Total 145 1, The residuals of the steel plant in 2012 are presented in the table below: Residuals in the steel plant Type tons Generated 6,126,781 Hazardous 169,552 Non hazardous 5,957,229 Reuse 5,604,411 Inventories 376,038 Final disp. 146,332 97

98 Mitigation of impacts The Company explicitly manifests its concern with attributing priority to being eco-efficient in all of its processes, and accordingly, the endless search for mitigation of environmental impacts is part of the Company s management activities. To mitigate the environmental impacts of products and services and the extension of the reduction of these impacts we highlight the investments in the Mining in projects and new technologies, which shall aim at more efficiency in the consumption and reuse of materials. What was characterized before as sterile and waste, shall be product in the Steel Plant and the deactivation of Coke Plant 1 of Ipatinga Plant and the investments in the extension of the Electrostatic Precipitator of the Sintering Machine 1 and continuity of the process to adapt the operating units for the use of GN. Environmental investments Of total environmental investments in 2012, we highlight R$ million in the Steel Plant and other R$69.9 million in Itaguaí Port. The main investments in the steel plant refer to the reconstruction of battery 3 of coke plant 2 and systems of dedusting to control the emissions of particle material in the sintering areas and blast furnace. Moreover, to control the hydric effluents an adequacy was made in the Units of Biological Treatment of Ammonia. In Itaguaí Port, the investment is concentrated in the conclusion of the process to repair the area. c) Company dependence on relevant patents, brands, licenses, concessions, franchises, royalty agreements for it to conduct its business. Technology - In 2011, Usiminas also stepped forward to differentiate from its competitors, upon beginning the manufacture of thick steel plates of high resistance, with limits equal to or above 490 N/mm2. The initiative was possible because the Company is the exclusive holder in Brazil, of the technology Continuous on Line Control Process (CLC). The contract for technological transfer was executed in 2009, with Nippon Steel & Sumitomo Metal Co. CLC technology consists in the combined use of controlled lamination and accelerated cooling. Accordingly, the equivalent carbon may be quite reduced, since the desired resistance is obtained in the cooling stage. The method provides excellent tenacity in low temperatures and excellent result in the welding operations. The steel processed by CLC technology is widely used around the world, specifically, in the naval industry, in platforms and pipes, in civil construction and industrial machinery. CLC steel is differentiated since it does not have refined grain and low carbon content, alloy elements and equivalent carbon. In addition, it s an excellent control during the stages of steel refine, casting, lamination and accelerated cooling. In addition to Nippon Steel & Sumitomo Metal Corporation, Usiminas also enters into partnerships with research institutions and with universities for R&D of products of the 98

99 Company s interest. Except for the ones described above, the Company does not have substantial dependence on intellectual property from third parties. Brands - As commented in item 9 b of the Reference Form, the brands which the Company owns are currently limited to its corporate identification and that of its companies. Although Usiminas does not depend on its own brands to carry-on with its activities, this intangible asset is essential for the external perception of its quality and values and has a highly relevant worth to itself and its corporate identity. According to the norms of the National Institute for Industrial Property INPI, the brand Usiminas is high-notoriety and for this reason no other company can register this name for professional use in the same line of business as ours. This same rule applies to several other countries in the world which signifies practically no risk that third parties will attempt to concede or use this brand name. Mining Rights - The Company depends on concessions for mining rights to conduct its mining activities as mentioned in item 9.1. b, which therefore are relevantly dependent on the concessions in its name Regarding the countries from which the Company obtains relevant revenue, identify: a) revenue generated by domestic customers and its share of the Company s total net revenue Total net revenue arising from customers in the headquarter country of the Company amounted to R$10,111 million, R$ 10,345 million and R$ 11,022 million in the years ended December 31, 2012, 2011 and 2010 respectively, which corresponds to 79.56%, 86.90% and 85.03% of the Company total net revenue in these same periods respectively. b) revenue generated by customers located in foreign countries and its share of the Company s total net revenue In the last three years, the revenue attributed to each foreign country was as follows: Country Year ended December 31, 2012 Revenue in thousands R$ % share of total net revenue Mexico 389,701 15% USA 363,721 14% Argentina 337,741 13% Colombia 311,761 12% India 233,820 9% Venezuela 129,900 5% Chile 129,900 5% Taiwan 129,900 5% Other 571,561 22% Foreign Market Net Revenue 2,598, % Domestic Market Net Revenue 10,110, % Total Net Revenue 12,708, % 99

100 Year ended December 31, 2011 Country Revenue in thousands R$ % share of total net revenue USA 544,815 35% Mexico 295,757 19% Argentina 264,625 17% India 140,095 9% Chile 93,397 6% Vietnam 46,698 3% Canada 46,698 3% Taiwan 31,132 2% Other 93,398 6% Foreign Market Net Revenue Domestic Market Net Revenue 1,556, % 10,345, % Total Net Revenue 11,901, % Year ended December 31, 2010 Country Revenue in thousands R$ % share of total net revenue China 310, % Colombia 174,674 9% Chile 174,674 9% Argentina 155,266 8% Thailand 135,858 7% USA 116,450 6% Taiwan 97,041 5% Spain 97,041 5% Other 679,289 35% Foreign Market Net Revenue Domestic Market Net Revenue 1,940, % 11,021, % Total Net Revenue 12,962, % 100

101 c) total revenue generated by foreign countries and its share of the Company s total net revenue As informed in the above item, total net revenue from foreign countries amounted to R$ 2,598,005 thousand, R$1,556,615 thousand and R$ 1,940,826 thousand in the years ended December 31, 2012, 2011 and 2010, respectively, corresponding to 20.44%, 13.08% and 14.97% total net revenue Regarding the foreign countries disclosed in item 7.6, inform to what extent the Company is subject to their regulations and in what manner this affects the Company s business. The Companhia has its exports addressed to the Latin America, NAFTA, Europe and Asia markets. Its products are internationally recognized. For not practicing business which might be recognized as unfair in the markets where it operates, it has no commercial adversary processes on its products of thick plates, cold laminated, galvanized and electro galvanized and plates. Against Usiminas there is only one antidumping process (and to which the other Brazilian plants are also subject) which is the hot rolled coils applied by Canada. This process started in 2001 and, from then on, and every 5 years, is being renewed under the allegation that Brazil, for being a large producer of hot rolled coils, might, if the process were terminated, focus its sales on that Canadian market. Although the process was judged against the Company, we do not believe that it could have any significant impact on the income. Accordingly, the Company understands that it does not cause any effects of foreign regulation which might affect its exports Description of the Company s relevant long-term relationships which are not listed in other sections of this Reference Form. In 2012, the Company issued its 2011 Annual Report, which contemplates sustainability indicators, available at the Company site and at CVM Brazilian Securities Commission site In 2012, the Company continued with the main actions related to the community and environment which are presented in this item and in item 7.5 of this Reference Form and did not issue new report with sustainability information for understanding that there were no significant changes. 101

102 People s Management Usiminas invests in training and qualification of its employees, provides social and labor benefits, in addition to compensation compatible with the one practiced in the segment. The main focus of the professional training programs is to prepare people for a management model guided towards the increase of the Company s competitiveness. Accordingly, the beginning of Avançar program activities for the development of highly qualified young professionals should be highlighted, as well as the continuity of Educar (Usiminas Corporate Education) program, which involves actions of continuous education and training customized to the company s reality. The group ended 2012 with 93.6% of its direct employees having participated of training. In 2012, Usiminas was awarded Sesi Award Work Quality, regional level, due to the program Atitude Rima com Saúde. Structured in 12 educational projects, addressed to pregnant women, old people, smokers, cancer prevention and other diseases, food reeducation, among others, the program is open for employees, former employees and their families of all Usiminas group companies, at national level. It ended 2012 with 12,351 participants. Public Authorities In the defense of the Company s interests, Usiminas maintains a transparent and regular dialogue with the Public Power representatives, and regularly accompanies the great questions in the National Congress and in the Legislative Assembly and in the Municipal Chambers of the locations in which it operates, where it works individually or together with the class and/or sectorial entities, following all the effective laws and standards. The Company participated of defense actions of the steel and industrial sector with federal, state and municipal authorities of its influence areas, contributing for the improvement of legislation and the effort of jobs and Market preservation for the local industry. For 2013, the Company will persist in the effort to show to the public authorities the importance of the sector in the generation of wealth and jobs in the country, performing in the necessary areas to assure its operations in a sustainable manner. Participation in Politics and election contributions In 2012, the Company financially supported the election process of candidature to Municipalities, registering in the TSE the amount of the company donations to candidates and parties, according to the effective legislation. Fight to corruption To fight the corruption and bribery practices, the Company uses and discloses to its employees specific tools, in addition to being signatory of the Pact for Integrity and Fight to Corruption of Instituto Ethos. 102

103 Conduct Code: approved in 2011 the Code provides to the employees of Usiminas companies the values of the Company to be used in the daily relationship with other employees, suppliers, clients and third parties in general. The Code is signed by each employee upon his admission and is of mandatory compliance. Direct and Incentivized Investments The Company uses its own resources and also those arising from the tax incentive laws to promote investments in the culture, sport, education, technological innovation and environment areas. In 2012, R$ 34.7 million was invested, of which R$ 12.6 million arising from incentives. The Company does not receive official resources for the investment in its operating activities. Community The Company strengthens the relationship with the communities of the regions in which it operates, in addition to promoting the local economic and social environmental development. Social Projects The Company invests in the surrounding communities development by means of own or partnership projects with nongovernmental organizations and local governments. Among the actions, some of them should be highlighted. Day V: Day V mobilizes volunteers to work in the communities. Employees and their families participate of actions that benefit entities in the municipalities of Vale do Aço. The activities performed were related to health, recreation and interaction with old people and services rendering of painting, cleaning, electric and mechanics maintenance. Mantiqueira Project: started in 2003, it fosters the citizenship and assures the rights for 70 children and adolescents, from 6 to 17 years old, who reside in the community of Pedra da Mantiqueira, region close to Cubatão Plant. The Project develops activities of school reinforcement, sport initiation, reading, arts, IT, dance and theater workshops. Usiminas at School: Project started in 1998 in the Fundamental Schools of the municipal public network of Santos, São Vicente and Cubatão (SP). The Project develops a management system of quality in the education to transform these schools into education reference centers and strengthens in the students the moral and ethical values as citizens. The Project includes actions in school management, education by sports and environment, involvement in the community, professional and motivational guideline. Instituto Cultural Usiminas Focused on the inclusion, formation and development of the citizen, Instituto Cultural Usiminas supported, in 2012, 97 projects by means of laws to culture and sports incentive (State Law for the Culture Incentive of Minas Gerais and São Paulo, Federal Law for the Culture Incentive, Federal Law for Sports Incentive and Promifae of Santos). The actions and partnerships invested approximately R$ 22 million in sponsorships. 103

104 One of the highlights of the supported projects was Circuito Usiminas de Cultura. The initiative took several music, teather and circus venues, in addition to workshops and films exhibition to six municipalities of Minas countryside. In its second edition, the event doubled the number of cities served and tripled the number of attendants. More than 40 thousand people followed the programming in public places, schools and gyms of Pouso Alegre, Santana do Paraíso, Itatiaiuçu, Igarapé, Mateus Leme and Itaúna (municipalities in which the Company operates). The activities promoted by Ação Educativa which aims to facilitate the audience relationship with different artistic languages counted on 23 thousand people, among teachers, students and artists of Vale do Aço region. Instituto Cultural Usiminas is responsible for managing own cultural spaces. In 2012, more than 117 thousand people attended the 371 plays and shows presented in Teatro do Centro Cultural Usiminas, in Ipatinga (MG). In Teatro Zélia Olguin, also in Ipatinga (MG), there were about 29 thousand attendants in 242 venues. For further information access Other information which the Company deems relevant. In 2012, the Company was awarded as follows: Usiminas Award Belmiro Siqueira in the category Citizen Company : indication of the Regional Council of Minas Gerais for the social performance during 2011 in the communities in which it is present. The award is granted annually by the Federal Administration Council (CFA) and aims to valuate studies and companies which contribute for the development of the Administration in Brasil. Transparence Trophy Anefac: survey of the National Association of Finance, Administration and Accounting Executives (Anefac) which highlighted Usiminas as one of the most transparent companies in Brazil. The ranking analyzed criteria as quality and depth of the information comprised in the 2011 financial statements. For the first time, Usiminas was recognized as Outstanding Company (category "traded with revenues of over R$ 5 billion") among the 20 winning companies of the Transparency Trophy Established by Anefac - National Association of Executives in Finance, Administration and Accounting, the award assesses best practices of corporate governance in the financial field, based on criteria such as quality, consistency and transparency of published financial statements. For the 2012 edition, the entity assessed 2,000 financial statements of Brazilian companies traded and closed. Platinum Supplier of Caterpillar: maximum degree granted by Caterpillar, one of the largest groups of heavy equipment in the world. Among the assessed items are quality, logistics, and management of processes in the supply of steel for manufacture of motor grader, crawler tractor, wheel loaders, retroscavators, among other equipment. Partner Supplier of John Deere: maximum excellence level granted by John Deere, world leader in the manufacture of agricultural machinery to its suppliers. 104

105 Commercial Excellence of Volkswagen: chosen in the category among more than 700 suppliers, in the traditional event Volkswagen Supply Award In addition to Usiminas, have also been honored the best suppliers of the assembler last year in the categories Quality, Operations, Post sales and Engineering. Sesi Award Quality in Work: Usiminas was awarded the regional award for the Program Atitude Rima com Saúde. Among the 260 competitor companies in Minas Gerais, the company was highlighted for the initiative focused on the life quality of more than 110 thousand coworkers, ex-coworkers and their dependents, of all the group companies. Best supplier of the year by Alstom: elected by the world and Latin American leader in Renewable Energy, present in Brazil for more than 55 years, as best supplier competing with international companies like Dillinger, SSAB and Arcelor Mittal. Usiminas Mecânica Best Supplier in Assembly in the category Capital Projects- 2011: award for the work performed in the project Onça Puma. Criteria like the Index of the Supplier Performance (IDF), whose assumption are the results achieved by the company in the industrial assembly, comprising a wide rank of requirement as security, quality of services, term, technique, Management and ethics in the conduction of work, are assessed. The selection was divided into five editions (four regional and one national). 10th Highlight Award of Civil Engineering 2012 category Construction Material Metallic Structures/ Construction Profile: award promoted by the Institute of Civil Engineering of the State of Minas Gerais (IMEC), with the support of Crea-MG. The award aims at recognize highlighted companies among the best suppliers and contribute for the sector development. Criteria like quality, durability and technology of products and service goods; cost x benefit relations; specialization and strength of the brand were taken into account in this choice. 8. Business Group 8.1. Description of the business group to which the issuer belongs, indicating: a) Direct or indirect controlling entities As indicated in item 15.1 of this Reference Form, the Company is controlled by (i) the Nippon Group, composed of Nippon Usiminas Co Ltd., Nippon Steel & Sumitomo Metal Corporation (new name of Nippon Steel Corporation); Metal One Corporation and Mitsubishi Corporation do Brasil S.A.; (ii) T/T Group, composed of Confab Industrial S.A., Prosid Investments S.C.A., Siderar S.A.I.C and Ternium Investments S.à.r.l.; and (iii)) Previdência Usiminas. (i) Nippon Group: Nippon Usiminas Co., Ltd., a company incorporated and organized under the laws of Japan, headquartered at 6-1, Otemachi 1-chome, Chiyoda-ku, Tokyo , Corporate Tax 105

106 Payer (CNPJ/MF) registration nbr / , which is a consortium of Japanese companies and institutions belonging to the Japanese government which have come together with the purpose of owning Usiminas shares. Nippon Steel & Sumitomo Metal Corporation, (new name of Nippon Steel Corporation) company incorporated and organized under the laws of Japan, headquartered at Marunouchi Park Bldg., 2-6-1, Marunouchi, Chiyoda Ward, , Tokyo, Japan, Corporate Tax Payer (CNPJ/MF) registration nbr / , member of the Nippon Steel Group, owns 89.35% of Nippon Usiminas common shares. The main shareholders of NSSMC s capital stock are: Japan Trustee Service Bank, Ltd. (10.1%) Sumitomo Metal Industries, Ltd. (4.2%), CBHK-Korea Securities Depository (3.5%), Nippon Life Insurance Company (3.3%) and The Master Trust Bank of Japan, Ltd. (3.0%), as described in item 15.1 of this Reference Form. Mitsubishi Corporation do Brasil Ltda., a Brazilian limited liability company, Corporate Tax Payer (CNPJ/MF) registration nbr / , head offices located at Av. Paulista, 1294, 23rd floor - room Bela Vista, in the city of São Paulo, state of São Paulo, and a fully-owned subsidiary of Mitsubishi Corporation. Metal One Corporation, a company incorporated and organized under the laws of Japan, Corporate Tax Payer (CNPJ/MF) registration nbr / , headquartered at 23-1, 3- chome, Shiba, Minato-ku, Tókio , Japan, a company affiliated with Mitsubishi Corporation. (ii) T/T Group: Confab Industrial S.A., a Brazilian publicly held company, listed in segment Level 1 of BM&FBOVESPA, headquartered at Rua Manoel Coelho, 303, 7th floor, Room 72, Centro São Caetano do Sul, , São Paulo - SP, Brazil, enrolled at CNPJ/MF registration nbr / , directly controlled by Siderca S.A.I.C., Argentine entrepreneurial company, and indirectly by Tenaris S.A., Luxembourg entrepreneurial company; Prosid Investments S.C.A., Uruguayan entrepreneurial company headquartered at La Cumparsita 1373, 2nd. floor, Montevideo 11200, Uruguay, enrolled at CNPJ/MF registration nbr / , and controlled by Siderar S.A.I.C.; Siderar S.A.I.C., Argentine entrepreneurial publicly held company listed in Buenos Aires Stock Exchange Argentina, headquartered at Carlos M. Della Paolera 299, 16th floor, C1001AAF, Buenos Aires, Argentina, enrolled at CNPJ/MF registration nbr / , controlled by Ternium S.A., Luxembourg entrepreneurial company; and Ternium Investments S.à r.l., Luxembourg entrepreneurial company headquartered at 29, avenue de la Porte-Neuve, L-2227 Luxembourg, Grand Duchy of Luxembourg, enrolled at CNPJ/MF registration nbr / , and a wholly owned subsidiary of Ternium S.A.. Tenaris S.A. and Ternium S.A. are controlled by San Faustin S.A., Luxembourg entrepreneurial company, which holds, indirectly through its Luxembourg wholly owned subsidiary Techint Holdings S.à r.l., approximately 60.5% of the shares issued by Tenaris S.A. and 62% of the shares issued by Ternium S.A. 106

107 Rocca & Partners Stichting Administratiekantoor Aandelen San Faustin, a Dutch private foundation ( RP STAK ), owns shares issued by San Faustin S.A. in sufficient number to control San Faustin S.A. No person or group of persons controls RP STAK. (iii) Previdência Usiminas: Previdência Usiminas, Brazilian entity, enrolled at CNPJ/MF under n / , headquartered at Rua Prof. Vieira de Mendonça, nº. 3011, 1st floor, ZIP CODE , in the City of Belo Horizonte, State of Minas Gerais. b) Controlled and Related Entities Corporate Name Relationship w/ Usiminas Usiminas Share of the Company s Capital Stock at 03/31/2013 Automotiva Usiminas S.A. Controlled 100% Cosipa Commercial Ltd. Controlled 100% Cosipa Overseas Ltd. Controlled 100% Fasal Trading Brasil S.A. (*) Joint Controlled 50% Modal Terminal de Graneis Ltda. (*) Joint Controlled 35% Soluções em Aço Usiminas S.A. Controlled % Unigal Usiminas Ltda. (*) Joint Controlled 70% Usiminas Commercial Ltd. Controlled 100% Usiminas Europa S.A Controlled 100% Usiminas Galvanized Steel ApS Controlled 100% Usiminas Eletrogalvanized Steel ApS Controlled 100% Usiminas International Ltd. Controlled 100% Usiminas Mecânica S.A. Controlled % Mineração Usiminas S.A. Controlled 70% Usiminas Participações e Logística S.A. Controlled 100% Usiroll Usiminas Court Tecnologia em Acabamento Superficial Ltda. (*) Joint Controlled 50% Rios Unidos Logística e Transportes de Aço Ltda. Controlled 100% Usiminas Danmark Controlled 100% Usiminas APS Controlled 100% Metalcentro Ltda. Controlled 100% Codeme Engenharia S.A. Related % MetForm S.A. Related % 107

108 MRS Logística S.A. Related % Terminal de Cargas Sarzedo Related % (*) From January 2013, these companies are recorded by the equity method in the consolidated financial statements of the Company. c) Issuer s share in companies belonging to the group Other than what is described above, the Company does not hold shares in any other company belonging to the group. d) Participation of companies in the group in the issuer s capital stock Other than what is described above, other companies in the group do not hold shares in the Company. e) Companies under common ownership The Company does not participate in companies under common ownership. 108

109 8.2. Organization Chart of the Business Group The following organization chart shows the corporate structure if the Company s business group: PARTICIPATION IN RELATED AND/OR CONTROLLED ENTITIES POSITION AT 3/31/

110 8.3. Operations involving restructuring, mergers, spin-offs, incorporation of shares, sales, acquisition of controlling stock and acquisition and sale of important assets: With respect to this information for the last three fiscal years, please see items 3.3.(b), 6.3. and 6.5 of this Reference Form Provide other information that the issuer deems relevant. Other than the information discussed above, the Company understands that there is no relevant additional information that requires disclosure in this item 8 of the Reference Form. 9. Relevant assets 9.1. Non-current assets that are relevant to the development of the Company s activities, indicating: a) Fixed assets, including those rented or leased, indicating their location. Type of Property Address of Property Municipality State Total Area (000 s of sq. mts.) Built Area (000 s of sq. mts.) HEAD OFFICE BUILDING RUA PROF. JOSÉ VIEIRA DE MENDONÇA, 3011 BELO HORIZONTE MG TAQUARIL MINE RODOVIA MG 7, KM 55 MATOZINHOS MG FEITOSA PLANTS I, II, III IPATINGA IPATINGA MG 10, SILVANA LAKE BR 458 CARATINGA MG 6, LAND IN POÇO REDONDO SANTANA DO PARAÍSO SANTANA DO PARAÍSO MG 2,276,0 0.0 CAPITÃO EDUARDO WAREHOUSE CIDADE INDUSTRIAL SANTA LUZIA MG INTENDENTE CÂMARA PLANT RODOVIA BR 381, KM 210 IPATINGA MG 10, ,100.0 SERVICE CENTER - TAUBATÉ - SP AIRPORT AV. PROJETADA 1, S/Nº - B. PIRACANGAGUA SANTANA DO PARAÍSO DIST. PIRACANGAGUA SP SANTANA DO PARAÍSO MG JOSÉ BONIFÁCIO DE ANDRADA PLANT ESTRADA DE PIAÇAGUERA, KM6 CUBATÃO SP 10, LIMESTONE MINES AND DEPOSIT CHÁCARA SANTA CATARINA S/N SALTO DE PIRAPORA SP ,0 CUBATÃO PORT TERMINAL UTINGA TRANSSHIPMENT TERMINAL ESTRADA DE PIAÇAGUERA, KM 6 CUBATÃO SP AVENIDA DOS ESTADOS, N 3001 SANTO ANDRÉ SP SANTANA DO PARAISO PLANT (PART) SANTANA DO PARAISO SANTANA DO PARAISO MG 5,352, ITAGUAÍ/SEPETIBA PORT ITAGUAÍ ITAGUAÍ RJ

111 b) Patents, brands, licenses, concessions, franchises and transfer of technology agreements indicating; duration; affected territory; events that can cause loss of rights to said assets; possible consequences to the Company of the loss of these rights: Patents Description of the Patents i) Duration ii)affected Territory DEVICE FOR ASSEMBLING AND DISASSEMBLING SECTOR AXLES OF SINTERING MACHINES Extra heavy plates roll sheeting process with flatness directly from the roll sheeting heat In the country In the country Chamfered wheel with dischargeable labyrinth In the country Device to change sintering machines sectors In the country Process to manufacture thick plates in the normalized state directly from hot lamination Steel with high resistance to atmospheric corrosion for industrial matter and process for its manufacturing In the country In the country Hot system of coil cooling In the country Adjustable leveling system for sintering machines In the country Improvement of the device for accelerated essays of corrosion in metallic materials by the alternate immersion method In the country System to determine thermal profile of blast furnace In the country Process for obtaining Black glass and dark hob from steelwork slag In the country Equipment for optimization of the sintering mix permeability In the country Method to verify the tightness in gas pipe of industrial furnace burning systems Wet de dusting system using raised deposit for mineral coal handling machine In the country In the country Process and material to apply in refractory covering splits and empty places In the country Liquid metal temperature continuous measurement system using optical process In the country System to measure the mass temperature of clay gun of High Furnaces In the country Structural steel with high resistance to atmospheric corrosion with low level of copper In the country Mobile device for Anchorage of return rolls of transporter belt In the country Device to extract superior valves and porous plug in steel panel of steel mill In the country Adaptor system of turning tong to move coil using two hooks "C" In the country Device to remove short plates from casting machinery In the country System to measure the mass temperature of clay gun of High Furnaces In the country Device to seal valves for elimination of contamination by nitrogen of the air in steel in Continuous Casting In the country Device for continuous measurement liquid steel temperature in the distributor with infrared pyrometer and optical fiber Device for continuous measurement liquid steel temperature in the distributor with infrared pyrometer and optical fiber Device for continuous measurement liquid steel temperature in the distributor with infrared pyrometer and optical fiber Device for continuous measurement liquid steel temperature in the distributor with infrared pyrometer and optical fiber USA EPO - France EPO - Italy EPO - Germany 111

112 Device for continuous measurement liquid steel temperature in the distributor with infrared pyrometer and optical fiber Device for continuous measurement liquid steel temperature in the distributor with infrared pyrometer and optical fiber Device for continuous measurement liquid steel temperature in the distributor with infrared pyrometer and optical fiber Device for continuous measurement liquid steel temperature in the distributor with infrared pyrometer and optical fiber EPO - Spain Japan China Russia iii) Events which may cause the loss of rights regarding said assets Industrial property rights are valid for 20 years, pursuant to Brazilian legislation. The privileges or rights over the object of the patent are terminated after this period, when it then becomes public domain. There are no breaches or litigations in which the Company is involved that could end-up in the loss of rights or privileges in the ownership of the patents listed above. iv) Possible consequences to the issuer of losing such rights The licensing or commercialization of Usiminas patents are beneficial in two manners: (a) royalties earned with the commercialization of licensed patents, when sales to third parties occur; or (b) discounts in the purchase of supplies furnished by partners in the development of the patented object. Regarding the patents owned by the Company, in the event it were to lose its rights over them it would not suffer a relevant financial impact as the values involved are equally not relevant. Brands The Company and the entities which it controls are related to it or are under common ownership currently use 9 brands that have been developed, registered and disseminated: Usiminas, Automotiva Usiminas, Usiminas Mecânica, Unigal Usiminas, Saúde Usiminas, Previdência Usiminas, Instituto Cultural Usiminas, Soluções Usiminas and Mineração Usiminas. These brands belong to the Company and were duly registered in the relevant classes for the activities in which the Company, the entities which it controls, are related to it or are under common ownership are involved. The Company also owns the following brands: Brand Registration Number Class Nature (figurative, nominative or mixed) Status Deposit/Registration Date CANAL ABERTO :10 Nominative Filed 12/01/1986 COS-EP 400 RC : Nominative Filed 09/14/1987 COS EEP CC TI : Nominative Filed 08/08/1991 COS EEP CC T : Nominative Filed 08/08/1991 COSIPISO : Nominative Register 06/24/1992 USIGALVE-EEP : Nominative Register 09/29/1993 USIGALVE-EEP-PC : Nominative Register 09/28/1993 USIGALVE-PLUS-EEP : Nominative Register 09/28/

113 USIGALVE-N : Nominative Register 02/06/1995 USIFIRE : Nominative Register 02/06/1995 AEROPORTO DA USIMINAS NCL(8 ) 39 Mixed Register 01/21/1997 COSEL : Nominative Filed 03/14/1997 COS EEP : Nominative Filed 03/14/1997 USICIVIL :15:00 Nominative Register 03/14/1997 USICIVIL : Nominative Register 03/14/1997 USIBRAS : Nominative Register 06/09/1997 INTERAÇÃO :10 Mixed Filed 12/22/1997 USICORT NCL(8 ) 06 Nominative Register 07/15/1999 USILIGHT NCL(8 ) 06 Nominative Register 10/08/1999 USILIGHT :20 Mixed Filed 10/08/1999 USICORT : Mixed Filed 10/15/1999 USISAMPLE NCL(8 ) 09 Mixed Filed 04/23/2004 USI-ABRA-L NCL(8 ) 06 Nominative Filed 03/08/2005 USI-AR-400-L NCL(8 ) 06 Nominative Filed 03/30/2005 USI-AR-360-L NCL(8 ) 06 Nominative Filed 03/30/2005 USI-AR-360-VO-Q NCL(8 ) 06 Nominative Filed 03/30/2005 USI-AR-360-Q NCL(8 ) 06 Nominative Filed 03/30/2005 USIMINAS NCL(8 ) 06 Mixed Filed 04/07/2005 USISAMPLE NCL(9 ) 09 Nominative Filed 04/24/2008 USIMINAS NCL(9 ) 06 Mixed Filed 02/04/2009 USIMINAS NCL(9 ) 06 Nominative Register 04/14/2009 UNIGAL USIMINAS NCL(9 ) 06 Mixed Filed 08/13/2009 Automotiva Usiminas NCL(9 ) 12 Mixed Register 08/13/2009 DUFER USIMINAS NCL(9 ) 06 Mixed Request waiting appeal 08/13/2009 Fasal Usiminas NCL(9 ) 06 Mixed Request waiting appeal 08/13/2009 UMSA , UMSA : Nominative Nominative Register extended 05/18/1995 Register extended 05/18/1995 UMSA : Nominative Register extended 05/18/1995 UMSA , UMSA :25-30 Nominative Nominative Register extended 05/18/1995 Register extended 05/18/1995 UMSA , Nominative Register extended 05/18/1995 USIMINAS MECÂNICA : Mixed Register extended 06/14/1995 USIMINAS MECÂNICA , Figurative Register extended 06/14/1995 USIMINAS NCL(9)06 Mixed Req.Com. 07/18/2011 USIMINAS NCL(9)06 Figurative Register 04/14/2009 SINCRON NCL(9)06 Nominative Req.Com. 08/04/2010 CICLO NCL(9)06 Nominative Req.Com. 08/04/2010 EZULT NCL(9)06 Nominative Req.Com. 08/04/

114 SETTER NCL(9)06 Nominative Req.Com. 08/04/2010 RAVUR NCL(9)06 Nominative Req.Com. 08/06/2010 ARPER NCL(9)06 Nominative Req.Com. 08/06/2010 EFFOR NCL(9)06 Nominative Req.Com. 08/06/2010 ARCTOS NCL(9)06 Nominative Req.Com. 08/06/2010 KORAGE NCL(9)06 Nominative Req.Com. 08/06/2010 Rios Unidos , Nominative Register extended 08/16/1977 TESMAF , Nominative Extinguished 04/29/1981 TESMAF , Nominative Register 07/26/1983 USISAÚDE NCL(8)36 Mixed Register 08/01/2006 USISAÚDE NCL(9)36 Mixed Notice granted 12/21/2009 COSIPA : Nominative Register 06/20/1956 COSIPA NCL(8)01 Nominative Register 02/04/1959 COSIPA , Mixed Register 06/21/1968 COSIPA :85 90 Mixed Register 06/21/1968 COSIPA , Nominative Register 02/16/1971 COS AR : Nominative Register 07/02/1982 COS AR COR : Nominative Register 11/10/1983 COS COR :20 30 Nominative Register 10/30/1986 COS RD :20 30 Nominative Register 10/30/1986 COS FIT , Nominative Register 03/30/1994 COSIPA , Nominative Register 07/28/1994 COSIPA :20-40 Nominative Register 07/28/1994 COSIPA :70 Nominative Register 07/28/1994 COSIPA :20-40 Mixed Register 07/28/1994 COSIPA , Nominative Register 07/28/1994 COSIPA , Mixed Register 07/28/1994 COSIPA :70 Mixed Register 07/28/1994 COSIPA , Mixed Register 07/28/1994 COS ALLOY :20 30 Nominative Register 04/10/1995 COS COR II , Nominative Register 04/10/1995 COSIPA :20-40 Mixed Register 06/09/1995 COSIPA :85-90 Mixed Register 06/09/1995 COSIPA , Mixed Register 06/09/1995 COSIPA , Mixed Register 06/09/1995 COSIPA :70 Mixed Register 06/09/1995 COSIPA : Mixed Register 06/09/1995 COSAÚDE , Nominative Register 03/13/1996 COS CF :20 30 Nominative Register 03/28/1996 COSIPA NCL(7) 16 Mixed Register 05/15/2001 COSIPA NCL(7) 39 Mixed Register 05/15/2001 COSIPA NA ESCOLA NCL(7) 41 Mixed Register 05/15/2001 COSIPA NCL(7)40 Mixed Register 05/15/2001 COSIPA NCL(7) 35 Mixed Register 05/15/2001 COSIPA NCL(7) 42 Nominative Register 05/15/

115 COSIPA NCL(7) 42 Mixed Register 05/15/2001 COSIPA NA ESCOLA NCL(7) 35 Nominative Register 05/15/2001 COSIPA NA ESCOLA NCL(7) 41 Nominative Register 05/15/2001 COSIPA NCL(7) 01 Mixed Register 05/15/2001 COSIPA NCL(7) 06 Mixed Register 05/15/2001 COSIPA NCL(7) 36 Mixed Register 05/15/2001 COSIPA NA ESCOLA NCL(7) 35 Mixed Register 05/15/2001 CHAPA NCL(7) 16 Nominative Register 07/26/2011 INTERAÇÃO COSIPA NCL(8) 16 Nominative Register 03/12/2004 Projeto Mantiqueira NCL(8) 41 Mixed Register 11/09/2006 Projeto Mantiqueira NCL(9) 41 Nominative Register 03/27/2007 SOLUÇÕES EM AÇO USIMINAS NCL (10)35 SOLUÇÕES EM AÇO USIMINAS NCL (10)40 Mixed Mixed Req.Com. 04/24/2012 Req.Com. 04/24/2012 MINERAÇÃO USIMINAS NCL (10) 06 Mixed Req.Com. 05/10/2012 i) Duration In Brazil, the property of a brand is legally secured only after validly registering it with the National Institute for Industrial Property ( INPI ). The owner is assured the right of exclusive use in all of the country s territory for 10 years as of the date the registration was conceded, a time-span that is extendable for successive terms of equal duration. During the registration process, the interested party merely has the expectation for the right of use of the deposited brands, with which it identifies its products and services. ii) Territorial reach The brands which the Company owns were registered in Brazil; no brands were registered abroad. iii) Events which may cause the loss of rights relative to such assets. The Company has no information regarding any event that could cause the loss of its intellectual property and its brands. iv) Possible consequences to the issuer of losing such rights The eventual loss of the rights over the brands registered by the Company and the Usiminas companies would signify the end of the right to exclusive use in the Brazilian territory. The Company and its controlled or related parties would face difficulties in restraining third parties from using identical or similar brands to sell their products. Additionally, if the Company or the Usiminas companies cannot prove they are the legitimate owners of the brands they use, it is possible that they would be subject to legal demands of a criminal or civil nature, for the improper use of the brand and the violation of third party rights. 115

116 As explained above, the Usiminas brand is one of the most valuable Company assets and for this reason, notwithstanding the loss of corporate identity, the loss of the rights over the brand would bear a relevant adverse effect on its businesses. Mining concessions Mining companies in Brazil may only exploit and extract minerals if they are granted a concession by the National Department of Mineral Production DNPM, an autarchy belonging to the Ministry of Mines and Energy of the Brazilian government. The DNPM concedes authorizations for mineral research to the requesting party for an initial term of three years. The term for these authorizations may be extended for an additional one to three years at DNPM s discretion and as long as the requesting party can prove that this extension is necessary for it to adequately conclude its research. The local research activities must begin in 60 days counted from the date of the formal publication of the authorization. After concluding the mineral research activities at the location, the company must submit a final report (favorable or unfavorable) to the DNPM. If the geological research reveals the existence of mineral deposits which can be economically exploited, the requesting company has one year (or longer, if approved by the DNPM) as of the date of approval of the final research report by the DNPM, in which to present a Plan for Economic Exploitation (PAE), which must include the engineering descriptive memorandum for the project which details the method of mining to be adopted, the dimensions of the equipment to be employed, economic aspects involved and the other legal requirements pursuant to the Mining Code. After the PAE has been approved by the DNPM and has been published in the Official Gazette of the Federal Executive, the entrepreneur must produce an Installation License furnished by the competent environmental agency within 180 days. When the mining concession has been officially published, the concessionaire must file for a Request for Taking Possession of the Mine, which identifies the limits of the concession in the field, and must initiate mining activities within six months. The concession granted by the DNPM is for an undetermined period and will last until all the mineral deposits have been mined to exhaustion. The extracted minerals, which are specified in the mining concession, belong to the mine s concessionaire. With the DNPM s prior approval, the concessionaire can transfer these rights to an unrelated third party which, in its turn, must prove it is qualified to own the mining concession. The holder should present yearly the Annual Mining Report, where must be presented the data of the mining, production, sale and taxes and of the Financial Compensation by the Mineral Resources Exploitation. If the AMR- Annual Mining Report - is not presented, may imply in penalties set forth in the mining code. The Company has several mining titles, among them, requirements for research, research authorizations and mining concessions, as follows: Description of DNPM authorizations Effectiveness Territory Mining concession in the Municipality of Itatiaiuçu/Itaúna DNPM process n /79 Undetermined Domestic Mining concession in the Municipality of Itatiaiuçu/Itaúna DNPM process n º /75 Undetermined Domestic Mining concession in the Municipality of Itatiaiuçu/Itaúna DNPM process n /59 Undetermined Domestic Mining concession in the Municipality of Itatiaiuçu/Itaúna DNPM process n /53 Undetermined Domestic Mining concession in the Municipality of Itatiaiuçu/Itaúna DNPM process n /53 Undetermined Domestic Mining concession in the Municipality of Itatiaiuçu/Itaúna DNPM process n /77 Undetermined Domestic Mining Concession in the Municipality of Itaúna/Mateus Leme - DNPM process n /73 Undetermined Domestic 116

117 Mining Concession in the Municipality of Itaúna - DNPM process n /81 Undetermined Domestic Mining Concession in the Municipality of Itaúna - DNPM process n /78 Undetermined Domestic Mining Concession in the Municipality of Itatiaiuçu - DNPM process n /63 Undetermined Domestic Mining Concession in the Municipality of Itatiaiuçu - DNPM process n º /74 Undetermined Domestic Mining Concession in the Municipality of Itatiaiuçu - DNPM process n /71 Undetermined Domestic Mining Concession in the Municipality of Itatiaiuçu /Mateus Leme - DNPM process n /78 Undetermined Domestic Mining Concession in the Municipality of Mateus Leme - DNPM process n /73 Undetermined Domestic Mining Concession in the Municipality of Mateus Leme - DNPM process n º /59 Undetermined Domestic Mining Concession in the Municipality of Itatiaiuçu - DNPM process n /60 Undetermined Domestic Mining Concession in the Municipality of Mateus Leme - DNPM process n /63 Undetermined Domestic Mining Concession in the Municipality of Itatiaiuçu - DNPM process n /80 Undetermined Domestic Mining Concession in the Municipality of Itatiaiuçu - DNPM process n /79 Undetermined Domestic Mining Concession in the Municipality of Itatiaiuçu - DNPM process n º /82 Undetermined Domestic Mining Concession in the Municipality of Mateus Leme - DNPM process n /73 Undetermined Domestic Mining Concession in the Municipality of Igarapé/Itatiaiuçu/Mateus Leme - DNPM process n /79 Undetermined Domestic Mining Concession in the Municipality of Mateus Leme - DNPM process n /81 Undetermined Domestic Mining Concession in the Municipality of Itatiaiuçu - DNPM process n /57 Undetermined Domestic Mining Concession in the Municipality of Itatiaiuçu - DNPM process n /59 Undetermined Domestic Request for mining in the municipality of Itatiaiuçu - DNPM process n /03 08/01/2009 Domestic Request for mining in the municipality of Itatiaiuçu - DNPM process n /06 06/20/2011 Domestic Request for mining in the municipality of Itatiaiuçu - DNPM process n º /07 06/20/2011 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/23/2014 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/23/2014 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/23/2014 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 10/03/2014 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/23/2014 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/23/2014 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/23/2014 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/23/2014 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 03/10/2014 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/23/2014 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/23/2014 Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/23/2014 Domestic Request for research in the Municipality of Rio Manso DNPM process n /10 Undetermined Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/02/2014 Domestic Request for research in the Municipality of São Joaquim de Bicas DNPM process n /10 Undetermined Domestic Authorization for research in the Municipality of Rio Manso DNPM process n /10 09/23/2014 Domestic Request for mining in the municipality of Itatiaiuçu/Itaúna - DNPM process n /88 02/23/1997 Domestic Request for mining in the municipality of Itatiaiuçu/Mateus Leme -DNPM process n /83 02/28/1989 Domestic Request for mining in the municipality of Itatiaiuçu - DNPM process n /85 11/13/1987 Domestic Request for mining in the municipality of Itatiaiuçu/Mateus Leme - DNPM process n /85 07/25/1989 Domestic Request for mining in the municipality of Itatiaiuçu/Mateus Leme - DNPM process n /81 04/20/1985 Domestic Request for mining in the municipality of Igarapé/Mateus Leme - DNPM process nº /78 05/16/2011 Domestic Request for mining in the municipality of Igarapé/Itatiaiuçu/Mateus Leme -DNPM process n /03 08/04/2008 Domestic Request for mining in the municipality of Igarapé/Itatiaiuçu - DNPM process n /77 12/10/1988 Domestic Request for mining in the municipality of Brumadinho/Igarapé - DNPM process n /82 08/03/1991 Domestic 117

118 Request for mining in the municipality of Brumadinho/Igarapé - DNPM process n /94 03/22/2009 Domestic Request for mining in the municipality of Brumadinho/Igarapé - DNPM process nº /88 09/28/2004 Domestic Request for mining in the municipality of Brumadinho/Igarapé - DNPM process n /82 02/10/1990 Domestic Request for research in the Municipality of Itatiaiuçu DNPM process n /2011 Undetermined Domestic Mining Concession in the Municipality of Prudente de Morais/MG - DNPM process nº 73/61 Undetermined Domestic Mining Concession in the Municipality of Pirapora do Bom Jesus/SP - DNPM process n /76 Undetermined Domestic Mining Concession in the Municipality of Salto de Pirapora/SP - DNPM process n /63 Undetermined Domestic Mining Concession in the Municipality of Salto de Pirapora/SP - DNPM process n /62 Undetermined Domestic Mining Concession in the Municipality of Salto de Pirapora/SP -DNPM process n /62 Undetermined Domestic Mining Concession in the Municipality of Salto de Pirapora/SP - DNPM process n /60 Undetermined Domestic iii) Events which may cause the loss of rights relative to such assets. The Company does not have information of any event that could cause the loss of its mining concession. iv) Possible consequences to the issuer of losing such rights If Usiminas were eventually to lose the concessions granted by DNPM it would be forced to interrupt the respective mining activities. The total shut-down of the enterprises would only occur after the loss of all of the mining concessions in the Company s name, being that the risk of losing the concessions is very small and would only happen if the Company were to abandon all of its obligations with DNPM and even then, only after administrative proceedings are initiated against the concession owner, which can still file an appeal. The loss of all of the concessions, a very small risk as commented above, can impact the cost of iron ore to the Company. The lack of the corresponding quantities of the raw material would in most probability have to be offset with market purchases at higher prices than those for the ore it produces itself. 118

119 c) The companies in which the issuer participates and about them, inform: Name Headquarter CVM code Subsidiary / Associated Holdi ng % Book Value of the Participation (PL) Market Value of the Participation Increase in value (devaluation) of the participation, according to book value Increase in Value or Devaluation of the participation, According to market value Dividends received 12/31/ /31/ /31/ /31/ /31/ /31/ /31/2010 Years 2012, 2011 and /31/ /31/ /31/2010 Automotiva Usiminas S.A. Pouso Alegre - MG No Subsidiary , , ,188 N/A 3,696 13, N/A 3,407 4, Cosipa Commercial Ltd. Cayman Islands No Subsidiary , N/A 21, N/A Cosipa Overseas Ltd. Cayman Islands No Subsidiary ,021 17,579 14,178 N/A 1,442 3,401 (5,428) N/A Fasal Trading Brasil S.A. Belo Horizonte - MG No Jointly Subsidiary 50 10,078 9,617 8,484 N/A 461 1,133 1,113 N/A (333) Modal Terminal de Graneis Ltda Itaúna - MG No Jointly Subsidiary N/A (2,280) N/A Soluções em Aço Usiminas S.A. Belo Horizonte - MG No Subsidiary , , ,001 N/A 5,243 (25,803) 7,437 N/A Unigal Ltda Belo Horizonte - MG No Jointly Subsidiary , , ,728 N/A (74,015) 81, ,125 N/A 175,000 17, Usiminas Commercial Ltd. Cayman Islands No Subsidiary , N/A 24, N/A Usiminas Europa S.A. Denmark No Subsidiary 100 1,588,086 1,962,977 1,626,209 N/A (374,891) 336, ,198 N/A Usiminas international Ltd. Luxembourg No Subsidiary , , ,868 N/A (182,695) 30,494 (7,962) N/A 207, Usiminas Mecânica S.A. Belo Horizonte - MG No Subsidiary , , ,824 N/A (149,455) 40,322 57,890 N/A 133,240 30,597 17,376 Usirrol Usiminas Court Tec. Em Acabamento Superficial Ltda Ipatinga - MG No Jointly Subsidiary 50 7,542 5,948 5,306 N/A 1, N/A MRS Logística S.A. Rio de Janeiro - RJ Associated ,027 6, N/A 603 6,424 (224,211) N/A ,695 Terminal de Cargas Sarzedo Ltda. Sarzedo - MG No Associated N/A (4,002) N/A ,678 Usifast Logística Industrial S.A. Betim - MG No Associated ,706 N/A 0.00 (10,706) 3,788 N/A Codeme Engenharia S.A. Betim MG No Associated ,593 38,290 37,785 N/A 7, ,785 N/A 1, MetForm S.A. Betim - MG No Associated ,956 17,840 16,291 N/A (6,884) 1,549 16,291 N/A 4,541 1, Metalcentro Ltda. Santa Luzia - MG No Subsidiary N/A N/A Rios Unidos Logística e Transportes de Aço Ltda. Itaquaquecetuba - SP No Subsidiary 100 9,459 10,206 11,432 N/A (747) (1,226) 11,432 N/A Mineração Usiminas S.A. Belo Horizonte - MG No Subsidiary 70 3,623,069 3,227,712 2,885,532 N/A 395, ,180 2,885,532 N/A 58, ,598 30,865 Usiminas Participações e Logística S/A São Paulo - SP No Subsidiary ,278 45,944 38,622 N/A 5,334 7,322 38,622 N/A 2,883 2, Observation N/A signifies: Not applicable, the shares issued by the company are not tradable in organized markets. In 2010, the companies Modal Terminal de Graneis Ltda, MRS Logística S.A and Terminal de Cargas Sarzedo Ltda, had their participation transferred to Mineração Usiminas S/A. 119

120 (iii) Activities of the Controlled Companies Automotiva Usiminas S.A. headquartered in Pouso Alegre, State of Minas Gerais, industrial production and sales of stamped steel parts. Cosipa Commercial Ltd. headquartered in Cayman Islands, was incorporated in April Its purpose is to optimize foreign funding opportunities. Cosipa Overseas Ltd. headquartered in Cayman Islands, was established in February 1994, its purpose is to optimize the Company s foreign trade operations to facilitate purchases of raw material, exportation of metallurgical products and also, acting as a means to procure funding in the international market, in obtaining financing for the Company s investments. Fasal Trading Brasil S.A. its primary activity is to promote negotiations as an exclusive trading company for the metallurgical products sold abroad, servicing the markets in Latin America, Central America, Europe and others. Fasal Trading Brasil S.A. has participation in Fasal Trading Corporation, a company incorporated in 2001 in the United States of America, which engages in promoting trades as an exclusive Trading Company of Usiminas steel products abroad, serving the markets of Latin and Central America, Europe and others. Modal Terminal de Granéis Ltda. headquartered in Itaúna, Minas Gerais, its business purpose is to operate highway and railway cargo terminals, store and handle minerals and metallurgical products and coordinate highway cargo transportation. Soluções Usiminas S.A. headquartered in Belo Horizonte, State of Minas Gerais, it has 10 industrial units, strategically located all over the country; it transforms metallurgical products and acts as a distribution center. Soluções Usiminas supplies the market with differentiated and greater value-added products, concentrating efforts on small and medium-size customers. Unigal Usiminas Ltda. headquartered in Belo Horizonte, State of Minas Gerais, it is a joint venture created in 1998 by Usiminas (70%) and by Nippon Steel & Sumitomo Metal Corporation (30%); it primarily transforms cold rolled coils into hot dip galvanized coils for the automotive industry. Unigal s plant is located in Ipatinga, Minas Gerais and has the installed capacity to produce 1,030 thousand tons of steel per year. Usiminas Commercial Ltd. headquartered in Cayman Islands, created in 2006, it obtains foreign funding for the Controlling party. Usiminas Europa S.A. created in 2005, headquartered in Copenhagen, Denmark, its main purpose is to hold the investments in the wholly owned subsidiaries Usiminas Galvanized Steel ApS ( Usiminas Galvanized ) and Usiminas Eletrogalvanized Steel ApS ( Usiminas Eletrogalvanized ), whose main activity is to foster the sales to clients abroad, respectively, of galvanized steel and electro galvanized steel produced by Usiminas. Usiminas International Ltd. headquartered in Luxembourg, created in 2001, it holds the Company s investment in Usiminas Portugal Serviços de Consultoria Ltd. ( Usiminas Portugal ) located on the Madeira Island, which purpose is to hold the Company s foreign investments. On November 30, 2012 Usiminas Portugal was closed down. Usiminas Mecânica S.A. headquartered in Belo Horizonte, State of Minas Gerais. Its primary activity is to manufacture equipment and facilities for the following sectors: steel production, petroleum, petrochemicals, hydroelectric power, mining, railway transportation, 120

121 cement, paper and cellulose, parts recovery, rolls and cylinders for heavy industry, stamping and cutting of sheets for manufacturing serial auto parts, stationary dump bodies and environmental control. Usiroll Usiminas Court. Tecnologia em Acabamento Superficial Ltda. headquartered in Ipatinga, State of Minas Gerais, renders services primarily for reconditioning cylinders and rollers. MRS Logística S.A. headquartered in Rio de Janeiro, MRS renders services in railway transportation and logistics in the southeastern region of Brazil. The Company s participation in MRS represents a strategic investment to optimize the supply of raw material and the transportation of finished products and of third party cargoes, especially regarding the operation of the Company s maritime terminals. Terminal de Cargas Sarzedo Ltda. headquartered in Sarzedo, Minas Gerais, it stores cargoes in general and administers the highway and railway cargo terminals, deposits and related services. Usifast Logística Industrial S.A. is a multi-modal logistics operator with nationwide activities. Usifast also possesses vast experience in port logistics, terminal administration and in the management of custom clearance stations - dry ports offering Industrial Dry Port services. Codeme Engenharia S.A. headquartered in Betim, State of Minas Gerais, engages in the construction of steel structures, mainly industrial buildings, commercial sheds and buildings of multiple floors. Codeme has plants in Betim (Minas Gerais) and in Taubaté (São Paulo). MetForm S.A. headquartered in Betim, State of Minas Gerais, manufactures and sells metallic tiles, steel decks and roofing systems. Metform has plants in Betim (Minas Gerais) and in Taubaté (São Paulo). Metalcentro Ltda. engages in the construction of steel structures. Rios Unidos Logística e Transportes de Aço Ltda located in Guarulhos, State of São Paulo, renders highway transportation services. Mineração Usiminas S.A headquartered in Belo Horizonte, State of Minas Gerais, it is a partnership between Usiminas (70%) and Sumitomo Group (30%), whose main activity is the extraction and processing of iron ore as pellet feed, sinter feed and granulated. Most of its production, extracted from the mines of Serra Azul region, is addressed for the consumption of Usiminas steel plants. MUSA holds interest of 50% in the jointly controlled subsidiary Modal Terminal de Granéis Ltda. ( Modal ), headquartered in Itaúna, Minas Gerais, whose main activity is the operation of road and railway load terminals, storage and handling of ore and steel products and road transportation of load. It also holds interest of 22.22% in the associated Terminal de Cargas Sarzedo Ltda. ( Terminal Sarzedo ) headquartered in Sarzedo, Minas Gerais, whose main activities are the storage of load, operation of road railway terminal, deposit and related services. Additionally, it fully controls Usiminas Participações e Logística S.A. ( UPL ) headquartered in São Paulo, Capital, whose main activity consists, solely, in the direct ownership of shares and other securities issued by MRS Logística S.A.. In 2011, MUSA acquired interest in Mineração Ouro Negro S.A. ( Mineração Ouro Negro). 121

122 Usiminas Participações e Logística S.A. headquartered in São Paulo, Capital, it consists exclusively in the possession of direct form, of stocks and other marketable securities issued by MRS Logística S/A. (xii) reasons for the acquisition and maintenance of participation in controlled / related entities: In addition to the reasons described in the above item, The Company acquired/incorporated or maintains participation in the controlled or related companies described above with the purpose of segregating capital assets and of exploring different market segments and opportunities, with the consequence of expanding its line of business according to those that the companies described above engage in Other information that the Company deems relevant. The company understands that there is no further relevant information to be disclosed in this item 9 of the Reference Form. 10. Comments from the directors The Directors should comment on: a) General financial and net worth situation The Directors understands that the Company s financial and new worth situation is sufficient for it to comply with its short and medium-term obligations. Its working capital is adequate for current requirements and its cash resources are sufficient to meet the funding needs of its activities and to cover cash requirements over the next twelve months, at least. b) Capital structure and the possibility of payment of shares or quotas The Directors understands that the present capital structure, especially measured by the net debt-to-equity ratio, is conservative in terms of leverage, as seen next: In thousands of reais R$ thousand Net debt 3,727,539 3,926, Net equity 18,513,073 19,014,205 19,029,437 Leverage

123 Year-end net debt for fiscal years 2010, 2011and 2012 was R$3,6 million, R$3,9 million and R$3,7 million respectively. The net debt-to-ebitda ratio was 4.7 times at December 31, 2012, 3.1 times at December 31, 2011 and 1.3 times at December 31, i. Redemption Hypotheses The Company s By-laws do not contemplate this situation and so the dispositions of the Law of Corporations must be observed in the resolution of eventual issues. ii. Formula for calculating redemption value In the event of redemption, the Company shall adopt a formula pursuant to legal dispositions. c) Capacity to pay in relation to the assumed financial commitments At 12/31/2012, the Company had cash of R$4.7 billion (R$5.2 billion at 12/31/2011 and R$4.6 billion at 12/31/2010). Its debt presents an average term of 6 years in 2012 (4 years in 2011 and 2010). The debt concentration the short term at 12/31/2012 is 20% of total debt (13% in 2011 and 11% in 2010). Debt profile - Consolidated The Company has financial capacity and credit lines to renew its debts extending the payment terms if necessary. 123

124 d) Sources of funding for working capital and for investments in used non-current assets The Company adopts a minimum cash balance policy to assure a comfortable liquidity level. Financing agreements are entered into bearing in mind an investment plan to be concluded in future years. This conservative policy aims at avoiding urgent funding requirements for working capital, seeing that loan operations are contracted within a comfortable lead time so that the best market moments can be capitalized on. e) Sources of funding for working capital and for investments in non-current assets which the Company intends to use to cover lack of liquidity As described above, the Company s policy is to maintain a comfortable cash balance by entering into long-term financing agreements. Moreover the Company possesses a US$ 2,0 million revolving credit line with the BNDES (National Development Bank). f) Debt levels and the features of such debt, yet describing: i. Relevant loan and financing agreements At 12/31/2012, the Usiminas Companies had the following relevant financing debt: 1) Loan agreement between Usiminas and BNDES in the amount of R$ 493 million to finance the construction of the Hot Rolled Coils 2 in Cubatão, with maturity at 01/15/ ) Credit limit from BNDES to Usiminas in the amount of R$2,0 billion (of which R$ 287 million has already been used), available for withdrawal until 2021 in order to be put into several projects in Ipatinga, Cubatão and in the subsidiaries. 3) Loan agreement between Usiminas and o KfW in the amount of EUR 27.8 million falling due in 2015, in order to finance the construction of the Continuous Casting of Cubatão. 4) Loan agreement between Usiminas and JBIC and Japanese commercial banks in the amount of US$100 million falling due in 2016, to finance the construction of Thermo electric Plant of Ipatinga. 5) Loan agreement between Usiminas and JBIC and Japanese commercial banks in the amount of US$240 million falling due in 2017, to finance the construction of Ipatinga Coke Plant. 6) Loan agreement between Usiminas and JBIC and Japanese commercial banks in the amount of US$550 million falling due in 2018, in order to finance the construction of Hot Rolled Coils 2 of Cubatão. 7) Loan agreement between Usiminas and JBIC and Japanese commercial banks in the amount of US$120 million falling due in 2021, available for withdrawal, in order to finance the construction of Heavy Plates Laminator. 8) Export pre-payment of Usiminas with Credit Suisse in the amount of US$70 million falling due in 2014, to export steel products. 9) Export pre-payment of Usiminas with a union of banks in the amount of US$ 600 million falling due in 2015, to export steel products. The contract was settled in March

125 10) Export Credit Bill with Banco do Brasil in the amount of R$300 million falling due in 2013, for working capital. The contract was settled in March ) Export Credit Bill with Banco do Brasil in the amount of R$1 billion falling due in 2018, for working capital. 12) Export Credit Bill with Banco do Brasil in the amount of R$1 billion falling due in 2015, for working capital. 13) Industrial Credit Bill with Banco do Brasil in the amount of R$400 million falling due in 2016, for working capital. 14) Export Credit Bill with Bradesco in the amount of R$49 million falling due in 2017, for working capital. 15) Issuance of Eurobonds through the subsidiary Cosipa Commercial in the amount of US$ 200 million falling due in 2016, in order to fulfill with the different investments plans of the company. 16) Issuance of Eurobonds through the subsidiary Usiminas Commercial in the amount of US$ 400 million, falling due in 2018, in order to fulfill with the different investments plans of the company. 17) Issuance of Usiminas debentures in the amount of R$ 500 million falling due in 2013, in order to fulfill with the different investments plans of the company. The contract was settled in February ) Loan agreement between the subsidiary Unigal and JBIC and Japanese commercial banks in the amount of US$ 140 million falling due in 2018, to finance the construction of line 2 of Unigal HDG. 19) Loan agreement between Usiminas and BNDES in the amount of R$318 million (of which R$ 297 million has already been used), to finance the construction of Hot Rolled Coils 2 in Cubatão, available for withdrawal until Nov/13. 20) Credit limit of Usiminas with BNDES of R$400 million, already disbursed. 21) Credit limit of Cosipa with BNDES of R$500 million, already disbursed. ii. Other long-term relationships with financial institutions At 12/31/2012, the Company has a revolving credit line in the amount of US$375 million with a union of banks that was available for withdrawal until This operation has been cancelled by the Company in March, iii. Degree of subordination among the debt At 12/31/2012, the Company has only one subordinated debt, that being debentures issued in the amount of R$500 million, due in 2013, according to item 17 related in the sub item f.i above. 125

126 iv. Eventual restrictions to the issuer, especially in relation to debt levels and the taking out of additional debt, distribution of dividends, sale of assets, issuing new securities and sale of corporate control The restrictions to the Company in financing agreements are as follows: - limitation in the sale of fixed assets, in relation to the value of the consolidated fixed asset balance, related to the agreements of the items 4,5,6,7,9 and 18, described in sub item f.i above. - limitation in the sale of receivables generated by export in relation to the net export revenue; related to the agreements of items 4,5,6,7,9 and 18 described in sub item f.i above. - limitation in the amount of Total Debt in relation to EBITD, related to the agreements of items 4,5,6 and 18, described in sub item f.i above. - limitation in the amount of Total Debt in relation to Total Debt added to Net Equity; related in the agreements of items 4,5,6 and 18, described in sub item f.i above. - limitation in the amount of Net Debt in relation to EBITDA, related to the agreements of items 1,2,7, 9, 10,11,12,13 and 17 described in sub item f.i above. - limitation in interest costs in relation to EBITD, related to the agreements of items 4,5,6,7,9,17 and 18 described in sub item f.i above. - restrictions to alterations in shareholder control; related to agreements of items 1,2,3,4,5,6,7,8,9,14,16,17 and 18 described in sub item f.i above. g) Limits in the use of financing already contracted At 12/31/2012, the Company still had a total of R$ 1.8 billion and US$ 120 million in available credit lines with financial institutions to comply with the additional disbursements in progress, which may be used whenever necessary, detailed as follows: - Usiminas credit limit with BNDES in the amount of R$1,7 billion to be disbursed, according to 2 of sub item f.i above. - Usiminas loan contract with BNDES in the amount of R$21 million to be disbursed, according to item 19 of the sub item f.i above. - Usiminas loan contract with the JBIC and Japanese commercial Banks in the amount of US$120 million: US$120 million to be disbursed, according to item 7 of sub item f.i above. In addition to the above contracts, the Company has a revolving credit line of US$375 million available for withdrawal until 2016, as informed in item f.ii above. h) Significant changes in each of the items of the financial statements Significant changes to the financial statements are commented in item 10.2 below. 126

127 10.2. The directors should comment on: a) Results of the issuer s operations, especially: i. Description of any important components of revenue Usiminas income is primarily generated by the sale of steel products such as heavy plates, hot rolled sheets, cold rolled sheets, slabs, galvanized items among others. Usiminas also reports revenue generated by mining, steel processing and capital assets in its consolidated financial statements from steel processing, capital goods and mining. The revenue of these units is mainly generated from: Mining: Sale of iron ore. Steel processing: Distribution of steel products, in addition to painted parts and cabins for the automotive sector. Capital goods: Manufacture of Metallic Structures, Industrial Equipment, Foundry and Railway Wagons and Services of Industrial Assembly. ii. Factors that materially affect the operating results In 2012, the consolidated net revenue reached R$12.7 billion, 6.8% above the 2011 net revenue of R$11.9 billion, mainly arising from the higher volume of steel sold in the Steel Plant unit. In the domestic market this revenue was lower than 2011 at 2.3%, and in the foreign market the performance was higher than 2011 at 66.9 %. In the Mining unit, net revenue decreased 7.8%, reaching R$0.9 billion against R$1.0 billion in 2011, due to lower prices of iron ore in the global market in In the Steel processing unit, net revenue was R$2.1 billion, 3.3% lower than 2011, mainly due to the lower volume of sales by Soluções Usiminas. In the capital goods unit net revenue was R$1.0 billion, 28.3% lower than 2011, impacted by the reduction of projects in portfolio. In 2011 the consolidated net revenue reached R$11.9 billion, 8.2% lower than 2010 which amounted to R$13.0 billion, mainly arising from the lower volume sold. In the domestic market, this revenue was lower than 2010 at 6.1%, and in the foreign market the performance was lower than 2010 at 8.0%. In 2010, when compared to 2009, net revenue was higher at 19%, increasing from R$10.9 billion in 2009 to R$13.0 billion in 2010, mainly due to the larger volume sold and increase in the average prices practiced in the period. In the domestic market, net revenue was 21.18% higher than 2009, and in the foreign market the performance was also positive, at 6.14%. In the domestic market, the products with highlighted revenue generation in 2012 were the hot and cold rolled coils, heavy plates and hot galvanized and both in 2011 and in 2010 were the hot and cold rolled coils and heavy plates. In the foreign market, in these same periods the segments presenting growth in revenue were the heavy plates and laminated, in addition to the plates in

128 b) Variation in revenue attributable to price modification, exchange rates, inflation, volume changes and the introduction of new products and services. i. Volumes of sales In the accumulated for 2012, physical sales of steel products totaled 6.9 million of tons, 16.3% higher than the volume sold in 2011 of 5.9 million of tons. The mix of sales destination was 73% in the domestic market (5.0 million of tons) and 27% in the foreign market (1.8 million of tons), with the exports volume 75.7% higher than In the Mining unit the total sales volume recorded was 6.1 million of tons, 9.9% higher when compared to In the accumulated for 2011, physical sales totaled 5.9 million tons, 10.6% lower than the volume sold in 2010, of 6.6 million tons. The mix of sales destination was 82% in the domestic market and 18% for the foreign market corresponding to 1.0 million tons, 36.7% lower than the 2010 exports. In the Mining Unit, total volume of sales recorded was 5.6 million of tons, lower than 2010, mainly due to the unavailability of port for export. In 2010, physical sales were 17% above the 2009 sales. The mix of sales destination was 75% in the domestic market and 25% of sales to the foreign market, reaching the volume of 1.7 million tons, 4% higher than the 2009 exports. Sales distribution per Product - Consolidated Thousand tons Var. 2012/2011 TOTAL PHYSICAL SALES 6, % 5, % 6, % 16% Heavy Plates 1,460 21% 1,491 25% 1,444 22% -2% Hot rolled Sheets 2,074 30% 1,738 29% 2,008 31% 19% Cold Rolled Sheets 1,483 22% 1,474 25% 1,781 27% 1% Electro galvanized Prods % 211 4% 227 3% -33% Hot Dip Galvanized Products % 500 8% 449 7% 42% Processed Products 169 2% 147 2% 152 2% 15% Slabs % 355 6% 504 8% 138% 128

129 The main exports destination in 2012 was as follows: ii. Sales prices The sales prices of steel products during 2012 were affected by the fierce competition between local plants. The devaluation of the Brazilian currency made that the differential of prices between the domestic steel and the imported one in Brasil remained in less attractive levels to the imports, which, however, are still high, pressing the domestic prices. The implementation of defense trade measures with the increase of import tax for items of heavy plates and hot laminated lines occurred only in October 2012, with its impact limited to Net revenue per ton of steel products in 2012 was lower at 4.86%, affected by the higher share of sales of the foreign market and the mentioned local competition. c) Impacts caused by inflation and by variation in prices, cost of primary supplies and products, exchange rates and interest rates to the operating and financial results of the issuer i. Cost of Products and Services Sold In 2012 the consolidated cost of sales (CPS) totaled R$12.0 billion, 13.2% higher than 2011 of R$10.6 billion. The main units explaining the CPS variation were: (a) in the Steel unit the increase was of R$1.3 billion, mainly due to the higher volume of steel sold (16.3%), to the process of unstocking of steel products manufactured in prior periods with higher prices of raw materials, to higher costs due to higher prices of raw material added to the foreign exchange effect of real devaluation before the US dollar on imported inputs and the inflation on the inputs supplied in the country including manpower, and the costs with the readjustment to the employees chart; (b) in the Mining unit, CPS increased at 72 million, mainly due to the increase of 9.9% in the sales volume. 129