1313ADITIONADITION

MAY | 2010MAY | 2010

Brazil Steel Institute | Phone (+55 21) 3445-6300 | www.acobrasil.org.br | acobrasil@acobrasil.org.br

More than 3.5 thousand people attended the

Brazilian Steel Meeting – 21st Meeting & ExpoAço

2010, organized by the Brazil Steel Institute between

April 14-16, 2010, at Transamérica Expo Center, in São

Paulo. Besides the lectures and the 3,000 m² occupied

by 50 stands, participants could visit the Steel Village,

an additional 1,400 m² space with full-size replicas of

steel applications in civil construction. The opening

ceremony had the participation of Brazil President Luiz

Inácio Lula da Silva; Minister of the Cities Marcio Fortes

de Almeida; São Paulo State Governor Alberto

Goldman; São Paulo City Mayor Giberto Kassab; Pará

State Governor, Ana Julia de Vasconcelos Carepa;

Senator Aloizio Mercadante; Congressman Leonardo

Quintão, representing the President of the House of

Representatives, and the Secretary of Geology and

Mining from the Ministry of Mines and Energy, Claudio

Scliar. Minister of Finace Guido Mantega attended the

event's closing ceremony.

President Lula opened ExpoAço, visited the Steel

Village and spoke for the approximately 800 congress

participants present. “Steel houses are ingenious. It is a

new possibility, and I think the Steel Village should be

presented throughout the country to provide an

alternative for the people, they have to see this. Let's

put the alternatives to the people and stimulate

competition”, said the President who, on the same

occasion, received from IABr the Steel Personality

awards, an acknowledgment for the countercrisis

measures taken by his Administration, especially relief

of tax burdens, mostly shifted to steel-intensive sectors,

allowing recuperation of the steel industry's domestic

sector and activities at a stronger pace than observed in

most of the world.

Civil construction was another sector cited by

President Lula as he mentioned the importance of

investments for the Country's growth. “We all learned

our lessons, through the hard times we lived, and little by

little Brazil got things right to reach the point where we

stand today. This is not the work of one administration,

or two, it is a historical process, you assess the

accumulated errors, accumulated certainties”, said Lula,

adding that “Brazil has a sound economy and needs to

grow”.

- It is no longer possible to play with Brazil. We are

tired of playing and irresponsibility. For all that,

congratulations to all of you and I hope the Steel Village

reaches large housing projects in our Country, so you can

build more blast-furnaces and we can close in on China

in steel output – completed Lula.

Then-President of the Brazil Steel Institute, Flávio

Azevedo, stated in his speech that the Brazilian steel

industry is working towards further promoting the use of

steel, particularly in civil construction, both in residential

construction and in infrastructure in general. “The sector

is thus following an enhanced trend in the global

steelmaking scenario and associating strongly to

governmental projects aimed at improving productivity

in civil construction through larger

u s e o f i n d u s t r i a l i z e d

cons t ru c t i on” , added

Azevedo, with a positive

tone.

Nearly 3.5 thousand people visited ExpoAço, the 3,000 m²

trade show promoted by the Brazil Steel Institute, which

gathered 50 Brazilian and foreign companies between April

14-16 at Transamérica Expo Center, in São Paulo. Exhibitors

came from countries such as Argentina, Chile, France,

Germany, India and Switzerland. The show occurred parallel to

the 21st Brazilian Steel Meeting, organized by the IABr.

ExpoAço also promoted the first meeting among important

class entities (INDA, SICETEL, ABIMAQ and ABDIB) from the

metal-mechanic sector, a clear sign of approach and

collaboration in the steel production chain. Visitors included

over 800 executives from several areas such as steelmaking,

distribution and logistics, mining, government, consulting,

financial institutions, industrial associations, steel suppliers and

consumers.

The Steel Village, an additional space of ExpoAço 2010, with

1,400 m² destined to present steel applications for civil

construction, was a success at the event. The Village was designed

to present full-size replicas of houses, buildings, urban equipment,

drywall systems, metallic fencing, steel frames, roofing and catwalks.

Businessmen, construction companies, engineers and architects, besides students,

could know better steel construction alternatives. Professors of Universities such as PUC,

USP and Mackenzie used the Village's structure to give classes on steel construction.

President Lula opens Brazilian Steel Meeting

ExpoSteel gathers nearly3.5 visitors in São Paulo

Steel Village presents solutionsfor civil construction

ExpoSteel 2010

1

Executives at the opening cocktail Over 3.5 thousand people visited ExpoAço Professionals had a great opportunity for networking

Structures may serve as leisure areasStudents learn about the use of steel in construction Urban furniture may also be made of steel

N E W S

BRAZIL STEEL

Brazilian Steel Conference Brazilian Steel Conference

Brazil Steel Institute changesits governance system

During the 21st Brazil Steel Meeting & ExpoAço

2010, the Brazil Steel Institute (IABr) announced

changes in its governance system at the ceremony

held on April 15. The presidency of the Institute is

now occupied full-time by Marco Polo de Mello

Lopes, until the Executive Vice-President. André B.

Gerdau Johannpeter (Gerdau) and Albano Chagas

Vie i ra (Votorant im

Siderurgia) became

respectively President

and Vice-President of

t h e B o a r d o f

A d m i n i s t r a t i o n ,

integrated by the

Presidents of the

a s s o c i a t e d

companies, which is

i n c h a r g e o f

e s t a b l i s h i n g t h e

Inst i tute's act ion

p o l i c i e s a n d

s t r a t e g i e s . T h e

President and Vice-President of the Board of

Administration will remain to serve a two-year term.

The new governance system is part of the

modernization strategy adopted by the Institute,

indicated after an image survey carried out in

2006/2007. The results showed an inaccurate

perception regarding the industry's actual

characteristics, its importance in the national

development process, as well as the relevance of steel

as a key raw material for several segments in the

transformation industry.

Last year, the Institute changed its name and visual

idendity, becoming Brazil Steel Institute. The new

name sought a better

identification of its

activities with the

products the sector

manufactures and

delivers to the market

(steel) rather than the

whole set of processes

character iz ing the

activity (steelmaking).

At the same time, the

I A B r h a s b e e n

intensifying actions in

the sense of getting

closer to public and

private entities, so as to

reduce the gap between the sector's identity and

image. Thus, the Institute becomes more agile in

supporting the sector and enhances its position as

legitimate representative in discussions regarding the

future of the steel industry in Brazil.

Albano Chagas Vieira, André B. Gerdau Johannpeter,Flávio Azevedo and Marco Polo de Mello Lopes

Challenges for steel industry expansionand Brazil's growth are discussed

2 7

Guido Mantega, Finance minister

Brazilian steel production should grow more than 24% in this year

Despite delays arising from the global economic crisis, theBrazilian steel industry should maintain greenfieldprojects regarding the construction of mills to producesemi-finished goods for exportation. The issue wasdiscussed at the last panel held on April 15, during theBrazilian Steel Congress, under the name of “GlobalSemi-Finished Market – Perspectives for Brazil”. The panelwas coordinated by Albano Chagas Vieira, Director-Superintendent of Votorantim Siderurgia; as lecturer,Joachim Schröder, CEO of Research & Consulting GroupAG; and participating in the debates, José Carlos Martins,Executive Director of Ferrous Products at Vale; MarcoAntônio Castello Branco, President of Usiminas; andBenjamin Mário Baptista Filho, Director-President ofArcelorMittal Tubarão – Aços Planos.

The main points discussed were:- The largest part of the semi-finished market comprisesinter-company operations, and this trend should maintain(e.g. CSA - Thyssen);- Ore and coal investments are of US$ 1 to US$ 1.5 foreach US$ 1 in revenues; in the case of steel, they are ofUS$ 2 to US$ 2.5 for each US$ 1 in revenues;- Investment costs for a greenfield plant are of US$1,200/t;- Internal return rate, currently at 6%, do not justifyinvestments;- Brazil has gotten expensive, with currency valuation of32% for a 22% IGP over the past 5 years. Taxation of 16%over investments;- Taxation system and credit conditions must be improved.

On April 16, the last panel, “World Economy / Brazil'sChallenges for Growth”, had lecturer Dani Rodrik,professor of international economic policy - HarvardUniversity. Panel participants were Delfim Netto,economist and ex-Minister of Finance; Jorge GerdauJohannpeter, general coordinator of Ação Empresarialand Armando Monteiro, President of CNI, undermoderation of journalist Miriam Leitão. The main pointswere the following:- Investment costs are high;- Brazil has high taxation before production starts;- Brazil is one of the few countries that export taxes;- There is exceeding production capacity in the world'ssteel sector;- Brazil's Achievements:Institutional: democracy, independent judicial system,free press, controlled inflation, fiscal responsibility act,autonomous Central Bank.In the economy: macro-economic stability, transparentGovernment actions, better integration to globaltrade/finance flows, sound financial system and lowervulnerability to foreign crisis.

Challenges for Brazil:- Redefine the role of the State in the Brazilian economy;- Reinforce industrial policies with priority to horizontalactions;- Attract private capital into infrastructure;- Essential reforms – tax system, concentrating efforts onICMS;- Improvements in education;- Tax policy must be strict especially regarding containingcurrent expenses to increase Brazil's domestic savings, stillrather low.

CHALLENGES

- The Asian Model may not serve as reference for theBrazilian economy.

The event was closed by Finance Minister GuidoMantega. He stated that the effects of the globalcrisis on the steel industry are being overcome,especially due to strong growth perspectives for

domestic consumption. Mantega also spoke aboutthe increase in iron ore prices and stated that it is notworth speculating over whether such increase willinfluence inflation rates. “We must evaluate theweight of metal prices in the costs of automotiveand white goods industries. Maintaining inflationunder control is a matter of honor for Brazil”, addedthe Minister, who also visited the Steel Village.

CLOSING SESSION

Brazilian steelmakers show optimism

The tone of debates at the 21st Brazilian SteelMeeting was optimistic. During the event, the BrazilStee Institute announced that Brazil's crude steeloutput in the first quarter of 2010 was of 8.0 Mt, up59.3% from the same period last year and 1.1%lower than the immediately previous quarter. Nationalapparent consumption of steel products inMarch/2010 was 2.4 Mt, totaling 6.3 Mt in the firstquarter of the year. These figures represent increasesof 77.6% and 73.0%, respectively, from the sameperiod of last year.

The good results of the first quarter confirmedBrazil steelmakers' positive view, still recovering from

the global economic crisis. Forecast steel output forthis year is 33.2 Mt, 25.1% up from last year. Sales,whose results were strongly affected by the 2008crisis, are forecast to present a 25% increase.

DOMESTIC SALESBetween January and March of this year, domestic

sales amounted to 5.0 Mt of steel products, a 2.9%increase compared to the last quarter of 2009. Whencompared to the same period of the previous year, theincrease is of 62.0%. Such results demonstrate thesuitability of Government actions to stimulate growthrecovery and tackle taxation, logistics, bureacracy andother problems.

- GDP, steel consumption and economicdeveloment are indissociable. Our consumption percapita has been stagnated for 26 years. We need togrow - stated Marco Polo de Mello Lopes, President ofIABr innaugurated during the Brazilian Steel Meeting.

Exportations of steel products in the 1st quarter ofthis year reached 2.0 Mt, generating US$ 1.2 billion.The forecast for 2010 is of exportations of 11.0 Mt ofsteel products.

- Among the sector's growing concerns are fallingexportations and increasing importations of somesteel-intensive goods – said Flávio Azevedo (V&M doBRASIL), at a Press Conference. “It is a scenario thatdemands attention and is associated to exchangerates and, in part, to uneven competition conditionsagainst foreign companies”, he added, mentioningthat sustained growth will take the Country beyond aconsumption per capita of 100 kg/inhab./y towards300 kg – 400 kg, a characteristic of developedeconomies.

André B. Gerdau Johannpeter (Gerdau), who tookoffice as President of the Board of Administration of

the IABr during the event, reinforced that the Braziliansteel industry is prepared to undertake economicgrowth challenges. “Brazil is capable today ofproducing 42.1 Mty of crude steel. This capacity willreceive, this year, an additional 6 Mty from new mills.Our current production capacity is approximately100% higher than the domestic demand forecast forthe year and enables the sector to maintain its highexporting position. Nevertheless, we will keepinvesting", said Johannpeter.

Forecast expansion projects comprise R$ 71.6billion, which should increase the Country'sproduction capacity to approximatly 77 Mty by 2016.Resume of expansion projections demonstrates thesteel industry's belief in Brazil's sustainable growthand reinforces its willingness to remain supplying infull the domestic market and expand its participationin international markets.

33 36

Brazilian and international discuss thefuture of the steel industry

Approximately 800 people attended the debates duringthe Brazilian Steel Congress, organized by the Brazil SteelInstitute between April 14-16 at the Transamérica ExpoCenter, in São Paulo. Lectures were divided in four panels:Global Steel Industry Trends, Large Consuming SectorTrends, Semi-Finished World Market and Brazil's GrowthChallenges.

The CEO of ArcelorMittal, Lakshmi Mittal, opened thedebates on April 15, stating that “the steel industry has abright future in Brazil”. The executive said that ArcelorMittalis committed to development and to the investmentsforecast for Brazil in forthcoming years, amounting to R$ 30billion. Lakshmi Mittal criticized Brazil's lack of investment ininfrastructure over the two past decades and said he waspaying attention to some points of the Brazilian economy,especially inflation, exchange rates, competitiveness andcost of investments.

- The sector's greatest challenge is still the high cost ofore – he said, adding that the company's plans for Brazilinclude expanding its ore production, doubling the steel millin Monlevade (MG) and the Tubarão Mill. After Mr. Mittal'slecture, the general manager of the World Steel Association,Ian Christmas; specialized professor in Chinese economy -University of Califórnia, Barry Naughton; the director ofBrookings-Tsinghua Center, Geng Xiao and the director ofAccenture, John Lichtenstein, participated in the panle“Global Steel Industry Trends / China's impact”. The mainpoints addressed were:

- China is the dominant driver and impacts on the rest ofworld (it grew 13% in 2009 while the rest of the worldshrank). The country is responsible for 47% of the world'ssteel output and for 60% of all operating blast-furnaces;

- The 2008 crisis had no impact on China due to promptaction by the central government supported by abundantcredit;

- Country growth largely dependent on credit;- Strong demand for steel must hold – large projects,

most of which economically non-sustainable;- China should take the measures necessary to adjust to

the world's reality;- It is hard to foresee Chinese demand; the country

should become a large net exporter of steel;- The world steel industry must work towards “zero

accidents” and reductions of CO emissions;- Risk of a “bubble” in 2010;

- Problems to be addressed: necessary significantstructural reforms; exchange rate issues (devaluated);correction of imbalances in the domestic market;

- Perspective of consumption return to 2007 levels: Asia,China, India – 2009; South America – 2010/2011; EU, CISand Nafta after 2012.

The second panel “Large Consuming Sector Trends –Special Projects (2014 World Cup, 2016 Olympic Games,Pre-Salt, “Minha Casa, Minha Vida” – popular housingproject, High-Speed Train) had the participation of PauloSergio Moreira da Fonseca, head of the base industrydepartment of BNDES; José Sérgio Gabrielli de Azevedo,President of Petrobras; Paulo Godoy, President of ABDIB andJosé Carlos de Oliveira Lima, Vice-President of FIESP/Coordinator of Construbusiness. The main points were:

BNDES-Productive Development Policy Targets – PDP;-Investment rate of 25% of GDP by 2016;-Growing investment forecast by 2016;-BNDES investments increased 270% between 2003 and2010.

Petrobras-Investments of US$ 174.4 million in the next four years;-Development of integration in the oil production chain –production, refining and distribution;-Additional demand of 4 Mt of steel over the next 4 years(without considering pre-salt). Necessary investment intechnology and capacitation of suppliers.

ABDIB-Several bottlenecks in infrastructure;-Necessary investment of R$ 161 billion over the next 4 years;-Strong work in improving management: regulatorybenchmarks, increase in concessions, credit and guarantess,modernization of public bid laws, in regulatory andenvironmental licensing agencies.

FIESP-Investment in housing of R$ 316 billion by 2030;-Tackle bureacracy (e.g. 411 days to approve popularhousing projects in SP, 3 ½ years for highways);-Expand activities of credit agents (BNDES and Caixa).

Brazilian Steel Conference Brazilian Steel Conference

ExpoAço gathered 50 exhibitors in 3,000 m²

Brazilian and international exhibitors at ExpoAço

Schroder, AG Group, talks about semi-finished

Paulo Godoy, ABDIB, participates in the debates

Gabrielli, President of Petrobras, participates in the debates

Naughton, Professor at the University of California, specialized in Chinese economy

Laksmi Mittal, CEO of ArcelorMittal, makes the opening speech

President Lula opens ExpoAço 2010, organized by the IABr

53 4

TROCAR

Lula receives the “Steel Personality 2010” Award from the IABr

Class entities from the steel-metallurgica chain, such asSicetel, participate in ExpoAço

Flavio Azevedo (V&M), Marco Polo de Mello Lopes (IABr) and Lula at the Steel Village

Dani Rodrik, Professor of International Economic Policies at Harvard University

Finance Minister Guido Mantega visits the Steel VillageThe press at the event's opening

President Lula praises use of steel in civil construction

Executives discuss the semi-finished market

Brazilian Steel Conference Brazilian Steel Conference

ExpoAço gathered 50 exhibitors in 3,000 m²

Brazilian and international exhibitors at ExpoAço

Schroder, AG Group, talks about semi-finished

Paulo Godoy, ABDIB, participates in the debates

Gabrielli, President of Petrobras, participates in the debates

Naughton, Professor at the University of California, specialized in Chinese economy

Laksmi Mittal, CEO of ArcelorMittal, makes the opening speech

President Lula opens ExpoAço 2010, organized by the IABr

53 4

TROCAR

Lula receives the “Steel Personality 2010” Award from the IABr

Class entities from the steel-metallurgica chain, such asSicetel, participate in ExpoAço

Flavio Azevedo (V&M), Marco Polo de Mello Lopes (IABr) and Lula at the Steel Village

Dani Rodrik, Professor of International Economic Policies at Harvard University

Finance Minister Guido Mantega visits the Steel VillageThe press at the event's opening

President Lula praises use of steel in civil construction

Executives discuss the semi-finished market

Brazilian Steel Conference Brazilian Steel Conference

Brazilian steelmakers show optimism

The tone of debates at the 21st Brazilian SteelMeeting was optimistic. During the event, the BrazilStee Institute announced that Brazil's crude steeloutput in the first quarter of 2010 was of 8.0 Mt, up59.3% from the same period last year and 1.1%lower than the immediately previous quarter. Nationalapparent consumption of steel products inMarch/2010 was 2.4 Mt, totaling 6.3 Mt in the firstquarter of the year. These figures represent increasesof 77.6% and 73.0%, respectively, from the sameperiod of last year.

The good results of the first quarter confirmedBrazil steelmakers' positive view, still recovering from

the global economic crisis. Forecast steel output forthis year is 33.2 Mt, 25.1% up from last year. Sales,whose results were strongly affected by the 2008crisis, are forecast to present a 25% increase.

DOMESTIC SALESBetween January and March of this year, domestic

sales amounted to 5.0 Mt of steel products, a 2.9%increase compared to the last quarter of 2009. Whencompared to the same period of the previous year, theincrease is of 62.0%. Such results demonstrate thesuitability of Government actions to stimulate growthrecovery and tackle taxation, logistics, bureacracy andother problems.

- GDP, steel consumption and economicdeveloment are indissociable. Our consumption percapita has been stagnated for 26 years. We need togrow - stated Marco Polo de Mello Lopes, President ofIABr innaugurated during the Brazilian Steel Meeting.

Exportations of steel products in the 1st quarter ofthis year reached 2.0 Mt, generating US$ 1.2 billion.The forecast for 2010 is of exportations of 11.0 Mt ofsteel products.

- Among the sector's growing concerns are fallingexportations and increasing importations of somesteel-intensive goods – said Flávio Azevedo (V&M doBRASIL), at a Press Conference. “It is a scenario thatdemands attention and is associated to exchangerates and, in part, to uneven competition conditionsagainst foreign companies”, he added, mentioningthat sustained growth will take the Country beyond aconsumption per capita of 100 kg/inhab./y towards300 kg – 400 kg, a characteristic of developedeconomies.

André B. Gerdau Johannpeter (Gerdau), who tookoffice as President of the Board of Administration of

the IABr during the event, reinforced that the Braziliansteel industry is prepared to undertake economicgrowth challenges. “Brazil is capable today ofproducing 42.1 Mty of crude steel. This capacity willreceive, this year, an additional 6 Mty from new mills.Our current production capacity is approximately100% higher than the domestic demand forecast forthe year and enables the sector to maintain its highexporting position. Nevertheless, we will keepinvesting", said Johannpeter.

Forecast expansion projects comprise R$ 71.6billion, which should increase the Country'sproduction capacity to approximatly 77 Mty by 2016.Resume of expansion projections demonstrates thesteel industry's belief in Brazil's sustainable growthand reinforces its willingness to remain supplying infull the domestic market and expand its participationin international markets.

33 36

Brazilian and international discuss thefuture of the steel industry

Approximately 800 people attended the debates duringthe Brazilian Steel Congress, organized by the Brazil SteelInstitute between April 14-16 at the Transamérica ExpoCenter, in São Paulo. Lectures were divided in four panels:Global Steel Industry Trends, Large Consuming SectorTrends, Semi-Finished World Market and Brazil's GrowthChallenges.

The CEO of ArcelorMittal, Lakshmi Mittal, opened thedebates on April 15, stating that “the steel industry has abright future in Brazil”. The executive said that ArcelorMittalis committed to development and to the investmentsforecast for Brazil in forthcoming years, amounting to R$ 30billion. Lakshmi Mittal criticized Brazil's lack of investment ininfrastructure over the two past decades and said he waspaying attention to some points of the Brazilian economy,especially inflation, exchange rates, competitiveness andcost of investments.

- The sector's greatest challenge is still the high cost ofore – he said, adding that the company's plans for Brazilinclude expanding its ore production, doubling the steel millin Monlevade (MG) and the Tubarão Mill. After Mr. Mittal'slecture, the general manager of the World Steel Association,Ian Christmas; specialized professor in Chinese economy -University of Califórnia, Barry Naughton; the director ofBrookings-Tsinghua Center, Geng Xiao and the director ofAccenture, John Lichtenstein, participated in the panle“Global Steel Industry Trends / China's impact”. The mainpoints addressed were:

- China is the dominant driver and impacts on the rest ofworld (it grew 13% in 2009 while the rest of the worldshrank). The country is responsible for 47% of the world'ssteel output and for 60% of all operating blast-furnaces;

- The 2008 crisis had no impact on China due to promptaction by the central government supported by abundantcredit;

- Country growth largely dependent on credit;- Strong demand for steel must hold – large projects,

most of which economically non-sustainable;- China should take the measures necessary to adjust to

the world's reality;- It is hard to foresee Chinese demand; the country

should become a large net exporter of steel;- The world steel industry must work towards “zero

accidents” and reductions of CO emissions;- Risk of a “bubble” in 2010;

- Problems to be addressed: necessary significantstructural reforms; exchange rate issues (devaluated);correction of imbalances in the domestic market;

- Perspective of consumption return to 2007 levels: Asia,China, India – 2009; South America – 2010/2011; EU, CISand Nafta after 2012.

The second panel “Large Consuming Sector Trends –Special Projects (2014 World Cup, 2016 Olympic Games,Pre-Salt, “Minha Casa, Minha Vida” – popular housingproject, High-Speed Train) had the participation of PauloSergio Moreira da Fonseca, head of the base industrydepartment of BNDES; José Sérgio Gabrielli de Azevedo,President of Petrobras; Paulo Godoy, President of ABDIB andJosé Carlos de Oliveira Lima, Vice-President of FIESP/Coordinator of Construbusiness. The main points were:

BNDES-Productive Development Policy Targets – PDP;-Investment rate of 25% of GDP by 2016;-Growing investment forecast by 2016;-BNDES investments increased 270% between 2003 and2010.

Petrobras-Investments of US$ 174.4 million in the next four years;-Development of integration in the oil production chain –production, refining and distribution;-Additional demand of 4 Mt of steel over the next 4 years(without considering pre-salt). Necessary investment intechnology and capacitation of suppliers.

ABDIB-Several bottlenecks in infrastructure;-Necessary investment of R$ 161 billion over the next 4 years;-Strong work in improving management: regulatorybenchmarks, increase in concessions, credit and guarantess,modernization of public bid laws, in regulatory andenvironmental licensing agencies.

FIESP-Investment in housing of R$ 316 billion by 2030;-Tackle bureacracy (e.g. 411 days to approve popularhousing projects in SP, 3 ½ years for highways);-Expand activities of credit agents (BNDES and Caixa).

Brazilian Steel Conference Brazilian Steel Conference

Brazilian Steel Conference Brazilian Steel Conference

Brazil Steel Institute changesits governance system

During the 21st Brazil Steel Meeting & ExpoAço

2010, the Brazil Steel Institute (IABr) announced

changes in its governance system at the ceremony

held on April 15. The presidency of the Institute is

now occupied full-time by Marco Polo de Mello

Lopes, until the Executive Vice-President. André B.

Gerdau Johannpeter (Gerdau) and Albano Chagas

Vie i ra (Votorant im

Siderurgia) became

respectively President

and Vice-President of

t h e B o a r d o f

A d m i n i s t r a t i o n ,

integrated by the

Presidents of the

a s s o c i a t e d

companies, which is

i n c h a r g e o f

e s t a b l i s h i n g t h e

Inst i tute's act ion

p o l i c i e s a n d

s t r a t e g i e s . T h e

President and Vice-President of the Board of

Administration will remain to serve a two-year term.

The new governance system is part of the

modernization strategy adopted by the Institute,

indicated after an image survey carried out in

2006/2007. The results showed an inaccurate

perception regarding the industry's actual

characteristics, its importance in the national

development process, as well as the relevance of steel

as a key raw material for several segments in the

transformation industry.

Last year, the Institute changed its name and visual

idendity, becoming Brazil Steel Institute. The new

name sought a better

identification of its

activities with the

products the sector

manufactures and

delivers to the market

(steel) rather than the

whole set of processes

character iz ing the

activity (steelmaking).

At the same time, the

I A B r h a s b e e n

intensifying actions in

the sense of getting

closer to public and

private entities, so as to

reduce the gap between the sector's identity and

image. Thus, the Institute becomes more agile in

supporting the sector and enhances its position as

legitimate representative in discussions regarding the

future of the steel industry in Brazil.

Albano Chagas Vieira, André B. Gerdau Johannpeter,Flávio Azevedo and Marco Polo de Mello Lopes

Challenges for steel industry expansionand Brazil's growth are discussed

2 7

Guido Mantega, Finance minister

Brazilian steel production should grow more than 24% in this year

Despite delays arising from the global economic crisis, theBrazilian steel industry should maintain greenfieldprojects regarding the construction of mills to producesemi-finished goods for exportation. The issue wasdiscussed at the last panel held on April 15, during theBrazilian Steel Congress, under the name of “GlobalSemi-Finished Market – Perspectives for Brazil”. The panelwas coordinated by Albano Chagas Vieira, Director-Superintendent of Votorantim Siderurgia; as lecturer,Joachim Schröder, CEO of Research & Consulting GroupAG; and participating in the debates, José Carlos Martins,Executive Director of Ferrous Products at Vale; MarcoAntônio Castello Branco, President of Usiminas; andBenjamin Mário Baptista Filho, Director-President ofArcelorMittal Tubarão – Aços Planos.

The main points discussed were:- The largest part of the semi-finished market comprisesinter-company operations, and this trend should maintain(e.g. CSA - Thyssen);- Ore and coal investments are of US$ 1 to US$ 1.5 foreach US$ 1 in revenues; in the case of steel, they are ofUS$ 2 to US$ 2.5 for each US$ 1 in revenues;- Investment costs for a greenfield plant are of US$1,200/t;- Internal return rate, currently at 6%, do not justifyinvestments;- Brazil has gotten expensive, with currency valuation of32% for a 22% IGP over the past 5 years. Taxation of 16%over investments;- Taxation system and credit conditions must be improved.

On April 16, the last panel, “World Economy / Brazil'sChallenges for Growth”, had lecturer Dani Rodrik,professor of international economic policy - HarvardUniversity. Panel participants were Delfim Netto,economist and ex-Minister of Finance; Jorge GerdauJohannpeter, general coordinator of Ação Empresarialand Armando Monteiro, President of CNI, undermoderation of journalist Miriam Leitão. The main pointswere the following:- Investment costs are high;- Brazil has high taxation before production starts;- Brazil is one of the few countries that export taxes;- There is exceeding production capacity in the world'ssteel sector;- Brazil's Achievements:Institutional: democracy, independent judicial system,free press, controlled inflation, fiscal responsibility act,autonomous Central Bank.In the economy: macro-economic stability, transparentGovernment actions, better integration to globaltrade/finance flows, sound financial system and lowervulnerability to foreign crisis.

Challenges for Brazil:- Redefine the role of the State in the Brazilian economy;- Reinforce industrial policies with priority to horizontalactions;- Attract private capital into infrastructure;- Essential reforms – tax system, concentrating efforts onICMS;- Improvements in education;- Tax policy must be strict especially regarding containingcurrent expenses to increase Brazil's domestic savings, stillrather low.

CHALLENGES

- The Asian Model may not serve as reference for theBrazilian economy.

The event was closed by Finance Minister GuidoMantega. He stated that the effects of the globalcrisis on the steel industry are being overcome,especially due to strong growth perspectives for

domestic consumption. Mantega also spoke aboutthe increase in iron ore prices and stated that it is notworth speculating over whether such increase willinfluence inflation rates. “We must evaluate theweight of metal prices in the costs of automotiveand white goods industries. Maintaining inflationunder control is a matter of honor for Brazil”, addedthe Minister, who also visited the Steel Village.

CLOSING SESSION

1313ADITIONADITION

MAY | 2010MAY | 2010

Brazil Steel Institute | Phone (+55 21) 3445-6300 | www.acobrasil.org.br | acobrasil@acobrasil.org.br

More than 3.5 thousand people attended the

Brazilian Steel Meeting – 21st Meeting & ExpoAço

2010, organized by the Brazil Steel Institute between

April 14-16, 2010, at Transamérica Expo Center, in São

Paulo. Besides the lectures and the 3,000 m² occupied

by 50 stands, participants could visit the Steel Village,

an additional 1,400 m² space with full-size replicas of

steel applications in civil construction. The opening

ceremony had the participation of Brazil President Luiz

Inácio Lula da Silva; Minister of the Cities Marcio Fortes

de Almeida; São Paulo State Governor Alberto

Goldman; São Paulo City Mayor Giberto Kassab; Pará

State Governor, Ana Julia de Vasconcelos Carepa;

Senator Aloizio Mercadante; Congressman Leonardo

Quintão, representing the President of the House of

Representatives, and the Secretary of Geology and

Mining from the Ministry of Mines and Energy, Claudio

Scliar. Minister of Finace Guido Mantega attended the

event's closing ceremony.

President Lula opened ExpoAço, visited the Steel

Village and spoke for the approximately 800 congress

participants present. “Steel houses are ingenious. It is a

new possibility, and I think the Steel Village should be

presented throughout the country to provide an

alternative for the people, they have to see this. Let's

put the alternatives to the people and stimulate

competition”, said the President who, on the same

occasion, received from IABr the Steel Personality

awards, an acknowledgment for the countercrisis

measures taken by his Administration, especially relief

of tax burdens, mostly shifted to steel-intensive sectors,

allowing recuperation of the steel industry's domestic

sector and activities at a stronger pace than observed in

most of the world.

Civil construction was another sector cited by

President Lula as he mentioned the importance of

investments for the Country's growth. “We all learned

our lessons, through the hard times we lived, and little by

little Brazil got things right to reach the point where we

stand today. This is not the work of one administration,

or two, it is a historical process, you assess the

accumulated errors, accumulated certainties”, said Lula,

adding that “Brazil has a sound economy and needs to

grow”.

- It is no longer possible to play with Brazil. We are

tired of playing and irresponsibility. For all that,

congratulations to all of you and I hope the Steel Village

reaches large housing projects in our Country, so you can

build more blast-furnaces and we can close in on China

in steel output – completed Lula.

Then-President of the Brazil Steel Institute, Flávio

Azevedo, stated in his speech that the Brazilian steel

industry is working towards further promoting the use of

steel, particularly in civil construction, both in residential

construction and in infrastructure in general. “The sector

is thus following an enhanced trend in the global

steelmaking scenario and associating strongly to

governmental projects aimed at improving productivity

in civil construction through larger

u s e o f i n d u s t r i a l i z e d

cons t ru c t i on” , added

Azevedo, with a positive

tone.

Nearly 3.5 thousand people visited ExpoAço, the 3,000 m²

trade show promoted by the Brazil Steel Institute, which

gathered 50 Brazilian and foreign companies between April

14-16 at Transamérica Expo Center, in São Paulo. Exhibitors

came from countries such as Argentina, Chile, France,

Germany, India and Switzerland. The show occurred parallel to

the 21st Brazilian Steel Meeting, organized by the IABr.

ExpoAço also promoted the first meeting among important

class entities (INDA, SICETEL, ABIMAQ and ABDIB) from the

metal-mechanic sector, a clear sign of approach and

collaboration in the steel production chain. Visitors included

over 800 executives from several areas such as steelmaking,

distribution and logistics, mining, government, consulting,

financial institutions, industrial associations, steel suppliers and

consumers.

The Steel Village, an additional space of ExpoAço 2010, with

1,400 m² destined to present steel applications for civil

construction, was a success at the event. The Village was designed

to present full-size replicas of houses, buildings, urban equipment,

drywall systems, metallic fencing, steel frames, roofing and catwalks.

Businessmen, construction companies, engineers and architects, besides students,

could know better steel construction alternatives. Professors of Universities such as PUC,

USP and Mackenzie used the Village's structure to give classes on steel construction.

President Lula opens Brazilian Steel Meeting

ExpoSteel gathers nearly3.5 visitors in São Paulo

Steel Village presents solutionsfor civil construction

ExpoSteel 2010

1

Executives at the opening cocktail Over 3.5 thousand people visited ExpoAço Professionals had a great opportunity for networking

Structures may serve as leisure areasStudents learn about the use of steel in construction Urban furniture may also be made of steel

N E W S

BRAZIL STEEL